Blackbaud Inc. Contracts
Sample Business Contracts
Commitment Letter - Wachovia Corp. and Blackbaud Inc.
Loan Forms
[LOGO] WACHOVIA SECURITIES
June 1, 2004
Blackbaud, Inc.
2000 Daniel Island Dr.
Charleston, SC 29492-7541
Attention: Timothy V. Williams
Chief Financial Officer
Re: Commitment for Arrangement of Senior Credit Facility
Ladies and Gentlemen:
You have advised us that Blackbaud, Inc. (the "Borrower") seeks financing
for ongoing working capital requirements and other general corporate purposes as
more fully described in the attached Summary of Terms and Conditions (the "Term
Sheet"). The Term Sheet describes the general terms and conditions for a senior
unsecured revolving credit facility in the aggregate principal amount of up to
$30 million (the "Facility").
Based upon and subject to the terms and conditions set forth in this
Commitment Letter (the "Commitment Letter"), in the Term Sheet and in the fee
letter of even date (the "Fee Letter"), Wachovia Bank, National Association
("Wachovia") is pleased to advise you of its commitment to act as sole and
exclusive administrative agent for the Facility and provide a portion of the
Facility equal to the lesser of (a) $10 million or (b) one third (1/3) of the
aggregate principal amount of the Facility on the closing date of the Facility.
Wachovia Capital Markets, LLC ("Wachovia Securities"*) is pleased to advise you
that it will act as sole lead arranger and sole book manager for the Facility.
Furthermore, Wachovia Securities commits to use its reasonable best efforts to
secure commitments for the remainder of the Facility from a syndicate of banks
and financial institutions (the "Lenders") reasonably acceptable to the Borrower
and Wachovia Securities upon the terms and subject to the conditions set forth
herein, in the Term Sheet and in the Fee Letter.
It is understood and agreed that Wachovia Securities will manage and
control all aspects of the syndication, including decisions as to the selection
of proposed Lenders and any titles offered to proposed Lenders, when commitments
will be accepted and the final allocations of the
---------------------------
* Wachovia Securities is the trade name under which Wachovia Corporation
conducts its investment banking, capital markets and institutional securities
business through Wachovia Capital Markets, LLC, Member NYSE, NASD, SIPC, and
through other bank and non-bank and broker-dealer subsidiaries of Wachovia
Corporation.
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Blackbaud, Inc.
Page 2
commitments among the Lenders. You also acknowledge and agree that the services
of Wachovia as sole administrative agent and the services of Wachovia Securities
as sole lead arranger and sole book manager will be on an exclusive basis during
the term of this Commitment Letter and that, during such term, no other bank or
other financial institution will be engaged or otherwise consulted or contacted
by you regarding any other proposed senior bank facility for the Borrower or its
subsidiaries. In addition, you agree that no other agents, co-agents, arrangers
or book managers will be appointed, no other titles will be awarded and no
compensation (other than to Wachovia and Wachovia Securities or as expressly
contemplated by the Term Sheet or the Fee Letter) will be paid in connection
with the Proposed Facility unless agreed by Wachovia Securities.
The commitments of Wachovia and Wachovia Securities hereunder are based
upon the financial and other information regarding the Borrower and its
subsidiaries previously provided to us. Accordingly, the commitments hereunder
are subject to the satisfaction of each of the following conditions precedent in
a manner reasonably acceptable to us:
(i) each of the terms and conditions set forth herein and in the Term
Sheet;
(ii) the absence of a material breach of any representation, warranty or
agreement of the Borrower set forth herein;
(iii) no change, occurrence or development that could reasonably be
expected to have a material adverse effect on the business, assets, liabilities
(actual or contingent), operations, condition (financial or otherwise) or
prospects of the Borrower and its subsidiaries taken as a whole shall have
occurred or become known to us;
(iv) the information concerning the Borrower and its subsidiaries and the
initial public offering of the Borrower's common equity securities (the "IPO")
shall not, in our reasonable judgment, differ in any material adverse manner
from the information and other matters previously disclosed to us prior to date
hereof;
(v) the completion, to our satisfaction, of all legal, tax, business and
other due diligence with respect to the business, assets, liabilities,
operations, condition (financial or otherwise) and prospects of the Borrower and
its subsidiaries and the IPO in scope and determination reasonably satisfactory
to us;
(vi) material compliance with all applicable laws and regulations by the
Borrower and its subsidiaries (including compliance of this Commitment Letter
and the transactions described herein with all applicable federal banking laws,
rules and regulations);
(vii) our satisfaction that, prior to and during the primary syndication
of the Facility, there shall be no competing offering, placement or arrangement
of any debt securities or bank financing by or on behalf of the Borrower or any
of its subsidiaries except with the prior written consent of Wachovia and
Wachovia Securities;
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Blackbaud, Inc.
Page 3
(viii) the negotiation, execution and delivery of definitive documentation
for the Facility consistent with the Term Sheet and otherwise reasonably
satisfactory to us;
(ix) there not having occurred any material disruption or adverse change
in the financial, banking or capital markets that could, in our reasonable
judgment, impair the syndication of the Facility or the IPO; and
(x) Wachovia Securities shall have received commitments (including the
commitment of Wachovia) equaling or exceeding the aggregate amount of the
Facility.
You agree to actively assist Wachovia Securities (including, if
applicable, after the closing of the Facility) in achieving a syndication of the
Facility that is satisfactory to Wachovia Securities and you. Such syndication
may be accomplished by a variety of means, including direct contact during the
syndication between senior management and advisors of the Borrower and its
subsidiaries, and the proposed Lenders. To assist Wachovia Securities in the
syndication efforts you hereby agree (i) to provide and cause your advisors to
provide Wachovia Securities and the proposed Lenders upon our reasonable request
with all information deemed reasonably necessary by Wachovia Securities to
complete the syndication, including, but not limited to, information and
evaluations prepared by you and any of your subsidiaries and their advisors, or
on their behalf, relating to the transactions contemplated hereby, (ii) to
assist Wachovia Securities upon its reasonable request in the preparation of an
information memorandum to be used in connection with the syndication of the
Facility, (iii) to use your commercially reasonable efforts to ensure that the
syndication efforts benefit materially from your existing lending and investment
banking relationships, and (iv) to otherwise assist Wachovia Securities in its
syndication efforts, including making officers and advisors of the Borrower and
its subsidiaries available from time to time, with reasonable prior notice, to
attend and make presentations regarding the business and prospects of the
Borrower and its subsidiaries, as appropriate, at a meeting or meetings of
Lenders or prospective Lenders.
You agree to afford Wachovia and its affiliates an opportunity to offer
proposals, on a non-exclusive basis, to provide, arrange, underwrite or
administer (i) any interest rate caps, currency swaps or other hedging
transactions to be entered into by you or any of your subsidiaries or
affiliates, (ii) any cash management, funds transfer, trade, corporate trust and
securities services to be obtained by you or any of your subsidiaries or
affiliates and (iii) any public or private debt or equity instruments or
securities to be issued by you or any of your subsidiaries or affiliates.
You hereby represent, warrant and covenant that (i) all information, other
than Projections (as defined below), which has been or is hereafter made
available to Wachovia, Wachovia Securities or the Lenders by you or any of your
representatives in connection with the transactions contemplated hereby
("Information") is and will be complete and correct in all material respects as
of the date made available to Wachovia, Wachovia Securities or the Lenders and
does not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained therein not
materially misleading and (ii) all financial projections concerning the Borrower
and its subsidiaries that have been or are hereafter made available to Wachovia,
Wachovia Securities or the Lenders by you or any of your representatives (the
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Blackbaud, Inc.
Page 4
"Projections") have been or will be prepared in good faith based upon reasonable
assumptions. You agree to furnish to us such Information and Projections as we
may reasonably request and to supplement the Information and the Projections
from time to time until the closing date of the Facility so that the
representation, warranty and covenant in the preceding sentence is correct on
the closing date of the Facility. In arranging and syndicating the Facility,
Wachovia and Wachovia Securities will be using and relying on the Information
and the Projections without responsibility for independent verification thereof.
By executing this Commitment Letter, you agree, from time to time on
demand, to (i) pay the reasonable fees, disbursements and other charges of
Kennedy Covington Lobdell & Hickman, L.L.P., as counsel to Wachovia and Wachovia
Securities and (ii) pay or reimburse Wachovia and Wachovia Securities for all
reasonable out-of-pocket fees, syndication expenses and other expenses, in each
case incurred before or after the date hereof in connection with the Facility
and the other transactions contemplated hereby (including, but not limited to,
the preparation and execution of the Commitment Letter, the Term Sheet, the Fee
Letter and the definitive documentation for the Facility and future
administration of the definitive documentation for the Facility).
By executing this Commitment Letter, you further agree to indemnify and
hold harmless Wachovia, Wachovia Securities, each other Lender and each
director, officer, employee, attorney, advisor, agent and affiliate of Wachovia,
Wachovia Securities and each other Lender (each such person or entity referred
to hereafter in this paragraph as an "Indemnified Person") from any losses,
claims, costs, damages, expenses or liabilities (or actions, suits or
proceedings, including any inquiry or investigation, with respect thereto) to
which any Indemnified Person may become subject, insofar as such losses, claims,
costs, damages, expenses or liabilities (or actions, suits, or proceedings,
including any inquiry or investigation, with respect thereto) arise out of, in
any way relate to, or result from, this Commitment Letter, the Term Sheet, the
Fee Letter, the Facility, reports or other information provided to any
Indemnified Person or contemplated by or referred to herein or therein or the
other transactions contemplated hereby and thereby and to reimburse upon demand
each Indemnified Person for any and all reasonable legal and other expenses
incurred in connection with investigating, preparing to defend or defending any
such loss, claim, cost, damage, expense or inquiry or investigation, with
respect thereto; provided, that you shall have no obligation to any Indemnified
Person under this indemnity provision for liabilities to the extent that such
liabilities are determined by a final, non-appealable judgment of a court of
competent jurisdiction to have resulted directly from the gross negligence or
willful misconduct of such Indemnified Person; provided, further that you shall
not be required to reimburse any Lender (other than Wachovia) for legal or other
fees and expenses incurred in connection with the negotiation and closing of the
definitive closing documentation executed and delivered at closing. The
foregoing provisions of this paragraph shall be in addition to any right that an
Indemnified Person shall have at common law or otherwise. This Commitment Letter
is addressed solely to the Borrower and is not intended to confer any
obligations to or on, or benefits to or on, any third party. No Indemnified
Person shall be liable for any damages arising from the use by others of
Information or other materials obtained through internet, Intralinks or other
similar transmission systems in connection with the Facility. In addition, no
Indemnified Person shall be responsible or
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Blackbaud, Inc.
Page 5
liable for consequential damages which may be alleged as a result of this
Commitment Letter, the Term Sheet or the Fee Letter.
The terms of this Commitment Letter, the Fee Letter and the Term Sheet are
confidential and may not be disclosed by you in whole or in part to any third
party without the prior consent of Wachovia and Wachovia Securities, except for
disclosure on a confidential basis to your attorneys, financial advisors and
accountants, in each case in connection with your evaluation hereof and to the
extent necessary in your reasonable judgment or as may be required by law,
regulation or legal process. You acknowledge and agree that Wachovia and
Wachovia Securities may share with their respective affiliates any information
relating to the Facility, the Borrower and its subsidiaries. You further
acknowledge and agree to the disclosure by Wachovia and Wachovia Securities of
information relating to the Facility to Gold Sheets and other similar bank trade
publications, with such information to consist of deal terms and other
information customarily found in such publications. Furthermore, Wachovia and
Wachovia Securities hereby notify you that pursuant to the requirements of the
USA Patriot Act (the "Act"), each of them is required to obtain, verify and
record information that identifies you in accordance with the Act.
The provisions of the immediately preceding three paragraphs shall remain
in full force and effect regardless of whether definitive financing
documentation shall be executed and delivered and notwithstanding the
termination of this Commitment Letter or the commitment of Wachovia or Wachovia
Securities hereunder.
This Commitment Letter and the Term Sheet do not summarize all of the
terms, conditions, covenants, representations, warranties and other provisions
which will be contained in the definitive credit documentation for the Facility
and the transactions contemplated thereby. Wachovia and Wachovia Securities
shall have the right to require that such credit documentation include, in
addition to the provisions outlined herein and in the Term Sheet, provisions
considered customary and appropriate by Wachovia and Wachovia Securities for
this type of financing transaction, as well as provisions that Wachovia and
Wachovia Securities may deem customary and appropriate after they are afforded
the opportunity to conduct and complete, to their satisfaction, the due
diligence review described above.
Wachovia shall have the right to review and approve any public
announcement or public filing made after the date hereof relating to any of the
transactions contemplated hereby or relating to Wachovia or any of its
affiliates, as the case may be, before any such announcement or filing is made
(such approval not to be unreasonably withheld or delayed).
Wachovia's commitment with respect to the Facility set forth above shall
terminate at 5:00 p.m. on June 3, 2004, unless this Commitment Letter and the
Fee Letter are accepted by the Borrower in writing and delivered to Wachovia
Securities prior to such time. Following acceptance by you, this Commitment
Letter shall expire at 5:00 p.m. on July 31, 2004, unless the Facility is closed
by such time.
This Commitment Letter, together with the Term Sheet and the Fee Letter,
embodies the entire agreement and understanding between Wachovia, Wachovia
Securities and the Borrower
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Blackbaud, Inc.
Page 6
with respect to the specific matters set forth above and supersedes all prior
agreements and understandings relating to the subject matter hereof. No party
has been authorized by Wachovia or Wachovia Securities to make any oral or
written statements inconsistent with this Commitment Letter.
This Commitment Letter shall be governed by and construed in accordance
with the laws of the State of North Carolina without reference to the conflicts
or choice of laws principles thereof. Each of us hereby irrevocably waives all
right to trial by jury in any action, proceeding or counterclaim (whether based
on contract, tort or otherwise) arising out of or relating to this Commitment
Letter, the Term Sheet, the Fee Letter, the transactions contemplated hereby and
thereby or the actions of Wachovia and Wachovia Securities in the negotiation,
performance or enforcement hereof and thereof.
This Commitment Letter may be executed in any number of counterparts, each
of which shall be an original, and all of which, when taken together, shall
constitute one agreement. Delivery of an executed signature page of this
Commitment Letter by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof; provided that such facsimile transmission
shall be promptly followed by the original thereof.
This Commitment Letter may not be amended or any provision hereof waived
or modified except by an instrument in writing signed by Wachovia, Wachovia
Securities and the Borrower.
This Commitment Letter may not be assigned by the Borrower without the
prior written consent of Wachovia and Wachovia Securities (and any purported
assignment without such consent shall be null and void).
[Signature Page Follows]
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Blackbaud, Inc.
Page 7
Please indicate your acceptance of this Commitment Letter and the Term
Sheet by signing in the space provided and returning the original copy to us.
Wachovia Securities is pleased to have the opportunity to assist you in
connection with this proposed financing transaction.
Very truly yours,
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ John D. Brady
-----------------------------------------------
Name: John D. Brady
Title: Director
WACHOVIA CAPITAL MARKETS, LLC
By: /s/ John D. Brady
-----------------------------------------------
Name: John D. Brady
Title: Director
ACCEPTED AND AGREED TO THIS 4th
DAY OF JUNE, 2004:
BLACKBAUD, INC.
By: /s/ Timothy V. Williams
-----------------------------------------
Name: Timothy V. Williams
Title: VP and CFO
[Commitment Letter-Blackbaud, Inc.]
<PAGE>
[LOGO] WACHOVIA SECURITIES
June 1, 2004
Blackbaud, Inc.
2000 Daniel Island Dr.
Charleston, SC 29492-7541
Attention: Timothy V. Williams
Chief Financial Officer
Re: Senior Credit Facility Fee Letter
Ladies and Gentlemen:
This letter is the fee letter (the "Fee Letter") referred to in that
certain commitment letter of even date herewith (the "Commitment Letter") from
Wachovia Bank, National Association ("Wachovia") and Wachovia Capital Markets,
LLC ("Wachovia Securities"*) to Blackbaud, Inc. (the "Borrower"), whereby
Wachovia has furnished its commitment to provide to the Borrower a portion of a
senior unsecured revolving credit facility in the aggregate principal amount of
up to $30 million (the "Facility") subject to the terms and conditions set forth
therein and in the Term Sheet attached thereto. Capitalized terms used herein
without definition shall have the meanings given to them in the Commitment
Letter or the Term Sheet.
In connection with the Commitment Letter, you hereby agree with Wachovia
and Wachovia Securities as follows:
(a) Upfront Fee.
(i) As consideration for the Lenders to provide their
commitments to the Facility, the Borrower hereby agrees to pay to
Wachovia Securities, for the account of each of the Lenders
(including Wachovia) on a pro rata basis in accordance with their
final allocated commitments, upfront fees (the "Upfront Fees") in an
aggregate amount reasonably determined by Wachovia Securities (in
consultation with the Borrower) as required in order to successfully
complete the syndication of the Facility. Wachovia Securities
currently estimates the Upfront Fees to equal 0.25% of the final
allocated commitment of each of the Lenders. The estimate of the
Upfront Fees may be impacted by many factors including, but not
limited to, current market conditions. Wachovia Securities agrees
that it will not
----------------------------
* Wachovia Securities is the trade name under which Wachovia
Corporation conducts its investment banking, capital markets and institutional
securities business through Wachovia Capital Markets, LLC, Member NYSE, NASD,
SIPC, and through other bank and non-bank and broker-dealer subsidiaries of
Wachovia Corporation.
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Blackbaud, Inc.
Page 2
increase the Upfront Fees payable pursuant to this paragraph without
your prior approval (which shall not be unreasonably withheld or
delayed).
(ii) Notwithstanding anything to the contrary contained in the
preceding clause (i), as consideration for Wachovia to provide its
commitment to the Facility, the Borrower hereby agrees that the
percentage upon which the Upfront Fee payable to Wachovia is based
shall be equal to the highest percentage amount paid to any other
Lender who commits to the Facility.
(iii) Furthermore, notwithstanding anything to the contrary
contained in the preceding paragraph, the entire amount of the
Upfront Fee payable to Wachovia shall be fully earned and shall be
due and payable on the closing date of the Facility.
(b) Administrative Agent Fee. As consideration for Wachovia to agree
to act as Administrative Agent in connection with the Facility, the
Borrower agrees to pay to Wachovia, for its own account and in its
capacity as Administrative Agent, an annual administrative fee in an
aggregate amount equal to the lesser of (i) $15,000 or (ii) $5,000 for
each Lender under the Facility. Such fee shall be due and payable in
advance on the closing date of the Facility and thereafter on each
anniversary of the closing date of the Facility until the Facility has
been terminated and all amounts owing thereunder are paid in full.
Wachovia reserves the right to review and adjust the annual administrative
fee, subject to your approval (which shall not be unreasonably withheld or
delayed), on an annual basis and at the time a material amendment is
requested by you, with any adjustment effective on the earlier of the date
of any material amendment and the anniversary of the closing date of the
Facility.
The Borrower agrees that all of the fees set forth in this Fee Letter
shall be fully-earned upon becoming due and payable in accordance with the terms
hereof, shall be paid in immediately available funds when due and payable, shall
be non-refundable under any circumstance, and shall be in addition to any other
fee, cost or expense payable pursuant to the Facility, including, without
limitation, all reasonable out-of-pocket expenses, syndication expenses and
other expenses of Wachovia or Wachovia Securities (subject to the limitations
herein and in the Commitment Letter and Term Sheet). The Borrower further agrees
to pay the unused commitment fee and other fees in the amounts and at the times
set forth in the Term Sheet. In addition, all of the fees set forth in this Fee
Letter shall not be subject to counterclaim or setoff for, or be otherwise
affected by, any claim or dispute the Borrower may have. It is understood that
no Lender participating in the Facility will receive compensation from the
Borrower outside the terms contained herein, in the Commitment Letter and in the
Term Sheet in order to obtain its commitment. Wachovia and Wachovia Securities
may allocate among their affiliates any of the fees payable hereunder in their
sole discretion.
Wachovia Securities shall be entitled, subject to your approval (which
shall not be unreasonably withheld or delayed), to change the pricing, amount,
terms, allocation or structure of the Facility, either before or after the
closing of the Facility, if Wachovia Securities determines in
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Blackbaud, Inc.
Page 3
its reasonable judgment that such changes are advisable in order to ensure a
successful syndication or an optimal capital structure. The commitments of
Wachovia and Wachovia Securities under the Commitment Letter are subject to the
agreements in this paragraph. The Term Sheet shall be deemed to be amended to
reflect such changes and the syndication process shall continue. The agreements
in this paragraph shall survive the closing of the Facility.
Except as required by applicable law, this Fee Letter and the contents
hereof shall not be disclosed by the Borrower to any third party without the
prior written consent of Wachovia and Wachovia Securities, other than as
permitted by the Commitment Letter.
This Fee Letter, together with the Term Sheet and the Commitment Letter,
embodies the entire agreement and understanding between Wachovia, Wachovia
Securities and the Borrower with respect to the specific matters set forth above
and supersedes all prior agreements and understandings relating to the subject
matter hereof. No party has been authorized by Wachovia or Wachovia Securities
to make any oral or written statements inconsistent with this Fee Letter.
This Fee Letter shall be governed by and construed in accordance with the
laws of the State of North Carolina without reference to the conflicts or choice
of laws principles thereof. Each of us hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to this Fee Letter, the
transactions contemplated hereby or the actions of Wachovia and Wachovia
Securities in the negotiation, performance or enforcement hereof.
This Fee Letter may be executed in any number of counterparts, each of
which shall be an original, and all of which, when taken together, shall
constitute one agreement. Delivery of an executed signature page of this Fee
Letter by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof; provided that such facsimile transmission shall be
promptly followed by the original thereof.
This Fee Letter may not be amended or any provision hereof waived or
modified except by an instrument in writing signed by Wachovia, Wachovia
Securities and the Borrower.
This Fee Letter may not be assigned by the Borrower without the prior
written consent of Wachovia and Wachovia Securities (and any purported
assignment without such consent shall be null and void).
It is understood and agreed that this Fee Letter shall not constitute or
give rise to any obligation on the part of Wachovia or Wachovia Securities to
provide any financing; such an obligation will only arise under the Commitment
Letter, and only in accordance with the terms thereof, if accepted in accordance
with its terms.
[Signature Page Follows]
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Blackbaud, Inc.
Page 4
The commitments of Wachovia and Wachovia Securities as set forth in the
Commitment Letter are subject to the receipt of a signed copy of this Fee
Letter, together with a signed copy of the Commitment Letter. If the Borrower is
in agreement with the foregoing, please sign the enclosed copy of this Fee
Letter and return it to Wachovia and Wachovia Securities, together with an
executed copy of the Commitment Letter, by no later than 5:00 p.m. on June 3,
2004.
Very truly yours,
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ John D. Brady
----------------------------------------
Name: John D. Brady
Title: Director
WACHOVIA CAPITAL MARKETS, LLC
By: /s/ John D. Brady
----------------------------------------
Name: John D. Brady
Title: Director
ACCEPTED AND AGREED TO THIS 4th
DAY OF JUNE, 2004:
BLACKBAUD, INC.
By: /s/ Timothy V. Williams
-------------------------------------
Name: Timothy V. Williams
Title: VP and CFO
[Fee Letter-Blackbaud, Inc.]
<PAGE>
BLACKBAUD, INC.
SUMMARY OF TERMS AND CONDITIONS
$30,000,000 SENIOR CREDIT FACILITY
JUNE 1, 2004
BORROWER: Blackbaud, Inc. (the "Borrower").
GUARANTORS: The Facility (as defined below) shall be irrevocably
and unconditionally guaranteed by all material
subsidiaries of the Borrower existing as of the closing
date of the Facility and such other material
subsidiaries that are subsequently acquired or organized
(the "Guarantors") pursuant to customary guaranty
agreements in form and substance satisfactory to the
Lenders (each a "Guaranty Agreement"). All Guaranty
Agreements shall be guarantees of payment and not of
collection.
ADMINISTRATIVE
AGENT: Wachovia Bank, National Association ("Wachovia" or
the "Administrative Agent") will act as the sole and
exclusive administrative agent.
SOLE LEAD
ARRANGER AND
BOOK MANAGER: Wachovia Capital Markets, LLC ("Wachovia Securities"
or the "Lead Arranger") will arrange and structure the
Facility. Wachovia Securities is the trade name under
which Wachovia Corporation conducts its investment
banking, capital markets and institutional securities
business through Wachovia Capital Markets, LLC, Member
NYSE, NASD, SIPC, and through other bank and non-bank
and broker-dealer subsidiaries of Wachovia Corporation.
LENDERS: A syndicate of banks and other financial institutions
(including Wachovia) arranged by the Lead Arranger,
which institutions shall be reasonably acceptable to the
Borrower and the Administrative Agent (collectively, the
"Lenders").
FACILITY: A $30,000,000 revolving credit facility (the
"Facility"), with a sublimit for the issuance of
swingline loans (each a "Swingline Loan") in an amount
to be mutually agreed upon and a sublimit for
1
WACHOVIA SECURITIES STRICTLY CONFIDENTIAL
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the issuance of standby letters of credit (each a
"Letter of Credit") in an amount to be mutually agreed
upon. Any Swingline Loans and Letters of Credit shall
reduce the available commitment under the Facility on a
dollar for dollar basis. Subject to the limitations
described herein, revolving credit loans may be repaid
and reborrowed.
SWINGLINE LOANS: Swingline Loans will be made by Wachovia to the
Borrower on same day notice. Each of the Lenders shall
acquire, under certain circumstances, an irrevocable and
unconditional pro rata participation in each such
Swingline Loan.
LETTERS OF CREDIT: Letters of Credit will be issued by Wachovia and
shall expire no later than the earlier of (i) one (1)
year after its date of issuance and (ii) the fifth (5th)
business day prior to the Maturity Date. Each of the
Lenders shall acquire, under certain circumstances, an
irrevocable and unconditional pro rata participation in
each such Letter of Credit.
MATURITY DATE: The Facility shall terminate and all amounts
outstanding thereunder shall be due and payable in full
upon the third (3rd) anniversary of the closing date of
the Facility (the "Maturity Date").
PURPOSE: The Facility shall be used (i) for general corporate
purposes of the Borrower and its subsidiaries,
including, without limitation, working capital, capital
expenditures in the ordinary course of business and
permitted acquisitions, and (ii) to pay fees and
expenses related to the Facility.
PRICING, FEES AND
EXPENSES: See Addendum I.
LOANS UNDER THE
CREDIT FACILITY: Borrowings may be requested upon three (3) business
days notice for LIBOR Rate Loans and same business day
notice for Base Rate Loans and Swingline Loans. Notice
must be given to the Administrative Agent by 11:00 a.m.,
Charlotte, North Carolina time, on the day on which such
notice is required. The aggregate of all outstanding
LIBOR Rate Loans, Base Rate Loans, Swingline Loans and
Letters of Credit will be considered usage for purposes
of determining availability under the Facility.
2
WACHOVIA SECURITIES STRICTLY CONFIDENTIAL
<PAGE>
REPAYMENT: The Facility shall be repaid in full, including any
unpaid interest, on the Maturity Date.
OPTIONAL
PREPAYMENTS;
COMMITMENT
REDUCTIONS: Base Rate Loans and Swingline Loans may be prepaid at
any time without penalty. LIBOR Rate Loans may be
prepaid at the end of the applicable Interest Period
without penalty. Prepayment of the LIBOR Rate Loans
prior to the end of the applicable Interest Period is
subject to payment of any funding losses.
The Borrower may at any time permanently reduce the
total amount of the Lenders' Commitments under the
Facility. Each such reduction shall be in a principal
amount of at least $2,500,000.
CONDITIONS
PRECEDENT
TO CLOSING: Customary for facilities of this nature, including,
but not limited to, credit documentation consistent with
the terms herein or otherwise reasonably satisfactory to
the Administrative Agent; legal opinions and other
closing documentation consistent with the terms herein
or otherwise reasonably satisfactory to the
Administrative Agent; all governmental, shareholder,
corporate and third party consents shall have been
obtained or waived; no material adverse change including
no material pending or threatened litigation, bankruptcy
or other proceeding; satisfactory review of all
corporate documentation and other legal due diligence;
completion of an initial public offering of the common
stock of the Borrower upon terms and conditions
substantially similar to those set forth in the
Borrower's initial Form S-1 filed May 11, 2004 or such
other terms and conditions as are reasonably acceptable
to the Administrative Agent; payment in full of all
principal, interest and other amounts outstanding in
connection with the Borrower's and the Guarantors'
existing debt (other than debt permitted under the terms
of the definitive credit documentation (including,
without limitation, all amounts due under the Borrower's
existing senior secured credit facility)); and payment
of all fees and expenses due to the Administrative Agent
and the Administrative Agent's counsel.
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WACHOVIA SECURITIES STRICTLY CONFIDENTIAL
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CONDITIONS
PRECEDENT TO
ALL BORROWINGS: Customary for facilities of this nature, including,
but not limited to, accuracy of representations and
warranties and absence of defaults.
REPRESENTATIONS
AND WARRANTIES: Customary for facilities of this nature, including,
but not limited to, corporate existence; corporate and
governmental authorization; enforceability; financial
information; no material adverse changes; compliance
with laws and agreements (including environmental laws);
compliance with ERISA; solvency; title to assets;
material contracts; no material litigation; payment of
taxes; financial condition; and full disclosure.
AFFIRMATIVE
COVENANTS: Customary for facilities of this nature, including,
but not limited to, receipt of financial information;
notification of litigation, investigations, and other
adverse changes; payment and performance of obligations;
conduct of business; maintenance of existence;
maintenance of property and insurance (including hazard
and business interruption coverage); maintenance of
records and accounts; inspection of property and books
and records; compliance with laws (including
environmental laws); payment of taxes; and ERISA.
FINANCIAL
COVENANTS: Financial covenants shall include, but not be limited
to, the following (in each case to be tested on a
quarterly basis):
(a) Maximum Total Leverage Ratio. Total Leverage Ratio
(Total Debt to EBITDA) shall be less than 2.00 to
1.00.
(b) Minimum Interest Coverage Ratio. Interest Coverage
Ratio (EBITDA to Interest Expense) shall be
greater than 5.00 to 1.00.
(c) Minimum Net Worth. Net Worth shall be greater than
$35,000,000.
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WACHOVIA SECURITIES STRICTLY CONFIDENTIAL
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For the purpose hereof, "EBITDA" means, for any period,
the sum of the following determined on a consolidated
basis, without duplication, for the Borrower and its
subsidiaries in accordance with generally accepted
accounting principles: (a) net income for such period
plus (b) the sum of the following to the extent deducted
in determining net income: (i) income and franchise
taxes, (ii) interest expense, and (iii) amortization,
depreciation and other non-cash charges (including
non-cash stock compensation charges) less (c) interest
income and any extraordinary gains.
All other definitions with respect to the capitalized
terms set forth above shall be customary for facilities
of this nature and shall be determined and calculated in
a manner reasonably acceptable to the Administrative
Agent and Borrower.
NEGATIVE
COVENANTS: Customary for facilities of this nature, including,
but not limited to, restrictions and limitations
(subject to customary exceptions and baskets to be
mutually agreed upon) on: indebtedness; liens; guaranty
obligations; changes in business; mergers; sales of
assets; acquisitions (other than permitted acquisitions
as described below); loans, advances and investments;
transactions with affiliates; sale and leaseback
transactions; prepayments of or material amendments to
indebtedness (including, without limitation, repayment
of any subordinated debt); restrictive agreements;
dividends and repurchases of the stock of the Borrower
(other than permitted dividends and stock repurchases as
described below); distributions and other restricted
payments (including, without limitation, payments with
respect to subordinated debt); and changes in fiscal
year or accounting method.
PERMITTED DIVIDENDS
AND STOCK RE-
PURCHASES: So long as (1) no default or event of default shall
have occurred and be continuing; (2) the Borrower is in
pro forma compliance with the financial covenants after
giving effect to any dividend payments or any
repurchases of stock of the Borrower and (3) the
Borrower will have at least $3 million of cash on hand
after giving effect to any dividend payments or any
repurchases of stock of the Borrower, the Borrower may
pay dividends and make stock repurchases at any time in
the following amounts:
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WACHOVIA SECURITIES STRICTLY CONFIDENTIAL
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(A) with respect to any dividends or stock repurchase
made on any date upon which there are no
outstanding loans or letters of credit under the
Facility, an aggregate amount of up to 100% of the
cash on hand as of the most recent fiscal quarter
end; provided that if the Borrower pays dividends
or makes stock repurchases in an aggregate amount
in excess of 70% of the cash on hand as of the
most recent fiscal quarter end, the availability
on the Facility will be reduced to $0 for a period
of 30 days following the date of any such dividend
or stock repurchase; or
(B) with respect to any dividends or stock repurchase
made on any date upon which there are any
outstanding loans or letters of credit under the
Facility, an aggregate amount not to exceed:
(i) if the Total Leverage Ratio is less than
1.00 to 1.00, 35% of cash on hand as of the
most recent fiscal quarter end; or
(ii) if the Total Leverage Ratio is equal to or
greater than 1.00 to 1.00, 25% of cash on
hand as of the most recent fiscal quarter
end.
PERMITTED
ACQUISITIONS: Acquisitions shall be permitted subject to the following
terms and conditions:
(1) No default or event of default shall have occurred
and be continuing both before and after giving
effect to such acquisition;
(2) The Borrower shall be in pro forma compliance with
the financial covenants both before and after
giving effect to such acquisition;
(3) Each acquisition shall be in an amount not to
exceed $20,000,000 of cash consideration;
(4) The Total Leverage Ratio, calculated on a pro
forma basis after giving effect to such
acquisition, shall be less than or equal to 1.75
to 1.00; and
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WACHOVIA SECURITIES STRICTLY CONFIDENTIAL
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(5) Other customary terms and conditions reasonably
required by the Administrative Agent.
EVENTS OF
DEFAULT: Customary events of default (and cure periods) for
facilities of this nature, including, but not limited
to: failure to pay any interest, principal or fees under
the Facility when due; failure to perform any covenant
or agreement; inaccurate or false representation or
warranties; cross defaults (including cross-defaults to
defaults under material contracts); actual or asserted
invalidity (by the Borrower or any other loan party) of
any guaranty in favor of the Administrative Agent and
the Lenders; insolvency or bankruptcy; ERISA; judgment
defaults; change in control; and any other events of
default deemed reasonably necessary by the
Administrative Agent and the Lenders in the context of
the proposed transaction.
ASSIGNMENTS &
PARTICIPATIONS: Each Lender will, subject in certain circumstances to
the approval of the Administrative Agent and/or the
Borrower (such consents not to be unreasonably withheld
or delayed), be permitted to make assignments in
acceptable minimum amounts. Participations shall be
permitted in acceptable minimum amounts.
REQUIRED LENDERS: On any date of determination, those Lenders who
collectively hold at least 66 2/3% of the Facility, or
if the Facility has been terminated, those Lenders who
collectively hold at least 66 2/3% of the aggregate
outstandings.
WAIVERS AND
AMENDMENTS: Amendments and waivers of the provisions of the credit
agreement and other definitive credit documentation will
require the approval of the Borrower and the Required
Lenders, except that the consent of all the Lenders
affected thereby shall be required with respect to (i)
increases in the commitment of such Lenders, (ii)
reductions of principal, interest or fees (other than
the permitted reductions described herein), (iii)
extensions of scheduled maturities or times for payment,
and (iv) releases of guarantees of the Facility, if any.
INDEMNIFICATION: Consistent with customary practice for transactions of
this nature, the Borrower shall indemnify the
Administrative Agent and the Lenders and their
respective affiliates from and against all losses,
liabilities, claims, damages or expenses arising out of
or relating to the Facility, the Borrower's use of the
loan proceeds or the commitments, including, but not
limited to, reasonable attorney's
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WACHOVIA SECURITIES STRICTLY CONFIDENTIAL
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fees and settlement costs; provided, that the Borrower
shall not be required to reimburse any lender (other
than the Administrative Agent and the Lead Arranger) for
legal or other fees and expenses incurred in connection
with the negotiation and closing of the definitive
closing documentation executed and delivered at closing.
This indemnification shall survive and continue for the
benefit of the indemnitees at all times after the
Borrower's acceptance of the Lenders' commitments for
the Facility, notwithstanding any failure of the
Facility to close.
WAIVER OF JURY
TRIAL, GOVERNING
LAW: Waiver of jury trial, submission to jurisdiction in
Charlotte, North Carolina and mandatory binding
arbitration in Charlotte, North Carolina; North Carolina
law (without reference to choice of law provisions) to
govern.
PATRIOT ACT: To help fight the funding of terrorism and money
laundering activities, Federal Law requires all
financial institutions to obtain, verify and record
information that identifies each person or corporation
who opens an account and/or enters into a business
relationship with such financial institution.
COUNSEL TO
LEAD ARRANGER AND
ADMINISTRATIVE
AGENT: Kennedy Covington Lobdell & Hickman, L.L.P.
MISCELLANEOUS: This summary of terms and conditions does not purport to
summarize all the conditions, covenants,
representations, warranties and other provisions which
would be contained in definitive credit documentation
for the Facility contemplated hereby.
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WACHOVIA SECURITIES STRICTLY CONFIDENTIAL
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ADDENDUM I
PRICING, FEES AND EXPENSES
INTEREST RATE
OPTIONS: The Borrower's option of:
(1) The Base Rate plus the Applicable Base Rate
Margin, as set forth in the pricing grid attached
hereto as Exhibit A. The initial Applicable Base
Rate Margin will be 0.50%. Loans bearing interest
at the Base Rate plus the Applicable Base Rate
Margin ("Base Rate Loans") shall be for a minimum
amount of $2,500,000 and $1,000,000 increments in
excess thereof.
The Base Rate means the greater of (i) the
Administrative Agent's Prime Rate or (ii) the
overnight federal funds rate plus 0.50%. The
Prime Rate is an index or base rate and shall
not necessarily be its lowest or best rate
charged to its customers or other banks.
Swingline Loans shall be maintained solely at
the Base Rate plus the Applicable Base Rate
Margin and may be borrowed in minimum increments
of $100,000.
(2) The LIBOR Rate plus the Applicable LIBOR Rate
Margin as set forth in the pricing grid attached
hereto as Exhibit A. The initial Applicable LIBOR
Rate Margin will be 1.50%. Loans bearing interest
at the LIBOR Rate plus the Applicable LIBOR Margin
("LIBOR Rate Loans") shall be for a minimum amount
of $5,000,000 and $1,000,000 increments in excess
thereof.
The LIBOR Rate shall mean reserve adjusted LIBOR
as set forth on Telerate Page 3750 or as
determined by the Administrative Agent if such
information is not available. The LIBOR Rate
Option is available for Interest Periods of one
(1), two (2), three (3), or six (6) months. No
more than five (5) Interest Periods may be in
effect at any time.
LIBOR Rate interest and all fees shall be
calculated on a 360 day basis, while Base Rate
interest shall be calculated on a 365/366 day
basis.
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WACHOVIA SECURITIES STRICTLY CONFIDENTIAL
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INTEREST
PAYMENTS: Interest on Base Rate Loans will be due and payable
quarterly in arrears. Interest on LIBOR Rate Loans will
be due and payable at the end of each applicable
Interest Period or, in the case of a six (6) month LIBOR
Rate Loan, every three (3) months.
DEFAULT RATE
INTEREST: Upon the occurrence and during the continuance of any
payment event of default or, at the option of the
Administrative Agent, upon the occurrence and during the
continuance of any other event of default, (i) the
Borrower shall no longer have the option to request
LIBOR Rate Loans or Swingline Loans, (ii) all amounts
due and payable with respect to LIBOR Rate Loans shall
bear interest at a rate per annum of two percent (2%) in
excess of the rate then applicable to such LIBOR Rate
Loans until the end of the applicable Interest Period
and thereafter at a rate equal to two percent (2%) in
excess of the rate then applicable to Base Rate Loans
and (iii) all amounts due and payable with respect to
Base Rate Loans and Swingline Loans shall bear interest
at a rate per annum equal to two percent (2%) in excess
of the rate then applicable to Base Rate Loans.
COMMITMENT AND
OTHER FEES: Commitment Fee: The Borrower shall pay a Commitment
Fee on a per annum basis, at a rate per annum of 0.30%,
on the average daily unused portion of the Facility. The
Commitment Fee shall be payable quarterly in arrears.
Upfront Fees: As set forth in the accompanying Fee
Letter.
Administrative Agent's and Other Fees: As set forth in
the accompanying Fee Letter.
LETTER OF CREDIT
FEES: Issuance Fee. An amount equal to the Applicable LIBOR
Rate Margin on a per annum basis multiplied by the face
amount of each Letter of Credit, payable to the
Administrative Agent, for the account of the Lenders,
quarterly in arrears.
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Fronting Fee: An amount equal to 0.250% per annum
multiplied by the face amount of each Letter of Credit,
payable to the Administrative Agent (as Issuing Lender),
for its own account, quarterly in arrears.
Other Fees. All normal and customary costs and expenses
of the Administrative Agent (as Issuing Lender) in
connection with the issuance, transfer or other
administration of the Letters of Credit shall be for the
account of the Borrower.
EXPENSES: The Borrower shall be responsible for all reasonable
legal and other out-of-pocket expenses incurred by the
Administrative Agent and Lead Arranger related to due
diligence performed by the Administrative Agent and Lead
Arranger in connection with the transaction, the
execution of the loan documentation, and future
administration of the definitive credit documentation.
INCREASED COSTS/
CHANGE OF
CIRCUMSTANCES: Provisions customary in facilities of this type
protecting the Lenders in the event of unavailability of
funding, illegality, capital adequacy requirements,
increased costs, withholding taxes and funding losses.
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EXHIBIT A
Pricing Grid
Applicable Base Rate Applicable LIBOR Rate
Level Leverage Ratio Margin Margin
----- ---------------------- -------------------- ---------------------
I Greater than 1.00% 2.00%
1.00 to 1.00
II Less than or equal to 0.50% 1.50%
1.00 to 1.00
The Applicable Base Rate Margin and the Applicable LIBOR Rate Margin shall be
based on Level II of the pricing grid set forth above until the first
calculation date following the receipt by the Administrative Agent and the
Lenders of the financial information and related compliance certificate for the
fiscal quarter ending June 30, 2004.
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WACHOVIA SECURITIES STRICTLY CONFIDENTIAL