SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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SCHEDULE 13D/A
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Under the Securities Exchange Act of 1934
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(Amendment No. 2)*
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Perspecta Inc.
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(Name of Issuer)
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Common Stock, par value $0.01 per share
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(Title of Class of Securities)
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715347100
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(CUSIP Number)
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Ramzi M. Musallam
c/o Veritas Capital Fund Management, L.L.C.
9 West 57th Street, 32nd Floor
New York, NY 10019
Copy to:
Richard A. Presutti
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
(212) 756-2000
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(Name, Address and Telephone Number of Person
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Authorized to Receive Notices and Communications)
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January 27, 2021
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(Date of Event Which Requires Filing of This Statement)
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CUSIP No. 715347100
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SCHEDULE 13D/A
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Page 2 of 8 Pages
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1
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NAME OF REPORTING PERSON
The SI Organization Holdings LLC
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
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(a) ☐
(b) ☐
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3
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SEC USE ONLY
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4
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SOURCE OF FUNDS
OO
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5
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
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☐
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6
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CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF
SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: |
7
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SOLE VOTING POWER
-0-
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8
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SHARED VOTING POWER
18,877,244 SEE ITEM 5
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9
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SOLE DISPOSITIVE POWER
0
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10
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SHARED DISPOSITIVE POWER
18,877,244 SEE ITEM 5
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
18,877,244 SEE ITEM 5
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12
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
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☐
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13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.7%*
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14
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TYPE OF REPORTING PERSON
CO
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* |
All percentages of Common Stock (as defined below) contained herein are based on 160,963,698 shares of Common Stock outstanding as of October 30, 2020.
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CUSIP No. 715347100
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SCHEDULE 13D/A
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Page 3 of 8 Pages
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1
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NAME OF REPORTING PERSON
The Veritas Capital Fund IV, L.P.
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
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(a) ☐
(b) ☐
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3
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SEC USE ONLY
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4
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SOURCE OF FUNDS
OO
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5
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
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☐
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6
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CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF
SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: |
7
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SOLE VOTING POWER
0
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8
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SHARED VOTING POWER
18,877,244 SEE ITEM 5
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9
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SOLE DISPOSITIVE POWER
0
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10
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SHARED DISPOSITIVE POWER
18,877,244 SEE ITEM 5
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
18,877,244 SEE ITEM 5
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12
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
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☐
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13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.7%
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14
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TYPE OF REPORTING PERSON
PN
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CUSIP No. 715347100
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SCHEDULE 13D/A
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Page 4 of 8 Pages
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1
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NAME OF REPORTING PERSON
Veritas Capital Partners IV, L.L.C.
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
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(a) ☐
(b) ☐
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3
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SEC USE ONLY
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4
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SOURCE OF FUNDS
OO
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5
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
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☐
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6
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CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF
SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: |
7
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SOLE VOTING POWER
0
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8
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SHARED VOTING POWER
18,877,244 SEE ITEM 5
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9
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SOLE DISPOSITIVE POWER
0
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10
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SHARED DISPOSITIVE POWER
18,877,244 SEE ITEM 5
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
18,877,244 SEE ITEM 5
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12
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
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☐
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13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.7%
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14
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TYPE OF REPORTING PERSON
OO
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CUSIP No. 715347100
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SCHEDULE 13D/A
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Page 5 of 8 Pages
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1
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NAME OF REPORTING PERSON
Ramzi M. Musallam
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
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(a) ☐
(b) ☐
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3
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SEC USE ONLY
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4
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SOURCE OF FUNDS
OO
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5
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
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☐
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6
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CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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NUMBER OF
SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: |
7
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SOLE VOTING POWER
0
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8
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SHARED VOTING POWER
23,273,341 SEE ITEM 5
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9
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SOLE DISPOSITIVE POWER
0
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10
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SHARED DISPOSITIVE POWER
23,273,341 SEE ITEM 5
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
23,273,341 SEE ITEM 5
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12
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
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☐
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13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.5%
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14
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TYPE OF REPORTING PERSON
IN
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CUSIP No. 715347100
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SCHEDULE 13D/A
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Page 6 of 8 Pages
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This Amendment No. 2 to the Schedule 13D amends and supplements the Schedule 13D filed with the Securities and Exchange Commission (the “SEC”) on June 6, 2018 (the “Original
13D”) and Amendment No. 1 to the Original 13D, filed with the SEC on January 6, 2021, (“Amendment No. 1,” and together with the Original 13D and this Amendment No. 2, the “Schedule 13D”), with respect to the shares of
common stock, par value $0.01 per share (the “Common Stock”), of Perspecta Inc., a Nevada corporation (the “Company”).
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Item 4.
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PURPOSE OF TRANSACTION
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Item 4 of the Schedule 13D is hereby amended and supplemented by the addition of the following:
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On January 27, 2021, Jaguar ParentCo Inc. (“Newco”) and Jaguar Merger Sub Inc., a wholly owned subsidiary of Newco (“Merger Sub”), entered into an Agreement and Plan of
Merger (the “Merger Agreement”) with the Company, providing for the merger of Merger Sub with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Newco. Newco and Merger
Sub were formed by affiliates of The Veritas Capital Fund V, L.P. (“Fund V”), The Veritas Capital Fund VII, L.P. (“Fund VII”), Peraton Holding Corp. (“Peraton Holding”), Peraton Corp. (“Peraton Corp.”) and
Peraton Inc. (together with Peraton Holding and Peraton Corp., collectively, “Peraton”). Ramzi M. Musallam is the managing partner of each of Veritas Capital Partners V, L.L.C. and Veritas Capital Partners VII, L.L.C., which are the
general partners of Fund V and Fund VII, respectively. Peraton is a portfolio company of Veritas Capital Management.
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At the Effective Time, each share of Common Stock (“Shares”) issued and outstanding immediately prior to the Effective Time will be converted automatically into the right to
receive from Newco cash in an amount equal to $29.35, without interest thereon (the “Merger Consideration”), and when so converted will cease to be outstanding and will automatically be canceled and extinguished and cease to exist.
Consummation of the Merger is subject to customary closing conditions, including, without limitation, the absence of certain legal impediments, the expiration or termination of the required waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and approval by the Company’s stockholders.
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Newco, Merger Sub and certain of their affiliates have obtained equity and debt financing commitments to fund (together with cash on hand of the Company) the Merger Consideration
pursuant to (a) a commitment letter (the “Equity Commitment Letter”) from Fund VII to Newco of up to $2,470,206,148 in the aggregate, (b) a debt commitment letter from JPMorgan Chase Bank, N.A. (“JPM”) to Merger Sub providing
commitments for up to $4,825,000,000 in the aggregate in term loans (the “Holdco Debt Commitment Letter”) and (c) a debt commitment letter from JPM to Peraton providing commitments for up to $5,315,000,000 in in the aggregate in a
combination of secured term loans, secured revolving commitments and secured bridge loans (the “Opco Debt Commitment Letter”).
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If the Merger is effected, it would result in one or more of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D, including, without limitation, the acquisition
of additional securities of the Company, a merger or other extraordinary transaction involving the Company, the delisting of the Common Stock from the New York Stock Exchange and the Common Stock becoming eligible for termination from
registration pursuant to Section 12(b) of the Act.
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CUSIP No. 715347100
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SCHEDULE 13D/A
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Page 7 of 8 Pages
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The foregoing description of the Merger Agreement, the Equity Commitment Letter, the Debt Commitment Letter and the transactions contemplated thereby does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the full text of each of the Merger Agreement, the Equity Commitment Letter, the Holdco Debt Commitment Letter and the Opco Debt Commitment Letter, which are attached as Exhibit
99.4, Exhibit 99.5, Exhibit 99.6 and Exhibit 99.7 respectively, and are incorporated herein by reference.
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Item 6.
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CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER
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Item 6 of the Schedule 13D is hereby amended and supplemented by the addition of the following:
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The Reporting Persons’ response to Item 4 is incorporated herein by reference.
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Item 7.
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MATERIAL TO BE FILED AS EXHIBITS
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Item 7 of the Schedule 13D is hereby amended and supplemented by the addition of the following:
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Merger Agreement (incorporated herein by referenced to Exhibit 2.1 of the Company’s Current Report on Form 8-K, filed January 27, 2021).
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Equity Commitment Letter.
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Holdco Debt Commitment Letter.
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Opco Debt Commitment Letter.
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CUSIP No. 715347100
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SCHEDULE 13D/A
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Page 8 of 8 Pages
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THE SI ORGANIZATION HOLDINGS LLC
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By:
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The Veritas Capital Fund IV, L.P., acting as the Majority of Members
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By:
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/s/ Ramzi M. Musallam
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Name: Ramzi M. Musallam
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Title: Authorized Signatory
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THE VERITAS CAPITAL FUND IV, L.P.
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By:
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Veritas Capital Partners IV, L.L.C., its General Partner
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By:
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/s/ Ramzi M. Musallam
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Name: Ramzi M. Musallam
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Title: Managing Partner
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VERITAS CAPITAL PARTNERS IV, L.C.C.
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By:
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/s/ Ramzi M. Musallam
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Name: Ramzi M. Musallam
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Title: Managing Partner
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RAMZI M. MUSALLAM
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By:
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/s/ Ramzi M. Musallam
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Sincerely,
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THE VERITAS CAPITAL FUND VII, L.P.
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By:
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Veritas Capital Partners VII, L.L.C., as General Partner
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By:
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/s/ Ramzi Musallam
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Name:
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Ramzi Musallam
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Title:
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Authorized Signatory
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Accepted and agreed as of the date first above written by:
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JAGUAR PARENTCO INC.
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By:
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/s/ Ramzi Musallam
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Name:
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Ramzi Musallam
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Title:
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President
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JPMORGAN CHASE BANK, N. A.
383 Madison Avenue
New York, NY 10179
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a $3,735 million senior secured first lien credit facility consisting of (i) a $3,535 million term loan facility (the “First Lien Term Facility”) and (ii) a $200 million
revolving credit facility (the “First Lien Revolving Facility” and, together with the First Lien Term Facility, the “First Lien Facilities”), as described in the Summary of Principal Terms and Conditions attached hereto as Annex
I (the “First Lien Term Sheet”);
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an $1,290 million senior secured second lien credit facility (the “Second Lien Term Facility” and, together with the First Lien Facilities, each, a “Facility”, and
collectively, the “Facilities”), as described in the Summary of Principal Terms and Conditions attached hereto as Annex II (the “Second Lien Term Sheet” and, together with the First Lien Term Sheet, the “Term Sheets”);
and
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equity investments by one or more funds managed by Veritas Capital Fund Management, L.L.C. and/or its affiliates (collectively, “Sponsor”) and certain controlled affiliates and
co-investors (the “Equity Investors”) in a direct or indirect parent of Holdings (in each case, consisting of common equity or otherwise on terms reasonably satisfactory to the First Lien Lead Arrangers (as defined below)), to be
contributed to Holdings or Borrower, together with any rollover equity of existing investors and members of the management of the Company equaling not less than 30% (such minimum amount, the “Minimum Equity Contribution Amount”) of the
pro forma total net debt and equity capitalization of Holdings and its subsidiaries after giving effect to the Transactions (excluding for the avoidance of doubt, cash, any issued letters of credit, drawings under the First Lien Revolving
Facility on the Closing Date for working capital purposes and amounts funded under the Facilities to fund upfront fees or original issue discount as a result of the “market flex” provisions of the Fee Letter) (the “Equity Contribution”),
provided that immediately upon the consummation of the Acquisition, the Sponsor and its controlled funds and affiliates will hold, directly or indirectly, no less than a majority of the aggregate amount of the equity of Holdings and
shall have majority voting control over the voting interests of Holdings.
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Very truly yours, | ||
JPMORGAN CHASE BANK, N.A.
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By:
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/s/ Robert P. Kellas
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Name: Robert P. Kellas
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Title: Executive Director
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JAGUAR MERGER SUB INC.
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By:
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/s/ Ramzi Musallam
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Name: Ramzi Musallam
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Title: President
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Borrowers:
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Jaguar Merger Sub Inc., a Nevada corporation (collectively with the co-borrowers described below, “Borrower”, and, together with the Guarantors (as defined
below), the “Loan Parties”). It is agreed that Holdings, with the consent of the Administrative Agent (acting reasonably), may designate certain of its subsidiaries organized under the laws of the United States, any state thereof or
the District of Columbia or other non-U.S. jurisdictions to be agreed by the Administrative Agent (acting reasonably) as a co-borrower on a joint and several basis with respect to all of Borrower’s obligations under the First Lien Facilities,
subject to receipt by the Administrative Agent of customary documentation and other customary information under applicable “know your customer” and anti-money laundering rules and regulations (including a certification regarding beneficial
ownership required by the Beneficial Ownership Regulation).
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Holdings:
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Jaguar ParentCo Inc., a Delaware corporation (“Holdings” and, together with its restricted subsidiaries, each a “Company” and collectively, the
“Companies”).
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Joint Lead Arrangers and Joint Bookmanagers:
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JPMCB (together with any Additional Committing Lender, the “Lead Arrangers”).
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Lenders:
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A syndicate of banks, financial institutions and other entities reasonably acceptable to Holdings (excluding Disqualified Institutions) arranged by the Lead
Arrangers in consultation with Holdings (collectively, the “Lenders”).
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First Lien Administrative Agent and First Lien Collateral Agent:
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JPMCB (or an affiliate, designee or sub-agent thereof) (in such capacity, the “First Lien Administrative Agent” and the “First Lien Collateral Agent”).
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Issuing Banks:
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With respect to the Letters of Credit (as defined below) issued under the First Lien Revolving Facility described herein, the First Lien Administrative Agent, each
Additional Committing Lender and any other Lender if requested by Borrower and such Lender agrees (in such capacity, each, an “Issuing Bank” and, collectively, the “Issuing Banks”).
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Type and Amount of Facility:
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First Lien Term Facility: A first lien senior secured term loan facility (the “First Lien Term Facility,” and the loans made thereunder, “Initial
Term Loans”) in an aggregate principal amount of $3,535 million (plus, at Borrower’s discretion, an amount sufficient to fund the amount of any original issue discount or upfront fees with respect to the First Lien Term Facility imposed
pursuant to the “market flex” provisions of the Fee Letter).
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First Lien Revolving Facility: A first lien senior secured revolving credit facility (the “First Lien Revolving Facility”) in an aggregate principal
amount of up to $200 million.
The First Lien Term Facility and the First Lien Revolving Facility are herein referred to collectively as the “First Lien Facilities.”
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Purpose:
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First Lien Term Facility: Proceeds of the First Lien Term Facility will be used on the Closing Date (i) to pay costs in connection with the Transactions,
(ii) to pay the Acquisition consideration, (iii) to finance the Refinancing and (iv) to the extent of any remaining amounts, for working capital and other general corporate purposes.
First Lien Revolving Facility: The First Lien Revolving Facility may be used (x) on the Closing Date as provided under “Availability” below and (y) following
the Closing Date for working capital and other general corporate purposes (including restricted payments, permitted acquisitions and other investments).
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Maturity Date:
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First Lien Term Facility: Seven years from the Closing Date (the “Term Maturity Date”).
First Lien Revolving Facility: Five years from the Closing Date (the “Revolving Maturity Date” and, together with the Term Maturity Date, the “Maturity
Dates”).
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Availability:
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First Lien Term Facility: Upon satisfaction or waiver of the Specified Conditions, a single drawing may be made on the Closing Date of the First Lien Term
Facility. Amounts borrowed under the First Lien Term Facility that are repaid or prepaid may not be reborrowed.
First Lien Revolving Facility: Upon satisfaction or waiver of conditions set forth under “Conditions to Each Borrowing” below, borrowings may be made at any
time after the Closing Date to but excluding the business day preceding the Revolving Maturity Date. Notwithstanding the foregoing, upon satisfaction or waiver of the Specified Conditions, borrowings may be made and Letters of Credit may be
issued on the Closing Date to (i) cash collateralize, replace or back-stop existing letters of credit of the Company, (ii) fund the amount of any original issue discount or upfront fees imposed pursuant to the “market flex” provisions of the
Fee Letter and (iii) pay the Acquisition consideration, fund the Refinancing and/or pay costs in connection with the Transaction (including purchase price and working capital adjustments) and for other general corporate purposes, in an amount
not to exceed, with respect to this clause (iii), an amount to be agreed (provided such amount shall not be less than $50 million).
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Letters of Credit:
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Up to an amount to be agreed of the First Lien Revolving Facility shall be available for the issuance of letters of credit (“Letters of Credit”) by the
Issuing Banks. Maturities for Letters of Credit will not exceed 12 months (or 180 days in the case of trade Letters of Credit), and, in any event, shall not extend beyond the fifth business day prior to the maturity of the First Lien
Revolving Facility (unless cash collateralized on terms reasonably satisfactory to the First Lien Administrative Agent and the applicable Issuing Bank); provided that no Issuing Bank shall be required
to issue any documentary, commercial or trade letters of credit; provided further that no Issuing Bank shall be required to issue any Letters of Credit in excess of its pro rata share of the Letter of
Credit sublimit (with such pro rata share of such Issuing Bank’s percentage of the Letter of Credit sublimit being equal to such Issuing Bank’s (or its affiliate’s) pro rata portion of the commitments for the First Lien Revolving Facility on
the Closing Date; provided, however, that any standby Letter of Credit may provide for renewal thereof for additional periods of up to 12 months (which in no
event shall extend beyond the date referred to above unless cash collateralized on terms reasonably satisfactory to the First Lien Administrative Agent and the applicable Issuing Bank). The face amount of any outstanding Letters of Credit
will reduce availability under the First Lien Revolving Facility on a dollar-for-dollar basis. Each Lender under the First Lien Revolving Facility shall acquire an irrevocable and unconditional pro rata participation in all Letter of Credit
outstandings. Any Lender may elect to become an Issuing Bank, and any Issuing Bank may agree unilaterally to increase its commitment to issue Letters of Credit.
If any Letter of Credit is drawn, a Base Rate borrowing will be automatically made under the First Lien Revolving Facility in the amount drawn and funded to the
applicable Issuing Bank. Such borrowing shall occur without a borrowing notice, making of representations, or satisfaction of other borrowing conditions, but subject to absence of any default or event of default. To the extent that the
Issuing Bank is not timely reimbursed for any drawn Letter of Credit, Borrower shall promptly reimburse the Issuing Bank. The Lenders under the First Lien Revolving Facility shall be irrevocably obligated to fund their pro rata participations
in any drawn Letter of Credit which is not timely reimbursed to the applicable Issuing Bank.
Letters of Credit under the First Lien Revolving Facility will be available in U.S. Dollars and any other currency that is approved by the applicable Issuing Bank.
The issuance of Letters of Credit shall be subject to the customary policies and procedures of the applicable Issuing Bank.
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Defaulting Lenders:
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The First Lien Facility Documentation will include customary provisions relating to Defaulting Lenders (to be defined in a customary manner to be mutually agreed).
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Interest:
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At Borrower’s option, loans will bear interest based on the Base Rate or LIBOR, as described below:
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A. Base Rate Option
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Interest for borrowings based on Base Rate will be at the Base Rate plus the applicable Interest Margin, calculated on the basis of the actual number of days
elapsed in a year of 360 days (or when calculated by reference to the “prime rate”, 365/366 days) and payable quarterly in arrears. The “Base Rate” is defined, for any day, as a fluctuating rate per annum equal to the highest of (i)
the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 1/2 of 1%, (ii) the prime commercial lending rate as published in the Wall Street Journal, from time to time, (iii) LIBOR (as set forth below) for an interest
period of one-month beginning on such day plus 1% and (iv) 1.00%.
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Base Rate borrowings will be in minimum amounts to be agreed upon and will require one business day’s prior notice, except that Base Rate borrowings may be funded
on the same business day notice is received if notice is received prior to a time to be agreed upon.
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B. LIBOR Option
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Interest for borrowings based on LIBOR will be determined for periods to be selected by Borrower (“Interest Periods”) of one, two, three or six months (or
twelve months or a lesser period if agreed to by all relevant Lenders) and will be at an annual rate equal to the London Interbank Offered Rate (“LIBOR”) for the corresponding deposits of U.S. dollars, plus the applicable Interest
Margin; provided that (i) the initial interest period may be less than one month and (ii) LIBOR for purposes of calculating interest on any loan under the First Lien Facilities shall be deemed to be
not less than 0% per annum. LIBOR will be determined by the First Lien Administrative Agent at the start of each Interest Period and will be fixed through such period. Interest will be paid at the end of each Interest Period or, in the case
of Interest Periods longer than three months, at the end of each three-month period, and will be calculated on the basis of the actual number of days elapsed in a year of 360 days. LIBOR will be adjusted for maximum statutory reserve
requirements (if any).
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LIBOR borrowings will require three business days’ prior notice (or such lesser notice as the First Lien Administrative Agent may agree in its discretion) and will
be in minimum amounts to be agreed upon. The First Lien Facility Documentation will include successor LIBOR provisions to be agreed.
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Interest Margins:
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The Interest Margins applicable to the First Lien Term Facility will be 375 basis points for LIBOR loans and 275 basis points for Base Rate loans, with two 25 basis
points step-downs at First Lien Leverage Ratios to be agreed (which step-downs shall not apply until the Restrictions End Date).
The Interest Margins applicable to the First Lien Revolving Facility will be 375 basis points for LIBOR loans and 275 basis points for Base Rate loans, with two 25
basis points step-downs at First Lien Leverage Ratios to be agreed (which step-downs shall not apply prior to the Restrictions End Date).
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“First Lien Leverage Ratio” and other financial terms used herein shall have the meanings defined in Exhibit A to this Annex I.
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Default Interest and Fees:
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Upon the occurrence and during the continuance of a bankruptcy or payment event of default, overdue principal, interest and other overdue amounts shall bear
interest, after as well as before judgment, at a rate equal to (i) in the case of overdue principal on any loan, at a rate of 2.0% per annum plus the rate otherwise applicable to the loans and (ii) in the case of any other overdue outstanding
amount, at a rate of 2.0% per annum plus the non-default interest rate then applicable to Base Rate loans, and will be payable on demand.
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Commitment Fee:
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A commitment fee shall accrue on the unused amounts of the commitments under the First Lien Revolving Facility (the “Commitment Fee”). Such Commitment Fee
will be 0.50% per annum, with a step-down following the Restrictions End Date to 0.25% at a First Lien Leverage Ratio to be agreed. Accrued Commitment Fees shall accrue from the Closing Date and will be payable quarterly in arrears
(calculated on a 360-day basis) and on the date of termination of commitments. No Commitment Fee shall be payable to Defaulting Lenders.
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Letter of Credit Fees:
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Borrower will pay (i) the Issuing Banks a fronting fee in an amount per annum to be agreed (not to exceed 0.125%) and (ii) the non-Defaulting Lenders under the
First Lien Revolving Facility letter of credit participation fees equal to the Interest Margin for LIBOR Loans under the First Lien Revolving Facility, in each case, on the undrawn amount of all outstanding letters of credit. In addition,
Borrower will pay the Issuing Banks’ customary issuance, amendment and other fees relating to Letters of Credit.
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Amortization:
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First Lien Term Facility: The First Lien Term Facility will amortize in equal quarterly installments in annual amounts equal to 1.0% of the original principal
amount of the First Lien Term Facility (commencing on the last day of the first full fiscal quarter ended after the Closing Date), with the balance payable on the Term Maturity Date.
First Lien Revolving Facility: None.
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Mandatory Prepayments:
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The First Lien Term Facility shall be prepaid (without premium or penalty) in an amount equal to (a) 100% of the net cash proceeds (with step-downs to 50% and 0%
(which stepdowns shall not apply until the Restrictions End Date) at First Lien Leverage Ratios of 0.50x inside the Closing Date First Lien Leverage Ratio and 1.00x inside the Closing Date First Lien Leverage Ratio, respectively) received
after the Closing Date from Dispositions (to be defined to include casualty (excluding business interruption insurance), condemnation and non-ordinary course asset sales, subject to customary thresholds and exceptions to be agreed) by any
Company, excluding, except to the extent separately agreed with JPMCB, amounts reinvested in the business of Borrower or any of its subsidiaries within 12 months of such Disposition (or if committed to be reinvested within such 12 months,
reinvested within 18 months of such Disposition), (b) 100% of the net proceeds received by any Company from the issuance of debt or disqualified preferred stock after the Closing Date, to the extent not permitted under the First Lien Facility
Documentation or consisting of proceeds of Refinancing Facilities or Other Refinancing Debt, and (c) commencing with the first full fiscal year ending after the Closing Date, 50% of Excess Cash Flow (to be defined in a manner to be mutually
agreed upon consistent with the Documentation Principles) in excess of a threshold to be agreed, subject to step-downs to 25% and 0% at pro forma First Lien Leverage Ratios of 0.50x inside the Closing Date First Lien Leverage Ratio and 1.00x
inside the Closing Date First Lien Leverage Ratio, respectively. Except to the extent financed with proceeds of long-term debt, (i) Excess Cash Flow shall be reduced by, among other things, (a) cash repayments, redemptions and repurchases of
non-revolving debt, (b) acquisitions, certain investments and capitalized expenditures made in cash and amounts committed in respect thereof to be extended in the succeeding fiscal year and (c) cash expenditures not reducing net income and
(ii) without duplication of the foregoing, the Excess Cash Flow prepayment amount shall be reduced on a dollar-for-dollar basis by voluntary prepayments or permitted repurchases of the First Lien Facilities and First Lien Incremental
Facilities (including any prepayment of the First Lien Revolving Facility or First Lien Incremental Revolving Facility to the extent accompanied by permanent reductions of the commitments thereunder), in each case to the extent cash is used
to pay the principal amount thereof.
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Additionally, recognition of Excess Cash Flow attributable to, and proceeds of any Disposition by, a non-U.S. restricted subsidiary shall be deferred to the extent
that (and for so long as) such amounts have not been distributed to a U.S. subsidiary and Borrower has determined in good faith that such distribution would (i) be prohibited or delayed by applicable local law or (ii) have a material adverse
tax consequence.
Any Lender may elect not to accept any mandatory prepayment made pursuant to clause (a) or (c) above (each a “Declining Lender”). Any prepayment amount declined by
a Declining Lender shall then be offered to the lenders under the Second Lien Term Facility and, if also declined by the lenders thereunder, such prepayment amount may be retained by Borrower and shall be added to the Available Amount (as
defined below) (such amount, “Declined Proceeds”).
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Optional Prepayments:
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Voluntary reductions of the unutilized portion of the First Lien Revolving Facility commitments and prepayments of borrowings under the First Lien Facilities will
be permitted at any time (subject to customary notice requirements), in minimum principal amounts to be mutually agreed upon, without premium or penalty, subject to (x) reimbursement of the Lenders’ usual and customary breakage costs actually
incurred (excluding loss of profit) in the case of a prepayment of LIBOR borrowings other than on the last day of the relevant interest period and (y) the “soft call” premium provision described in the next paragraph.
Borrower shall pay a “prepayment premium” in connection with any Repricing Event (as defined below) with respect to all or any portion of Initial Term Loans that
occurs prior to the date that is six months after the Closing Date (or, if later, the Marketing Benchmark Date), in an amount equal to 1.00% of the principal amount of Initial Term Loans subject to such Repricing Event. The term “Repricing
Event” shall mean (i) any prepayment of Initial Term Loans from proceeds of any new or replacement tranche of term loans and (ii) any amendment to the First Lien Term Facility (and any mandatory assignment in connection therewith), in
each case, if the primary purpose of such refinancing or amendment is to reduce the all-in yield applicable to Initial Term Loans (calculated as described in the “MFN Requirement” below); provided,
for the avoidance of doubt, that a Repricing Event shall not include any amendment, prepayment, conversion or repricing made in connection with a change of control, initial public offering, dividend
recapitalization, a Transformative Transaction or certain other material transactions to be agreed). For purposes of the foregoing, “Transformative Transaction” shall mean any acquisition, investment or disposition by Holdings,
Borrower or any restricted subsidiary that is either (a) not permitted by the terms of the First Lien Facilities immediately prior to the consummation of such acquisition, investment or disposition or (b) if permitted by the terms of the
First Lien Facilities immediately prior to the consummation of such acquisition, investment or disposition, would not provide Holdings, Borrower and their restricted subsidiaries with adequate flexibility under the First Lien Facilities for
the continuation and/or expansion of their combined operations following such consummation, as determined by Holdings acting in good faith.
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Application of Prepayments:
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Prepayments of the First Lien Term Facility will be applied to the remaining amortization payments under the First Lien Term Facility as directed by Borrower.
Prepayments of the First Lien Revolving Facility shall be applied in the manner specified by Borrower.
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First Lien Incremental Facilities:
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The First Lien Facility Documentation will permit Borrower following the Restrictions End Date to add one or more incremental first lien term loan facilities to the
First Lien Term Facility either as a separate tranche or a fungible increase to an existing tranche (each, a “First Lien Incremental Term Facility” and collectively, the “First Lien Incremental Term Facilities”) and/or increase
commitments under the First Lien Revolving Facility (each, a “First Lien Incremental Revolving Facility” and collectively, the “First Lien Incremental Revolving Facilities”; the First Lien Incremental Term Facilities and the First Lien
Incremental Revolving Facilities are collectively referred to herein as “First Lien Incremental Facilities”) in an aggregate principal amount not exceeding the Incremental Cap (as defined below) when combined with any First Lien
Incremental Equivalent Debt (as defined below and, together with the First Lien Incremental Facilities, “First Lien Incremental Debt”) Second Lien Incremental Debt and Second Lien Incremental Equivalent Debt (as defined in the Second
Lien Term Sheet, and together with the First Lien Incremental Debt, the “Incremental Debt”). First Lien Incremental Facilities may be provided by existing Lenders or Eligible Assignees (each an “Incremental Lender”), but no Lender
will be required to participate in any First Lien Incremental Facility.
The terms of any First Lien Incremental Term Facility shall be as agreed by Borrower and the applicable Incremental Lenders, provided that (i) any First Lien
Incremental Debt incurred in reliance on the Incurrence Incremental Amount in an amount that exceeds an amount to be agreed, issued within six months after the Closing Date and maturing earlier than two (2) years after the Term Maturity Date
shall comply with the MFN Requirement (defined below), (ii) other than Permitted Short-Term Incremental Debt (defined below), the maturity date and weighted average life to maturity of any First Lien Incremental Term Facility shall be no
earlier or shorter, respectively, than the maturity date and weighted average life to maturity of the initial First Lien Term Facility (determined without giving effect to any prepayments that reduce amortization) and (iii) covenants and
events of default shall be no more restrictive than the comparable provisions in the First Lien Facility Documentation, except (A) if the more restrictive terms also benefit the initial First Lien Term Facility and the First Lien Revolving
Facility or are not effective until after the Term Maturity Date, or (B) to the extent reasonably satisfactory to the First Lien Administrative Agent. Any First Lien Incremental Term Facility may provide for the ability to participate (on
not more than a pro rata basis) in any prepayments of the term loans under the First Lien Term Facility.
Each First Lien Incremental Revolving Facility shall be on terms and pursuant to documentation applicable to the First Lien Revolving Facility (including the final
maturity date thereof); provided that the applicable margins applicable thereto may be increased if necessary to be consistent with that for the First Lien Incremental Revolving Facility.
Obligations under any First Lien Incremental Facility shall constitute pari passu secured, junior secured or unsecured
obligations under the First Lien Facility Documentation, guaranteed by the Guarantees and, to the extent secured, co-secured by the liens on the Collateral granted under the First Lien Facility Documentation, on an equal and ratable or junior
basis. The First Lien Facility Documentation shall be amended to give effect to borrowings under the First Lien Incremental Facility by documentation executed by the applicable Incremental Lenders, the First Lien Administrative Agent and
Borrower, without the consent of any other Lender.
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The “Incremental Cap,” on the date of incurrence of any First Lien Incremental Debt, shall equal the sum of (A) an unlimited amount (the “Incurrence
Incremental Amount”) at any time so long as, (x) in the case of First Lien Incremental Debt secured by the Collateral on a pari passu basis with the First Lien Facilities, the First Lien
Leverage Ratio shall be no greater than (1) the Closing Date First Lien Leverage Ratio or (2) in the case of any such First Lien Incremental Debt incurred in connection with any acquisition or similar investment not prohibited by the First
Lien Facility Documentation, the greater of the Closing Date First Lien Leverage Ratio and the level at the end of the most recently ended fiscal quarter prior to such transaction, (y) in the case of First Lien Incremental Debt secured by
liens on Collateral that are pari passu with or junior to the liens of the Second Lien Term Facility, the Secured Leverage Ratio (as defined below) shall be no
greater than (1) the Closing Date Secured Leverage Ratio or (2) in the case of any such First Lien Incremental Debt incurred in connection with any acquisition or similar investment not prohibited by the First Lien Facility Documentation, the
greater of the Closing Date Secured Leverage Ratio and the level at the end of the most recently ended fiscal quarter prior to such transaction, and (z) in the case of unsecured First Lien Incremental Debt, either (i) the Total Leverage Ratio
(as defined below) shall not exceed (1) 0.50x outside the Closing Date Total Leverage Ratio or (2) in the case of any such First Lien Incremental Debt incurred in connection with any acquisition or similar investment not prohibited by the
First Lien Facility Documentation, the greater of 0.50x outside the Closing Date Total Leverage Ratio and the level at the end of the most recently ended fiscal quarter prior to such transaction, or (ii) the Interest Coverage Ratio (to be
defined as the ratio of EBITDA to cash interest expense) is greater than or equal to (1) 2.00:1.00 or (2) in the case of any such First Lien Incremental Debt incurred in connection with any acquisition or similar investment not prohibited by
the First Lien Facility Documentation, the lesser of (x) 2.00:1.00 or (y) the level at the end of the most recently ended fiscal quarter prior to such transaction, in each case, calculated on an Incremental Pro Forma Basis plus (B) an amount
(the “First Lien Fixed Incremental Amount”) equal to (I) the greater of (x) a fixed amount equal to 1.0x pro forma EBITDA as of the Closing Date and (y) 100% of pro forma EBITDA (as defined below) at the time of incurrence, less (II)
the aggregate principal amount of Second Lien Incremental Debt incurred in reliance on the Second Lien Fixed Incremental Amount plus (C) the aggregate amount of all voluntary prepayments of the First Lien Facilities (with respect to the First
Lien Revolving Facility, to the extent accompanied by a permanent reduction of the revolving commitments thereunder) or First Lien Incremental Debt (to the extent secured on a pari passu basis with the First Lien Facilities) prior to such date of incurrence (other than to the extent such voluntary prepayment is funded with proceeds of long-term debt), additional debt buybacks of the
Initial Term Loans permitted under the First Lien Facility Documentation (to the extent of the actual amount of cash paid), payments utilizing the yank-a-bank provisions of the First Lien Facility Documentation, and, solely with respect to
the applicable extension debt, such portion of outstanding loans under the First Lien Facilities effectively extended pursuant to any applicable First Lien Incremental Debt (the “Prepayment Component”); provided that, except as provided below under “Conditions to Each Subsequent Borrowing” with respect to a Limited Condition Transaction (as defined below), (i) no event of default shall exist or would exist after giving
effect to such First Lien Incremental Debt and (ii) the representations and warranties in the First Lien Facility Documentation shall be true and correct in all material respects (unless already qualified by materiality, in which case they
shall be true and correct in all respects).
The “MFN Requirement” means that the all-in yield (taking into consideration interest rate margins, original issue discount (“OID”), upfront fees (which
shall be deemed to constitute like amounts of OID) payable by Borrower to the relevant Lenders (with OID being equated to interest based on an assumed four-year life to maturity), but disregarding any arranger fees or LIBOR or Base Rate
floor, of the First Lien Incremental Facility will not be more than 75 basis points higher than the corresponding all-in yield for the existing First Lien Term Facility, calculated consistently, but giving effect to any increase in interest
rate margins or additional fees (which shall be deemed to constitute like amounts of OID) provided with respect to the existing First Lien Term Facility in connection with such issuance and/or syndication.
“Permitted Short-Term Incremental Debt” means (x) debt in an aggregate outstanding principal amount not exceeding the greater of an amount to be agreed and a
percentage to be agreed of pro forma EBITDA or (y) any bridge financing converting to, or intended to be refinanced by, debt complying with the applicable maturity and weighted average life requirement subject to customary terms and
conditions to be agreed.
If Borrower incurs First Lien Incremental Debt using the First Lien Fixed Incremental Amount and/or Prepayment Component on the same date that it incurs
indebtedness using the Incurrence Incremental Amount, the First Lien Leverage Ratio or other applicable ratio will be calculated without regard to any incurrence of indebtedness under the First Lien Fixed Incremental Amount and/or Prepayment
Component.
Any portion of First Lien Incremental Debt incurred other than under the Incurrence Incremental Amount may be re-designated at any time, as Borrower may elect from
time to time, as incurred under the Incurrence Incremental Amount if Borrower meets the applicable ratio under the Incurrence Incremental Amount, at such time on a pro forma basis at any time subsequent to the incurrence of such First Lien
Incremental Debt by written notice to the First Lien Administrative Agent on such date.
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Notwithstanding anything to the contrary herein, with respect to any First Lien Incremental Debt or other debt incurred in connection with any permitted acquisition
or investment (a “Limited Condition Transaction”), subject to customary testing provisions for future incurrence tests pending the consummation of such Limited Condition Transaction, the proceeds of which will fund such Limited
Condition Transaction, (x) Borrower may elect to calculate the Incremental Cap or other applicable ratio as of the date it commits to such Limited Condition Transaction, and may thereafter incur such First Lien Incremental Debt or other debt
to finance such Limited Condition Transaction in reliance on such calculation; provided that any such First Lien Incremental Debt shall be deemed incurred for purposes of calculating the Incurrence
Incremental Amount (and other incurrence ratios) at any time after such calculation date and prior to the incurrence of such First Lien Incremental Debt (or termination or rescission of such agreement or declaration) and (y) the conditions
precedent related to the absence of defaults (other than a payment or bankruptcy event of default) and accuracy of representations and warranties will be waivable by the lenders in respect of any such First Lien Incremental Debt.
The First Lien Administrative Agent and lenders providing First Lien Incremental Debt may conclusively rely on Borrower’s calculation of the Incremental Cap and
determination that other applicable requirements have been met, and First Lien Incremental Facilities provided in reliance thereon shall be deemed effective (but nothing in this sentence shall serve to waive any default arising from
Borrower’s failure to satisfy such requirements).
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In addition, following the Restrictions End Date, Borrower may incur debt outside of the First Lien Facility Documentation in lieu of adding First Lien Incremental
Term Facilities (“First Lien Incremental Equivalent Debt”), in an aggregate principal amount not exceeding the Incremental Cap, when combined with all other First Lien Incremental Debt, on such terms as Borrower may agree; provided that, (i) other than Permitted Short-Term Incremental Debt, the maturity date and weighted average life to maturity of such First Lien Incremental Equivalent Debt shall be no earlier or shorter,
respectively, than the maturity date and weighted average life to maturity (determined without giving effect to any prepayments that reduce amortization) of the initial First Lien Term Facility, (ii) the terms of any junior-lien or unsecured
First Lien Incremental Equivalent Debt (other than Permitted Short-Term Incremental Debt) shall not provide for any scheduled repayment, mandatory redemption, sinking fund obligations or other payment (other than periodic interest payments)
prior to the earliest maturity date permitted by clause (i), above, other than the ability to participate (on a junior basis) in any mandatory prepayments of the Initial Term Loans, (iii) First Lien Incremental Equivalent Debt secured by the
Collateral on a pari passu basis with the First Lien Facilities may participate (on not more than a pro rata basis) in any mandatory prepayments of the First Lien Term Facility, (iv) borrowers and
guarantors of First Lien Incremental Equivalent Debt shall be Loan Parties, (v) any secured First Lien Incremental Equivalent Debt shall (A) be subject to an intercreditor agreement on terms reasonably acceptable to the First Lien
Administrative Agent and (B) not be secured by any property or assets other than Collateral and (vi) the terms and conditions of such First Lien Incremental Equivalent Debt (excluding pricing, interest rate margins, fees, discounts, rate
floors and optional prepayment or redemption terms) are (taken as a whole) not materially more favorable (as determined in good faith by the board of directors of Borrower) to the lenders or noteholders providing such First Lien Incremental
Equivalent Debt than those applicable to the First Lien Term Facility (except for covenants or other provisions applicable only to periods after the earliest maturity date permitted by clause (i), above) as determined in good faith by
Borrower.
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Refinancing Facilities:
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The First Lien Facility Documentation will permit Borrower to refinance loans under the First Lien Term Facility (as it may be increased pursuant to the provisions
described above) or commitments under the First Lien Revolving Facility (as it may be increased pursuant to the provisions described above) from time to time, in whole or part, in a principal amount not to exceed the principal amount of debt
so refinanced (plus any accrued but unpaid interest, premiums and fees payable by the terms of such debt thereon and reasonable fees, expenses, original issue discount and upfront fees incurred in connection with such refinancing, plus such
additional amounts to the extent otherwise permitted to be incurred under the First Lien Facility Documentation (provided the applicable baskets are utilized in connection with the incurrence of such
additional amount of debt)), with (A) one or more new term facilities (“Refinancing Term Facilities”) or new revolving credit facilities (“Refinancing Revolving Facilities” and, collectively with any Refinancing Term Facilities,
the “Refinancing Facilities”) under the First Lien Facility Documentation complying with the applicable restrictions on terms applicable to First Lien Incremental Facilities (other than the MFN Requirement) or (B) other debt (not
governed by the First Lien Facility Documentation), which may be unsecured, or secured by the Collateral on a pari passu or junior basis with the First Lien Facilities (“Other Refinancing Debt”)
complying with the applicable restrictions on terms applicable to First Lien Incremental Equivalent Debt.
Obligations under any Refinancing Facility shall constitute pari passu secured obligations under the First Lien Facility
Documentation, guaranteed by the Guarantees and co-secured by the liens on the Collateral granted under the First Lien Facility Documentation, on an equal and ratable basis. The First Lien Facility Documentation shall be amended to give
effect to borrowings under the Refinancing Facility by documentation executed by the lenders providing such Refinancing Facility, the First Lien Administrative Agent and Borrower, without the consent of any other Lender.
The First Lien Administrative Agent and lenders providing Refinancing Facilities or Other Refinancing Debt may conclusively rely on Borrower’s determination that
applicable requirements have been met, and Refinancing Facilities or Other Refinancing Debt provided in reliance thereon shall be deemed effective (but nothing in this sentence shall serve to waive any default arising from Borrower’s failure
to satisfy such requirements).
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Guarantees:
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The First Lien Facilities and any First Lien Hedging/Cash Management Arrangements (as defined below) will be fully and unconditionally guaranteed (the “Guarantees”)
on a joint and several basis by Holdings and all of the existing and future direct and indirect U.S. wholly-owned restricted subsidiaries of Holdings (other than Borrower (except with respect to First Lien Hedging/Cash Management Arrangements
of its restricted subsidiaries)), subject to exceptions to be agreed, including: (i) any U.S. subsidiary that has no material assets other than equity, of one or more foreign subsidiaries of Holdings that are “controlled foreign
corporations” within the meaning of Section 957 of the Internal Revenue Code of 1986, as amended (any such foreign entity, a “CFC”) (any such U.S. subsidiary, a “FSHCO”), (ii) any U.S. subsidiary of a foreign subsidiary of Holdings that is a
CFC, (iii) immaterial subsidiaries, (iv) any special purpose entity, captive insurance subsidiary or not for profit subsidiaries, (v) any subsidiary to the extent that the burden or cost (including adverse tax consequences) of obtaining a
guaranty outweighs the benefit afforded thereby as determined by Borrower and the First Lien Administrative Agent together in good faith, (vi) any unrestricted subsidiary, (vii) any subsidiary if providing such guaranty would result in
material adverse tax consequences, as reasonably determined by Borrower, and (viii) any subsidiary prohibited or restricted (including by any third party consent requirement) from providing such Guarantee by (A) applicable law, or (B) any
permitted contract (including permitted debt) entered into prior to (and not entered into in contemplation of) the Closing Date or the acquisition of such subsidiary.
Holdings and restricted subsidiaries providing Guarantees are referred to herein as “Guarantors”.
Guarantees shall exclude swap obligations to the extent not permitted by the Commodity Exchange Act, or any regulation thereunder, by virtue of a subsidiary failing
to constitute an “eligible contract participant.”
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Security:
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Subject to the limitations set forth below and subject to the Certain Funds Provisions, the obligations of Borrower and the Guarantors in respect of the First Lien
Facilities and any hedging or cash management obligations designated by Borrower to which the First Lien Administrative Agent, any arranger under the First Lien Facilities, any lender under the First Lien Facilities or any affiliate of any of
the foregoing is a counterparty (the “First Lien Hedging/Cash Management Arrangements”) shall be secured by a first priority perfected security interest (subject to permitted liens and other mutually agreed exceptions) on substantially
all tangible and intangible assets, and mortgages on real property, in each case, of Borrower and the Guarantors, now or hereafter owned (after giving effect to the Excluded Assets (as defined below), collectively, the “Collateral”).
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Notwithstanding anything set forth herein to the contrary, (a) not more than 65% of the voting equity interests (and 100% of any non-voting equity interests) of any
foreign subsidiary that is a CFC or any FSHCO shall be required to be pledged and (b) agreed exceptions to the Collateral will include: (i) any real property that is not fee-owned and any real property with a value of less than an amount to
be agreed (it being understood there shall be no requirement to obtain any survey, landlord or other third party waivers, estoppels or collateral access letters), (ii) motor vehicles and other assets subject to certificates of title (except
as to which perfection of the security interest therein can be accomplished by the filing of a UCC financing statement), letter of credit rights (except to the extent constituting a supporting obligation for other Collateral as to which
perfection of the security interest in such other Collateral is accomplished automatically without further action or by the filing of a UCC financing statement) and commercial tort claims below a threshold to be agreed, (iii) pledges and
security interests prohibited by law after giving effect to the applicable anti-assignment provisions of the UCC, (iv) equity interests (A) constituting margin stock, (B) of unrestricted subsidiaries, (C) of captive insurance subsidiaries,
(D) of not for profit subsidiaries, (E) of special purpose entities, and (F) of any person (other than Borrower and any wholly-owned U.S. subsidiary) if such pledge would violate any restriction (including, by any consent requirement) in its
organizational or joint venture documents or any contract binding on such person on the Closing Date or at the time of its acquisition by a Loan Party and not entered into in contemplation thereof, in each case after giving effect to the
applicable anti-assignment provisions of the UCC, (v) “intent-to-use” trademark applications prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect thereto, to the extent, if any, that, and solely during the
period, if any, in which the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark application under applicable federal law, (vi) any intellectual property, lease, license, or other
agreement to the extent that a grant of a security interest therein would violate or invalidate, or render unenforceable any right, title or interest of Borrower or any Guarantor in, such intellectual property, lease, license, or agreement,
or create a right of termination in favor of any other party thereto (other than Borrower or a Guarantor), after giving effect to the applicable anti-assignment provisions of the UCC, (vii) any property and assets the pledge of which would
require governmental consent, approval, license or authorization that has not been obtained, after giving effect to the applicable anti-assignment provisions of the UCC, (viii) any governmental lease, licenses or state or local franchises,
charters and authorizations if and for so long as the grant of a security interest therein is prohibited or restricted thereby, after giving effect to the applicable anti-assignment provisions of the UCC, (ix) any acquired property (including
property acquired through acquisition or merger of another entity that is not Borrower or a Guarantor) if at the time of such acquisition the granting of a security interest therein or the pledge thereof is prohibited by any contract or other
agreement binding on such property (in each case, not created in contemplation thereof) to the extent and for so long as such contract or other agreement prohibits such security interest or pledge after giving effect to the applicable
anti-assignment provisions of the UCC or other applicable law, (x) if Borrower and the First Lien Administrative Agent in good faith determine the cost, burden or consequences (including adverse tax consequences) of obtaining or perfecting a
security interest in such assets is excessive in relation to the practical benefit afforded thereby, (xi) any payroll and other employee wage and benefit accounts, tax accounts (including, without limitation, sales tax accounts), escrow
accounts and fiduciary or trust accounts maintained for the benefit of unaffiliated third parties, in each case, as long as such accounts are used solely for such purposes, (xii) any property subject to any purchase money security interest or
capital lease, in each case permitted under the First Lien Facility Documentation to the extent and for so long as such contract or other agreement prohibits such security interest or pledge, (xiii) any assets to the extent a security
interest in such assets would result in material adverse tax consequences as reasonably determined by Borrower in consultation with the First Lien Administrative Agent and (xiv) other exceptions to be mutually agreed (clauses (a) and (b)
collectively, the “Excluded Assets”). In addition, (A) except in the case of the assets and equity of any co-borrower organized in any non-U.S. jurisdiction pursuant to the provisions under the heading “Borrower” above, no security or
pledge agreements governed under the laws of any non-U.S. jurisdiction shall be required, and Borrower and the Guarantors shall not be required to take any actions outside the U.S. to create or perfect security interests in any assets located
or titled outside of the U.S. (it being understood that there shall be no security agreement or pledge agreement governed under the laws of any non-U.S. jurisdiction) and (B) perfection by possession or control shall not be required with
respect to any immaterial notes or other evidence of immaterial debt, or any deposit or securities accounts, and no delivery of stock certificates (or equivalent) with respect to equity interests in any immaterial subsidiaries or non-wholly
owned subsidiaries shall be required.
The above-described pledges, security interests and mortgages shall be created on terms, and pursuant to documentation, reasonably satisfactory to the First Lien
Administrative Agent and in any event subject to the Documentation Principles.
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Conditions to Initial Borrowings:
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Conditions precedent to initial borrowings under the First Lien Facilities on the Closing Date shall consist solely of the Specified Conditions (subject to the
Certain Funds Provisions).
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Conditions to Each Subsequent Borrowing:
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Conditions precedent to each borrowing or issuance under the First Lien Facilities (other than the borrowings on the Closing Date) will be (1) the absence of any
continuing default or event of default (provided that with respect to any First Lien Incremental Facility the proceeds of which are used to finance a Limited Condition Transaction, no event of default
shall have occurred and be continuing at the time of, entry into the applicable acquisition agreement and no payment or bankruptcy event of default shall have occurred and be continuing at the time of such credit extension), (2) the accuracy
of all representations and warranties in all material respects (or, if qualified by materiality or material adverse effect, in all respects) (provided that with respect to any First Lien Incremental
Facility the proceeds of which are to be used to finance a Limited Condition Transaction, the conditions precedent related to the accuracy of representations and warranties will be waivable by the lenders in respect of any such First Lien
Incremental Debt), and (3) receipt of a customary borrowing notice or letter of credit request, as applicable.
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Documentation Principles:
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The First Lien Facility Documentation shall (i) be based on, and not less favorable, taken as a whole, to Borrower than, that certain First Lien Credit Agreement,
dated as of October 1, 2020, by and among Gainwell Acquisition Corp. (f/k/a Milano Acquisition Corp.), the other borrowers party thereto from time to time, the guarantors party thereto from time to time, the lending institutions party thereto
from time to time, JPMorgan Chase Bank, N.A., as administrative agent, L/C issuer and a lender and the other parties thereto (the “Precedent Credit Agreement”), (ii) be initially drafted by counsel to Sponsor and be negotiated in good
faith by Borrower and the Commitment Parties to finalize such First Lien Facility Documentation, giving effect to the Certain Funds Provisions, as promptly as practicable after the acceptance of this Commitment Letter and the Fee Letter,
(iii) contain the terms and conditions set forth in this Commitment Letter, (iv) not be subject to any conditions to the funding of the First Lien Facilities on the Closing Date other than as set forth in Annex III to the Commitment Letter,
(v) contain only those mandatory prepayments, representations, warranties, affirmative, financial and negative covenants and events of default provided for in this Annex I to the Commitment Letter, in each case, applicable to Borrower and its
restricted subsidiaries (and in certain customary cases, Holdings) and with exceptions for materiality or otherwise and “baskets” consistent (where applicable) with the other clauses of this section, (vi) reflect the administrative and
operational requirements of the First Lien Administrative Agent, (vii) contain updates to the precedent documentation for changes in law, (viii) give due regard to the financial model provided to the Lead Arrangers, and (ix) give due regard
to the operational and strategic requirements of Holdings and its restricted subsidiaries and their size, industries, practices, proposed business plan and the matters described in the Acquisition Agreement, including as to materiality
thresholds, qualifications, “baskets” and other limitations and exceptions commensurate with the size of Holdings, in each case, after giving effect to the Transactions. This paragraph and the provisions herein are referred to as the “Documentation
Principles”.
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Representations and Warranties:
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Subject to the Certain Funds Provisions, representations and warranties will apply to Holdings and its restricted subsidiaries, will be subject to customary
materiality levels and/or exceptions to be negotiated and reflected in the First Lien Facility Documentation (in accordance with the Documentation Principles), will be subject to the disclosure schedule delivered on the Closing Date, and will
in any event be limited to the following:
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Accuracy of financial statements; Projections prepared in good faith; no material adverse change after the Closing Date; organization and qualification; compliance
with law; organizational power and authority; due authorization; execution and delivery and enforceability of the First Lien Facility Documentation; no material governmental approvals and consents; no conflict with organizational documents,
law or material contractual obligations; no default under material agreements; no material litigation; ownership of property; intellectual property; taxes; Federal Reserve regulations; ERISA and labor; Investment Company Act; restricted
subsidiaries and equity interests held by the Loan Parties; environmental matters; solvency on a consolidated basis on the Closing Date (such representation and warranty to contain a definition of solvency consistent with the Solvency
Certificate set forth in Exhibit A to Annex III); accuracy and completeness of disclosure; Patriot Act; compliance with OFAC, FCPA, anti-terrorism laws and other applicable sanctions and anti-money laundering laws; insurance; use of proceeds;
and creation and perfection and priority of security interests.
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Affirmative Covenants:
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Affirmative covenants will apply to Holdings and its restricted subsidiaries, will be subject to thresholds and exceptions to be agreed in accordance with the
Documentation Principles, and will be limited to the following:
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Delivery of (x) unaudited quarterly financials (for the first three fiscal quarters of each fiscal year) certified as to accuracy and compliance with GAAP by a
financial officer; (y) audited annual financial statements (with the audited annual financial statements, an annual audit opinion from a nationally recognized auditor that is not subject to any qualification as to “going concern” or scope of
the audit (other than with respect, or expressly resulting from (i) an upcoming maturity date under any debt, (ii) any potential inability to satisfy any financial maintenance covenant on a future date or in a future period or (iii)
activities of Unrestricted Subsidiaries)) and (z) annual budget (within time periods to be agreed, with extended time periods to be agreed for delivery of the first audit and budget, and certain quarterly financial statements, after the
Closing Date or any material acquisition); quarterly management’s discussion and analysis; compliance certificates; notices of defaults, material litigation, material ERISA events and material adverse change; payment of material taxes;
maintenance of existence and material rights and privileges; compliance with all applicable laws and regulations (including, without limitation, environmental matters, taxation, ERISA); maintenance of property and customary insurance;
maintenance of books and records; subject to limitations to be agreed, right of the First Lien Administrative Agent to inspect property and books and records; use of proceeds; guarantees/collateral; further assurances; use of commercially
reasonable efforts to obtain and maintain public corporate credit/family ratings of Holdings and ratings of the First Lien Term Facility from Moody’s and S&P (but not to maintain a specific rating); delivery of information required by
PATRIOT ACT and beneficial ownership regulations.
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Negative Covenants:
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Incurrence-based negative covenants will apply to Holdings and its restricted subsidiaries, will be subject to thresholds and exceptions to be agreed in accordance
with the Documentation Principles, and will be limited to the following:
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Limitations on debt and debt-like preferred stock, liens, investments, restricted payments (dividends and equity repurchases and redemptions), prepayments of
certain junior debt, Dispositions, mergers, transactions with affiliates, agreements restricting liens and restricted payments, activities of Holdings, changes to fiscal year and amendments to junior debt documents and organizational
documents.
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Exceptions to such negative covenants will, (x) where appropriate, include caps and thresholds based on the greater of an amount to be agreed and a corresponding
percentage of EBITDA, (y) permit allocation (or reallocation) of transactions across multiple exceptions (subject to certain exceptions to be agreed) and (z) include, without limitation, the following:
(a) Debt:
(i) intercompany debt (subject to compliance with
investment restriction);
(ii) following the Restrictions End Date, baskets
permitting the Incremental Facilities and the Incremental Equivalent Debt as in effect on the Closing Date;
(iii) indebtedness in respect of capital/finance leases
existing as of the Closing Date to the extent permitted under the terms of the Acquisition Agreement and additional purchase money debt and capital/finance leases not to exceed the greater of (x) a fixed dollar amount to be agreed and (y) a
corresponding percentage of EBITDA;
(iv) following the Restrictions End Date, indebtedness
subject to customary limitations (“Ratio Debt”) so long as:
• in the case of indebtedness
secured on a pari passu basis with the First Lien Facilities, the First Lien Leverage Ratio is equal to or less than (1) the Closing Date First Lien Leverage Ratio or (2) in the case of any such
Ratio Debt incurred in connection with any acquisition or similar investment not prohibited by the First Lien Facility Documentation, the greater of the Closing Date First Lien Leverage Ratio and the level at the end of the most recently
ended fiscal quarter prior to such transaction, in each case on a pro forma basis,
• in the case of indebtedness
secured on a pari passu basis with the Second Lien Term Facility, the Secured Leverage Ratio is equal to or less than (1) the Closing Date Secured Leverage Ratio or (2) in the case of any such Ratio
Debt incurred in connection with any acquisition or similar investment not prohibited by the First Lien Facility Documentation, the greater of the Closing Date Secured Leverage Ratio and the level at the end of the most recently ended
fiscal quarter prior to such transaction, in each case on a pro forma basis,
• in the case of indebtedness
secured on a junior basis to the Second Lien Term Facility, the Secured Leverage Ratio is equal to or less than (1) the Closing Date Secured Leverage Ratio or (2) in the case of any such Ratio Debt incurred in connection with any
acquisition or similar investment not prohibited by the First Lien Facility Documentation, the greater of the Closing Date Secured Leverage Ratio and the level at the end of the most recently ended fiscal quarter prior to such transaction,
in each case on a pro forma basis,
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• in the case of indebtedness that is unsecured, either (i) the Total Leverage Ratio shall not exceed (1) 0.50x outside the Closing Date Total Leverage Ratio or (2) in the case of any such Ratio Debt incurred
in connection with any acquisition or similar investment not prohibited by the First Lien Facility Documentation, the greater of 0.50x outside the Closing Date Total Leverage Ratio and the level at the end of the most recently ended fiscal
quarter prior to such transaction, or (ii) the Interest Coverage Ratio is greater than or equal to (1) 2.00:1.00 or (2) in the case of any such Ratio Debt incurred in connection with any acquisition or similar investment not prohibited by the
First Lien Facility Documentation, the lesser of (x) 2.00:1.00 or (y) the level at the end of the most recently ended fiscal quarter prior to such transaction, in each case on a pro forma basis, and • Ratio Debt of non-Guarantor subsidiaries will be subject to a cap not to exceed the greater of (x) a fixed dollar amount to be agreed and (y) a corresponding percentage of EBITDA (when combined with indebtedness of non-Guarantor subsidiaries incurred under the Assumed Acquisition Debt and Incurrence Acquisition Debt exceptions); (v) following the Restrictions End Date, acquired debt (“Assumed Acquisition Debt”) (pre-existing debt of acquired persons not incurred in anticipation of the acquisition) so long as the amount thereof does not exceed the sum of (a) the greater of a fixed dollar amount to be agreed and a corresponding percentage of EBITDA plus (b) either: • in the case of indebtedness secured on a pari passu basis with the First Lien Facilities, the First Lien Leverage Ratio is equal to or less than the greater of (x) Closing Date First Lien Leverage Ratio and (y) the level at the end of the most recently ended fiscal quarter prior to such acquisition, in each case on a pro forma basis, • in the case of indebtedness secured on a pari passu basis with the Second Lien Term Facility, the Secured Leverage Ratio is equal to or less than the greater of (x) the Closing Date Secured Leverage Ratio and (y) the level at the end of the most recently ended fiscal quarter prior to such acquisition, in each case on a pro forma basis, • in the case of indebtedness secured on a junior basis to the Second Lien Term Facility, the Secured Leverage Ratio is equal to or less than the greater of (x) the Closing Date Secured Leverage Ratio and (y) the level at the end of the most recently ended fiscal quarter prior to such acquisition, in each case on a pro forma basis, • in the case of indebtedness that is unsecured, (1) the Total Leverage Ratio is equal to or less than the greater of (x) 0.50x outside the Closing Date Total Leverage Ratio and (y) the level at the end of the most recently ended fiscal quarter prior to such acquisition, in each case on a pro forma basis or (2) the Interest Coverage Ratio is greater than or equal to the lesser of (x) 2.00:1.00 or (y) the level at the end of the most recently ended fiscal quarter prior to such acquisition, in each case on a pro forma basis, and |
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• Assumed Acquisition Debt of non-Guarantor subsidiaries will be subject to a cap not to exceed the greater of (x) a fixed dollar amount to be agreed and (y) a corresponding percentage of EBITDA (when combined
with indebtedness of non-Guarantor subsidiaries incurred under the Incurrence Acquisition Debt and Ratio Debt exceptions); (vi) following the Restrictions End Date, indebtedness incurred or assumed to finance an acquisition permitted under the First Lien Facility Documentation subject to customary limitations (“Incurrence Acquisition Debt”) so long as the amount thereof does not exceed the sum of (a) the greater of a fixed dollar amount to be agreed and a corresponding percentage of EBITDA plus (b) either: • in the case of indebtedness secured on a pari passu basis with the First Lien Facilities, the First Lien Leverage Ratio is equal to or less than the greater of (x) Closing Date First Lien Leverage Ratio and (y) the level at the end of the most recently ended fiscal quarter prior to such acquisition, in each case on a pro forma basis, • in the case of indebtedness secured on a pari passu basis with the Second Lien Term Facility, the Secured Leverage Ratio is equal to or less than the greater of (x) the Closing Date Secured Leverage Ratio and (y) the level at the end of the most recently ended fiscal quarter prior to such acquisition, in each case on a pro forma basis, • in the case of indebtedness secured on a junior basis to the Second Lien Term Facility, the Secured Leverage Ratio is equal to or less than the greater of (x) the Closing Date Secured Leverage Ratio and (y) the level at the end of the most recently ended fiscal quarter prior to such acquisition, in each case on a pro forma basis, • in the case of indebtedness that is unsecured, (1) the Total Leverage Ratio is equal to or less than the greater of (x) 0.5x outside the Closing Date Total Leverage Ratio and (y) the level at the end of the most recently ended fiscal quarter prior to such acquisition, in each case on a pro forma basis or (2) the Interest Coverage Ratio is greater than or equal to the lesser of (x) 2.00:1.00 or (y) the level at the end of the most recently ended fiscal quarter prior to such acquisition, in each case on a pro forma basis, and • Incurrence Acquisition Debt of non-Guarantor subsidiaries will be subject to a cap not to exceed the greater of (x) a fixed dollar amount to be agreed and (y) a corresponding percentage of EBITDA (when combined with indebtedness of non-Guarantor subsidiaries incurred under the Assumed Acquisition Debt and Ratio Debt exceptions); (vii) following the Restrictions End Date, unsecured debt of Holdings, subject to customary requirements to be agreed; |
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(viii) other debt up to the greater of (x) a fixed dollar amount to be agreed and (y) a corresponding percentage of EBITDA (provided that only a portion of such basket to be agreed shall be available prior to the
Restrictions End Date); (ix) following the Restrictions End Date, indebtedness in connection with securitization, factoring or similar arrangements not to exceed the greater of (x) a fixed dollar amount to be agreed and (y) a corresponding percentage of EBITDA; and (x) the unsecured 7.450% Notes due 2029 outstanding on the Closing Date (approximately $66 million outstanding on the date of the Commitment Letter). (b) Liens: (i) Liens securing any Incremental Debt or Other Refinancing Debt, (ii) liens securing Ratio Debt, Assumed Acquisition Debt and Incurrence Acquisition Debt, so long as, in each case, such debt is subject to an intercreditor agreement reasonably acceptable to the First Lien Administrative Agent and Borrower; (iii) liens securing (x) permitted intercompany debt (which shall be subordinated to the liens securing the First Lien Facilities (if granted by Loan Parties)) and (y) indebtedness incurred pursuant to clause (a)(iii) above and clause (a)(ix) above (subject to customary parameters to be agreed), which liens may be senior to the liens of the First Lien Facilities; (iv) liens on assets of non-Loan Parties securing obligations that are permitted to be incurred by such non-Loan Parties; (v) pre-existing liens on acquired assets not incurred in anticipation of the acquisition; and (vi) other liens up to the greater of (x) a fixed dollar amount to be agreed and (y) a corresponding percentage of EBITDA; (c) Investments: (i) investments in any Company (other than Holdings), limited for Loan Party investments in non-Loan Parties to the greater of (x) a fixed dollar amount to be agreed and (y) a corresponding percentage of EBITDA; (ii) following the Restrictions End Date, acquisitions of all or a majority of any person or business (including any increase in an existing investment resulting in full or majority ownership) subject only to the following and to the Limited Condition Transaction provisions (“Permitted Acquisitions”): (x) no event of default existing on the date of the acquisition or investment agreement and no payment or bankruptcy event of default exists or would result therefrom on the closing date of the acquisition or investment, (y) acquired persons will become (or acquired assets will be owned by) restricted subsidiaries or persons that become restricted subsidiaries and (z) (subject to limitations in “Guarantees” and “Security” above)compliance with the collateral and guaranty requirements; |
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(iii) following the Restrictions End Date, subject to (i) no event of default existing or resulting therefrom (and to the Limited Condition Transaction provisions) and (ii) pro forma compliance with a Total
Leverage Ratio equal to the Closing Date Total Leverage Ratio, investments using the Available Amount (as defined below); (iv) following the Restrictions End Date, unlimited investments so long as the pro forma Total Leverage Ratio does not exceed a level 1.00x inside the Closing Date Total Leverage Ratio, subject to the absence of any continuing event of default (and to the Limited Condition Transaction provisions); and (v) other investments up to the greater of (x) a fixed dollar amount to be agreed and (y) a corresponding percentage of EBITDA (provided that only a portion of such basket shall be available prior to the Restrictions End Date); (d) Dispositions: (i) Dispositions for fair market value, subject to no event of default existing or resulting therefrom to the extent (x) not exceeding the greater of an amount to be agreed and a percentage to be agreed of EBITDA or (y) otherwise provided that at least 75% of the consideration for such Disposition consists of (A) cash or cash equivalents and/or (B) designated non-cash consideration to be agreed (provided that there shall be a cap on the maximum amount of dispositions prior to the Restrictions End Date); (ii) Dispositions resulting in no more than an amount to be agreed in net cash proceeds for any individual transaction and no more than an amount to be agreed in net cash proceeds for all asset sales in any fiscal year; and (iii) Dispositions of non-core assets acquired in an acquisition or other investment, either (x) pursuant to agreements executed in connection with such acquisition or investment or (y) for fair market value within one year after such acquisition or investment; (e) Restricted payments and junior debt prepayments: (i) Following the Restrictions End Date, regular dividends following an initial public offering up to per annum cap equal to 6.00% of the greater of (x) the net proceeds thereof and (y) the market capitalization of Holdings, so long as no Event of Default exists at the time of the declaration thereof or would result therefrom; (ii) customary tax distributions; (iii) distributions to pay operating expenses and employee equity repurchases, in each case, up to an annual cap to be agreed, with full carry-forward, and subject to customary terms; (iv) following the Restrictions End Date, subject to no event of default existing or resulting therefrom, payments made with the Available Amount; (v) following the Restrictions End Date, subject to no event of default existing or resulting therefrom, unlimited payments so long as the pro forma Total Leverage Ratio does not exceed a level 1.50x inside the Closing Date Total Leverage Ratio; and (vi) payments aggregating up to a fixed amount and a percentage of EBITDA to be agreed (provided that only a portion of such basket shall be available prior to the Restrictions End Date). (f) Affiliate transactions: limited to transactions with a fair market value in excess of an amount to be agreed. |
“Available Amount” means, at any time, an amount equal to (a) the greater of (x) a fixed dollar amount to be agreed and (y) a corresponding percentage of
EBITDA (the “Available Amount Starter Basket”), plus (b) an amount (which shall not be less than zero in any year) equal to either Retained Excess Cash Flow (to be defined in a manner to be mutually agreed upon) or 50% of Consolidated
Net Income (which Consolidated Net Income for such purposes shall be no less than $0), as elected by Borrower prior to the earlier of the Closing Date and the launch of general syndication, plus (c) amounts received by Borrower from qualified
equity issuances and capital contributions after the Closing Date (valued as of receipt, and excluding Specified Equity Contributions) that are not otherwise applied, plus (d) the aggregate amount of third party debt converted to or exchanged
for qualified equity (excluding junior debt subject to prepayment restrictions as contemplated above), plus (e) the net proceeds of sales of investments after the Closing Date made using the Available Amount (up to the amount of the original
investment), plus (f) to the extent not included in Consolidated Net Income or EBITDA, as the case may be, the value of returns, profits, distributions and similar amounts received on investments made using the Available Amount (up to the
amount of the original investment), plus (g) the amount of investments in unrestricted subsidiaries made using the Available Amount (up to the amount that is the lesser of (A) the fair market value of the unrestricted subsidiary at the time
of redesignation and (B) the amount of the original investment) to the extent redesignated restricted subsidiaries or merged or consolidated with restricted subsidiaries, plus (h) Declined Proceeds minus the amount of investments, restricted
payment and restricted junior debt prepayments made using the Available Amount.
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Financial Covenant:
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With respect to the First Lien Term Facility: None.
With respect to the First Lien Revolving Facility: Limited to a maximum First Lien Leverage Ratio covenant (the “Financial Covenant”). The Financial
Covenant will be set at a single level set to reflect a 35% cushion to Closing Date EBITDA (and without giving effect to any cash on the balance sheet on the Closing Date).
The Financial Covenant shall be tested only in the event that on the last day of any fiscal quarter of Holdings (commencing with the first full fiscal quarter of
Holdings ending after the Closing Date) the aggregate revolving credit exposure under the First Lien Revolving Facility exceeds 35% of the aggregate commitments under the First Lien Revolving Facility (excluding all cash collateralized
letters of credit and other letters of credit in an aggregate undrawn amount to be agreed) (the “Testing Threshold”).
The cash proceeds of a sale of, or contribution to, equity (which equity shall be common equity or other equity (such other equity to be on terms reasonably
acceptable to the First Lien Administrative Agent)) of Holdings (contributed, in turn, as cash common equity to Borrower) during any fiscal quarter and on or prior to the day that is fifteen (15) business days after the day on which financial
statements are required to be delivered for such fiscal quarter (the “Cure Period”) will, at the request of Borrower, be included in the calculation of EBITDA for purposes of determining compliance with the Financial Covenant at the
end of such fiscal quarter and applicable subsequent periods which include such fiscal quarter (any such equity contribution so included in the calculation of EBITDA, a “Specified Equity Contribution”); provided that (a) in
each four (4) consecutive fiscal quarter period, there shall be no more than two (2) fiscal quarters in which a Specified Equity Contribution is made, (b) no more than five (5) Specified Equity Contributions may be made in the aggregate, (c)
the Specified Equity Contribution shall be counted only as EBITDA solely for the purpose of compliance with the Financial Covenant and shall not be included for any other purpose under the First Lien Facility Documentation (including the
calculation of baskets or ratios), (d) the Specified Equity Contribution shall be no greater than the sum of the amount required for purposes of complying with the Financial Covenant, and (e) the Specified Equity Contribution shall not result
in any actual or pro forma debt reduction in the period in which it is included in EBITDA. The First Lien Facility Documentation will contain a standstill provision with regard to the exercise of remedies (but not as to limitations on
borrowing) during the period in which any Specified Equity Contribution will be made after the receipt of written notice by the First Lien Administrative Agent of Borrower’s intention to cure a Financial Covenant default with the proceeds of
the Specified Equity Contribution; provided that the Lenders shall have no obligation to fund any loans under the First Lien Revolving Facility and the Issuing Banks shall have no obligation to issue new Letters of Credit unless and
until the Specified Equity Contribution is made or all events of default are cured; provided, further, that such standstill shall apply solely in respect of the breach (or prospective breach) of the Financial Covenant giving
rise thereto, and if the Specified Equity Contribution is not made before the expiration of the Cure Period, such event of default or potential event of default shall be deemed reinstated.
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Events of Default:
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Events of default will be subject to thresholds, exceptions, grace and cure periods to be agreed (in accordance with the Documentation Principles, with materiality
thresholds to be agreed), and will in any event be limited to the following:
nonpayment of principal when due, nonpayment of interest, fees and other amounts after a five business day grace period, breach of representations in any material
respect when made (or in any respect with respect to any representation already qualified by materiality) and covenants (provided that any breach of the Financial Covenant shall not constitute an event
of default with respect to the First Lien Term Facility unless the loans under the First Lien Revolving Facility have been accelerated), cross default and cross acceleration, in each case, to material debt, material loss of lien validity or
priority, invalidity of material guarantees or other material rights under First Lien Facility Documentation, bankruptcy and insolvency events with respect to Holdings and its material restricted subsidiaries, ERISA events (subject to a
“material adverse effect” standard), failure to satisfy or stay material monetary judgments and change of control (which shall not include a “continuing director” test or most favored nation clause).
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Assignments and Participations:
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Each Lender may assign all or, subject to the minimum amounts set forth below, a portion of its loans and commitments to one or more “Eligible Assignees” (to
be defined in a manner to be mutually agreed upon) with the consent of the First Lien Administrative Agent and Borrower, which shall not be unreasonably withheld or delayed; provided that no consent
of Borrower shall be required (i) for an assignment to an existing Lender or an affiliate or approved fund or managed account of an existing Lender or (ii) during a payment or bankruptcy default; provided further that Borrower’s consent shall be deemed to have been given with respect to an assignment to an Eligible Assignee unless Borrower objects to such assignment within 10 business days after having
received notice of such assignment.
Each assignment will be in an amount of an integral multiple of $1.0 million (or $500,000 in the case of an assignment under the First Lien Term Facility) or, if
less, all of such Lender’s remaining commitments and loans of the applicable class. In addition, each Lender may sell participations in all or a portion of its loans and commitments under the First Lien Term Facility or First Lien Revolving
Facility; provided that no purchaser of a participation shall have the right to exercise or to cause the selling Lender to exercise voting rights in respect of the participating interests (except with
respect to: (x) reductions or forgiveness of principal, interest or fees payable to such participant; (y) extensions of the applicable Maturity Date or the date for payment of interest, principal or fee on the loans in which such participant
participates; and (z) releases of all or substantially all of the value of the guarantees, or all or substantially all of the Collateral). Notwithstanding the foregoing, in no event shall any loans or commitments, or any participation
therein, be assigned to a Disqualified Institution. The list of Disqualified Institutions shall be available to each Lender and prospective assignees and participants upon request in connection with an assignment or participation. The First
Lien Administrative Agent may charge a processing and recordation fee of up to $3,500 in connection with any assignment.
The First Lien Administrative Agent shall have no obligation or liability with respect to monitoring or enforcing prohibitions on assignments or participations to
Disqualified Institutions (or disclosure of confidential information to Disqualified Institutions) and the list of Disqualified Institutions.
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So long as no event of default has occurred and is continuing and no proceeds of loans under the First Lien Revolving Facility are used to fund such purchases,
loans under the First Lien Term Facility may be purchased by and assigned to Holdings or any of its subsidiaries on a non-pro rata basis through open market purchases and/or auctions; provided that
loans so purchased and not concurrently assigned to an Eligible Assignee are deemed automatically cancelled without further action.
Assignments of the First Lien Term Facility to Sponsor or any of its affiliates (other than Holdings, Borrower and their subsidiaries) (each, an “Affiliated
Lender”) shall be permitted, provided that the following limitations will apply for so long as loans are held by an Affiliated Lender, other than an Affiliated Debt Fund (defined below):
(i) Affiliated Lenders will not receive information provided solely to lenders and will not be permitted to attend/participate in “lender only” meetings;
(ii) Affiliated Lenders may not acquire revolving loans or commitments;
(iii) For purposes of any amendment, waiver or modification of the First Lien Facility Documentation or any plan of reorganization that does not in each case
adversely affect such Affiliated Lender (solely in its capacity as a Lender) in any material respect as compared to other Lenders, Affiliated Lenders will be deemed to have voted in the same proportion as non-affiliated lenders voting on such
matter; provided that Affiliated Lenders shall be entitled to receive their ratable portion of any amendment, waiver or consent fee paid by Borrower to the Lenders in order to obtain any such
amendment, waiver or consent and (y) no amendment, modification or waiver of the First Lien Facility Documentation shall, without the consent of such Affiliated Lender, (i) increase the commitment of such Affiliated Lender, (ii) reduce the
principal, interest, fees or premium of or due to such Affiliated Lender, (iii) extend the final maturity or the due date of any amortization, interest, fee or premium due to such Affiliated Lender, or (iv) deprive such Affiliated Lender of
its pro rata share of any payment to which all Lenders under the First Lien Term Facility are entitled;
(iv) Neither Borrower, the Sponsor, nor any Affiliated Lender shall be required to make a representation that it is not in possession of material non-public
information with respect to Borrower, its subsidiaries or their respective securities; and
(v) Affiliated Lenders may not hold more than 25% of the total amount of term loans outstanding (determined at the time of purchase thereof).
The foregoing restrictions in clauses (i) through (v) shall not apply to any Affiliated Lender that is a bona fide debt fund that is primarily engaged in, or
advises funds or other investment vehicles that are primarily engaged in, making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit or securities in the ordinary course of its business and
whose managers have fiduciary duties to the investors in such fund or investment vehicle independent of their duties to any Sponsor (“Affiliated Debt Fund”); provided that Affiliated Debt Funds
shall not constitute more than 49.9% of any required lender vote.
The First Lien Facility Documentation will contain provisions allowing Borrower to replace (x) a Defaulting Lender, (y) a Lender requesting indemnification,
reimbursement or payment for increased costs, taxes, etc., or (z) a non-consenting Lender in connection with an amendment or waiver requiring the vote of all lenders or all lenders directly and adversely affected thereby.
The First Lien Administrative Agent will maintain a register of the Lenders, and no assignment will be valid unless and until recorded on the register.
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Expenses, Limitations on Liability and Indemnification:
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On the Closing Date and from time to time thereafter, all reasonable and documented out-of-pocket expenses (including but not limited to reasonable and documented
legal fees (absent an actual or bona fide potential conflict of interest) of one outside counsel for the Commitment Parties and their affiliated indemnified persons (and reasonably necessary local counsel) and expenses of the Commitment
Parties’ due diligence and travel, courier, reproduction, printing and delivery expenses) of the Commitment Parties, the First Lien Administrative Agent and the Issuing Banks associated with the syndication and execution of the First Lien
Term Facility and with the preparation, review, negotiation, execution and delivery of the Commitment Letter, the Fee Letter and the First Lien Facility Documentation and the amendment, modification or waiver of the Commitment Letter and the
Fee Letter (or any proposed amendment, modification or waiver); provided that Expenses are not required to be reimbursed in the event the Closing Date does not occur.
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The Facility Documentation will contain customary exculpation provisions consistent with the Commitment Letter.
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Borrower will indemnify the Lenders, the Commitment Parties, the First Lien Administrative Agent, the First Lien Collateral Agent and the Issuing Banks and the
First Lien Lead Arrangers and the officers, directors, partners, trustees, employees, advisors, shareholders, agents and representatives of each of the foregoing and each of their successors and permitted assigns, and hold them harmless from
and against all reasonable out-of-pocket costs, expenses (including but not limited to reasonable and documented legal fees and expenses promptly after receipt of written demand together with customary backup documentation (such legal expense
to be limited (absent an actual or bona fide potential conflict of interest) to one outside counsel for all Indemnified Persons and reasonably necessary local counsel in applicable jurisdictions)) and liabilities arising out of or relating to
the Transactions and any actual or proposed use of the proceeds of any loans made under the First Lien Facilities; provided, however, that no such person will
be indemnified for costs, expenses or liabilities to the extent determined by a final, non-appealable judgment of a court of competent jurisdiction to have been incurred by reason of the gross negligence, bad faith or willful misconduct of
such person or the material breach of funding obligations under the First Lien Facilities without the fault of the indemnifying person or its affiliates, or to the extent arising from any dispute solely among indemnified persons (other than
(x) a dispute involving claims against the First Lien Administrative Agent, First Lien Lead Arrangers or other similarly titled person, in their respective capacities as such, and (y) any dispute arising out of any act or omission of
Borrower, any Guarantor or any of their affiliates).
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Yield Protection, Taxes and Other Deductions:
|
The First Lien Facility Documentation will contain yield protection provisions, customary for facilities of this nature and consistent with LSTA, protecting the
Lenders in the event of unavailability of LIBOR, breakage losses, reserve, capital adequacy and liquidity requirements (including, without limitation, with respect to the Dodd-Frank Wall Street Reform and Consumer Protection Act and Basel III
regardless of when enacted) and will include customary tax gross-up provisions; provided that the First Lien Facility Documentation will provide that no Lender shall claim any compensation for capital
adequacy and liquidity requirements unless such Lender is generally seeking similar and proportionate compensation from similarly situated borrowers.
The First Lien Facility Documentation will contain provisions relating to taxes (including withholding) that are customary for facilities of this nature and
consistent with LSTA.
|
||
Voting:
|
Amendments and waivers of the First Lien Facility Documentation will require the approval of Lenders holding more than 50% of the aggregate amount of the exposure
and unused commitments under the First Lien Term Facility and the First Lien Revolving Facility (the “Required Lenders”), except that (i) the consent of each adversely affected Lender shall be required with respect to, among other things, (a)
increases in the commitment of such Lender, (b) reductions of principal, interest or fees payable to such Lender, or extensions of any due date thereof, and (c) extensions of final maturity or scheduled amortization of the loans or
commitments of such Lender, (ii) the consent of each Lender shall be required with respect to, among other things, (a) releases of all or substantially all of the value of the Guarantees, or all or substantially all of the value of the
Collateral, (b) changes to the voting percentages, (c) assignments by Borrower of its rights or obligations under the First Lien Facilities, and (d) amendments to the “waterfall” and certain pro rata provisions, (iii) the consent of Lenders
holding more than 50% of the aggregate amount of loans and commitments under a particular facility or tranche of loans or commitments under the First Lien Facility Documentation (“Required Class Lenders”) shall be required for any
change to the application of prepayments or proceeds of collection among or between such facilities or tranches, (iv) amendments, consents and waivers of the Financial Covenant (and financial definitions solely to the extent used therein)
shall require the consent of holders of a majority of the exposure and unused commitments under the First Lien Revolving Facility in lieu of the Required Lenders and (v) the consent of the First Lien Administrative Agent shall be required
with respect to amendments and waivers affecting the rights or duties of the First Lien Administrative Agent.
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The First Lien Facility Documentation will permit amendments thereof (x) with the consent of Borrower and the consent of the applicable Lenders holding more than
50% of the aggregate amount of loans and commitments under a particular facility or tranche of loans or commitments under the First Lien Facility Documentation to the extent any amendment applies solely to the terms of a particular facility
or tranche and does not adversely affect another facility or tranche, and (y) with the consent of Borrower and any consenting Lenders, if all loans and other amounts payable to non-consenting Lenders will be paid in full, and all commitments
thereof will be terminated, substantially concurrently with the effectiveness of such amendment.
Notwithstanding the foregoing, the First Lien Facility Documentation will permit amendments thereof to the extent expressly provided for elsewhere in this First
Lien Term Sheet (including, in connection with First Lien Incremental Facilities and Refinancing Facilities), with the consent of Borrower, the First Lien Administrative Agent and any lenders specified in the applicable provision.
The First Lien Administrative Agent and Borrower may amend the First Lien Facility Documentation to correct any obvious error or omission of a technical nature
therein, unless Required Lenders object to such amendment within 5 business days following receipt of notice thereof.
The First Lien Administrative Agent will have customary rights to execute, modify and release collateral documentation and guarantees as contemplated by the First
Lien Facility Documentation, including the right to release or subordinate liens as required by the terms of any purchase money security interest, capital lease, acquired lien or any lien expressly permitted to be senior in priority to the
liens of the First Lien Facility Documentation.
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Amend and Extend Provisions:
|
The First Lien Facility Documentation will contain customary “amend and extend” provisions pursuant to which Borrower, with the approval of consenting Lenders, may
extend the loans of such consenting Lenders and, in connection therewith, amend the interest rates, yield, fees, amortization (so long as the maturity and weighted average life to maturity is not shortened) and prepayment provisions
applicable to such extended loans. The First Lien Facility Documentation may be amended by Borrower, the First Lien Administrative Agent and such consenting Lenders.
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Unrestricted Subsidiaries:
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The First Lien Facility Documentation will contain provisions pursuant to which, subject to no event of default existing or resulting therefrom and customary
limitations on loans, advances to, and other investments in, unrestricted subsidiaries, in each case in accordance with the Documentation Principles (and subject to additional limitations to be agreed prior to the Restrictions End Date),
Borrower will be permitted to designate any existing or subsequently acquired or organized subsidiary (other than a co-borrower) as an “unrestricted subsidiary” and subsequently re-designate any such unrestricted subsidiary as a restricted
subsidiary. Unrestricted subsidiaries will not be subject to the representations and warranties, affirmative or negative covenants or event of default provisions of the First Lien Facility Documentation and results of operations and debt of
unrestricted subsidiaries will not be taken into account for purposes of determining any financial ratio or covenant contained in the First Lien Facility Documentation. Notwithstanding the foregoing, the First Lien Facility Documentation
shall not permit transfers of material intellectual property from Loan Parties to non-Loan Parties.
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Intercreditor Arrangements:
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Consistent with the Documentation Principles, the priority of the security interests in the Collateral and related creditors’ rights will be set forth in a
customary intercreditor agreement reasonably acceptable to Borrower, the First Lien Administrative Agent and the Second Lien Administrative Agent (the “Intercreditor Agreement”).
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EU/UK Bail-in Provisions:
|
Customary Loan Syndications & Trading Association EU/UK Bail-In provisions shall be included in the First Lien Facility Documentation.
|
||
Governing Law and Forum:
|
The laws of the State of New York.
|
||
Counsel to the First Lien Administrative Agent and the Lead Arrangers:
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Cahill Gordon & Reindel LLP.
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Borrower:
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Jaguar Merger Sub Inc., a Nevada corporation (collectively with the co-borrowers described below, the “Borrower”, and, together with the Guarantors (as defined
below), the “Loan Parties”). It is agreed that Holdings, with the consent of the Administrative Agent (acting reasonably), may designate certain if of its subsidiaries organized under the laws of the United States, any state thereof or the
District of Columbia or other non-U.S. jurisdictions to be agreed to by the Administrative Agent (acting reasonably) as a co-borrower on a joint and several basis with respect to all of Borrower’s obligations under the Second Lien Term
Facility, subject to receipt by the Administrative Agent of customary documentation and other customary information under applicable “know your customer” and anti-money laundering rules and regulations (including a certification regarding
beneficial ownership required by the Beneficial Ownership Regulation).
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Holdings:
|
Jaguar ParentCo Inc., a Delaware corporation (“Holdings” and, together with Borrower and Borrower’s restricted subsidiaries, each a “Company” and collectively, the
“Companies”).
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Lead Arranger and Bookmanager:
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JPMCB (the “Lead Arranger”).
|
Lenders:
|
A syndicate of banks, financial institutions and other entities reasonably acceptable to Borrower (excluding Disqualified Institutions), arranged by the Lead
Arranger in consultation with Borrower (collectively, the “Lenders”).
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Second Lien Administrative Agent and Second Lien Collateral Agent:
|
A financial institution reasonably acceptable to the Lead Arranger and Borrower (in such capacity, the “Second Lien Administrative Agent” and the “Second Lien
Collateral Agent”, respectively).
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Type and Amount of Facilities:
|
Second Lien Term Facility: A second lien senior secured term loan facility (the “Second Lien Term Facility” and the loans thereunder, the “Second Lien Term Loans”)
in an aggregate principal amount of $1,290 million (plus, at Borrower’s discretion, an amount sufficient to fund the amount of any original issue discount or upfront fees with respect to the Second Lien Term Facility required pursuant to the
“market flex” provisions of the Fee Letter).
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Purpose:
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Proceeds of the Second Lien Term Facility will be used on the Closing Date (i) to pay a portion of costs in connection with the Transactions, (ii) to pay a portion
of the Acquisition consideration, (iii) to finance a portion of the Refinancing and (iv) to the extent of any remaining amounts, for working capital and other general corporate purposes.
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Maturity Date and Amortization:
|
The Second Lien Term Facility will mature on the date that is eight years from the Closing Date (the “Second Lien Term Maturity Date”).
There will be no amortization.
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Availability:
|
Second Lien Term Facility: Upon satisfaction or waiver of the Specified Conditions, a single drawing may be made on the Closing Date of the full amount of the
Second Lien Term Facility. Amounts borrowed under the Second Lien Term Facility that are repaid or prepaid may not be reborrowed.
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Interest:
|
At Borrower’s option, loans will bear interest based on the Base Rate or LIBOR, as described below:
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|
A. Base Rate Option
|
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Interest for borrowings based on Base Rate will be at the Base Rate plus the applicable Interest Margin, calculated on the basis of the actual number of days
elapsed in a year of 360 days (or when calculated by reference to the “prime rate”, 365/366 days) and payable quarterly in arrears. The “Base Rate” is defined, for any day, as a fluctuating rate per annum equal to the highest of (i) the
Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 1/2 of 1%, (ii) the prime commercial lending rate as published in the Wall Street Journal, from time to time, (iii) LIBOR (as set forth below) for an interest
period of one-month beginning on such day plus 1% and (iv) 1.00%.
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Base Rate borrowings will be in minimum amounts to be agreed upon and will require one business day’s prior notice, except that Base Rate borrowings may be funded
on the same business day notice is received if notice is received prior to a time to be agreed upon.
|
||
B. LIBOR Option
|
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Interest for borrowings based on LIBOR will be determined for periods to be selected by Borrower (“Interest Periods”) of one, two, three or six months (or twelve
months or a lesser period if agreed to by all relevant Lenders) and will be at an annual rate equal to the London Interbank Offered Rate (“LIBOR”) for the corresponding deposits of U.S. dollars, plus the applicable Interest Margin; provided that (i) the initial interest period may be less than one month and (ii) LIBOR for purposes of calculating interest on any loan under the Second Lien Term Facility shall be deemed to be not less
than 0% per annum. LIBOR will be determined by the Second Lien Administrative Agent at the start of each Interest Period and will be fixed through such period. Interest will be paid at the end of each Interest Period or, in the case of
Interest Periods longer than three months, at the end of each three-month period, and will be calculated on the basis of the actual number of days elapsed in a year of 360 days. LIBOR will be adjusted for maximum statutory reserve
requirements (if any).
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LIBOR borrowings will require three business days’ prior notice (or such lesser notice as the Second Lien Administrative Agent may agree in its discretion) and will
be in minimum amounts to be agreed upon. The Second Lien Term Facility Documentation will include customary “successor LIBOR” provisions substantially consistent with the First Lien Facility Documentation.
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Interest Margins:
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The applicable Interest Margin under the Second Lien Term Facility will be 800 basis points for LIBOR loans and 700 basis points for Base Rate loans.
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Default Interest and Fees:
|
Upon the occurrence and during the continuance of a bankruptcy or payment event of default, overdue principal, interest and other overdue amounts shall bear
interest, after as well as before judgment, at a rate equal to (i) in the case of overdue principal on any loan, at a rate of 2.0% per annum plus the rate otherwise applicable to the loans and (ii) in the case of any other overdue outstanding
amount, at a rate of 2.0% per annum plus the non-default interest rate then applicable to Base Rate loans under the Second Lien Term Facility, and will be payable on demand.
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Mandatory Prepayments:
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Subject to the full repayment of the First Lien Facilities and subject to the rights of the Lenders to receive declined amounts under the First Lien Facilities,
mandatory prepayment provisions substantially similar to those under the First Lien Term Facility (including the applicable step-downs based on First Lien Leverage Ratios set forth in the First Lien Term Facility).
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Optional Prepayments:
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The Second Lien Term Loans may be prepaid, in whole or in part, in minimum principal amounts to be mutually agreed upon, at par plus accrued and unpaid interest to
the date of prepayment but without premium or penalty (except as set forth below), subject to (x) reimbursement of the Lenders’ usual and customary breakage costs actually incurred (excluding loss of profit) in the case of a prepayment of
LIBOR borrowings other than on the last day of the relevant interest period and (y) the payment of the Prepayment Premium applicable thereto.
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Call Protection:
|
Except as provided in the Fee Letter, any optional prepayment (including as a result of “yank-a-bank”) of Second Lien Term Loans and any mandatory prepayment of
Second Lien Term Loans made in connection with the receipt of net proceeds by any Company from the issuance of debt or disqualified stock after the Closing Date to the extent not permitted under the Second Lien Term Facility Documentation or
consisting of proceeds of Refinancing Facilities or Other Refinancing Debt, in each case, consummated prior to the date that is: (i) on or prior to the first anniversary of the Closing Date (or, if later, the Restrictions End Date), shall
be subject to a prepayment premium of 2.00% and (ii) after the first anniversary of the Closing Date (or, if later the Restrictions End Date) but on or prior to the second anniversary of the Closing Date (or, if later, the Restrictions End
Date), shall be subject to a prepayment premium of 1.00% (the “Prepayment Premium”) provided that such Prepayment Premium shall not be payable in the event that the “Closing Date” (as defined in the Peraton Commitment Letter) has occurred and
the Second Lien Term Facility is prepaid in full in connection therewith.
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Application of Prepayments:
|
Prepayments of the Second Lien Term Facility will be applied to the outstanding amount of the Second Lien Term Loans as directed by Borrower.
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Second Lien Incremental Facility:
|
The Second Lien Term Facility Documentation will permit Borrower, following the Restrictions End Date, to add one or more incremental second lien term loan
facilities to the Second Lien Term Facility either as a separate tranche or a fungible increase to an existing tranche (each, a “Second Lien Incremental Facility” and collectively, the “Second Lien Incremental Facilities”) in an
aggregate principal amount not exceeding the Incremental Cap (as defined below) when combined with any Second Lien Incremental Equivalent Debt (as defined below and, together with the Second Lien Incremental Facilities, “Second Lien
Incremental Debt”) and First Lien Incremental Debt (as defined in the First Lien Term Sheet). Second Lien Incremental Facilities may be provided by existing Lenders or Eligible Assignees (each an “Incremental Lender”), but no Lender will be
required to participate in any Second Lien Incremental Facility.
The terms of any Second Lien Incremental Facility shall be as agreed by Borrower and the applicable Incremental Lenders, provided that (i) any Second Lien
Incremental Debt incurred in reliance on the Incurrence Incremental Amount in an amount that exceeds an amount to be agreed, issued within six months after the Closing Date and maturing earlier than two (2) years after the Second Lien Term
Maturity Date shall comply with the MFN Requirement (defined below), (ii) other than Permitted Short-Term Incremental Debt (defined below), the maturity date and weighted average life to maturity of any Second Lien Incremental Facility shall
be no earlier or shorter, respectively, than the maturity date and weighted average life to maturity of the initial Second Lien Term Facility (determined without giving effect to any prepayments that reduce amortization) and (iii) covenants
and events of default shall be no more restrictive than the comparable provisions in the Second Lien Term Facility Documentation, except (A) if the more restrictive terms also benefit the initial Second Lien Term Facility or are not effective
until after the Second Lien Term Maturity Date, or (B) to the extent reasonably satisfactory to the Second Lien Administrative Agent. Any Second Lien Incremental Facility may provide for the ability to participate (on not more than a pro
rata basis) in any prepayments of the loans under the Second Lien Term Facility.
Obligations under any Second Lien Incremental Facility shall constitute pari passu secured, junior secured or unsecured
obligations under the Second Lien Term Facility Documentation, guaranteed by the Guarantees and, to the extent secured, co-secured by the liens on the Collateral granted under the Second Lien Term Facility Documentation, on an equal and
ratable or junior basis. The Second Lien Term Facility Documentation shall be amended to give effect to borrowings under the Second Lien Incremental Facility by documentation executed by the applicable Incremental Lenders, the Second Lien
Administrative Agent and Borrower, without the consent of any other Lender.
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The “Incremental Cap,” on the date of incurrence of any Second Lien Incremental Debt, shall equal the sum of (A) an unlimited amount (the “Incurrence Incremental
Amount”) at any time so long as, (x) in the case of Second Lien Incremental Debt secured by the Collateral on a pari passu basis with the Second Lien Term Facility or Second Lien Incremental Debt
secured by liens on Collateral that are junior to the liens of the Second Lien Term Facility, the Secured Leverage Ratio (as defined below) shall be no greater than (1) the Closing Date Secured Leverage Ratio or (2) in the case of any such
Second Lien Incremental Debt incurred in connection with any acquisition or similar investment not prohibited by the Second Lien Term Facility Documentation, the greater of the Closing Date Secured Leverage Ratio and the level at the end of
the most recently ended fiscal quarter prior to such transaction and (y) in the case of unsecured Second Lien Incremental Debt, either (i) the Total Leverage Ratio (as defined below) shall not exceed (1) 0.50x outside the Closing Date Total
Leverage Ratio or (2) in the case of any such Second Lien Incremental Debt incurred in connection with any acquisition or similar investment not prohibited by the Second Lien Term Facility Documentation, the greater of 0.50x outside the
Closing Date Total Leverage Ratio and the level at the end of the most recently ended fiscal quarter prior to such transaction, or (ii) the Interest Coverage Ratio (to be defined as the ratio of EBITDA to cash interest expense) is greater
than or equal to (1) 2.00:1.00 or (2) in the case of any such Second Lien Incremental Debt incurred in connection with any acquisition or similar investment not prohibited by the Second Lien Term Facility Documentation, the lesser of (x)
2.00:1.00 or (y) the level at the end of the most recently ended fiscal quarter prior to such transaction, in each case, calculated on an Incremental Pro Forma Basis plus (B) an amount (the “Second Lien Fixed Incremental Amount”) equal to (I)
the greater of (x) a fixed amount equal to 1.0x pro forma EBITDA as of the Closing Date and (y) 100% of pro forma EBITDA at the time of incurrence, less (II) the aggregate principal amount of First Lien Incremental Debt incurred in reliance
on the First Lien Fixed Incremental Amount, plus (C) the aggregate amount of all voluntary prepayments of the Second Lien Term Facility or Second Lien Incremental Debt prior to such date of incurrence (other than to the extent such voluntary
prepayment is funded with proceeds of long-term debt), additional debt buybacks permitted under the Second Lien Term Facility Documentation (to the extent of the actual amount of cash paid), payments utilizing the yank-a-bank provisions of
the Second Lien Term Facility Documentation, and such portion of outstanding loans under the Second Lien Term Facility effectively extended pursuant to any applicable Second Lien Incremental Debt (the “Prepayment Component”); provided that, except as provided under “Conditions to Each Subsequent Borrowing” (as set forth in the First Lien Term Sheet) with respect to a Limited Condition Transaction (as defined below), (i) no
event of default shall exist or would exist after giving effect to such Second Lien Incremental Debt and (ii) the representations and warranties in the Second Lien Term Facility Documentation shall be true and correct in all material respects
(unless already qualified by materiality, in which case they shall be true and correct in all respects).
The “MFN Requirement” means that the all-in yield (taking into consideration interest rate margins, original issue discount (“OID”), upfront fees (which shall be
deemed to constitute like amounts of OID) payable by Borrower to the relevant Lenders (with OID being equated to interest based on an assumed four-year life to maturity), but disregarding any arranger fees or LIBOR or Base Rate floor, of the
Second Lien Incremental Facility will not be more than 75 basis points higher than the corresponding all-in yield for the existing Second Lien Term Facility, calculated consistently, but giving effect to any increase in interest rate margins
or additional fees (which shall be deemed to constitute like amounts of OID) provided with respect to the existing Second Lien Term Facility in connection with such issuance and/or syndication.
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“Permitted Short-Term Incremental Debt” means any bridge financing converting to, or intended to be refinanced by, debt complying with the applicable maturity and
weighted average life requirement subject to customary terms and conditions to be agreed.
If Borrower incurs Second Lien Incremental Debt using the Second Lien Fixed Incremental Amount and/or Prepayment Component on the same date that they incur
indebtedness using the Incurrence Incremental Amount, the Secured Leverage Ratio or other applicable ratio will be calculated without regard to any incurrence of indebtedness under the Second Lien Fixed Incremental Amount and/or Prepayment
Component.
Any portion of Second Lien Incremental Debt incurred other than under the Incurrence Incremental Amount may be re-designated at any time, as Borrower may elect from
time to time, as incurred under the Incurrence Incremental Amount if Borrower meets the applicable ratio under the Incurrence Incremental Amount, at such time on a pro forma basis at any time subsequent to the incurrence of such Second Lien
Incremental Debt, by written notice to the Second Lien Administrative Agent on such date.
Notwithstanding anything to the contrary herein, with respect to any Second Lien Incremental Debt or other debt incurred in connection with any permitted
acquisition or investment (a “Limited Condition Transaction”), subject to customary testing provisions for future incurrence tests pending the consummation of such Limited Condition Transaction, the proceeds of which will fund such Limited
Condition Transaction, (x) Borrower may elect to calculate the Incremental Cap or other applicable ratio as of the date it commits to such Limited Condition Transaction, and may thereafter incur such Second Lien Incremental Debt or other debt
to finance such Limited Condition Transaction in reliance on such calculation; provided that any such Second Lien Incremental Debt shall be deemed incurred for purposes of calculating the Incurrence
Incremental Amount (and other incurrence ratios) at any time after such calculation date and prior to the incurrence of such Second Lien Incremental Debt (or termination or rescission of such agreement or declaration) and (y) the conditions
precedent related to the absence of defaults (other than a payment or bankruptcy event of default) and accuracy of representations and warranties will be waivable by the lenders in respect of any such Second Lien Incremental Debt.
The Second Lien Administrative Agent and the Incremental Lenders may conclusively rely on Borrower’s calculation of the Incremental Cap and determination that other
applicable requirements have been met, and Second Lien Incremental Facilities provided in reliance thereon shall be deemed effective (but nothing in this sentence shall serve to waive any default arising from Borrower’s failure to satisfy
such requirements).
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In addition, following the Restrictions End Date, Borrower may incur debt outside of the Second Lien Term Facility Documentation in lieu of adding Second Lien
Incremental Facilities (“Second Lien Incremental Equivalent Debt”), in an aggregate principal amount not exceeding the Incremental Cap, when combined with all other Second Lien Incremental Debt, on such terms as Borrower may agree; provided that, (i) other than Permitted Short-Term Incremental Debt, the maturity date and weighted average life to maturity of such Second Lien Incremental Equivalent Debt shall be no earlier or shorter,
respectively, than the maturity date and weighted average life to maturity (determined without giving effect to any prepayments that reduce amortization) of the initial Second Lien Term Facility, (ii) the terms of any junior-lien or unsecured
Second Lien Incremental Equivalent Debt (other than Permitted Short-Term Incremental Debt) shall not provide for any scheduled repayment, mandatory redemption, sinking fund obligations or other payment (other than periodic interest payments)
prior to the earliest maturity date permitted by clause (i), above, other than the ability to participate (on a junior basis) in any mandatory prepayments of the Second Lien Term Loans, (iii) Second Lien Incremental Equivalent Debt secured by
the Collateral on a pari passu basis with the Second Lien Term Facility may participate (on not more than a pro rata basis) in any mandatory prepayments of the Second Lien Term Facility, (iv)
borrowers and guarantors of Second Lien Incremental Equivalent Debt shall be Loan Parties, (v) any secured Second Lien Incremental Equivalent Debt shall (A) be subject to an intercreditor agreement on terms reasonably acceptable to the Second
Lien Administrative Agent, (B) not be secured by any property or assets other than Collateral and (C) shall rank pari passu with or junior to (but not senior to) the Second Lien Term Loans, and (vi)
the terms and conditions of such Second Lien Incremental Equivalent Debt (excluding pricing, interest rate margins, fees, discounts, rate floors and optional prepayment or redemption terms) are (taken as a whole) not materially more favorable
(as determined in good faith by the board of directors of Borrower) to the lenders or noteholders providing such Second Lien Incremental Equivalent Debt than those applicable to the Second Lien Term Facility (except for covenants or other
provisions applicable only to periods after the earliest maturity date permitted by clause (i), above) as determined in good faith by Borrower.
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Refinancing Facilities:
|
The Second Lien Term Facility Documentation will permit Borrower to refinance loans under the Second Lien Term Facility (as it may be increased pursuant to the
provisions described above) from time to time, in whole or part, in a principal amount not to exceed the principal amount of indebtedness so refinanced (plus any accrued but unpaid interest, premiums and fees payable by the terms of such
indebtedness thereon and reasonable fees, expenses, original issue discount and upfront fees incurred in connection with such refinancing, plus such additional amounts to the extent otherwise permitted to be incurred under the Second Lien
Term Facility Documentation (provided the applicable baskets are utilized in connection with the incurrence of such additional amount of indebtedness)), with (A) one or more new term facilities (each, a “Refinancing Facility” and
collectively, the “Refinancing Facilities”) under the Second Lien Term Facility Documentation complying with the applicable restrictions on terms applicable to Second Lien Incremental Facilities (other than the MFN Requirement) or (B) other
debt (not governed by the Second Lien Term Facility Documentation), which may be unsecured, or secured by the Collateral on a pari passu or junior basis with the Second Lien Term Facility (“Other
Refinancing Debt”) complying with the applicable restrictions on terms applicable to Second Lien Incremental Equivalent Debt; provided, that any Other Refinancing Debt which is in the form of loans
will be unsecured or secured on a junior basis.
Obligations under any Refinancing Facility shall constitute pari passu secured obligations under the Second Lien Term
Facility Documentation, guaranteed by the Guarantees and co-secured by the liens on the Collateral granted under the Second Lien Term Facility Documentation, on an equal and ratable basis. The Second Lien Term Facility Documentation shall be
amended to give effect to borrowings under the Refinancing Facility by documentation executed by the lenders providing such Refinancing Facility, the Second Lien Administrative Agent and Borrower, without the consent of any other Lender.
The Second Lien Administrative Agent and lenders providing Refinancing Facilities or Other Refinancing Debt may conclusively rely on Borrower’s determination that
applicable requirements have been met, and Refinancing Facilities or Other Refinancing Debt provided in reliance thereon shall be deemed effective (but nothing in this sentence shall serve to waive any default arising from Borrower’s failure
to satisfy such requirements).
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Guarantees:
|
The Second Lien Term Loans will be guaranteed by each Guarantor (the “Guarantors”) of the First Lien Facilities (the “Guarantees”). The Guarantees will rank pari passu in right of payment with all obligations under the First Lien Facilities and all other senior indebtedness of the Guarantors.
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|
Security:
|
Subject to the limitations set forth below in this section and subject to the Certain Funds Provision, the Second Lien Term Loans and the Guarantees will be secured
by a second-priority (subject to permitted liens and other exceptions consistent with the Documentation Principles) security interest in the Collateral of Borrower and the Guarantors securing the First Lien Facilities from time to time.
All the above-described security interests shall be created on terms, and pursuant to documentation, consistent with the Documentation Principles, subject to
exceptions to be reasonably agreed.
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|
Intercreditor Arrangements:
|
Consistent with the Documentation Principles, the priority of the security interests in the Collateral and related creditors’ rights will be set forth in a
customary intercreditor agreement reasonably acceptable to Borrower, the First Lien Administrative Agent and the Second Lien Administrative Agent (the “Intercreditor Agreement”).
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Conditions to Initial Borrowings:
|
Conditions precedent to initial borrowings under the Second Lien Term Facility on the Closing Date shall consist solely of the Specified Conditions (subject to the
Certain Funds Provisions).
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|
Documentation Principles:
|
The definitive documentation for the Second Lien Term Facility (the “Second Lien Term Facility Documentation”) shall, except as otherwise set forth herein, be based
on and consistent with the Documentation Principles (as defined in the First Lien Term Sheet), with such changes as are appropriate to (i) reflect the administrative and operational requirements of the Second Lien Administrative Agent and
(ii) reflect the second lien nature of the Second Lien Term Facility. Schulte Roth & Zabel LLP, as counsel to Borrower, shall initially draft the Second Lien Term Facility Documentation.
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Representations and Warranties:
|
Limited to those specified under the heading “Representations and Warranties” in the First Lien Term Sheet, with such changes as are appropriate for the second lien nature of the Second
Lien Term Facility.
|
Affirmative Covenants:
|
Limited to those specified under the heading “Affirmative Covenants” in the First Lien Term Sheet, with such changes as are appropriate for the second lien nature
of the Second Lien Term Facility.
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|
Negative Covenants:
|
The Second Lien Term Facility Documentation will contain negative covenants substantially similar to (and, in any event, no less favorable to Holdings, Borrower and
its restricted subsidiaries) and consistent with those negative covenants contained in the First Lien Facility Documentation, except “baskets” (but not ratios) for the negative covenants under the Second Lien Term Facility Documentation will
be sized at 25% above the “basket” levels under the First Lien Facility Documentation. It is understood that the negative covenants shall permit the incurrence of any First Lien Incremental Debt permitted to be incurred under the First Lien
Facility Documentation.
|
|
Financial Covenant:
|
None.
|
|
Events of Default:
|
Substantially the same as those under the First Lien Term Facility; provided that (a) dollar and EBITDA thresholds shall be 25% greater than the corresponding
thresholds under the First Lien Term Facility and (b) with respect to the First Lien Term Facility or any other facility with a first lien on Collateral, the Second Lien Term Facility shall have a cross-acceleration event of default, other
than in the case of a failure to make a principal payment at stated final maturity, in which such case, the Second Lien Term Facility shall have a cross-default.
|
|
Assignments and Participations:
|
Each Lender may assign all or, subject to the minimum amounts set forth below, a portion of its loans and commitments to one or more “Eligible Assignees” (to be
defined in a manner to be mutually agreed upon) with the consent of the Second Lien Administrative Agent and Borrower, which shall not be unreasonably withheld or delayed; provided that no consent of
Borrower shall be required (i) for an assignment to an existing Lender or an affiliate or approved fund or managed account of an existing Lender or (ii) during a payment or bankruptcy default; provided further that Borrower’s consent shall be deemed to have been given with respect to an assignment to an Eligible Assignee unless Borrower objects to such assignment within 10 business days after having
received notice of such assignment. Each assignment will be in an amount of an integral multiple of $500,000 or, if less, all of such Lender’s remaining commitments and loans of the applicable class. In addition, each Lender may sell
participations in all or a portion of its loans and commitments under the Second Lien Term Facility; provided that no purchaser of a participation shall have the right to exercise or to cause the
selling Lender to exercise voting rights in respect of the participating interests (except with respect to: (x) reductions or forgiveness of principal, interest or fees payable to such participant; (y) extensions of the applicable Maturity
Date or the date for payment of interest, principal or fee on the loans in which such participant participates; and (z) releases of all or substantially all of the value of the guarantees, or all or substantially all of the Collateral).
Notwithstanding the foregoing, in no event shall any loans or commitments, or any participation therein, be assigned to a Disqualified Institution. The list of Disqualified Institutions shall be available to each Lender and prospective
assignees and participants upon request in connection with an assignment or participation. The Second Lien Administrative Agent may charge a processing and recordation fee of up to $3,500 in connection with any assignment.
|
The Second Lien Administrative Agent shall have no obligation or liability with respect to monitoring or enforcing prohibitions on assignments or participations to
Disqualified Institutions (or disclosure of confidential information to Disqualified Institutions) and the list of Disqualified Institutions.
So long as no event of default has occurred and is continuing, loans under the Second Lien Term Facility may be purchased by and assigned to Holdings or any of its
subsidiaries on a non-pro rata basis through open market purchases and/or auctions; provided that loans so purchased and not concurrently assigned to an Eligible Assignee are deemed automatically
cancelled without further action.
Assignments of the Second Lien Term Facility to Sponsor or any of its affiliates (other than Holdings, Borrower and their subsidiaries) (each, an “Affiliated
Lender”) shall be permitted, provided that the following limitations will apply for so long as loans are held by an Affiliated Lender, other than an Affiliated Debt Fund (defined below):
(i) Affiliated Lenders will not receive information provided solely to lenders and will not be permitted to attend/participate in “lender only” meetings;
(ii) Affiliated Lenders may not acquire revolving loans or commitments;
(iii) For purposes of any amendment, waiver or modification of the Second Lien Term Facility Documentation or any plan of reorganization that does not in each case
adversely affect such Affiliated Lender (solely in its capacity as a Lender) in any material respect as compared to other Lenders, Affiliated Lenders will be deemed to have voted in the same proportion as non-affiliated lenders voting on such
matter; provided that Affiliated Lenders shall be entitled to receive their ratable portion of any amendment, waiver or consent fee paid by Borrower to the Lenders in order to obtain any such
amendment, waiver or consent and (y) no amendment, modification or waiver of the Second Lien Term Facility Documentation shall, without the consent of such Affiliated Lender, (i) increase the commitment of such Affiliated Lender, (ii) reduce
the principal, interest, fees or premium of or due to such Affiliated Lender, (iii) extend the final maturity or the due date of any amortization, interest, fee or premium due to such Affiliated Lender, or (iv) deprive such Affiliated Lender
of its pro rata share of any payment to which all Lenders under the Second Lien Term Facility are entitled;
(iv) Neither Borrower, the Sponsor, nor any Affiliated Lender shall be required to make a representation that it is not in possession of material non-public
information with respect to Borrower, its subsidiaries or their respective securities; and
(v) Affiliated Lenders may not hold more than 25% of the total amount of term loans outstanding (determined at the time of purchase thereof).
The foregoing restrictions in clauses (i) through (v) shall not apply to any Affiliated Lender that is a bona fide debt fund that is primarily engaged in, or
advises funds or other investment vehicles that are primarily engaged in, making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit or securities in the ordinary course of its business and
whose managers have fiduciary duties to the investors in such fund or investment vehicle independent of their duties to any Sponsor (“Affiliated Debt Fund”); provided that Affiliated Debt Funds shall
not constitute more than 49.9% of any required lender vote.
The Second Lien Term Facility Documentation will contain provisions allowing Borrower to replace (x) a Defaulting Lender, (y) a Lender requesting indemnification,
reimbursement or payment for increased costs, taxes, etc., or (z) a non-consenting Lender in connection with an amendment or waiver requiring the vote of all lenders or all lenders directly and adversely affected thereby.
The Second Lien Administrative Agent will maintain a register of the Lenders, and no assignment will be valid unless and until recorded on the register.
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Expenses and Indemnification:
|
On the Closing Date and from time to time thereafter, all reasonable and documented out-of-pocket expenses (including but not limited to reasonable and documented
legal fees (absent an actual or bona fide potential conflict of interest) of one outside counsel for the Commitment Parties and their affiliated indemnified persons (and reasonably necessary local counsel) and expenses of the Commitment
Parties’ due diligence and travel, courier, reproduction, printing and delivery expenses) of the Commitment Parties and the Second Lien Administrative Agent associated with the syndication and execution of the Second Lien Term Facility and
with the preparation, review, negotiation, execution and delivery of the Commitment Letter, the Fee Letter and the Second Lien Term Facility Documentation and the amendment, modification or waiver of the Commitment Letter and the Fee Letter
(or any proposed amendment, modification or waiver); provided that Expenses are not required to be reimbursed in the event the Closing Date does not occur.
|
|
Borrower will indemnify the Lenders, the Commitment Parties, the Second Lien Administrative Agent, the Second Lien Collateral Agent and the Second Lien Lead
Arranger and the officers, directors, partners, trustees, employees, advisors, shareholders, agents and representatives of each of the foregoing and each of their successors and permitted assigns, and hold them harmless from and against all
reasonable out-of-pocket costs, expenses (including but not limited to reasonable and documented legal fees and expenses promptly after receipt of written demand together with customary backup documentation (such legal expense to be limited
(absent an actual or bona fide potential conflict of interest) to one outside counsel for all Indemnified Persons and reasonably necessary local counsel in applicable jurisdictions)) and liabilities arising out of or relating to the
Transactions and any actual or proposed use of the proceeds of any loans made under the Second Lien Term Facility; provided, however, that no such person will
be indemnified for costs, expenses or liabilities to the extent determined by a final, non-appealable judgment of a court of competent jurisdiction to have been incurred by reason of the gross negligence, bad faith or willful misconduct of
such person or the material breach of funding obligations under the Second Lien Term Facility without the fault of the indemnifying person or its affiliates, or to the extent arising from any dispute solely among indemnified persons (other
than (x) a dispute involving claims against the Second Lien Administrative Agent, the Second Lien Lead Arranger or other similarly titled person, in their respective capacities as such, and (y) any dispute arising out of any act or omission
of Borrower, any Guarantor or any of their affiliates).
|
||
Yield Protection, Taxes and Other Deductions:
|
The Second Lien Term Facility Documentation will contain yield protection provisions, customary for facilities of this nature and consistent with LSTA, protecting
the Lenders in the event of unavailability of LIBOR, breakage losses, reserve, capital adequacy and liquidity requirements (including, without limitation, with respect to the Dodd-Frank Wall Street Reform and Consumer Protection Act and Basel
III regardless of when enacted and will include customary tax gross-up provisions; provided that the Second Lien Term Facility Documentation will provide that no Lender shall claim any compensation
for capital adequacy and liquidity requirements unless such Lender is generally seeking similar and proportionate compensation from similarly situated borrowers.
|
|
The Second Lien Term Facility Documentation will contain provisions relating to taxes (including withholding) that are customary for facilities of this nature and
consistent with LSTA.
|
Voting:
|
Amendments and waivers of the Second Lien Term Facility Documentation will require the approval of Lenders holding more than 50% of the aggregate amount of the
loans and commitments under the Second Lien Term Facility (the “Required Second Lien Lenders”), except that (i) the consent of each adversely affected Lender shall be required with respect to, among other things, (a) increases in the
commitment of such Lender, (b) reductions of principal, interest or fees payable to such Lender, or extensions of any due date thereof and (c) extensions of final maturity or scheduled amortization of the loans or commitments of such Lender
and (ii) the consent of each Lender shall be required with respect to, among other things, (a) releases of all or substantially all of the value of the Guarantees, or all or substantially all of the value of the Collateral, (b) changes to the
voting percentages, (c) assignments by Borrower or any Guarantor of its rights or obligations under the Second Lien Term Facility, and (d) amendments to the pro rata or “waterfall” provisions. The consent of the Second Lien Administrative
Agent shall be required with respect to amendments and waivers affecting the rights or duties of Second Lien Administrative Agent.
|
|
The Second Lien Term Facility Documentation will permit amendments thereof (x) with the consent of Borrower and the consent of the applicable Lenders holding more
than 50% of the aggregate amount of loans and commitments under a particular facility or tranche of loans or commitments under the Second Lien Term Facility Documentation to the extent any amendment applies solely to the terms of a particular
facility or tranche and does not adversely affect another facility or tranche, and (y) with the consent of Borrower and any consenting Lenders, if all loans and other amounts payable to non-consenting Lenders will be paid in full, and all
commitments thereof will be terminated, substantially concurrently with the effectiveness of such amendment.
Notwithstanding the foregoing, the Second Lien Term Facility Documentation will permit amendments thereof to the extent expressly provided for elsewhere in this
Second Lien Term Sheet (including, in connection with Second Lien Incremental Facilities and Refinancing Facilities), with the consent of Borrower, the Second Lien Administrative Agent and any lenders specified in the applicable provision.
The Second Lien Administrative Agent and Borrower may amend the Second Lien Term Facility Documentation to correct any obvious error or omission of a technical
nature therein, unless Required Lenders object to such amendment within 5 business days following receipt of notice thereof.
The Second Lien Administrative Agent will have customary rights to execute, modify and release collateral documentation and guarantees as contemplated by the Second
Lien Term Facility Documentation, including the right to release or subordinate liens as required by the terms of any purchase money security interest, capital lease, acquired lien or any lien expressly permitted to be senior in priority to
the liens of the Second Lien Term Facility Documentation.
|
||
Amend and Extend Provisions:
|
The Second Lien Term Facility Documentation will contain customary “amend and extend” provisions pursuant to which Borrower, with the approval of consenting
Lenders, may extend the loans of such consenting Lenders and, in connection therewith, amend the interest rates, yield, fees, amortization (so long as the maturity and weighted average life to maturity is not shortened) and prepayment
provisions applicable to such extended loans. The Second Lien Term Facility Documentation may be amended by Borrower, the Second Lien Administrative Agent and such consenting Lenders.
|
Unrestricted Subsidiaries:
|
The Second Lien Term Facility Documentation will contain provisions pursuant to which, subject to no event of default existing or resulting therefrom and customary
limitations on loans, advances to, and other investments in, unrestricted subsidiaries (and additional restrictions to be agreed prior to the Restrictions End Date), in each case in accordance with the Documentation Principles, Borrower will
be permitted to designate any existing or subsequently acquired or organized subsidiary (other than a co-borrower) as an “unrestricted subsidiary” and subsequently re-designate any such unrestricted subsidiary as a restricted subsidiary.
Unrestricted subsidiaries will not be subject to the representations and warranties, affirmative or negative covenants or event of default provisions of the Second Lien Term Facility Documentation and results of operations and debt of
unrestricted subsidiaries will not be taken into account for purposes of determining any financial ratio or covenant contained in the Second Lien Term Facility Documentation. Notwithstanding the foregoing, the Second Lien Term Facility
Documentation shall not permit transfers of material intellectual property from Loan Parties to non-Loan Parties.
|
|
EU/UK Bail-in Provisions:
|
Customary Loan Syndications & Trading Association EU/UK Bail-In provisions shall be included in the Second Lien Term Facility Documentation.
|
|
Governing Law and Forum:
|
The laws of the State of New York.
|
|
Counsel to the Second Lien Administrative Agent and the Lead Arranger:
|
Cahill Gordon & Reindel LLP.
|
JPMORGAN CHASE BANK, N. A.
383 Madison Avenue
New York, NY 10179
|
•
|
A $2,445 million senior secured first lien credit facility (the “Dutchman
First Lien Credit Facility”) consisting of (i) a $2,145 million term loan facility (the “Dutchman First Lien Term Facility”) and (ii)
a $300 million revolving credit facility (the “Dutchman Revolving Facility” and, together with the Dutchman First Lien Term Facility, the “Dutchman First Lien Facilities”), in each case, on the terms described in the Existing Dutchman Commitment Letter and the Fee Letter (as defined in the
Existing Dutchman Commitment Letter) (the “Existing Dutchman Fee Letter”);
|
•
|
An $855 million senior secured term loan (the “Dutchman Second
Lien Term Facility”) under a second lien credit facility (the “Dutchman Second Lien Credit Facility” and, together with the Dutchman
First Lien Facilities, the “Dutchman Facilities”), on the terms set forth in the Existing Dutchman Commitment Letter and the Existing Dutchman Fee
Letter;
|
•
|
(i) A $2,355 million senior secured incremental term loan facility (the “First Lien Incremental Term Facility”) under the Dutchman First Lien Credit Facility and (ii) $200 million of incremental revolving commitments (the “Incremental Revolving Commitments” and, together with the First Lien Incremental Term Facility, the “First Lien Incremental
Credit Facilities”) as described in the Summary of Principal Terms and Conditions attached hereto as Annex I (the “First Lien Incremental Credit Facilities Term Sheet”);
|
•
|
$1,420 million of gross proceeds of new senior secured first lien notes (the “First Lien Notes”) or if less than such amount of gross proceeds of First Lien Notes is received on or prior to the Closing Date, borrowings under a senior secured first lien bridge loan facility (the “First Lien Bridge Facility” and, together with the First Lien Incremental Credit Facilities, the “First Lien Facilities”) of up to $1,420 million minus the gross proceeds from First Lien Notes issued on or prior to the Closing Date as described in the Summary of Principal Terms and Conditions
attached hereto as Annex II (the “First Lien Bridge Facility Term
Sheet”);
|
•
|
a $1,340 million incremental senior secured second lien term loan facility (the “Second Lien Incremental Term Facility” and, together with the First Lien Facilities, the “Facilities”) under the
Dutchman Second Lien Credit Facility, as described in the Summary of Principal Terms and Conditions attached hereto as Annex III (the “Second Lien Incremental Facility Term Sheet” and together with the First Lien Incremental Credit Facilities Term Sheet and the First Lien Bridge Facility
Term Sheet, the “Term Sheets”); and
|
•
|
equity investments by one or more funds managed by Veritas Capital Fund Management, L.L.C. and/or its affiliates (collectively, “Sponsor”) and certain controlled affiliates and co-investors (the “Equity
Investors”) in a direct or indirect parent of Holdings (in each case, consisting of common equity or otherwise on terms reasonably
satisfactory to the Lead Arrangers (as defined below)), to be contributed to P Corp. (together with (x) any rollover equity of members of the management of the Acquired Businesses (and, in the case of the Jaguar Acquisition, existing equity
investors of Jaguar), (y) the fair market value of the existing equity in Holdings (or a direct or indirect parent of Holdings) immediately prior to the consummation of the Dutchman Acquisition (based on the methodology agreed between JPMCB
and the Sponsor prior to the date of this Commitment Letter) and (z) if the Jaguar Acquisition closes prior to the Jaguar Contribution, the amount of equity contributions made to Jaguar Holdings by the Equity Investors in connection with
the Jaguar Acquisition minus the amount of the Additional Consideration paid in connection with the Jaguar Contribution) equaling not less than 30% (such minimum amount, the “Minimum Equity Contribution Amount”) of the pro forma total net debt and equity capitalization of Holdings and its subsidiaries after giving effect to the Transactions (excluding for the avoidance of doubt,
cash, any issued letters of credit, drawings under the Dutchman Revolving Facility or the Incremental Revolving Commitments on the closing date of the Dutchman Acquisition or the closing date of the Jaguar Acquisition (or to refinance such
amounts on the Closing Date), in either case, for working capital purposes and amounts funded under the Dutchman Facilities or the Facilities to fund upfront fees or original issue discount as a result of the “market flex” provisions of the
Fee Letter (as defined in the Existing Dutchman Commitment Letter) or the Fee Letter) (the “Equity Contribution”), provided that on the Closing Date, the Sponsor and its controlled funds and affiliates will hold, directly or indirectly, no less than a majority of the aggregate
amount of the equity of Holdings and shall have majority voting control over the voting interests of Holdings.
|
(a)
|
the Initial Lenders, the Lead Arrangers and/or their respective affiliates and subsidiaries (collectively, the “Lead Arranger Group”), in their capacity as principal or agent, are involved in a wide range of commercial banking and investment banking activities
globally (including investment advisory; asset management; research; securities issuance, trading, and brokerage) from which conflicting interests or duties may arise and therefore, conflicts may arise between duties of the Initial Lenders
or the Lead Arrangers hereunder and other duties or interests of the Initial Lenders, the Lead Arrangers or another member of the Lead Arranger Group;
|
(b)
|
the Initial Lenders, the Lead Arrangers and any other member of the Lead Arranger Group may, at any time, (i) provide services
to any other person, (ii) engage in any transaction (on its own account or otherwise) with respect to you, or any member of the same group as you or (iii) act in relation to any matter for any other person whose interests may be adverse to
you or any member of your group (a “Third Party”), and may retain for its own benefit any related remuneration or profit, notwithstanding that a
conflict of interest exists or may arise and/or any member of the Lead Arranger Group is in possession or has come or comes into possession (whether before, during or after the agreements hereunder) of information confidential to you and
not otherwise publicly available; provided that such information shall be used only for the purpose for which it was disclosed to a
member of the Lead Arranger Group and shall not be shared with any Third Party. You accept that permanent or ad hoc arrangements/information barriers may be used between and within divisions of the Initial Lenders, the Lead Arrangers or
other members of the Lead Arranger Group for this purpose and that locating directors, officers or employees in separate workplaces is not necessary for such purpose. You acknowledge that the Initial Lenders, the Lead Arrangers or other
members of the Lead Arranger Group may, in their sole discretion, offer and/or provide committed or other financing to other parties who are interested in engaging in a transaction with any Acquired Business which may be on terms similar to
those or which may be materially different than the terms set forth in this Commitment Letter;
|
(c)
|
information which is held elsewhere within the Initial Lenders, the Lead Arrangers or the Lead Arranger Group but of which
none of the individual directors, officers or employees having the conduct of transactions contemplated by this letter actually has knowledge (or can properly obtain knowledge without breach of internal procedures), shall not for any
purpose be taken into account in determining the Initial Lenders’ or the Lead Arrangers’ responsibilities to you hereunder;
|
(d)
|
none of the Initial Lenders, the Lead Arrangers nor any other member of the Lead Arranger Group shall have any duty to
disclose to, or utilize for the benefit of, you, any non-public information acquired in the course of providing services to any other person, engaging in any transaction (on its own account or otherwise) or otherwise carrying on its
business; and
|
(e)
|
no Commitment Party nor any other member of the Lead Arranger Group is advising you as to any legal, tax, investment,
accounting or regulatory matters in any jurisdiction. You shall consult with your own advisors concerning such matters and shall be responsible for making your own independent investigation and appraisal of the transactions contemplated by
this Commitment Letter and the Fee Letter, and no Commitment Party nor any other member of the Lead Arranger Group shall have responsibility or liability to you with respect thereto. Any review by us, or on our behalf, of you, the Acquired
Businesses, the Transactions, the other transactions contemplated by this Commitment Letter and the Fee Letter or other matters relating to such transactions will be performed solely for our benefit and shall not be on behalf of you or any
of your affiliates.
|
Very truly yours, | ||
JPMORGAN CHASE BANK, N.A.
|
||
By:
|
/s/ Robert P. Kellas
|
|
Name: Robert P. Kellas
|
||
Title: Executive Director
|
Accepted and agreed to as of
|
||
the date first written above:
|
||
PERATON HOLDING CORP.
|
||
By:
|
/s/ K. Stuart Shea | |
|
Name: K. Stuart Shea
|
|
|
Title: President & Chief Executive Officer
|
|
PERATON CORP.
|
||
By:
|
/s/ K. Stuart Shea
|
|
|
Name: K. Stuart Shea
|
|
|
Title: President & Chief Executive Officer
|
|
PERATON INC.
|
||
By:
|
/s/ K. Stuart Shea | |
Name: K. Stuart Shea
|
||
|
Title: President & Chief Executive Officer
|
Borrower:
|
P Corp. and P Inc. (collectively, the “Borrower”, and,
together with the Guarantors (as defined in the Existing Dutchman Commitment Letter), the “Loan Parties”). It being agreed and understood, that
Holdings may designate a subsidiary as an additional co-borrower under the circumstances described in the Existing Dutchman Commitment Letter.
|
Holdings:
|
Peraton Holding Corp. (“Holdings”).
|
First Lien Lead Arrangers and Bookmanagers:
|
JPMCB (together with any Additional Committing Lender, the “First
Lien Credit Facility Lead Arrangers”).
|
First Lien Lenders:
|
A syndicate of banks, financial institutions and other entities reasonably acceptable to Borrower (excluding Disqualified Institutions) arranged by
the First Lien Credit Facility Lead Arrangers in consultation with Borrower (collectively, the “Lenders”).
|
Administrative Agent and Collateral Agent:
|
JPMCB (in such capacities, the “First Lien Credit Facility
Administrative Agent” and the “First Lien Credit Facility Collateral Agent”).
|
Type and Amount of Facilities:
|
(A) A first lien senior secured term loan facility (the “First Lien
Incremental Term Facility,” and the loans made thereunder, “First Lien Incremental Term Loans”; together with
the term loans under the Dutchman First Lien Term Facility (the “First Lien Term Loans”) in an aggregate principal amount of $2,355 million (plus, at
Borrower’s discretion, an amount sufficient to fund the amount of any original issue discount or upfront fees with respect to the First Lien Incremental Term Facility imposed pursuant to the “market flex” provisions of the Fee Letter). The
First Lien Incremental Term Facility shall be established as a new class of term loans pursuant to the provisions of the Dutchman First Lien Credit Facility described under “First Lien Incremental Facilities” in the Existing Dutchman
Commitment Letter or, to the extent mutually agreed to by the Borrower and the First Lien Credit Facility Lead Arrangers, an increase in the Dutchman First Lien Term Facility.
(B) Revolving commitment (the “Incremental Revolving Commitments”)
in an aggregate principal amount of $200 million. The Incremental Revolving Commitments shall be established as an increase in the amount of revolving commitments under the Dutchman Revolving Facility pursuant to the provisions of the
Dutchman First Lien Credit Facilities described under “First Lien Incremental Facilities” in the Existing Dutchman Commitment Letter and shall be on the same terms (including interest rates, commitment fees, prepayment provisions and
maturity) applicable to the Dutchman Revolving Facility pursuant to the Existing Dutchman Commitment Letter.
|
1 |
All capitalized terms used but not defined herein shall have the meanings provided in the Commitment Letter to which this summary is attached.
|
Purpose:
|
Proceeds of the First Lien Incremental Credit Facilities will be used on the Closing Date (i) to pay costs in connection with the Transactions
(including the Transaction Costs), (ii) to pay the Jaguar Acquisition consideration (if the Jaguar Acquisition closes on the Closing Date) or to pay the Additional Consideration (if the Jaguar Contribution occurs following the closing date of
the Jaguar Acquisition), (iii) to finance the Refinancing and (iv) to the extent of any remaining amounts, for working capital and other general corporate
purposes.
|
Maturity Date:
|
The First Lien Incremental Term Facility will mature on the date that is seven years following the date of the Dutchman Acquisition (the “First Lien Incremental Term Maturity Date”). The Incremental Revolving Commitments shall terminate on the termination date of the Dutchman Revolving
Facility (the “Revolving Maturity Date”)
|
Availability:
|
Upon satisfaction or waiver of the Specified Conditions, a single drawing may be made on the Closing Date of the full amount of the First Lien
Incremental Term Facility. Amounts borrowed under the First Lien Incremental Term Facility that are repaid or prepaid may not be reborrowed.
Upon satisfaction or waiver of the conditions set forth under “Conditions to Each Borrowing” in the Existing Dutchman Commitment Letter, borrowings
may be made under the Incremental Revolving Commitments at any time after the Closing Date to but excluding the business day preceding the Revolving Maturity Date. Notwithstanding the foregoing, upon satisfaction or waiver of the conditions
set forth under “Conditions to each Borrowing” in the Existing Dutchman Commitment Letter, borrowings may be made and Letters of Credit may be issued on the Closing Date to (i) cash collateralize, replace or back-stop existing letters of
credit of Jaguar, (ii) fund the amount of any original issue discount or upfront fees imposed pursuant to the “market flex” provisions of the Fee Letter and (iii) pay the Jaguar Acquisition consideration, fund the Refinancing and/or pay costs
in connection with the foregoing (including purchase price and working capital adjustments) and for other general corporate purposes, in an amount not to exceed, with respect to this clause (iii), an amount to be agreed (provided such amount
shall not be less than $50 million).
|
Letters of Credit:
|
Letters of credit will be available under the Incremental Revolving Commitments on the same terms as the Dutchman Revolving Facility.
|
Defaulting Lenders:
|
As set forth in the Dutchman First Lien Credit Facilities.
|
Interest:
|
At Borrower’s option, loans will bear interest based on the Base Rate or LIBOR, as described below:
|
A. Base Rate Option
|
|
For the First Lien Incremental Term Facility, as set forth in the Dutchman First Lien Credit Facilities for the Dutchman First Lien Term Facility.
For loans under the Incremental Revolving Commitments, as set forth in the Dutchman First Lien Credit Facility for loans under the Dutchman Revolving Facility.
|
|
B. LIBOR Option
|
|
For the First Lien Incremental Term Facility, as set forth in the Dutchman First Lien Credit Facilities for the Dutchman First Lien Term Facility.
For loans under the Incremental Revolving Commitments, as set forth in the Dutchman First Lien Credit Facility for loans under the Dutchman Revolving Facility.
|
|
Default Interest and Fees:
|
As set forth in the Dutchman First Lien Credit Facilities.
|
Interest Margins:
|
The Interest Margins applicable to the First Lien Incremental Term Facility will be 425 basis points for LIBOR loans and 325 basis points for Base
Rate loans, with two 25 basis points step-downs at First Lien Leverage Ratios to be agreed. The Interest Margins for the Incremental Revolving Commitments will be the same as for loans under the Dutchman Revolving Facility.
|
Commitment Fee:
|
The commitment fees for the Incremental Revolving Commitments will be the same as for the Dutchman Revolving Facility.
|
Amortization:
|
The First Lien Incremental Term Facility will amortize in equal quarterly installments in annual amounts equal to 1.0% of the original principal
amount of the First Lien Incremental Term Facility (commencing on the last day of the first full fiscal quarter ended after the Closing Date), with the balance payable on the First Lien Incremental Term Maturity Date (or, if the First Lien
Incremental Term Facility takes the form of an increase in the Dutchman First Lien Term Facility, the remaining scheduled amortization payments for the Dutchman First Lien Term Facility shall be increased proportionately to reflect the
funding of the First Lien Incremental Term Facility). The Incremental Revolving Commitments shall not have any amortization prior to the Revolving Maturity Date.
|
Mandatory Prepayments:
|
As set forth in the Dutchman First Lien Credit Facilities for the Dutchman First Lien Term Facility.
|
Optional Prepayments:
|
For the First Lien Incremental Term Loans, as set forth in the First Lien Credit Agreement for the Dutchman First Lien Term Facility.
|
Prepayment Premium:
|
Borrower shall pay a “prepayment premium” in connection with any Repricing Transaction (as defined in the Dutchman First Lien Credit Facilities for
the Dutchman First Lien Term Facility with appropriate modifications to apply to the First Lien Incremental Term Loans) with respect to all or any portion of First Lien Incremental Term Facility that occurs on or before the six month
anniversary of the Closing Date, in an amount equal to 1.00% of the principal amount of First Lien Incremental Term Facility subject to such Repricing Transaction.
|
Application of Prepayments:
|
For the First Lien Incremental Term Loans, as set forth in the Dutchman First Lien Credit Facilities for the Dutchman First Lien Term Facility.
For loans under the Incremental Revolving Commitments, as set forth in the Dutchman First Lien Credit Facilities for the Dutchman Revolving Facility.
|
||
Guarantees:
|
Same as under the Dutchman First Lien Credit Facilities.
|
||
Security:
|
Secured on a pari passu basis with the Dutchman First Lien Credit Facilities.
|
||
Conditions to Initial Borrowings:
|
Conditions precedent to initial borrowings under the First Lien Incremental Term Facility on the Closing Date shall consist solely of the Specified
Conditions (subject to the Certain Funds Provisions).
|
||
Conditions to each Borrowing:
|
Same as under the Dutchman First Lien Credit Facilities.
|
||
Documentation:
|
The First Lien Incremental Credit Facilities will be effected pursuant to an Incremental Amendment (as defined in the Dutchman First Lien Credit
Facilities), duly executed by each Lender, the Loan Parties and the First Lien Credit Facility Administrative Agent, which shall contain terms and conditions consistent with this First Lien Incremental Credit Facilities Term Sheet and will
not contain any condition to funding the First Lien Incremental Term Facility other than the Specified Conditions. The Incremental Amendment, the Dutchman First Lien Credit Facilities and the other documentation governing the Dutchman First
Lien Credit Facilities are collectively referred to herein as the “Loan Documentation”.
|
||
Representations and Warranties:
|
As set forth in the Dutchman First Lien Credit Facilities modified to reflect the Transactions.
|
||
Affirmative Covenants:
|
As set forth in the Dutchman First Lien Credit Facilities.
|
||
Negative Covenants:
|
As set forth in the Dutchman First Lien Credit Facilities.
|
||
Financial Covenant:
|
First Lien Incremental Term Facility: None.
Incremental Revolving Commitments: Same as Dutchman
Revolving Facility.
|
||
Events of Default:
|
As set forth in the Dutchman First Lien Credit Facilities.
|
||
Assignments and Participations:
|
As set forth in the Dutchman First Lien Credit Facilities.
|
||
Expenses, Limitations on Liability and Indemnification:
|
As set forth in the First Lien Credit Agreement.
|
||
Yield Protection, Taxes and Other Deductions:
|
As set forth in the Dutchman First Lien Credit Facilities.
|
Voting:
|
As set forth in the Dutchman First Lien Credit Facilities.
|
Amend and Extend Provisions:
|
As set forth in the Dutchman First Lien Credit Facilities.
|
Unrestricted Subsidiaries:
|
As set forth in the Dutchman First Lien Credit Facilities.
|
EU/UK Bail-in Provisions:
|
As set forth in the Dutchman First Lien Credit Facilities.
|
Governing Law and Forum:
|
The laws of the State of New York.
|
Counsel to the Administrative Agent and the Lead Arrangers:
|
Cahill Gordon & Reindel LLP.
|
Borrower:
|
Same as the First Lien Incremental Credit Facilities (collectively, the “Borrower” and, together with the Guarantors (defined below), the “Loan Parties”).
|
Holdings:
|
Same as the First Lien Incremental Credit Facilities (“Holdings”
and, together with its restricted subsidiaries, each a “Company” and collectively, the “Companies”).
|
Joint Lead Arrangers and Joint Bookmanagers:
|
JPMCB (together with any Additional Committing Lender, the “First Lien
Bridge Facility Lead Arrangers”).
|
Lenders:
|
A syndicate of banks, financial institutions and other entities reasonably acceptable to Borrowers (excluding Disqualified Institutions), including
JPMCB, arranged by the First Lien Bridge Facility Lead Arrangers in consultation with Borrower (collectively, the “Lenders”).
|
Bridge Loan Administrative Agent and Collateral Agent:
|
JPMCB (in such capacities, the “First Lien Bridge Facility
Administrative Agent” and the “First Lien Bridge Facility Collateral Agent”).
|
Type and Amount of Facility:
|
Senior secured increasing rate bridge loans providing $1,420 million of gross cash proceeds (the “Bridge Loans”) less the aggregate amount of gross cash proceeds provided by First Lien Notes (and/or First Lien Securities) issued on or prior to the Closing Date in lieu of the Bridge Loans.
|
Purpose:
|
Proceeds of the First Lien Bridge Facility will be used on the Closing Date (together with proceeds of the First Lien Incremental Credit
Facilities) (i) to pay costs in connection with the Transactions, (ii) to pay the Jaguar Acquisition consideration (if the Jaguar Acquisition closes on the Closing Date) or to pay the Additional Consideration (if the Jaguar Contribution
occurs following the closing date of the Jaguar Acquisition), (iii) to finance the Refinancing and (iv) to the extent of any remaining amounts, for working capital purposes.
|
Maturity Date:
|
One year from the Closing Date (the “Bridge Loan Maturity Date”).
|
Rollover:
|
If the Bridge Loans are not repaid in full on or prior to the Bridge Loan Maturity Date, and provided that no bankruptcy default under the First Lien Bridge Facility Documentation has occurred and is continuing with respect to the Borrowers, the Bridge Loans shall be automatically
converted on the Bridge Loan Maturity Date into senior secured term loans due on the sixth anniversary of the Bridge Loan Maturity Date (the “Extended Term Loans”)
in an aggregate principal amount equal to the aggregate principal amount of Bridge Loans so converted. The Extended Term Loans will have the terms set forth in Exhibit A
to this Annex II. Under certain circumstances to be determined by the First Lien Bridge Facility Lead Arrangers, Extended Term Loans may
be exchanged by the holders thereof for exchange notes (“Exchange Notes”), which will have the terms set forth in Exhibit A to this Annex II; provided that (i) no Exchange Notes shall be issued until Borrower shall have received requests to issue at least $200 million in aggregate amount of Exchange Notes and (ii) no subsequent
Exchange Notes shall be issued until Borrower shall have received additional requests to issue at least $200 million (or the remaining aggregate principal amount of Bridge Loans) in aggregate principal amount of additional Exchange Notes.
The Exchange Notes will be issued under an indenture, and related security documents, that will have the terms set forth in Exhibit A to this Annex II. In connection with each such exchange, if requested by any Lender that is a Lender as of the Closing Date (each, an “Initial Bridge Lender”), Borrower shall (i) deliver to the Lender that is receiving Exchange Notes, and to such other Lenders as such Initial Bridge Lender requests, an
offering memorandum of the type customarily utilized in a Rule 144A “private for life” offering of high yield securities covering the resale of such Exchange Notes by such Lenders, in such form and substance as reasonably acceptable to
Borrower and such Initial Bridge Lender, and keep such offering memorandum updated in a manner as would be required pursuant to a customary Rule 144A “private for life” securities purchase agreement, (ii) execute an exchange agreement
containing provisions customary in Rule 144A “private for life” securities purchase agreements (including indemnification provisions) if reasonably requested by such Initial Bridge Lender, (iii) deliver or cause to be delivered such opinions
and accountants’ comfort letters addressed to the Initial Bridge Lender and such certificates as such Initial Bridge Lender may reasonably request as would be customary in Rule 144A “private for life” offerings and otherwise in form and
substance reasonably satisfactory to such Initial Bridge Lender and (iv) take such other actions, and cause its advisors, auditors and counsel to take such actions, as reasonably requested by such Initial Bridge Lender in connection with
issuances or resales of Exchange Notes, including providing such information regarding the business and operations of Borrower and its subsidiaries as is reasonably requested by any prospective holder of Exchange Notes and customarily
provided in due diligence investigations in connection with purchases or resales of Rule 144A “private for life” securities.
The Extended Term Loans will be governed by the provisions of the First Lien Bridge Facility Documentation and will have the same terms as the
Bridge Loans except as expressly set forth in Exhibit A to this Annex
II.
|
Availability:
|
Upon satisfaction or waiver of the Specified Conditions, a single drawing may be made on the Closing Date of the First Lien Bridge Facility.
Amounts borrowed under the First Lien Bridge Facility that are repaid or prepaid may not be reborrowed.
|
Interest:
|
The Bridge Loans will bear interest at a rate per
annum equal to three month LIBOR (which shall be subject to a 0.75% floor), adjusted quarterly, plus a spread of 4.50% (the “Rate”). The Rate will increase by (i) 50 basis points upon the 90‑day anniversary of the Closing Date, plus (ii) an additional 50 basis points upon each subsequent 90-day anniversary following the initial 90‑day anniversary of the Closing Date. Interest on the Bridge Loans
(excluding default interest, if any) shall not exceed the First Lien Total Cap (as defined in the Fee Letter), in each case, without giving effect to any default interest. Interest will be payable quarterly in arrears, on the Bridge Loan
Maturity Date and on the date of any prepayment of the Bridge Loans.
|
Default Interest and Fees:
|
Upon the occurrence and during the continuance of a bankruptcy or payment event of default, overdue principal, interest and other overdue amounts
shall bear interest, after as well as before judgment, at a rate equal to 2.0% per annum plus the rate otherwise applicable to the Bridge Loans.
|
Amortization:
|
None.
|
Mandatory Prepayments:
|
The First Lien Bridge Facility shall be prepaid at 100% of the outstanding principal amount thereof with, subject to exceptions to be agreed of
(i) the net proceeds from the issuance of the First Lien Notes or any other debt securities (other than Second Lien Securities (as defined in the Fee Letter)), or subject to certain exceptions to be mutually agreed, other indebtedness for
borrowed money of Holdings or any of its restricted subsidiaries, (ii) the net proceeds from any non-ordinary course asset sales by Holdings or any of its restricted subsidiaries in excess of amounts reinvested in a manner permitted by the
First Lien Bridge Facility Documentation (and subject to the Borrower’s right to apply a pro rata portion of such proceeds to prepay the First Lien Credit Facilities) and (iii) the net proceeds of public equity issuances of Holdings and the
Borrowers (subject to certain exceptions, including equity issued to the Sponsor or pursuant to employee benefit plans).
In the event any Lender or affiliate of a Lender purchases debt securities from Holdings or the Borrower pursuant to a permitted securities demand
at a price above the level at which such Lender or affiliate has reasonably determined such debt securities can be resold by such Lender or affiliate to a bona fide third party at the time of such purchase (and notifies the Borrower thereof),
the net cash proceeds received by the Borrowers in respect of such debt securities may, at the option of such Lender or affiliate, be applied first to prepay the portion of the First Lien Bridge Facility held by such Lender or affiliate prior
to being applied to prepay the Bridge Loans held by other Lenders.
|
Change of Control:
|
Each holder of the Bridge Loans will be entitled to require Borrower, and Borrower shall offer, to repay the Bridge Loans held by such holder, at a
price of 100% of the principal amount thereof, plus all accrued fees and all accrued and unpaid interest to, but not including, the date of repayment, upon
the occurrence of a “change of control” (to be defined in the First Lien Bridge Facility Documentation in a manner consistent with the Documentation Principles (as defined below)).
|
Optional Prepayments:
|
Permitted in whole or in part, with prior notice but without premium or penalty (except LIBOR breakage costs) and including accrued and unpaid
interest, subject to limitations as to minimum amounts of prepayments.
|
Guarantees:
|
The First Lien Bridge Facility will be fully and unconditionally guaranteed, subject to the release provisions set forth therein (the “Guarantees”), on a joint and several basis by Holdings and each subsidiary of Holdings that guarantees the Dutchman First Lien Credit Facilities (such
subsidiaries providing guarantees, together with Holdings, collectively, the “Guarantors”).
|
Security:
|
The First Lien Bridge Facility and the Guarantees will be secured on a pari passu basis with the Dutchman First Lien Credit Facilities by the
Collateral pursuant to the First Lien Intercreditor Agreement (as defined in the Duchman First Lien Credit Facilities) and will be secured on a senior lien basis to the Dutchman Second Lien Term Facility, the Second Lien Incremental Term
Facility and any Second Lien Securities pursuant to the Closing Date Intercreditor Agreement (as defined in the Duchman First Lien Credit Facilities).
|
Documentation Principles:
|
The First Lien Bridge Facility Documentation shall (i) be based on a precedent to be agreed, with such changes and modifications to reflect the
terms and conditions set forth in this Annex II, and (ii) be initially drafted by counsel to Sponsor and will reflect the same Documentation
Principles as the First Lien Incremental Credit Facilities.
|
Conditions to Initial Borrowings:
|
Conditions precedent to initial borrowings under the First Lien Bridge Facility on the Closing Date shall consist solely of the Specified
Conditions (subject to the Certain Funds Provisions).
|
Representations and Warranties:
|
Limited to those applicable to the Dutchman First Lien Credit Facilities, as modified to reflect the Transactions, with such changes to be mutually
agreed as are appropriate for the First Lien Bridge Facility, and subject to the Certain Funds Provisions.
|
Affirmative and Negative Covenants:
|
Limited to and substantially the same as those applicable to the Dutchman First Lien Credit Facilities, with such changes and additions to be
mutually agreed as are appropriate in connection with the Bridge Loans and subject to thresholds and exceptions to be negotiated (giving due regard to the Documentation Principles) (it being understood and agreed that the negative covenants
of the First Lien Bridge Facility Documentation will be incurrence-based and customary for senior secured high yield debt securities consistent with the Documentation Principles; provided that the restricted payments, debt incurrence, liens and prepayment of debt covenants may be more restrictive in connection with the Bridge Loans than the equivalent provisions for the
Dutchman First Lien Credit Facilities prior to the Bridge Loan Maturity Date as reasonably agreed to by the First Lien Bridge Facility Administrative Agent and Borrower).
|
Financial Covenant:
|
None.
|
Events of Default:
|
Limited to and substantially the same as those under the Dutchman First Lien Credit Facilities, with such changes to be mutually agreed as are
appropriate for the First Lien Bridge Facility. The First Lien Bridge Facility will cross-default to the Dutchman First Lien Credit Facilities only upon an acceleration of the obligations under the Dutchman First Lien Credit Facilities
following an event of default thereunder.
|
Assignments and Participations:
|
Each Lender may assign all or a portion of its loans subject to terms consistent with those applicable to the Dutchman First Lien Credit
Facilities, with such changes to be mutually agreed as are appropriate for the First Lien Bridge Facility; provided that, for the twelve
month period commencing on the Closing Date, the consent of Borrower (not to be unreasonably withheld) shall be required (other than upon the occurrence and continuation of a payment or bankruptcy (with respect to Holdings or the Borrower)
event of default) with respect to any assignment that would result in the Initial Bridge Lenders and their respective affiliates holding less than a majority of the aggregate outstanding principal amount of the Bridge Loans.
|
Expenses and Indemnification:
|
The First Lien Bridge Facility Documentation will included expense reimbursement and indemnification provisions consistent with the applicable
terms of the Dutchman First Lien Credit Facilities.
|
Yield Protection, Taxes and Other Deductions:
|
The First Lien Bridge Facility Documentation will contain customary yield protection provisions and customary tax withholding and gross-up
provisions consistent with the applicable terms of the Dutchman First Lien Credit Facilities.
|
Voting:
|
Provisions governing amendments and waivers of the First Lien Bridge Facility Documentation will be consistent with the applicable terms specified
in the Dutchman First Lien Credit Facilities, with such changes to be mutually agreed as are appropriate for the First Lien Bridge Facility.
|
Unrestricted Subsidiaries:
|
The First Lien Bridge Facility Documentation will contain provisions regarding designation and treatment of unrestricted subsidiaries consistent
with the applicable terms of the Dutchman First Lien Credit Facilities.
|
Governing Law and Forum:
|
The laws of the State of New York; provided
that the Acquisition Related Matters shall be governed by, and construed in accordance with, the applicable Acquisition Agreement Governing Law.
|
Counsel to the First Lien
Bridge Facility Administrative Agent and
the First Lien Bridge Facility Lead Arrangers:
|
Cahill Gordon & Reindel LLP.
|
2 |
All capitalized terms used but not defined herein shall have the meanings provided in the Commitment Letter to which this summary is attached.
|
Maturity:
|
The Extended Term Loans will mature on the sixth anniversary of the Bridge Loan Maturity Date.
|
Interest Rate:
|
The Extended Term Loans will bear interest at a rate per annum (the “Interest Rate”) equal to the First Lien Total Cap (as defined in the Fee Letter).
Overdue principal and, to the extent permitted by applicable law, overdue interest and all other overdue amounts in respect of the Extended Term
Loans will bear interest at the then-applicable rate.
|
Covenants, Defaults and Mandatory Prepayments:
|
Upon and after the Bridge Loan Maturity Date, the covenants, mandatory prepayments (other than with respect to a change of control, with respect to
which the provisions of the Bridge Loans will apply) and defaults which would be applicable to the Exchange Notes, if issued, will also be applicable to the Extended Term Loans in lieu of the corresponding provisions of the First Lien Bridge
Facility Documentation.
|
Maturity Date:
|
The Exchange Notes will mature on the sixth anniversary of the Bridge Loan Maturity Date.
|
3 |
All capitalized terms used but not defined herein shall have the meanings provided in the Commitment Letter to which this summary is attached.
|
Interest Rate:
|
Each Exchange Note will bear interest at a rate per annum equal to the First Lien Total Cap.
Interest will be payable in arrears on a semi-annual basis. Default interest will be payable on demand.
Overdue principal, and to the extent permitted by applicable law, overdue interest and all other overdue amounts in respect of the Exchange Notes
shall bear interest at the then-applicable rate plus 2.0% per annum.
|
Optional Redemption:
|
Exchange Notes will be non-callable until the third anniversary of the Closing Date. Thereafter, each Exchange Note will be callable at par plus accrued and unpaid interest to, but not including, the redemption date plus
a premium equal to 50% of the coupon on such Exchange Note on each subsequent anniversary of the Closing Date, which call premium shall decline ratably to zero on the date which is two years prior to the Maturity Date of the Exchange Notes.
Prior to the third anniversary of the Closing Date, the Exchange Notes may be redeemed at a make-whole price based on U.S. Treasury notes with a
maturity closest to the third anniversary of the Closing Date plus 50 basis points. In addition, prior to the third anniversary of the Closing Date, up to 40% of the Exchange Notes may redeemed with proceeds from certain equity sales (to be
defined) at a price equal to par plus the coupon of such Exchange Notes.
Any Exchange Notes held by the Commitment Parties or their affiliates (other than (x) Exchange Notes held by any asset management affiliates
purchasing securities in the ordinary course of their business as part of a regular distribution of the securities and (y) Exchange Notes acquired pursuant to bona fide open market purchases from third parties or market-making activities)
shall be redeemable at any time and from time to time at the option of Borrower at a redemption price equal to par plus accrued and unpaid interest to the redemption date.
|
Defeasance and Discharge Provisions:
|
Customary defeasance and discharge provisions similar to those contained in indentures governing senior secured high yield debt securities
involving similarly situated private equity sponsored issuers.
|
Modification:
|
Customary modification provisions similar to those contained in indentures governing senior secured high yield debt securities of similarly
situated private equity sponsored issuers.
|
Change of Control:
|
Borrower will be required to repurchase the Exchange Notes following the occurrence of a “change of control” (to be defined in a manner consistent
with the Documentation Principles for the First Lien Bridge Facility) at 101% of the outstanding principal amount thereof, plus accrued and unpaid interest to, but not including, the date of purchase.
|
Covenants:
|
The Indenture will include covenants similar to those contained in indentures governing senior secured high yield debt securities of similarly
situated private equity sponsored issuers, taking into account size, operational requirements, industry, business, business practices, proposed business plans and credit quality.
|
Events of Default:
|
The Indenture will provide for events of default similar to those contained in indentures governing senior secured high yield debt securities of
similarly situated private equity sponsored issuers, taking into account size, operational requirements, industry, business, business practices, proposed business plans and credit quality.
|
Registration Rights:
|
None. In addition, the Indenture shall not be qualified under, subject to, or incorporate, restate or make reference to, any provisions of the
Trust Indenture Act of 1939, as amended.
|
Guarantees and Security:
|
:Same as the First Lien Bridge Facility.
|
Borrowers:
|
P Inc. and P Corp. (collectively, the “Borrower”, and, together
with the Guarantors (defined below), the “Loan Parties”). It being agreed and understood, that Holdings may designate a subsidiary as an additional
co-borrower under the circumstances described in the Existing Dutchman Commitment Letter.
|
Holdings:
|
Peraton Holding Corp., a Delaware corporation (“Holdings” and,
together with its restricted subsidiaries, each a “Company” and collectively, the “Companies”).
|
Lead Arranger and Bookmanager:
|
JPMCB (the “Second Lien Term Facility Lead Arranger”).
|
Lenders:
|
A syndicate of banks, financial institutions and other entities reasonably acceptable to Borrower (excluding Disqualified Institutions), arranged
by the Lead Arranger in consultation with Borrowers (collectively, the “Lenders”).
|
Second Lien Administrative Agent and Second Lien Collateral Agent:
|
Same as under the Dutchman Second Lien Term Facility or, in the case of a Side Car Second Lien Term Facility (as defined below) a financial
institution reasonably acceptable to the Second Lien Term Facility Lead Arranger and Borrower (in such capacity, the “Second Lien Administrative Agent” and
the “Second Lien Collateral Agent”, respectively).
|
Type and Amount of Facilities:
|
A second lien senior secured term loan facility (the “Second Lien
Incremental Term Facility,” and the loans made thereunder, “Second Lien Incremental Term Loans”; together with the Dutchman Second Lien Term Facility
(the “Second Lien Term Loans”) in an aggregate principal amount of $1,340 million (plus, at Borrower’s discretion, an amount sufficient to fund the amount of
any original issue discount or upfront fees with respect to the Second Lien Incremental Term Facility imposed pursuant to the “market flex” provisions of the Fee Letter).
The Second Lien Incremental Term Facility shall be established as a new class of term loans pursuant to the provisions of the Dutchman Second Lien
Credit Facility described under “Incremental Second Lien Facility” in the Existing Dutchman Commitment Letter or, at the option of JPMCB, (i) an increase in the Dutchman Second Lien Term Facility or (ii) in the event the administrative agent
under the Dutchman Second Lien Credit Facility does not consent to JPMCB (and each other Lender to whom JPMCB has syndicated any Second Lien Incremental Term Loans) becoming Lenders under the Dutchman Second Lien Credit Facility (and waive
all assignment fees in connection with the initial syndication of the Second Lien Incremental Term Loans), under a separate credit agreement (a “Side Car Second Lien
Term Facility”) and related security documentation that is substantially identical to the Dutchman Second Lien Credit Facility except for (i) administrative provisions, which will be as agreed between the administrative agent
selected by the Borrower for the Side Car Second Lien Term Facility and the Borrower and (ii) terms specifically set forth herein (in which case, the Borrower shall be required to pay such administrative agent an annual administrative agency
fee in an amount to be agreed by such administrative agent and the Borrower).
|
4 |
All capitalized terms used but not defined herein shall have the meanings provided in the Commitment Letter to which this summary is attached.
|
Purpose:
|
Proceeds of the Second Lien Incremental Term Facility will be used on the Closing Date (i) to pay costs in connection with the Transactions
(including the Transaction Costs), (ii) to pay the Jaguar Acquisition consideration (if the Jaguar Acquisition closes on the Closing Date) or to pay the Additional Consideration (if the Jaguar Contribution occurs following the closing date of
the Jaguar Acquisition), (iii) to finance the Refinancing and (iv) to the extent of any remaining amounts, for working capital and other general corporate purposes.
|
Maturity Date and Amortization:
|
The Second Lien Incremental Term Facility will mature on the date that is eight years from the closing date of the Dutchman Acquisition (the “Second Lien Term Maturity Date”).
There will be no amortization.
|
Availability:
|
Second Lien Incremental Term Facility: Upon satisfaction or
waiver of the Specified Conditions, a single drawing may be made on the Closing Date of the full amount of the Second Lien Incremental Term Facility. Amounts borrowed under the Second Lien Incremental Term Facility that are repaid or prepaid
may not be reborrowed.
|
Interest:
|
At Borrower’s option, loans will bear interest based on the Base Rate or LIBOR, as described below:
|
A. Base Rate Option
|
|
As set forth in the Dutchman Second Lien Credit Facility for the Dutchman Second Lien Term Facility.
|
|
B. LIBOR Option
|
|
As set forth in the Dutchman Second Lien Credit Facility for the Dutchman Second Lien Term Facility.
|
|
Interest Margins:
|
The applicable Interest Margin under the Second Lien Incremental Term Facility will be 800 basis points for LIBOR loans and 700 basis points for
Base Rate loans.
|
Default Interest and Fees:
|
Same as for the Dutchman Second Lien Term Facility.
|
Mandatory Prepayments:
|
As set forth in the Dutchman Second Lien Credit Facility.
|
Optional Prepayments:
|
As set forth in the Dutchman Second Lien Credit Facility.
|
Call Protection:
|
Any optional prepayment (including as a result of “yank-a-bank”) of Second Lien Incremental Term Loans and any mandatory prepayment of Second Lien
Term Loans made in connection with the receipt of net proceeds by any Company from the issuance of debt or disqualified stock after the Closing Date to the extent not permitted under the Second Lien Incremental Term Facility Documentation or
consisting of proceeds of Refinancing Facilities or Other Refinancing Debt, in each case, consummated prior to the date that is: (i) on or prior to the first anniversary of the Closing Date, shall be subject to a prepayment premium of 2.00%
and (ii) after the first anniversary of the Closing Date but on or prior to the second anniversary of the Closing Date, shall be subject to a prepayment premium of 1.00% (the “Prepayment Premium”).
|
Application of Prepayments:
|
As set forth in the Dutchman Second Lien Credit Facility.
|
Guarantees:
|
Same as the Dutchman Second Lien Term Facility.
|
Security:
|
Same as the Dutchman Second Lien Term Facility.
|
Intercreditor Arrangements:
|
Same as the Dutchman Second Lien Term Facility.
|
Conditions to Initial Borrowings:
|
Conditions precedent to initial borrowings under the Second Lien Incremental Term Facility on the Closing Date shall consist solely of the
Specified Conditions (subject to the Certain Funds Provisions).
|
Documentation Principles:
|
The definitive documentation for the Second Lien Term Facility (the “Second
Lien Term Facility Documentation”) shall, except as otherwise set forth above with respect to a Side Car Second Lien Term Loan Facility, be effected pursuant to an Incremental Amendment (as defined in the Dutchman Second Lien Term
Facility), duly executed by each Lender, the Loan Parties and the Second Lien Administrative Agent, which shall contain terms and conditions consistent with this Second Lien Incremental Faciity Term Sheet and will not contain any condition to
funding other than the Specified Conditions.
|
Representations and Warranties:
|
As set forth in the Dutchman Second Lien Credit Facility, modified to reflect the Transactions.
|
Affirmative Covenants:
|
As set forth in the Dutchman Second Lien Credit Facility.
|
Negative Covenants:
|
As set forth in the Dutchman Second Lien Credit Facility
|
Financial Covenant:
|
None.
|
Events of Default:
|
As set forth in the Dutchman Second Lien Credit Facility
|
Assignments and Participations:
|
As set forth in the Dutchman Second Lien Credit Facility.
|
Expenses and Indemnification:
|
As set forth in the Dutchman Second Lien Credit Facility
|
Yield Protection, Taxes and Other Deductions:
|
As set forth in the Dutchman Second Lien Credit Facility
|
Voting:
|
As set forth in the Dutchman Second Lien Credit Facility.
|
Amend and Extend Provisions:
|
As set forth in the Dutchman Second Lien Credit Facility.
|
Unrestricted Subsidiaries:
|
As set forth in the Dutchman Second Lien Credit Facility.
|
EU/UK Bail-in Provisions:
|
As set forth in the Dutchman Second Lien Credit Facility.
|
Governing Law and Forum:
|
The laws of the State of New York.
|
Counsel to the Second Lien Administrative Agent and the Lead Arranger:
|
Cahill Gordon & Reindel LLP.
|