-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gb/4j/+S4qHwcpFi/OClmT6tEeimm3yq+0luM89v+m4bvQwMcuzWy7OQTTzyADJe qO0rgMzTAr7JjWeqXjUF6A== 0001193125-09-200099.txt : 20090930 0001193125-09-200099.hdr.sgml : 20090930 20090929173112 ACCESSION NUMBER: 0001193125-09-200099 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20090930 DATE AS OF CHANGE: 20090929 GROUP MEMBERS: DR. ROMESH WADHWANI GROUP MEMBERS: MAXIMUS HOLDINGS INC. GROUP MEMBERS: MAXIMUS INC. GROUP MEMBERS: STG III GP, L.P. GROUP MEMBERS: STG III, L.P. GROUP MEMBERS: STG III-A, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MSC SOFTWARE CORP CENTRAL INDEX KEY: 0000717238 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 952239450 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-34721 FILM NUMBER: 091093874 BUSINESS ADDRESS: STREET 1: 815 COLORADO BLVD CITY: LOS ANGELES STATE: CA ZIP: 90041 BUSINESS PHONE: 3232589111 MAIL ADDRESS: STREET 1: 815 COLORADO BOULEVARD CITY: LOS ANGELES STATE: CA ZIP: 90041 FORMER COMPANY: FORMER CONFORMED NAME: MACNEAL SCHWENDLER CORP DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: STG UGP, LLC CENTRAL INDEX KEY: 0001416748 IRS NUMBER: 208818310 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 2475 HANOVER STREET CITY: PALO ALTO STATE: CA ZIP: 94304 BUSINESS PHONE: (650) 935-9500 MAIL ADDRESS: STREET 1: 2475 HANOVER STREET CITY: PALO ALTO STATE: CA ZIP: 94304 FORMER COMPANY: FORMER CONFORMED NAME: STG UGP LTD DATE OF NAME CHANGE: 20071029 SC 13D/A 1 dsc13da.htm AMENDMENT NO. 1 TO SCHEDULE 13D Amendment No. 1 to Schedule 13D

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 13D

[Rule 13d-101]

 

Under the Securities Exchange Act of 1934

(Amendment No. 1)*

 

 

 

MSC.Software Corporation

(Name of Issuer)

 

 

Common Stock, $0.01 par value per share

(Title of Class of Securities)

 

 

553531104

(CUSIP Number)

 

 

Symphony Technology Group, LLC

2475 Hanover Street

Palo Alto, CA 94304

Attn: Chief Financial Officer

Telephone: (650) 935-9500

with copies to:

Steve L. Camahort

Shearman & Sterling LLP

525 Market Street

San Francisco, CA 94105

Telephone: (415) 616-1100

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

 

 

September 28, 2009

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.  ¨

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

 

*   The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).


CUSIP No. 553531104

 

  1.  

Names of Reporting Persons.

 

            Maximus Holdings Inc.

   
  2.  

Check the Appropriate Box if a Member of a Group (See Instructions)

(a)  x

(b)  ¨

   
  3.  

SEC Use Only

 

   
  4.  

Source of Funds (See Instructions)

 

            AF, BK, OO, SC

   
  5.  

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)

 

  ¨
  6.  

Citizenship or Place of Organization

 

            Delaware

   

Number of  

Shares  

Beneficially  

Owned by  

Each  

Reporting  

Person  

With  

 

  7.    Sole Voting Power

 

                0

 

  8.    Shared Voting Power

 

                7,526,496 **

 

  9.    Sole Dispositive Power

 

                0

 

10.    Shared Dispositive Power

 

11.  

Aggregate Amount Beneficially Owned by Each Reporting Person

 

            7,526,496 **

   
12.  

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

  ¨
13.  

Percent of Class Represented by Amount in Row (11)

 

            16.1% **

   
14.  

Type of Reporting Person (See Instructions)

 

            CO

   

 

2


CUSIP No. 553531104

 

  1.  

Names of Reporting Persons.

 

            Maximus Inc.

   
  2.  

Check the Appropriate Box if a Member of a Group (See Instructions)

(a)  x

(b)  ¨

   
  3.  

SEC Use Only

 

   
  4.  

Source of Funds (See Instructions)

 

            AF, BK, OO, SC

   
  5.  

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)

 

  ¨
  6.  

Citizenship or Place of Organization

 

            Delaware

   

Number of  

Shares  

Beneficially  

Owned by  

Each  

Reporting  

Person  

With  

 

  7.    Sole Voting Power

 

                0

 

  8.    Shared Voting Power

 

                7,526,496**

 

  9.    Sole Dispositive Power

 

                0

 

10.    Shared Dispositive Power

 

                0

11.  

Aggregate Amount Beneficially Owned by Each Reporting Person

 

            7,526,496 **

   
12.  

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

  ¨
13.  

Percent of Class Represented by Amount in Row (11)

 

            16.1%**

   
14.  

Type of Reporting Person (See Instructions)

 

            CO

   

 

3


CUSIP No. 553531104

 

  1.  

Names of Reporting Persons.

 

            STG UGP, LLC

   
  2.  

Check the Appropriate Box if a Member of a Group (See Instructions)

(a)  x

(b)  ¨

   
  3.  

SEC Use Only

 

   
  4.  

Source of Funds (See Instructions)

 

            AF, BK, OO, SC

   
  5.  

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)

 

  ¨
  6.  

Citizenship or Place of Organization

 

            Delaware

   

Number of  

Shares  

Beneficially  

Owned by  

Each  

Reporting  

Person  

With  

 

  7.    Sole Voting Power

 

                0

 

  8.    Shared Voting Power

 

                7,526,496**

 

  9.    Sole Dispositive Power

 

                0

 

10.    Shared Dispositive Power

 

                0

11.  

Aggregate Amount Beneficially Owned by Each Reporting Person

 

            7,526,496 **

   
12.  

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

  ¨
13.  

Percent of Class Represented by Amount in Row (11)

 

            16.1%**

   
14.  

Type of Reporting Person (See Instructions)

 

            CO

   

 

4


CUSIP No. 553531104

 

  1.  

Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only)

 

            STG III GP, L.P.

   
  2.  

Check the Appropriate Box if a Member of a Group (See Instructions)

(a)  x

(b)  ¨

   
  3.  

SEC Use Only

 

   
  4.  

Source of Funds (See Instructions)

 

            AF, BK, OO, SC

   
  5.  

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)

 

  ¨
  6.  

Citizenship or Place of Organization

 

            Delaware

   

Number of  

Shares  

Beneficially  

Owned by  

Each  

Reporting  

Person  

With  

 

  7.    Sole Voting Power

 

                0

 

  8.    Shared Voting Power

 

                7,526,496**

 

  9.    Sole Dispositive Power

 

                0

 

10.    Shared Dispositive Power

 

11.  

Aggregate Amount Beneficially Owned by Each Reporting Person

 

            7,526,496 **

   
12.  

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

  ¨
13.  

Percent of Class Represented by Amount in Row (11)

 

            16.1%**

   
14.  

Type of Reporting Person (See Instructions)

 

            PN

   

 

5


CUSIP No. 553531104

 

  1.  

Names of Reporting Persons.

 

            STG III, L.P.

   
  2.  

Check the Appropriate Box if a Member of a Group (See Instructions)

(a)  x

(b)  ¨

   
  3.  

SEC Use Only

 

   
  4.  

Source of Funds (See Instructions)

 

            AF, BK, OO, SC

   
  5.  

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)

 

  ¨
  6.  

Citizenship or Place of Organization

 

            Delaware

   

Number of  

Shares  

Beneficially  

Owned by  

Each  

Reporting  

Person  

With  

 

  7.    Sole Voting Power

 

                0

 

  8.    Shared Voting Power

 

                7,526,496 **

 

  9.    Sole Dispositive Power

 

                0

 

10.    Shared Dispositive Power

 

                0

11.  

Aggregate Amount Beneficially Owned by Each Reporting Person

 

            7,526,496 **

   
12.  

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

  ¨
13.  

Percent of Class Represented by Amount in Row (11)

 

            16.1% **

   
14.  

Type of Reporting Person (See Instructions)

 

            PN

   

 

6


CUSIP No. 553531104

 

  1.  

Names of Reporting Persons.

 

            STG III-A, L.P.

   
  2.  

Check the Appropriate Box if a Member of a Group (See Instructions)

(a)  x

(b)  ¨

   
  3.  

SEC Use Only

 

   
  4.  

Source of Funds (See Instructions)

 

            AF, BK, OO, SC

   
  5.  

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)

 

  ¨
  6.  

Citizenship or Place of Organization

 

            Delaware

   

Number of  

Shares  

Beneficially  

Owned by  

Each  

Reporting  

Person  

With  

 

  7.    Sole Voting Power

 

                0

 

  8.    Shared Voting Power

 

                7,526,496 **

 

  9.    Sole Dispositive Power

 

                0

 

10.    Shared Dispositive Power

 

                0

11.  

Aggregate Amount Beneficially Owned by Each Reporting Person

 

            7,526,496 **

   
12.  

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

  ¨
13.  

Percent of Class Represented by Amount in Row (11)

 

            16.1%**

   
14.  

Type of Reporting Person (See Instructions)

 

            PN

   

 

7


CUSIP No. 553531104

 

  1.  

Names of Reporting Persons.

 

            Dr. Romesh Wadhwani

   
  2.  

Check the Appropriate Box if a Member of a Group (See Instructions)

(a)  x

(b)  ¨

   
  3.  

SEC Use Only

 

   
  4.  

Source of Funds (See Instructions)

 

            AF, BK, OO, SC

   
  5.  

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)

 

  ¨
  6.  

Citizenship or Place of Organization

 

            United States

   

Number of  

Shares  

Beneficially  

Owned by  

Each  

Reporting  

Person  

With  

 

  7.    Sole Voting Power

 

                0

 

  8.    Shared Voting Power

 

                7,526,496 **

 

  9.    Sole Dispositive Power

 

                0

 

10.    Shared Dispositive Power

 

                0

11.  

Aggregate Amount Beneficially Owned by Each Reporting Person

 

            7,526,496 **

   
12.  

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

  ¨
13.  

Percent of Class Represented by Amount in Row (11)

 

            16.1%**

   
14.  

Type of Reporting Person (See Instructions)

 

            IN

   

 

 

** See Item 5

 

8


This Amendment No. 1 to Schedule 13D is being filed jointly by the following (each a “Reporting Person” and collectively, the “Reporting Persons”): (1) Maximus Holdings Inc., a Delaware corporation (“Parent”), (2) Maximus Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”), (3) STG UGP, LLC., a Delaware limited liability company (“STG UGP”), (4) STG III GP, L.P., a Delaware limited liability partnership (“STG III GP”), (5) STG III, L.P., a Delaware limited partnership (“STG III”), (6) STG III-A, L.P., a Delaware limited partnership (“STG III-A”) and (7) Dr. Romesh Wadhwani (“Dr. Wadhwani”), to supplement and amend the Schedule 13D filed on behalf of the Reporting Persons on July 17, 2009. Each item below amends and supplements the information disclosed under the corresponding item of Schedule 13D. Capitalized terms defined in the Schedule 13D are used herein with their defined meaning.

All information in this Amendment No. 1 to Schedule 13D is being supplied solely by the Reporting Persons and only the Reporting Persons shall be deemed responsible for the accuracy of such information.

 

Item 3. Source Amount of Funds or Other Consideration

The response set forth in Item 3 of the Schedule 13D is hereby amended and supplemented by the following:

On September 28, 2009, Parent, Merger Sub and Issuer entered into an amendment (the “Amendment”) to the Merger Agreement, to, amongst other things, increase the per share merger consideration from $7.63 per share to $8.40 per share, to increase the Termination Fee (as defined in the Merger Agreement) from $11,800,000 to $13,000,000, and to increase the Parent Termination Fee (as defined in the Merger Agreement) from $16,800,000 to $40,000,000.

In connection with the Amendment, Parent has obtained a revised equity and debt commitment letter from STG III and STG III-A dated September 28, 2009 (the “New STG Commitment Letter”), pursuant to which, STG III and STG III-A, severally and not jointly, have agreed to contribute, or cause to be contributed, to Parent, at or prior to the consummation of the Merger, immediately available funds in the amount equal to $121,406,051 and $16,103,949, respectively, in exchange for the equity and debt securities described therein.

In connection with the Amendment, the Lenders have also provided a revised Senior Secured Credit Facility Commitment Letter dated September 28, 2009 (the “New Debt Commitment Letter”) to Symphony Technology Group, pursuant to which the Lenders, subject to the terms and conditions therein, recommitted to provide an aggregate of $65,000,000 in debt financing, which financing will be used for the purpose of funding a portion of the consideration payable in connection with the Merger, to pay certain fees and expenses of the Merger, and for general corporate purposes for the operation of the Issuer following the closing of the Merger.

The foregoing descriptions of the Amendment, New STG Commitment Letter and New Debt Commitment Letter do not purport to be complete and are qualified in their entirety by reference to such agreements, each of which is incorporated by reference in its entirety into this Item 3. Copies of the Amendment, New STG Commitment Letter and New Debt Commitment Letter are filed as Exhibits 99.14, 99.15 and 99.16, respectively, hereto.

 

Item 4. Purpose of Transaction

The second paragraph in the response set forth in Item 4 of the Schedule 13D is hereby amended and restated to read as follows:

“Upon the consummation of the Merger, each outstanding share of Common Stock of the Issuer will be converted into the right to receive $8.40 in cash, without interest. All shares of Common Stock held by the Issuer (other than in an employee plan of the Issuer) or owned by Parent immediately prior to the effectuation of the Merger shall be cancelled, and no payment shall be made. All options to purchase shares of Common Stock (the “Stock Options”) granted under the Issuer’s 1991 Stock Option Plan, the 1998 Stock Option Plan, the 2001 Stock Option Plan, the Advanced Enterprise Solutions Program, the 2006 Performance Incentive Plan and certain non-plan option agreements (the “Company Stock Plans”) shall be converted into the right to receive an amount in cash determined by multiplying (i) the excess, if any, of $8.40 over the applicable exercise price of such option by (ii) the number of

 

9


shares of Common Stock such holder could have acquired under such option (the “Conversion Right”). The Conversion Right shall be subject to the same terms and conditions as the related Stock Option, including the vesting and forfeiture provisions, except that the holder thereof shall be entitled to automatic settlement in cash of the vested portion of the Conversion Right in accordance with the original vesting schedule (including any terms related to automatic accelerated vesting) of the related Stock Option. To the extent that a Stock Option is vested as of, or vests upon the consummation of the Merger in accordance with its terms, Parent shall, or shall cause the Issuer, to settle the resulting vested Conversion Right promptly after the consummation of the Merger. All restricted stock units or performance stock units granted under the Company Stock Plans (each a “Company Stock Unit”) shall be converted into the right to receive $8.40 for each share of Common Stock the holder could have acquired under the terms of the Company Stock Unit immediately prior to the consummation of the Merger (the “Conversion Unit”). The Conversion Units shall be subject to the same terms and conditions as the Company Stock Unit, except that the holder shall be entitled to automatic settlement in cash of the vested portion of the Conversion Unit. To the extent that a Company Stock Unit is vested as of, or vests upon the consummation of the Merger in accordance with its terms, Parent shall, or shall cause the Issuer, to settle the resulting vested Conversion Unit promptly after the consummation of the Merger.”

 

Item 7. Material to Be Filed as Exhibits.

 

Exhibit
Number

  

Document

99.1    Joint Filing Agreement, dated July 16, 2009, by and among Maximus Holdings Inc., Maximus Inc., STG UGP, LLC, STG III GP, L.P., STG III, L.P., STG III-A, L.P. and Dr. Romesh Wadhwani.*
99.9    Power of Attorney granted by STG UGP, LLC.*
99.10    Power of Attorney granted by STG III GP, L.P.*
99.11    Power of Attorney granted by STG III, L.P.*
99.12    Power of Attorney granted by STG III-A, L.P.*
99.13    Power of Attorney granted by Dr. Romesh Wadhwani*
99.14    Amendment to Agreement and Plan of Merger, dated September 28, 2009, by and among Maximus Holdings Inc., Maximus Inc. and MSC.Software Corporation.
99.15    Equity and Debt Commitment letter among STG III, L.P., a Delaware limited partnership, STG III-A, L.P., a Delaware limited partnership, and Maximus Holdings Inc., a Delaware corporation, dated September 28, 2009.
99.16    Fifth Amended and Restated Debt Commitment Letter among Wells Fargo Foothill, LLC, CapitalSource Bank and Symphony Technology Group, dated September 28, 2009.

 

* Filed as an Exhibit to the Reporting Person’s joint Statement on Schedule 13D filed on July 17, 2009, and incorporated by reference herein.

 

10


SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

Dated: September 29, 2009    
    MAXIMUS HOLDINGS INC.
    By:  

/s/    Brad MacMillin

    Name:   Brad MacMillin
    Title:   Secretary
    MAXIMUS INC.
    By:  

/s/    Brad MacMillin

    Name:   Brad MacMillin
    Title:   Secretary
    STG UGP, LLC
    By:  

/s/    Brad MacMillin

    Name:   Brad MacMillin
    Title:   Authorized Person**
    STG III GP, L.P.
    By:   STG UGP, LLC, its general partner
    By:  

/s/    Brad MacMillin

    Name:   Brad MacMillin
    Title:   Authorized Person**
    STG III, L.P.
    By:   STG III GP, L.P., its general partner
    By:   STG UGP, LLC, its general partner
   

By:

 

/s/    Brad MacMillin

   

Name:

  Brad MacMillin
   

Title:

  Authorized Person**

 

** See Powers of Attorney

 

11


    STG III-A, L.P.
   

By:

By:

 

STG III GP, L.P., its general partner

STG UGP, LLC, its general partner

    By:  

/s/    Brad MacMillin

    Name:   Brad MacMillin
    Title:   Authorized Person**
    DR. ROMESH WADHWANI
    By:  

/s/    Brad MacMillin

    Name:   Brad MacMillin
    Title:   Authorized Person**

 

** See Powers of Attorney

 

12

EX-99.14 2 dex9914.htm AMENDMENT TO AGREEMENT AND PLAN OF MERGER Amendment to Agreement and Plan of Merger

Exhibit 99.14

AMENDMENT TO

AGREEMENT AND PLAN OF MERGER

This Amendment, dated as of September 28, 2009 (this “Amendment”), to the Agreement and Plan of Merger, dated as of July 7, 2009 (the “Merger Agreement”), by and among Maximus Holdings Inc., a Delaware corporation (“Parent”), Maximus Inc., a Delaware Corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and MSC.Software Corporation, a Delaware corporation (the “Company”), is entered into by the Company, Parent and Merger Sub.

WHEREAS, Section 11.03 of the Merger Agreement permits the parties to amend the Merger Agreement by execution of an instrument in writing signed by each of Parent, Merger Sub and the Company; and

WHEREAS, each of Parent, Merger Sub and the Company desires to amend the Merger Agreement as provided herein.

NOW, THEREFORE, in consideration of the mutual agreements specified in this Amendment, Parent, Merger Sub and the Company hereby agree as follows:

1. Amendment of Section 2.02(a) of the Merger Agreement. Section 2.02(a) of the Merger Agreement is hereby amended to replace the reference to “$7.63” with “$8.40.”

2. Amendment of Section 4.05(a) of the Merger Agreement. Section 4.05(a) of the Merger Agreement is hereby amended to replace the reference to “$900,000” with “$1,350,000.”

3. Amendment of Section 5.07 of the Merger Agreement. Section 5.07 of the Merger Agreement is hereby amended and restated in its entirety to read as follows:

“Financing. Parent has provided to the Company true and complete copies of (i) the fully executed commitment letter, dated as of September 28, 2009, between Parent and each of Wells Fargo Foothill LLC and Capital Source Bank (the “Debt Financing Commitments”), pursuant to which each of Wells Fargo Foothill LLC and Capital Source Bank has agreed to lend the amounts set forth therein on the terms and subject to the conditions set forth therein (the “Debt Financing”) for the purpose of funding the transactions contemplated by this Agreement, and (ii) (A) the fully executed equity and debt commitment letter, dated as of September 28, 2009, between Parent and STG III, L.P. and STG III-A, L.P. (the “STG Equity Commitment”) and (B) the fully executed equity and debt commitment letter, dated as of July 7, 2009, between Parent and Elliott Associates, L.P. and Elliott International, L.P. (the “Elliott Equity Commitment” and, together with the STG Equity Commitment, the “Equity Financing Commitments” and together with the Debt Financing Commitments, the “Financing Commitments”), pursuant to which each of STG III, L.P., STG III-A, L.P., Elliott Associates, L.P. and Elliott International, L.P. has committed to invest the amount set forth therein on the terms and subject to the conditions set forth therein (the “Equity Financing” and together with the Debt Financing, the “Financing”). As of September 28, 2009, none of the Financing Commitments has been amended or modified, and the respective commitments contained in the Financing Commitments have not been withdrawn or rescinded in any respect. The Financing


Commitments are in full force and effect and constitute the legal, valid and binding obligations of each of Parent, Merger Subsidiary and the other parties thereto (except as such enforceability may be limited by applicable bankruptcy, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application (regardless of whether such enforceability is considered in a proceeding in equity or at law)). There are no conditions precedent or other contingencies related to the funding of the full amount of the Financing, other than as expressly set forth in the Financing Commitments, and Parent has no reason to believe that it will not be able to satisfy any term or condition of closing of the Financing that is required to be satisfied as a condition to the Financing, or that the Financing will not be made available to Parent on the Closing Date (assuming in each case compliance by the Company with its covenants hereunder and the continuing accuracy of the Company’s representations and warranties hereunder). Subject to the terms and conditions of the Financing Commitments, the aggregate proceeds of the Financings together with the Company Cash Deposit is an amount sufficient to consummate the Merger upon the terms contemplated by this Agreement and pay all related fees and expenses of Parent, Merger Subsidiary and their respective Representatives pursuant to this Agreement.”

4. Amendment of Section 8.01(b) of the Merger Agreement. Section 8.01(b) of the Merger Agreement is amended to delete the last sentence thereof, such that the section reads as follows:

“Each of Parent and the Company shall (i) make an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated hereby as promptly as practicable, (ii) make any appropriate filings pursuant to the Foreign Antitrust Laws which Parent reasonably determines are necessary or advisable, (iii) supply as promptly as practicable any additional information and documentary material that may be requested pursuant to the HSR Act or by any relevant Governmental Authority, and (iv) use their reasonable best efforts to take all other actions necessary to cause the expiration or termination of the applicable waiting periods, or obtain any necessary approvals from any Governmental Authority, under the HSR Act and Foreign Antitrust Laws as soon as practicable.”

5. Amendment of Section 9.01(b) of the Merger Agreement. Section 9.01(b) of the Merger Agreement is amended and restated to read as follows:

“no restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Merger shall have taken effect after the date hereof and shall still be in effect;”

6. Amendment of Section 11.04(b) of the Merger Agreement. Section 11.04(b) of the Merger Agreement is amended to replace the reference to “$11,800,000” with “$13,000,000.”

7. Amendment of Section 11.04(c) of the Merger Agreement. Section 11.04(c) of the Merger Agreement is amended to replace the reference to “$16,800,000” with “$40,000,000.”

8. Representations and Warranties. Each of the Company, Parent and Merger Sub represents and warrants that (i) it has the corporate power and authority to execute and deliver

 

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this Amendment, (ii) this Amendment has been duly and validly authorized by all necessary action of its Board of Directors and, with respect to the Company, the Company’s Board of Directors has unanimously approved this Amendment (subject to recusal of any members of the Company’s Board of Directors), and (iii) this Amendment has been duly and validly executed and delivered and, assuming due authorization and execution by the other parties hereto, constitutes its legal, valid and binding obligation enforceable against it in accordance with its terms.

9. Defined Terms. Capitalized terms used but not defined herein shall have the meaning assigned to them in the Merger Agreement.

10. No Other Modification. The Merger Agreement shall not be modified by this Amendment in any respect except as expressly set forth herein.

11. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law rules of such state.

12. Counterparts. This Amendment may be executed in counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized respective officers as of the date first written above.

 

MSC.SOFTWARE CORPORATION
By:  

/s/ John A. Mongelluzzo

Name:   John A. Mongelluzzo
Title:   Executive Vice President
MAXIMUS HOLDINGS INC.
By:  

/s/ William F. Chisholm

Name:   William F. Chisholm
Title:   President
MAXIMUS INC.
By:  

/s/ William F. Chisholm

Name:   William F. Chisholm
Title:   President

 

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EX-99.15 3 dex9915.htm EQUITY AND DEBT COMMITMENT LETTER Equity and Debt Commitment Letter

Exhibit 99.15

September 28, 2009

CONFIDENTIAL

Maximus Holdings Inc.

c/o Symphony Technology Group

2475 Hanover Street

Palo Alto, CA 94304

 

  Re: STG Equity and Debt Commitment

Ladies and Gentlemen:

Reference is made to that Agreement and Plan of Merger, dated as of July 7, 2009 (including any amendment thereto, the “Merger Agreement”), by and among Maximus Holdings Inc., a Delaware corporation (“Parent”), Maximus Inc., a Delaware corporation and wholly-owned subsidiary of Parent (“Merger Sub”) and MSC.Software Corporation, a Delaware corporation (the “Company”). Capitalized terms in this commitment letter (this “Commitment Letter”) used but not defined herein shall have the meanings ascribed to such terms under the Merger Agreement. As used herein, the terms “Parent” and “Merger Sub” shall include any entity to which Parent or Merger Sub, as applicable, shall assign their respective rights, interests and obligations under the Merger Agreement in accordance with Section 11.06 thereof.

Subject only to satisfaction or waiver, at or prior to the Closing Date, of each of the conditions to the obligation of Parent and Merger Sub to effect the Merger as set forth in Sections 9.01 and 9.02 of the Merger Agreement, the signatories to this Commitment Letter, each of STG III, L.P., a Delaware limited partnership (“STG III”), and STG III-A, L.P., a Delaware limited partnership (“STG III-A” and, together with STG III, “STG”, and each, individually, an “STG Party”), severally and not jointly (based on their respective Pro Rata Portions (as defined below)), hereby confirms that it will contribute, or cause to be contributed, to Parent, at or prior to Closing, immediately available funds in an amount equal to (a) $88,288,889 and $11,711,111, respectively, in exchange for the equity and debt securities described in Exhibit A, (b) an additional $1,765,778 and $234,222, respectively, as contemplated by the section entitled “Additional Matters—Additional Funding” in Exhibit A, in exchange for the equity and debt securities described in Exhibit A, and (c) an additional $31,351,384 and $4,158,616, respectively, in exchange for an aggregate of $35,510,000 of Notes (as defined in Exhibit A) (collectively, the “Capital”). The “Pro Rata Portion” for STG III shall be 88.29%, and the “Pro Rata Portion” for STG III-A shall be 11.71%.

The obligation of each STG Party to effect the transfers contemplated herein shall be subject to the following conditions precedent: (a) the negotiation and execution at or prior to Closing of definitive documentation providing for the issuance of the securities described in Exhibit A, and the other arrangements described in Exhibit A, in each case on the terms and conditions set forth in Exhibit A, including the execution of the stockholder agreement contemplated thereby by each stockholder of Parent as of the Closing (the “Investment Documentation”), (b) the effective filing of a certificate of incorporation or certificate of


designation establishing and authorizing the preferred stock contemplated by Exhibit A in accordance with the terms set forth in Exhibit A, (c) the absence of any prohibition against the consummation of the transactions contemplated hereby by any applicable law, statute, rule, regulation, judgment or order of any governmental authority of competent jurisdiction and (d) the satisfaction or waiver, at or prior to the Closing Date, of each of the conditions to the obligation of Parent and Merger Sub to effect the Merger as set forth in Sections 9.01 and 9.02 of the Merger Agreement.

Each STG Party and Parent agree to negotiate in good faith the Investment Documentation.

Each STG Party hereby represents and warrants, severally and not jointly, that (a) as of the date hereof it has, and as of the Closing Date it will have, unexpired capital commitments from its partners at least equal to the Capital, and (b) this Commitment Letter has been duly executed and delivered and constitutes the legal, valid and binding commitment of such STG Party to provide such STG Party’s Pro Rata Potion of the Capital as set forth above, enforceable in accordance with its terms.

Each STG Party reserves the right, prior to or after execution of definitive documentation for the financing transactions contemplated hereby, to cause any portion of its obligation to provide such STG Party’s Pro Rata Portion of the Capital hereunder (such STG Party’s “Commitment”) to be fulfilled by causing one or more of its Affiliates or other investors to actually fund all or any portion of the investment in Parent required by this Commitment Letter, and upon the actual funding of such portion of such STG Party’s Commitment, such STG Party’s remaining Commitment hereunder shall be correspondingly reduced.

Each STG Party’s obligation to fund such STG Party’s Commitment will expire on the earlier to occur of (i) the consummation of the Merger and the satisfaction of Parent’s payment obligations under Article 2 of the Merger Agreement, (ii) the termination of the Merger Agreement in accordance with the terms thereof, (iii) the time at which the Company or any of its Affiliates asserts in any litigation or other proceeding any claim under the limited guarantee of even date herewith delivered by the STG Parties (the “Limited Guarantee”), or otherwise against either STG Party or any of their respective Affiliates in connection with the Merger Agreement or any of the transactions contemplated hereby or thereby, and (iv) the one-year anniversary of the date hereof. From and after the expiration of all of STG’s obligations under this Commitment Letter, neither STG nor any of its directors, officers, partners, employees, investors or Affiliates will have any further liability or obligation to any Person or entity as a result of this Commitment Letter.

This Commitment Letter shall be binding solely on, and inure solely to the benefit of, the undersigned and Parent and their respective successors and permitted assigns, and nothing set forth in this Commitment Letter shall be construed to confer upon or give to any Person other than the undersigned and Parent and their respective successors and permitted assigns any benefits, rights or remedies under or by reason of, or any rights to enforce or cause Parent to enforce, the obligation to fund the Commitment or any provisions of this letter.

 

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Notwithstanding anything that may be expressed or implied in this Commitment Letter, Parent, by its acceptance of the benefits of this equity commitment, covenants, agrees and acknowledges that no Person other than STG and its successors and permitted assigns shall have any obligation hereunder and that, notwithstanding that STG or any of its successors or permitted assigns may be a partnership or limited liability company, no recourse hereunder or under any documents or instruments delivered in connection herewith shall be had against any former, current or future director, officer, agent, Affiliate, employee, general or limited partner, member, manager or stockholder of STG or any of its successors or permitted assigns or any former, current or future director, officer, agent, Affiliate, employee, general or limited partner, member, manager or stockholder of any of the foregoing, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other Applicable Law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any former, current or future director, officer, agent, Affiliate, employee, general or limited partner, member, manager or stockholder of STG or any former, current or future director, officer, agent, Affiliate, employee, general or limited partner, member, manager or stockholder of any of the foregoing, as such, for any obligations of STG or any of its successors or permitted assigns under this Commitment Letter or any documents or instrument delivered in connection herewith or for any claim based on, in respect of, or by reason of such obligation or their creation.

This Commitment Letter may only be enforced by Parent at the direction of STG in its sole discretion. Parent shall have no right to enforce this Commitment Letter unless directed to do so by STG in its sole discretion. Parent’s creditors shall have no right to enforce this Commitment Letter or to cause Parent to enforce this Commitment Letter.

On July 7, 2009, each STG Party executed and delivered to the Company a Limited Guarantee related to the obligations of Parent and Merger Sub under clauses 11.04(c) and 11.04(d) of the Merger Agreement. As and to the extent provided for in the Limited Guarantee, the Company’s remedies against STG under the Limited Guarantee shall, and are intended to be, the sole and exclusive direct or indirect remedies available to the Company and its Affiliates against STG and any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder, Affiliate or assignee of STG or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder, Affiliate or assignee of any of the foregoing in respect of any liabilities or obligations arising under, or in connection with, the Merger Agreement and the transactions contemplated thereby, including in the event Parent or Merger Sub breaches its obligations under the Merger Agreement, whether or not Parent’s or Merger Sub’s breach is caused by STG’s breach of its obligations under this Commitment Letter. Nothing in this Commitment Letter, express or implied, is intended to or shall confer upon any Person, other than Parent and STG, any right, benefit or remedy of any nature whatsoever under or by reason of this Commitment Letter.

This Commitment Letter (together with the exhibits hereto) sets forth the entire agreement between the parties with respect to the matters addressed herein, supersedes all prior communications, written or oral, with respect hereto, and may not be amended, supplemented, or modified except in a writing signed by the parties hereto. The parties hereto acknowledge and agree that any previous STG Equity and Debt Commitment Letter Commitment Letter executed by the STG Parties and Parent has been superseded by the terms hereof.

 

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This Commitment Letter shall be governed and construed in accordance with the laws of the State of New York without regard to its conflict of laws provisions. Under no circumstances shall STG or any of its directors, officers, partners, employees, investors or affiliates be liable to any Person for incidental, consequential, punitive, exemplary, or special damages.

EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS COMMITMENT LETTER OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

This Commitment Letter may be signed in two or more counterparts, any one of which need not contain the signature of more than one party, but all such counterparts taken together shall constitute one and the same agreement. The rights of Parent or the beneficiary under this Commitment Letter may not be assigned in any manner without STG’s prior written consent. The obligations of STG under this Commitment Letter may not be assigned in any manner except as expressly set forth herein.

[Signature page follows]

 

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Sincerely,
STG III, L.P. and STG III-A, L.P.

each by STG III GP, L.P., its General Partner

 

by STG UGP, LLC, its General Partner

  By:  

/s/ William F. Chisholm

  Name:   William F. Chisholm
  Title:   Managing Director

Accepted and Agreed to as of the date first above written.

 

MAXIMUS HOLDINGS INC.
By:  

/s/ William F. Chisholm

Name:   William F. Chisholm
Title:   President

[Signature Page to Equity Commitment Letter]

 

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Exhibit A

INVESTMENT TERM SHEET

THIS TERM SHEET HAS BEEN PREPARED SOLELY TO FACILITATE DISCUSSIONS OF A POSSIBLE TRANSACTION AMONG THE PARTIES IDENTIFIED HEREIN. IT IS NOT INTENDED, AND WILL NOT BE DEEMED, TO CONSTITUTE AN OFFER OR AGREEMENT, OR TO CREATE LEGALLY BINDING OR ENFORCEABLE OBLIGATIONS, OF ANY TYPE OR NATURE. NO SUCH OFFER, AGREEMENT OR OBLIGATIONS SHALL BE MADE OR CREATED AMONG THE PARTIES IDENTIFIED HEREIN EXCEPT PURSUANT TO A WRITTEN AGREEMENT EXECUTED BY SUCH PARTIES.

 

Terms of the Investment   
The Transaction   

Symphony Technology Group and/or its designated affiliate (“STG”) and Elliott Associates, L.P., Manchester Securities Corp (“Manchester”), a wholly-owned subsidiary of Elliott Associates, L.P. and/or their designated affiliates (collectively, “Elliott”) would jointly finance the acquisition of MSC.Software Corporation (“MSC”).

 

STG’s investment would be in the form of Convertible Participating Preferred Equity (the “Preferred Stock”), Senior Convertible Subordinated Notes (the “Convertible Notes”) and vested penny warrants (the “Vested Warrants” or the “Warrants”), issued in a newly formed acquisition vehicle (the “Company”). Elliott’s investment would be in a combination of the same series of Preferred Stock issued to STG and in Senior Subordinated Notes (the “Notes”).

 

STG’s investment will be made in the form of cash in the amount of $100,000,000. Elliott’s investment will be made in the form of (i) the contribution of 6,060,058 shares of MSC common stock valued at the MSC acquisition price of $7.63 and (ii) cash in the amount of $49,761,757.46. In exchange for such contribution, (a) STG will receive $48.0 million in initial principal amount of Convertible Notes and $52.0 million in initial liquidation preference of Preferred Stock, and (b) Elliott will receive $48.0 million in initial principal amount of Notes and $48.0 million in initial liquidation preference of Preferred Stock. At closing, Elliott’s initial investment would constitute approximately 25.0% of the fully diluted equity of the Company, STG’s initial investment would constitute approximately 65.0% of the fully diluted equity of the Company, and the management option pool referred to below would constitute 10% of the fully-diluted equity of the Company (in each case determined after giving effect to the Warrants).

 

The Preferred Stock, Convertible Notes and Notes will be issued pursuant to a contribution and purchase agreement in customary form.

 

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Closing    Concurrent with the closing of the acquisition of MSC by the Company.
Terms of Subordinated Notes   
Maturity    100.0% of the outstanding Principal Amount of the Notes and all accrued interest on the Notes shall be repaid five (5) years from the Closing Date.
Interest Rate    15.5%, paid-in-kind, until the fourth (4th ) anniversary of the Closing Date; 20%, paid-in-kind, thereafter.

Basis of Interest

Calculation

   360 days (twelve 30-day periods).
Redemption at Company’s Option    The Notes will be prepayable at the Company’s option at any time, without penalty.
Redemption at the Holder’s Option   

Elliott shall have the right to require the Company to purchase all or a portion of its outstanding Notes at par plus accrued and unpaid interest on the Principal Amount of the Notes to be prepaid upon the occurrence at any time of any one of the following events: (i) an initial public offering of debt or equity securities of the Company ; (ii) the sale of all or substantially all of the assets of the Company; and/or (iii) a Change of Control of the Company; provided, however, that in each case, the Principal Amount of the Notes shall only be prepaid to the extent allowed by the Senior Debt and the Company’s cash on hand after allowing the Company to retain sufficient cash as determined in good faith by the Company in its best judgment that it needs for working capital for the Company’s operations.

 

Any redemption or repurchase of the Notes shall be done on a pari passu basis with the Convertible Notes (to the extent the holders of the Convertible Notes choose to participate).

 

So long as any Notes remain outstanding, the Company shall not redeem or repurchase any Preferred Stock or Junior Securities.

Change in Control    Over 50% of the outstanding fully diluted shares of the Company are owned by a person or group who are not permitted holders (to be defined).
Covenants    No financial covenants. The purchase agreement governing the Notes will have affirmative and negative covenants (certain of which will be subject to materiality thresholds, baskets and customary exceptions and qualifications to be mutually agreed upon) applicable to the issuer of the Notes and its subsidiaries as are usual and customary for financings of this type including

 

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   delivery of financial statements, reports and certificates; corporate existence; limitations on indebtedness (other than under the senior credit facility and permitted refinancings thereof); limitations on liens; limitations on disposal of assets; Change of Control put; limitations on investments and mergers and acquisitions (other than Permitted Acquisitions); limitations on dividends or distributions on, and redemptions and repurchases of, equity interests and other restricted payments; limitations on prepayments, redemptions and repurchases of certain subordinated debt; and limitations on transactions with affiliates.
Events of Default    The purchase agreement governing the Notes will include such events of default (certain of which will be subject to materiality thresholds, exceptions and grace periods to be mutually agreed upon) applicable to the issuer of the Notes and its subsidiaries as are usual and customary for financings of this type, including: non-payment of principal, interest and other amounts; non-performance of covenants and obligations; material judgments; bankruptcy or insolvency; acceleration of other material debt (including debt under the senior credit facility; provided, however, in the case of an acceleration based solely on a breach of a financial covenant in the Senior Debt, the holders of the Notes may not accelerate until the earliest to occur of: (i) the date STG and Elliott reasonably agree in good faith that the holders of the Senior Debt are reasonably likely to take imminent action to enforce their rights or remedies in respect of such acceleration, (ii) the date the holders of Senior Debt have commenced any action the against Company or any guarantor of the Senior Debt or any of their respective properties to enforce their rights or remedies in respect of such acceleration, (iii) the date that is 30 days after the date of delivery of such acceleration notice (if such acceleration notice has not been withdrawn prior to such date) and (iv) the occurrence of any acceleration of any material debt (including the Senior Debt) other than any acceleration based solely on a breach of a financial covenant in the Senior Debt); breach of any representation or warranty; actual or asserted invalidity of any guarantee with respect to the Notes; and ERISA events.
Ranking Priority    The Notes will be expressly subordinated only to “Senior Debt” in a maximum principal amount of $65,000,000 (plus a modest cushion to be negotiated) and will be pari passu with the Convertible Notes. “Senior Debt” will include all existing bank credit facilities and replacements therefore (as agreed). Subordination provisions will be negotiated with the Senior Debt holders.
Default Rate    The holders of the Notes shall be entitled to that rate of interest which is equal to the then current Interest Rate plus 2.0% per annum, compounded quarterly, from the date a default or an

 

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   Event of Default has occurred until the date such default or Event of Default is waived or cured in writing or otherwise satisfied in full.
Modifications and Amendments    Modifications and amendments of the Notes may be made by the Company with the consent of the holders of 66% of the then outstanding Principal Amount thereof, subject to customary 100% requirements.
Assignments; Right of First Refusal    The prior written consent (not to be unreasonably withheld, delayed or conditioned) of the Company is required for any assignment of Notes to any non-Elliott entity, except during an event of default. The Company has a “right of first offer” on the transfer of any Note to a non-Elliott entity, except during an event of default, with the “right of first offer” providing that if the holder of a Note proposes to sell a Note at a certain price to a non-Elliott entity, it shall first offer such Note (within a reasonable time period to be specified) to the Company and if the Company does not purchase such Note, such holder than can sell such Note to anyone else at that price or a higher price.
Terms of the Convertible Notes   
Maturity    100.0% of the outstanding Principal Amount of the Convertible Notes shall be repaid five (5) years from the Closing Date.
Interest Rate    0%.
Conversion    The Convertible Notes will be convertible at any time, in whole or in part, at the option of the holder, into the number of shares of Preferred Stock obtained by dividing the principal amount of Convertible Notes being so converted by the Original Issue Price. The shares of Preferred Stock received upon any such conversion will have an accrued Liquidation Preference in an amount calculated as if such shares were outstanding since the Closing Date.
Redemption at the Holder’s Option   

STG shall have the right to require the Company to purchase all or a portion of its outstanding Convertible Notes at par upon the occurrence at any time of any one of the following events: (i) an initial public offering of debt or equity securities of the Company; (ii) the sale of all or substantially all of the assets of the Company; and/or (iii) a Change of Control (as defined above) of the Company; provided, however, that in each case, the Principal Amount of the Convertible Notes shall only be prepaid to the extent allowed by the Senior Debt and the Company’s cash on hand after allowing the Company to retain sufficient cash as determined in good faith by the Company in its best judgment that it needs for working capital for the Company’s operations.

 

Any redemption or repurchase of the Convertible Notes shall be done on a pari passu basis with the Notes (to the extent the holders of the Notes choose to participate).

 

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Ranking Priority    The Convertible Notes will be expressly subordinated only to Senior Debt in a maximum principal amount of $65,000,000 (plus a modest cushion to be negotiated) and will be pari passu with the Notes. “Senior Debt” will include all existing bank credit facilities and replacements therefore (as agreed). Subordination provisions will be negotiated with the Senior Debt holders.
Covenants    No financial covenants. The purchase agreement governing the Convertible Notes will have affirmative and negative covenants (certain of which will be subject to materiality thresholds, baskets and customary exceptions and qualifications to be mutually agreed upon) applicable to the issuer of the Notes and its subsidiaries as are usual and customary for financings of this type including delivery of financial statements, reports and certificates; corporate existence; limitations on indebtedness (other than under the senior credit facility and permitted refinancings thereof); limitations on liens; limitations on disposal of assets; Change of Control put; limitations on investments and mergers and acquisitions (other than Permitted Acquisitions); limitations on dividends or distributions on, and redemptions and repurchases of, equity interests and other restricted payments; limitations on prepayments, redemptions and repurchases of certain subordinated debt; and limitations on transactions with affiliates.
Events of Default    The purchase agreement governing the Convertible Notes will include such events of default (certain of which will be subject to materiality thresholds, exceptions and grace periods to be mutually agreed upon) applicable to the issuer of the Convertible Notes and its subsidiaries as are usual and customary for financings of this type, including: non-payment of principal, interest and other amounts; non-performance of covenants and obligations; material judgments; bankruptcy or insolvency; acceleration of other material debt (including debt under the senior credit facility; provided, however, in the case of an acceleration based solely on a breach of a financial covenant in the Senior Debt, the holders of the Convertible Notes may not accelerate until the earliest to occur of: (i) the date STG and Elliott reasonably agree in good faith that the holders of the Senior Debt are reasonably likely to take imminent action to enforce their rights or remedies in respect of such acceleration, (ii) the date the holders of Senior Debt have commenced any action the against Company or any guarantor of the Senior Debt or any of their respective properties to enforce their rights or remedies in respect of such acceleration, (iii) the date that is 30 days after the date of delivery of such acceleration notice (if such acceleration notice

 

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   has not been withdrawn prior to such date) and (iv) the occurrence of any acceleration of any material debt (including the Senior Debt) other than any acceleration based solely on a breach of a financial covenant in the Senior Debt)); breach of any representation or warranty; actual or asserted invalidity of any guarantee with respect to the Convertible Notes; and ERISA events.
Modifications and Amendments    Modifications and amendments of the Convertible Notes may be made by the Company with the consent of the holders of 66% of the then outstanding Principal Amount thereof, subject to customary 100% requirements.
Assignments    The Convertible Notes may not be Transferred (as defined below).
Terms of the Preferred Stock   
Dividends   

The holders of Preferred Stock will be entitled to receive, when, as and if declared by the Board of Directors, out of funds legally available for payment of dividends, quarterly dividends in respect of each share of Preferred Stock equal to the greater of (x) a rate per annum of 8% of the Liquidation Preference (as defined below) and (y) the amount of dividends declared during such period on the number of shares of Common Stock into which such share of Preferred Stock is then convertible. Dividends on preferred shares will be cumulative and accrued and unpaid dividends will compound quarterly, on the basis of a 365-day year and the number of days elapsed.

 

The Company may not declare, pay or set aside for payment, any dividend on the shares of Common Stock or other securities ranking junior to the Preferred Stock or securities convertible into, or exchangeable or exercisable for, any such securities (“Junior Securities”) unless all accrued and unpaid dividends on the Preferred Stock (including for the then-current interest period) have been paid in full.

Liquidation Preference    Upon a liquidation or similar event with respect to Company, the holders of Preferred Stock will be entitled to receive, in preference to payment on Junior Securities, an amount with respect to each share of Preferred Stock equal to the greater of (i) the sum of (A) the original purchase price per share of Preferred Stock (as appropriately adjusted for stock splits, recapitalizations and similar events, the “Original Issue Price”) plus (B) all accrued and unpaid dividends (as appropriately adjusted for stock splits, recapitalizations and similar events, the “Liquidation Preference”) and (ii) the amount distributable to holders of shares of Common Stock in such event (assuming the conversion of all Preferred Stock, at the then-applicable Conversion Price).

 

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   In the case of any merger, reorganization, sale of a majority of the equity, or sale of all or substantially all of the assets, of the Company, or similar transaction, the proceeds of such transaction will be distributed in the same manner as in a liquidation.
Conversion    Each share of Preferred Stock will be convertible at any time, at the option of the holder, into the number of shares of common stock of the Company (“Common Stock”) obtained by dividing the Liquidation Preference by the then-applicable Conversion Price. The “Conversion Price” will initially be equal to the Original Issue Price and will be subject to adjustment as described below under “Anti-Dilution”.
Anti-Dilution    The Conversion Price will be subject to adjustment in the event that the Company issues additional equity securities or securities convertible into, or exchangeable or exercisable for, equity securities (“Equity Securities”) (other than pursuant to certain equity compensation arrangements approved by the Board and other customary carve-outs (“Excluded Transactions”)) at a per-share purchase price less than the then-applicable Conversion Price. The Conversion Price will be subject to adjustment on a broad-based (i.e., taking into account all issued and outstanding options) weighted average basis, which takes into account issuances of additional Equity Securities at prices less than the applicable Conversion Price. The Conversion Price will also be appropriately adjusted for stock splits, recapitalizations and similar events.
Mandatory Conversion    The Preferred Stock shall automatically convert into shares of Common Stock at the then-applicable Conversion Price upon the closing of a firmly underwritten public offering of shares of Common Stock with gross proceeds of at least $30 million and an initial per-share public offering price (after underwriting commissions and expenses) of no less than the Liquidation Preference (a “QPO”).
Redemption at the Option of the Holder   

At any time following the fifth anniversary of the Closing, holders of at least a majority of the outstanding Preferred Stock will be entitled to cause the Company to redeem all of the outstanding Preferred Stock at a price per share equal to the greater of (i) the Liquidation Preference or (ii) the amount that would be distributable to holders of shares of Common Stock if the Company were to be liquidated immediately prior to such redemption (assuming the conversion of all Preferred Stock, at the then-applicable Conversion Price).

 

To the extent the Company does not then have funds legally available for the redemption of all Preferred Stock to be redeemed, the Company will redeem the greatest number of

 

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shares of Preferred Stock then legally permitted and will redeem the remaining Preferred Stock as soon as legally permitted. Redeemed Preferred Stock will be cancelled and will cease to be outstanding.

 

So long as the Preferred Stock is outstanding, the Company shall not redeem or repurchase any Junior Securities.

Voting Rights    Preferred Stock will vote together with the shares of Common Stock (on an as-converted basis) as a single class on all matters.
Terms of Warrants   
Vested Warrants   

The Warrants will entitle the holder thereof to purchase a number of shares of Common Stock equal to approximately 15% of the fully diluted equity of the Company (determined after giving effect to the management option pool but without giving effect to the Warrants and with the exact percentage to be determined so as to result in the initial 65%/25%/10% split between STG, Elliott and the management option pool referenced in “Terms of the Investment – The Transaction” above) as of immediately following the Closing.

 

Except as provided under “Sale Transaction,” the Warrants may be exercised at any time from and after the Closing.

Exercise Price    $0.01 per share of Common Stock.
Sale Transaction    In the event of an acquisition of 100% of the equity of the Company by any person (whether by merger or sale of securities) (a “Sale Transaction”), including any Sale Transaction constituting a Triggering Event, the Company will be entitled to terminate the Warrants immediately following consummation of such Sale Transaction. Holders of Warrants shall be entitled to prior notice of any Sale Transaction and shall be permitted to exercise the Warrants effective immediately prior to, and subject to consummation of, such Sale Transaction.
Adjustments    The Exercise Price and number of shares issuable upon exercise of Warrants will be appropriately adjusted for stock splits, recapitalizations and similar events. In the case of any recapitalization, business combination or reorganization in which the Preferred Stock is converted into or exchanged for the right to receive other securities, cash or other assets (other than a Sale Transaction), the Warrants will be automatically converted into warrants to purchase such other securities, cash or other assets as may be issued or exchanged for the number of shares of Preferred Stock issuable upon exercise of the Warrants immediately prior to such recapitalization, business combination, reorganization or reclassification.

 

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Stockholder and Registration Rights Agreement   
Stockholders Agreement    All stockholders of the Company at Closing will enter into a Stockholders Agreement having customary terms and conditions for a transaction of this type, including the terms and conditions described below.
Board of Directors   

At closing, the Board of Directors will consist of six members, including:

 

•   Four (4) individuals designated by STG;

 

•   One (1) individual designated by Elliott; and,

 

•   the Chief Executive Officer of the Company.

 

Elliott will continue to be entitled to such designee so long as Elliott owns at least 20% of its initial equity position.

STG Voting Rights    Provision will be made so that STG will be entitled to the voting power associated with its fully diluted equity ownership (without the need to exercise the Convertible Notes).
Protective Provisions   

Approval of Elliott (or its Permitted Transferee (as defined below)) will be required for the Company or any of its Subsidiaries to take any of the following actions:

 

•   engage in transactions between the Company and STG or any of STG’s affiliates, other than transactions on an arm’s-length basis (subject to the section below titled “Offshore Development and Services” below);

 

•   distribute securities, cash or other assets on a non pro rata basis;

 

•   issue Equity Securities (i) at a price below Fair Market Value or (ii) ranking senior to the Preferred Stock;

 

•   amend the Stockholders Agreement or the Registration Rights Agreement (as defined below);

 

•   so long as Elliott or its Permitted Transferee hold at least 5% of the outstanding shares of Common Stock (on a fully-diluted basis), amend its Certificate of Incorporation, Bylaws or similar governing documents, in each case, other than amendments that would not modify the terms of the Preferred Stock in an adverse manner.

 

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Elliott will be provided with written notice prior to the Company engaging in any transaction with STG or any of STG’s affiliates and will be provided promptly with any information that it reasonably requests regarding such transaction.

 

“Fair Market Value” means fair market value, as determined in good faith by the Board of Directors; provided, that if any holder of at least 10% of the outstanding shares of Common Stock (on a fully-diluted basis) objects to a determination of Fair Market Value, such amount shall be determined by an expedited external review mechanism to be determined.

Offshore Development and Services    The Company will subcontract its offshore development and services work to Symphony Services, subject to fair pricing consistent with what Symphony Services charges to other third party clients for similar services, subject to the approval of Elliott (which approval shall not be unreasonably withheld, delayed or conditioned). Elliott will be entitled to receive reasonable documentation as to Symphony Services’ standard pricing for such services, and as to prevailing market pricing for such services, before acting on any request for approval.
Information Rights    Until a QPO, each stockholder that holds at least 5% of the outstanding shares of Common Stock (on a fully-diluted basis) will be entitled to receive audited annual, and unaudited quarterly and monthly, financial statements, and such other financial information as such stockholder shall reasonably request.
Preemptive Rights    Until a QPO, each securityholder that holds at least 5% of the outstanding shares of Common Stock (on a fully-diluted basis) will have preemptive rights with respect to any issuance of Equity Securities (other than pursuant to Excluded Transactions) to maintain such person’s percentage of fully diluted equity.
Restrictions on Transfer    Prior to an initial public offering (“IPO”), no securityholder may sell, transfer, pledge or otherwise dispose of (“Transfer”) any Equity Securities other than (i) to a Permitted Transferee (to be defined) or (ii) following compliance with the Right of First Offer and Tag-Along Right described below.
Right of First Offer and Tag-Along Right   

In the event any securityholder proposes to transfer Equity Securities prior to an IPO, other than to a Permitted Transferee, then first the Company and then Elliott (so long as it holds at least 5% of the outstanding shares of Common Stock (on a fully-diluted basis)) and STG (on a pro rata basis, together with their respective Permitted Transferees) will have:

 

•   a right of first offer to purchase all, but not less than all, of such Equity Securities proposed to be Transferred; and

 

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•   if the Company and Elliott and STG (together with their respective Permitted Transferees) do not exercise the Right of First Offer with respect to all offered Equity Securities, a Tag-Along Right (together with the other stockholders) to participate in such Transfer on the same terms and conditions as the proposing stockholder.

Compelled Sale Rights   

So long as STG (together with its Permitted Transferees) continues to hold at least 30% of the outstanding shares of Common Stock (on a fully-diluted basis), and so long as an IPO has not been completed, then, if STG shall receive an arm’s-length, bona fide offer from an unaffiliated third party to purchase 100% of the equity of the Company, then STG shall have the right to cause each other stockholder to sell all of such stockholder’s Equity Securities on the same terms and conditions applicable to STG (other than commercially reasonable arms-length transactions or arrangements entered into by STG or its affiliates in good faith with such third party or its affiliates in connection with such transaction); provided that each such stockholder shall be required to make only customary representations as to such stockholder (i.e., organization, authorization, conflicts, title and brokers) and liability of each such stockholder shall be pro rata in accordance with the securities sold and limited to such stockholder’s proceeds in the transaction.

 

Elliott will be provided with written notice of any such offer and will be provided promptly with any information that it reasonably requests regarding such proposed transaction.

Transferability of Elliott’s Rights    Subject to applicable laws, Elliott shall be entitled to assign its governance, registration and other rights under the Stockholders Agreement, in whole or in part, as part of any Transfer of shares made in accordance with the transfer restrictions described above.
Registration Rights   

Demand Registration. Beginning six months following an IPO, Elliott will have the right to three demand registrations, provided that each such demand registration shall be for no less than $10,000,000 worth of shares of Common Stock.

 

Form S-3. Elliott will be entitled to unlimited registrations on Form S-3 (or any successor form then in effect), provided that each registration on Form S-3 shall be for no less than $3,000,000 worth of shares of Common Stock. An S-3 registration will not count as a demand registration.

 

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Piggy Back Registration. Following the IPO, Elliott will have unlimited pro rata piggy back registration rights, subject to standard underwriter cutbacks.

 

Expenses. The Company will bear customary expenses in connection with each demand registration, S-3 registration and piggy back registration.

Additional Matters   
Management Options    The available pool for the grant of Common Stock option to Company management shall total 10% of fully diluted (determined giving effect to the Warrants and the option pool) Common Stock (5 year vesting, 1 year cliff).
Sharing of Fees    Any closing or post-closing fees (e.g. management fees, transaction fees, advisory fees) to be split on a pro rata basis (based on aggregate investments) between STG and Manchester.
Expense Reimbursement    Upon Closing, the Company will reimburse STG for its expenses in connection with the Transaction and Elliott for its expenses incurred in connection with the Transaction after April 10, 2009.
Preferred Stock Structure    If so requested by Elliott, the Preferred Stock (and underlying Common Stock) will be issued in multiple classes or series such that the aggregate voting power of all shares issued to the Elliott investors may be exercised by a single entity.
Press Release    STG shall use reasonable efforts to provide Elliott with the opportunity to include a quote in the MSC press release issued upon announcement of the transaction; provided, that if MSC refuses to consent to such inclusion, Elliott and STG shall issue simultaneously with the MSC press release a joint press release in form and substance reasonably satisfactory to Elliott and STG.
Additional Funding    To the extent necessary to support MSC’s working capital requirements as determined by the Company’s board of directors, STG and Elliott shall each make additional investments in equal amounts not to exceed $2,000,000 each in the aggregate. Each such investment will be made (i) in the case of Elliott, in the form of additional shares of Preferred Stock and Notes and (ii) in the case of STG, in the form of additional shares of Preferred Stock and Convertible Notes. The amount of each such security so issued will be determined, and the management option pool will be increased, in the case of each such additional investment so as to preserve the relative 65%/25%/10% fully diluted equity split among STG, Elliott and the management option pool, respectively.

 

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EX-99.16 4 dex9916.htm FIFTH AMENDED AND RESTATED DEBT COMMITMENT LETTER Fifth Amended and Restated Debt Commitment Letter

Exhibit 99.16

LOGO

September 28, 2009

Symphony Technology Group

2475 Hanover Street

Palo Alto, CA 94304

Attn: William Chisholm

FIFTH AMENDED AND RESTATED COMMITMENT LETTER

$65 MILLION SENIOR SECURED CREDIT FACILITY

Ladies and Gentlemen:

As we, Wells Fargo Foothill, LLC (“WFF”) and CapitalSource Bank (“CapSource”; WFF and CapSource each a “Lender” and severally, the “Lenders” or “we” or “us”), understand, Symphony Technology Group (the “Sponsor” or “you”) has formed an acquisition entity (“Newco”) in order to acquire (the “Acquisition”) MSC.Software Corporation (the “Company”). The Acquisition is to be accomplished by means of the merger of a wholly-owned subsidiary of Newco with and into Company, with Company as the survivor of such merger. The Lenders further understand that Sponsor is desirous of obtaining financing for Company in order to (a) finance a portion of the consideration payable in connection with the consummation of the Acquisition, (b) refinance certain of Company’s existing indebtedness, (c) finance general corporate purposes of Company (including permitted acquisitions (“Permitted Acquisitions”; such term to be defined in a mutually agreeable manner in the final loan documentation for the Facility (as hereinafter defined)), and (d) pay fees and expenses associated with the transactions contemplated hereby (collectively, the “Transaction”). You have informed WFF and CapSource that the sources and uses (the “Sources and Uses”) for the debt and equity financing of the Transaction are as set forth on Annex A hereto.

Reference is hereby made to that certain commitment letter, dated July 7, 2009 (together with the exhibits and annexes thereto, the “Original Commitment Letter”), addressed to Sponsor by WFF and CapSource, and that certain term sheet attached thereto (together with the exhibits and annexes thereto, the “Original Term Sheet”).

Reference is hereby made to that certain amended and restated commitment letter, dated September 14, 2009 (together with the exhibits and annexes thereto, the “Amended and Restated Commitment Letter”), addressed to Sponsor by WFF and CapSource, and that certain amended and restated term sheet attached thereto (together with the exhibits and annexes thereto, the “Amended and Restated Term Sheet”).


Symphony Technology Group

September 28, 2009

Page 2

 

Reference is hereby made to that certain second amended and restated commitment letter, dated September 21, 2009 (together with the exhibits and annexes thereto, the “Second Amended and Restated Commitment Letter”), addressed to Sponsor by WFF and CapSource, and that certain amended and restated term sheet attached thereto (together with the exhibits and annexes thereto, the “Second Amended and Restated Term Sheet”).

Reference is hereby made to that certain third amended and restated commitment letter, dated September 23, 2009 (together with the exhibits and annexes thereto, the “Third Amended and Restated Commitment Letter”), addressed to Sponsor by WFF and CapSource, and that certain amended and restated term sheet attached thereto (together with the exhibits and annexes thereto, the “Third Amended and Restated Term Sheet”).

Reference is hereby made to that certain fourth amended and restated commitment letter, dated September 24, 2009 (together with the exhibits and annexes thereto, the “Fourth Amended and Restated Commitment Letter”), addressed to Sponsor by WFF and CapSource, and that certain amended and restated term sheet attached thereto (together with the exhibits and annexes thereto, the “Fourth Amended and Restated Term Sheet”).

The Lenders are pleased to provide you with this fifth amended and restated commitment letter (the “Fifth Amended and Restated Commitment Letter”), and the fifth amended and restated term sheet attached hereto (the “Fifth Amended and Restated Term Sheet”), which establish the terms and conditions under which WFF (on a several basis) commits to provide to Company $45,000,000 and CapSource (on a several basis) commits to provide to Company $20,000,000 of a $65,000,000 senior secured credit facility (the “Facility”). The Fifth Amended and Restated Commitment Letter and the Fifth Amended and Restated Term Sheet supersede and amend and restate in their entirety the Fourth Amended and Restated Commitment Letter and the Fourth Amended and Restated Term Sheet, respectively. The parties acknowledge that the Fifth Amended and Restated Term Sheet and this Fifth Amended and Restated Commitment Letter (a) summarize all of the substantive conditions precedent to the Facility, and (b) summarize all of the substantive covenants, representations, and events of default but do not purport to summarize the other provisions that will be in the definitive legal documentation. The parties agree that such covenants, representations, warranties and other provisions (to the extent not already addressed in the Fifth Amended and Restated Term Sheet or this Fifth Amended and Restated Commitment Letter) will be customary for transactions of this type or otherwise acceptable to Sponsor, WFF, and CapSource. In addition, the parties acknowledge and agree that the commitments of WFF and CapSource are several obligations and are not joint or joint and several commitments.

Expenses and Indemnification

You agree (a) to pay or reimburse, all reasonable, out-of-pocket fees, costs, and expenses (including, without limitation, reasonable fees and disbursements of counsel, reasonable consultant costs and expenses, filing and recording fees, and costs and expenses associated with due diligence, travel, appraisals, valuations, and audits) (the “Expenses”) incurred by or on behalf of WFF and/or CapSource in connection with (i) the preparation, negotiation, execution,


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September 28, 2009

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and delivery of this Fifth Amended and Restated Commitment Letter, the Fifth Amended and Restated Term Sheet, the Fourth Amended and Restated Commitment Letter, the Fourth Amended and Restated Term Sheet, the Third Amended and Restated Commitment Letter, the Third Amended and Restated Term Sheet, the Second Amended and Restated Commitment Letter, the Second Amended and Restated Term Sheet, the Amended and Restated Commitment Letter, the Amended and Restated Term Sheet, the Original Commitment Letter, the Original Term Sheet, and any and all documentation for the Facility, and (ii) the enforcement of any of WFF’s or CapSource’s rights and remedies under this Fifth Amended and Restated Commitment Letter in each case irrespective of whether the Transaction is consummated, and (b) to indemnify, defend, and hold harmless WFF, CapSource, each of their respective affiliates, and each of their officers, directors, employees, agents, advisors, attorneys, and representatives (each, an “Indemnified Person”) as set forth on Exhibit A hereto. WFF agrees to provide telephonic updates as to the estimated accrued amount of Expenses from time to time at the request of Sponsor.

WFF and Sponsor hereby agree that (a) the letter agreement, dated as of May 11, 2009, by and between WFF and Sponsor relating to expense reimbursement is hereby terminated; and (b) the reimbursement of all out-of-pocket fees, costs, and expenses (including, without limitation, reasonable fees and disbursements of counsel, reasonable consultant costs and expenses, filing and recording fees, and costs and expenses associated with due diligence, travel, appraisals, valuations, and audits) incurred by WFF prior to, or, or after the date hereof shall be governed by the terms of this Fifth Amended and Restated Commitment Letter.

Fees

You agree to pay or cause Company to pay the fees set forth on Annex A-I, in immediately available funds, as and when indicated therein.

Conditions

The several commitments of WFF and CapSource to provide their ratable share of the Facility shall be subject to (a) the negotiation, execution and delivery of definitive loan documentation customary for transactions of this type and consistent with the terms and conditions set forth herein and in the Fifth Amended and Restated Term Sheet, in form and substance reasonably satisfactory to WFF and CapSource (the “Loan Documents”), (b) since December 31, 2008, there has not been any Material Adverse Effect (as defined below), as determined by WFF and CapSource in their reasonable discretion, (c) the absence of any change, in any material respect, to the Sources and Uses, as determined by WFF and/or CapSource in their reasonable discretion (provided, however, that the Sources and Uses may change as contemplated by the conditions in Annex B), and (d) the performance of your obligations set forth herein and in the Fifth Amended and Restated Term Sheet, and the satisfaction of the conditions set forth herein and in the Fifth Amended and Restated Term Sheet.

For the purposes hereof, “Material Adverse Effect” means, with respect to the Company, any change, event, occurrence or state of facts that (a) is materially adverse to the financial condition,


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September 28, 2009

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business, assets, or results of operations of the Company and its Subsidiaries (as defined in the Execution Copy of the Agreement and Plan of Merger, dated July 7, 2009, by and among MSC.Software Corporation, a Delaware corporation, Maximum Holdings Inc., a Delaware corporation, and Maximus Inc., a Delaware corporation, together with the Company Disclosure Schedule and Annexes A and B to the Disclosure Schedules, each of which was delivered by Shearman & Sterling LLP to Paul, Hastings, Janofsky & Walker LLP at 3:22 p.m. (Pacific time), 1:43 p.m. (Pacific time), and 2:53 p.m. (Pacific time), respectively, on July 7, 2009, as will be amended by that certain draft Amendment to Agreement and Plan of Merger, by and among MSC.Software Corporation, a Delaware corporation, Maximum Holdings Inc., a Delaware corporation, and Maximus Inc., a Delaware corporation, which was delivered by Shearman & Sterling LLP to Paul, Hastings, Janofsky & Walker LLP at 5:10 p.m. (Pacific time) on September 28, 2009 (the “Merger Agreement”)), taken as a whole, or (b) prevents the Company from consummating the Merger (as defined in the Merger Agreement) and the other transactions contemplated by the Merger Agreement, excluding, in the case of clause (a), any effect resulting from (A) changes in the financial or securities markets (including, but not limited to, changes in currency exchange rates and interest rates) or changes in general global, national or regional economic or political conditions, in either case not having a materially disproportionate effect on the Company and its Subsidiaries, taken as a whole, relative to other participants in the software industry, (B) changes (including changes of Applicable Law (as defined in the Merger Agreement) or in GAAP (as defined in the Merger Agreement) or regulatory accounting requirements) generally affecting the software industry and not specifically relating to or having a materially disproportionate effect on the Company and its Subsidiaries, taken as a whole, relative to other participants in the software industry, (C) acts of war, sabotage or terrorism or natural disasters not having a materially disproportionate effect on the Company and its Subsidiaries, taken as a whole, relative to other participants in the software industry, (D) the announcement, pendency or consummation of the transactions contemplated by the Merger Agreement (including any loss of, or adverse change in, the relationship of the Company and its Subsidiaries with their respective employees, customers, distributors, partners or suppliers resulting therefrom), (E) any failure by the Company and its Subsidiaries to meet any internal or published budgets, projections, forecasts or predictions of financial performance for any period (it being understood that the causes underlying such failure may be considered in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur) or (F) any action taken by the Company or its Subsidiaries at the written request of Parent (as defined in the Merger Agreement) or that is expressly required pursuant to the Merger Agreement in and of itself (it being understood that the manner in which any such action is taken, and the effects of any such action, may be considered in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur).

For the purposes hereof, “Projections” means the financial information and projections as WFF and CapSource may reasonably request, including a business plan for fiscal year 2009 through fiscal year 2012 on a quarterly basis and a written analysis of the business and prospects of Company and its subsidiaries for such period, all in form and substance reasonably satisfactory to WFF and CapSource; it being recognized by WFF and CapSource that projections of future events are not to be viewed as facts and actual results may vary significantly from projected results.


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Notwithstanding anything in this Fifth Amended and Restated Commitment Letter, the Fifth Amended and Restated Term Sheet or any other letter agreement or other undertaking concerning the Facility to the contrary, (i) the only representations and warranties relating to the Company and its subsidiaries and their businesses, the accuracy of which shall be a condition to the availability of the Facility on the Closing Date shall be (A) such of the representations and warranties made by the Company in the Merger Agreement, to the extent that you or Parent have a right not to consummate the transactions contemplated by the Merger Agreement or to terminate your or its obligations under the Merger Agreement as a result of a breach of such representations and warranties, and (B) the Specified Representations (as hereinafter defined), and (ii) the terms of the Facility shall contain no condition precedent to the funding of the Facility on the Closing Date other than those set forth in this Fifth Amended and Restated Commitment Letter or in Annex B to the Fifth Amended and Restated Term Sheet, the satisfaction of which shall obligate the Lenders to provide the Facility on the terms set forth in this Fifth Amended and Restated Commitment Letter and the Fifth Amended and Restated Term Sheet (it being understood that, to the extent any collateral is not provided on the Closing Date after your use of commercially reasonable efforts to do so (other than (x) the filing of Uniform Commercial Code financing statements, (y) the filing of intellectual property security agreements for intellectual property that is registered as of the Closing Date, and (z) the delivery of stock certificates), the providing of such collateral shall not constitute a condition precedent to the availability of the Facility on the Closing Date but shall be required to be provided after the Closing Date pursuant to arrangements to be mutually agreed upon). For purposes hereof, “Specified Representations” means the representations and warranties set forth in the Loan Documents relating to organization, existence, power and authority, due authorization, execution, delivery, enforceability and non-contravention of the Loan Documents with the Loan Parties’ governing documents, applicable law, or any order, judgment, or decree of any court or other governmental authority binding on any Loan Party or its subsidiaries, receipt of governmental approvals in connection with the Facility, use of proceeds, solvency, debt, liens, Federal Reserve Bank margin regulations, the Investment Company Act and, subject to parenthetical in clause (ii) above, the perfection of the security interests granted in the collateral as of the Closing Date.

Confidentiality

(a) You agree that this Fifth Amended and Restated Commitment Letter (including the Fifth Amended and Restated Term Sheet) is for your confidential use only and that neither its existence, nor the terms hereof, will be disclosed by you to any person other than your officers, directors, employees, accountants, attorneys, and other advisors, and then only on a “need-to-know” basis in connection with the Transaction contemplated hereby and on a confidential basis. This Fifth Amended and Restated Commitment Letter is provided solely for the benefit of the parties signatory hereto, and no other person shall acquire or have any right under or by virtue of this Fifth Amended and Restated Commitment Letter. The foregoing notwithstanding, you may (i) provide a copy hereof (including the Fifth Amended and Restated Term Sheet, but not


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September 28, 2009

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including Annex A-I or Annex A-II) to Company so long as it agrees not to disclose this Fifth Amended and Restated Commitment Letter other than to its officers, directors, employees, accountants, attorneys, and other advisors, and then only on a “need-to-know” basis in connection with the Transaction contemplated hereby and on a confidential basis, (ii) provide a copy hereof (including the Fifth Amended and Restated Term Sheet) to Elliott Associates L.P. and Elliott Management Corporation and their respective affiliates that are investment firms so long as they agree not to disclose this Fifth Amended and Restated Commitment Letter other than to their respective officers, directors, employees, accountants, attorneys, and other advisors, and then only on a “need-to-know” basis in connection with the Transaction contemplated hereby and on a confidential basis, (iii) provide a copy hereof (including the Fifth Amended and Restated Term Sheet) to your officers, directors, employees, accountants, attorneys, and other advisors, and then only on a “need-to-know” basis in connection with the Transaction contemplated hereby and on a confidential basis, and (iv) after your acceptance hereof in accordance with the terms hereof, file or make such other public disclosures of the terms and conditions hereof (including the Fifth Amended and Restated Term Sheet, but not including Annex A-I or Annex A-II) (A) as you are required by law, in the opinion of your counsel, to make, (B) as may be required by regulatory authorities so long as such authorities are informed of the confidential nature of such information, (C) as may be required by statute, decision, or judicial or administrative order, rule, or regulation, provided that prior to any disclosure under this clause (C), the disclosing party agrees to provide WFF and CapSource with prior notice thereof, to the extent that it is practicable to do so and to the extent that the disclosing party is permitted to provide such prior notice to WFF and CapSource pursuant to the terms of the applicable statute, decision, or judicial or administrative order, rule, or regulation, (D) as may be agreed to in advance by WFF and CapSource, (E) as requested or required by any governmental authority pursuant to any subpoena or other legal process, provided that prior to any disclosure under this clause (E) the disclosing party agrees to provide WFF and CapSource with prior notice thereof, to the extent that it is practicable to do so and to the extent that the disclosing party is permitted to provide such prior notice to WFF and CapSource pursuant to the terms of the subpoena or other legal process, (F) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by Sponsor), and (G) in connection with any litigation or other adverse proceeding involving parties to this Fifth Amended and Restated Commitment Letter; provided that prior to any disclosure to a party other than WFF and CapSource, their respective affiliates and their respective counsel under this clause (G) with respect to litigation involving a party other than WFF and CapSource, and their respective affiliates, the disclosing party agrees to provide WFF and CapSource with prior notice thereof.

(b) Each of the Lenders agrees that material, non-public information regarding Company and its subsidiaries, their operations, assets, and existing and contemplated business plans shall be treated by such Lender in a confidential manner, and shall not be disclosed by such Lender to persons who are not parties to this Fifth Amended and Restated Commitment Letter, except: (i) to attorneys for and other advisors, accountants, auditors, and consultants to WFF or CapSource, as applicable, on a “need to know” basis in connection with Transaction contemplated hereby and on a confidential basis, (ii) to subsidiaries and affiliates of WFF or CapSource, as applicable,


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provided that any such subsidiary or affiliate shall have agreed to receive such information hereunder subject to the terms of this clause (b), (iii) as may be required by regulatory authorities so long as such authorities are informed of the confidential nature of such information, (iv) as may be required by statute, decision, or judicial or administrative order, rule, or regulation, provided that prior to any disclosure under this clause (iv), the disclosing party agrees to provide Sponsor with prior notice thereof, to the extent that it is practicable to do so and to the extent that the disclosing party is permitted to provide such prior notice to Sponsor pursuant to the terms of the applicable statute, decision, or judicial or administrative order, rule, or regulation, (v) as may be agreed to in advance by Sponsor, (vi) as requested or required by any governmental authority pursuant to any subpoena or other legal process, provided that prior to any disclosure under this clause (vi) the disclosing party agrees to provide Sponsor with prior notice thereof, to the extent that it is practicable to do so and to the extent that the disclosing party is permitted to provide such prior notice to Sponsor pursuant to the terms of the subpoena or other legal process, (vii) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by a Lender), (viii) in connection with any proposed assignment or participation of WFF’s or CapSource’s, as applicable, interest in the Facility, provided that any such proposed assignee or participant shall have agreed in writing to receive such information subject to the terms of this clause (b), and (ix) in connection with any litigation or other adverse proceeding involving parties to this Fifth Amended and Restated Commitment Letter; provided that prior to any disclosure to a party other than Sponsor, Company, the Lenders (as defined in the Fifth Amended and Restated Term Sheet), their respective affiliates and their respective counsel under this clause (ix) with respect to litigation involving a party other than Sponsor, Company, the Lenders, and their respective affiliates, the disclosing party agrees to provide Sponsor with prior notice thereof.

Anything to the contrary in this Fifth Amended and Restated Commitment Letter notwithstanding, Sponsor agrees that WFF and CapSource shall have the right to provide information concerning the aggregate amount of the Facility and the names of Sponsor and Borrower to loan reporting services.

Exclusivity and Certain Fees

The parties agree that the exclusivity, Lender Break-Up Fee (as defined in Annex A-II), and Termination Fee (as defined in Annex A-II) provisions shall be as set forth on Annex A-II.

Information

In issuing this Fifth Amended and Restated Commitment Letter, each Lender is relying on the accuracy of the information furnished to it by or on behalf of Sponsor and Company and their affiliates, without independent verification thereof. Sponsor acknowledges that it is a further condition precedent to the funding of the Facility that, to the best of Sponsor’s knowledge after diligent inquiry, (a) all written information (other than forward looking information and Projections) concerning Company and its subsidiaries (the “Information”) that has been, or is hereafter, made available by or on behalf of Sponsor or Company is, or when delivered shall be, when considered as a whole, complete and correct in all material respects and does not, or shall


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not when delivered, contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading in any material respect in light of the circumstances under which such statements have been made, and (b) all Projections that have or are hereafter made available by or on behalf of Sponsor or Company are, or when delivered shall be, prepared in good faith on the basis of information and assumptions that are believed by Sponsor or Company to be reasonable at the time such Projections were prepared; it being recognized by WFF and CapSource that projections of future events are not to be viewed as facts and actual results may vary significantly from projected results.

Sharing Information; Absence of Fiduciary Relationship; Affiliate Activities

You acknowledge that WFF and CapSource or one or more of their affiliates may be providing debt financing, equity capital or other services (including financial advisory services) to other companies in respect of which you may have conflicting interests regarding the transactions described herein or otherwise. You also acknowledge that we do not have any obligation to use in connection with the transactions contemplated by this Fifth Amended and Restated Commitment Letter, or to furnish to you, confidential information obtained by us from other companies.

You further acknowledge and agree that (a) no fiduciary, advisory or agency relationship between you, on the one hand, and WFF or CapSource, on the other hand, is intended to be or has been created in respect of any of the transactions contemplated by this Fifth Amended and Restated Commitment Letter, irrespective of whether WFF, CapSource, or one or more of their affiliates has advised or is advising you on other matters, (b) WFF or CapSource, on the one hand, and you, on the other hand, have an arms-length business relationship that does not directly or indirectly give rise to, nor do you rely on, any fiduciary duty on the part of WFF or CapSource, (c) you are capable of evaluating and understanding, and you understand and accept, the terms, risks and conditions of the transactions contemplated by this Fifth Amended and Restated Commitment Letter, (d) you have been advised that WFF, CapSource, or one or more of their affiliates is engaged in a broad range of transactions that may involve interests that differ from your interests and that WFF and CapSource do not have any obligation to disclose such interests and transactions to you by virtue of any fiduciary, advisory or agency relationship, and (e) you waive, to the fullest extent permitted by law, any claims you may have against WFF or CapSource for breach of fiduciary duty or alleged breach of fiduciary duty and agree that WFF and CapSource shall not have any liability (whether direct or indirect) to you in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf of or in right of you, including your stockholders, employees or creditors. For the avoidance of doubt, the provisions of this paragraph apply only to the transactions contemplated by this Fifth Amended and Restated Commitment Letter and the relationships and duties created in connection with the transactions contemplated by this Fifth Amended and Restated Commitment Letter.

You further acknowledge that one or more of the Lenders’ affiliates are a full service securities firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, the Lenders or one or more of the Lenders’ affiliates may provide investment banking and other financial services to,


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and/or acquire, hold or sell, for their respective own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of, you, and Company and other companies with which you or Company may have commercial or other relationships. With respect to any debt or other securities and/or financial instruments so held by any Lender or one or more of its affiliates or any of their respective customers, all rights in respect of such securities and financial instruments, including any voting rights, will be exercised by the holder of the rights, in its sole discretion.

Governing Law, Etc.

This Fifth Amended and Restated Commitment Letter shall be governed by, and construed in accordance with, the law of the State of California. Each of the parties hereto consents to the exclusive jurisdiction and venue of the federal and/or state courts located in Los Angeles, California.

This Fifth Amended and Restated Commitment Letter (together with the exhibits and annexes hereto, the Fifth Amended and Restated Term Sheet, and the Fifth Amended and Restated WFF Fee Letter (as defined in the Fifth Amended and Restated Term Sheet)) sets forth the entire agreement between the parties with respect to the matters addressed herein, supersedes all prior communications, written or oral, with respect hereto, and may not be amended, supplemented, or modified except in a writing signed by the parties hereto. The parties hereto acknowledge and agree that (a) the Fourth Amended and Restated Commitment Letter and the Fourth Amended and Restated Term Sheet are superseded and amended and restated in their entirety by this Fifth Amended and Restated Commitment Letter (together with the exhibits and annexes hereto, and the Fifth Amended and Restated Term Sheet), and (b) the Fourth Amended and Restated WFF Fee Letter (as defined in the Fifth Amended and Restated Term Sheet) is superseded and amended and restated in its entirety by the Fifth Amended and Restated WFF Fee Letter (as defined in the Fifth Amended and Restated Term Sheet).

This Fifth Amended and Restated Commitment Letter may be executed in any number of counterparts, each of which, when so executed, shall be deemed to be an original and all of which, taken together, shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Fifth Amended and Restated Commitment Letter by telecopier or other electronic transmission shall be equally effective as delivery of a manually executed counterpart of this Fifth Amended and Restated Commitment Letter.

In the event that this Fifth Amended and Restated Commitment Letter is terminated or expires, the Expenses and Indemnification, Fees, Confidentiality, Exclusivity and Certain Fees (including Annex A-II), Governing Law, and Waiver of Jury Trial provisions hereof shall survive such termination or expiration. Anything contained herein to the contrary notwithstanding, the obligations of Sponsor under this Fifth Amended and Restated Commitment Letter shall terminate at the time of the execution and delivery of the Loan Documents relative to the Facility.


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Waiver of Jury Trial

To the maximum extent permitted by applicable law, each party hereto irrevocably waives any and all rights to a trial by jury in any action or proceeding (whether based on contract, tort, or otherwise) arising out of or relating to this Fifth Amended and Restated Commitment Letter or the Transaction contemplated hereby or the actions of WFF or CapSource or any of their affiliates in the negotiation, performance, or enforcement of this Fifth Amended and Restated Commitment Letter.

Patriot Act

WFF and CapSource hereby notify you that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “PATRIOT Act”), WFF and/or CapSource may be required to obtain, verify and record information that identifies the Loan Parties (as defined in the Fifth Amended and Restated Term Sheet), which information includes the name, address, tax identification number and other information regarding the Loan Parties that will allow WFF and/or CapSource to identify the Loan Parties in accordance with the PATRIOT Act. This notice is given in accordance with the requirements of the PATRIOT Act.

* * * * *


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This Fifth Amended and Restated Commitment Letter shall expire, unless otherwise agreed to in writing by WFF and CapSource, at 12:00 a.m. (Eastern time) on September 30, 2009 (9:00 p.m. (Pacific time) on September 29, 2009), unless prior thereto (i) WFF and CapSource have received a copy of this Fifth Amended and Restated Commitment Letter signed by Sponsor, and (ii) WFF has received a copy of the Fifth Amended and Restated WFF Fee Letter (as defined in the Fifth Amended and Restated Term Sheet) signed by Sponsor. In the event the Loan Documents for the Facility are not executed and delivered by the parties thereto on or prior to November 7, 2009 or the Acquisition is not consummated on or prior to November 7, 2009, then the Lenders’ commitment to provide the Facility shall automatically expire on such date. If you elect to deliver your signed counterpart of this Fifth Amended and Restated Commitment Letter by telecopier or other electronic transmission, please arrange for the executed original to follow by next-day courier. The “Closing Date” shall mean the date of the initial funding under the Facility.


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Very truly yours,
WELLS FARGO FOOTHILL, LLC
By:  

/s/ Jee Hoon Park

Name:   Jee Hoon Park
Title:   Vice President


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CAPITALSOURCE BANK
By:  

/s/ Jason Schwartz

Name:   Jason Schwartz
Title:   Banking Officer


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September 28, 2009

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ACCEPTED AND AGREED TO
this      day of September, 2009
SYMPHONY TECHNOLOGY GROUP
By:  

/s/ William Chisholm

Name:   William Chisholm
Title:   Managing Director

 

cc:    Thomas E. Lane, Senior Vice President, National Underwriting Manager, Wells Fargo Foothill, LLC
   Ryan Chin, Director, Loan Syndications, Wells Fargo Foothill, LLC
   James Oh, Associate, Loan Syndications, Wells Fargo Foothill, LLC


ANNEX A

[Redacted]


EXHIBIT A

Indemnification Provisions

Capitalized terms used herein shall have the meanings set forth in the fifth amended and restated commitment letter, dated September 28, 2009 (the “Fifth Amended and Restated Commitment Letter”) addressed to Symphony Technology Group (the “Indemnifying Party”) from Wells Fargo Foothill, LLC (“WFF”) and CapitalSource Bank (“CapSource”).

To the fullest extent permitted by applicable law, Indemnifying Party agrees that it will indemnify, defend, and hold harmless each of the Indemnified Persons from and against (i) any and all losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements, (ii) any and all actions, suits, proceedings and investigations in respect thereof, and (iii) any and all legal or other costs, expenses or disbursements in giving testimony or furnishing documents in response to a subpoena or otherwise (including, without limitation, the costs, expenses and disbursements, as and when incurred, of investigating, preparing or defending any such action, proceeding or investigation (whether or not in connection with litigation in which any of the Indemnified Persons is a party) and including, without limitation, any and all losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements, resulting from any negligent act or omission of any of the Indemnified Persons), directly or indirectly, caused by, relating to, based upon, arising out of or in connection with (a) the Transaction, (b) the Original Commitment Letter, the Amended and Restated Commitment Letter, the Second Amended and Restated Commitment Letter, the Third Amended and Restated Commitment Letter, the Fourth Amended and Restated Commitment Letter, the Fifth Amended and Restated Commitment Letter or the Facility, or (c) any untrue statement or alleged untrue statement of a material fact contained in, or omissions or alleged omissions in, information furnished by Indemnifying Party or Company, or any of their subsidiaries or affiliates, or any other person in connection with the Transaction, the Original Commitment Letter, the Amended and Restated Commitment Letter, the Second Amended and Restated Commitment Letter, the Third Amended and Restated Commitment Letter, the Fourth Amended and Restated Commitment Letter, or the Fifth Amended and Restated Commitment Letter, provided, however, such indemnity agreement shall not apply to any portion of any such loss, claim, damage, obligation, penalty, judgment, award, liability, cost, expense or disbursement to the extent it is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily and directly from the gross negligence or willful misconduct of the Indemnified Persons.

These Indemnification Provisions shall be in addition to any liability which any Indemnifying Party may have to the Indemnified Persons.

If any action, suit, proceeding or investigation is commenced, as to which any of the Indemnified Persons proposes to demand indemnification, it shall notify the Indemnifying Parties with reasonable promptness, provided, however, that any failure by any of the Indemnified Persons to so notify any Indemnifying Party shall not relieve any Indemnifying Party from its obligations hereunder. WFF, on behalf of WFF and its Indemnified Persons, shall have the right to retain counsel of its choice to represent WFF and its Indemnified Persons. CapSource, on behalf of

 

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CapSource and its Indemnified Persons, shall have the right to retain counsel of its choice to represent CapSource and its Indemnified Persons. Each Indemnifying Party shall pay the fees, expenses and disbursements of such counsel, and such counsel shall, to the extent consistent with its professional responsibilities, cooperate with the Indemnifying Party and any counsel designated by the Indemnifying Parties. Each Indemnifying Party shall be liable for any settlement of any claim against any of the Indemnified Persons made with its written consent, which consent shall not be unreasonably withheld. Without the prior written consent of WFF, none of WFF’s Indemnifying Parties shall settle or compromise any claim, permit a default or consent to the entry of any judgment in respect thereof. Without the prior written consent of CapSource, none of CapSource’s Indemnifying Parties shall settle or compromise any claim, permit a default or consent to the entry of any judgment in respect thereof.

In order to provide for just and equitable contribution, if a claim for indemnification pursuant to these Indemnification Provisions is made but is found by a judgment of a court of competent jurisdiction (not subject to further appeal) that such indemnification may not be enforced in such case, even though the express provisions hereof provided for indemnification in such case, then each Indemnifying Party, on the one hand, and the Indemnified Persons, on the other hand, shall contribute to the losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements to which the Indemnified Persons may be subject in accordance with the relative benefits received by each Indemnifying Party, on the one hand, and the Indemnified Persons, on the other hand, and also the relative fault of the Indemnifying Party, on the one hand, and the Indemnified Persons collectively and in the aggregate, on the other hand, in connection with the statements, acts or omissions which resulted in such losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements and the relevant equitable considerations shall also be considered. No person found liable for a fraudulent misrepresentation shall be entitled to contribution from any other person who is not also found liable for such fraudulent misrepresentation. Notwithstanding the foregoing, none of the Indemnified Persons shall be obligated to contribute any amount hereunder that exceeds the amount of fees previously received by such Indemnified Person pursuant to the Fifth Amended and Restated Commitment Letter.

Neither expiration or termination of either or both of the Lenders’ commitments under the Fifth Amended and Restated Commitment Letter nor funding or repayment of the loans under the Facilities shall affect these Indemnification Provisions which shall remain operative and in full force and effect.

All obligations and liabilities of the Indemnifying Parties under these Indemnification Provisions shall be in all respects joint and several.

 

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FIFTH AMENDED AND RESTATED TERM SHEET

This Fifth Amended and Restated Term Sheet is part of the fifth amended and restated commitment letter, dated September 28, 2009 (the “Fifth Amended and Restated Commitment Letter”), addressed to Symphony Technology Group (“Sponsor”) by Wells Fargo Foothill, LLC (“WFF”) and CapitalSource Bank (“CapSource”) and is subject to the terms and conditions of the Fifth Amended and Restated Commitment Letter. Capitalized terms used herein and the accompanying Annexes shall have the meanings set forth in the Fifth Amended and Restated Commitment Letter unless otherwise defined herein.

 

Borrower:

MSC.Software Corporation (the “Company”) and each of its domestic subsidiaries (together with the Company, individually and collectively, jointly and severally, the “Borrower”).

 

Guarantors:

The direct parent company of the Company (the “Parent”) and all of Parent’s present and future direct and indirect subsidiaries (other than Borrower); provided, that, subject to the section hereof entitled “Collateral” and in particular the provision therein regarding intellectual property, subsidiaries that are controlled foreign corporations (each a “CFC”) will not be required to be Guarantors if to do so could reasonably be expected to (i) result in adverse tax consequences to Parent and its subsidiaries, (ii) result in costs to Parent and its subsidiaries that are disproportionately large in relation to the benefit to Lenders, as determined by the Lenders in their reasonable discretion, or (iii) be prevented or significantly impaired by foreign laws or regulations (such Guarantors, together with Borrower, each a “Loan Party” and collectively, the “Loan Parties”).

Anything to the contrary contained in the Fifth Amended and Restated Commitment Letter or this Fifth Amended and Restated Term Sheet notwithstanding, the Lenders reserve the right to amend the structure of the Facility to obtain first priority perfected security interests on assets (including, without limitation, accounts receivable, cash, deposit accounts, and intellectual property) of subsidiaries organized under laws other than the laws of the United States.

 

Lenders and Agent:

WFF, CapSource and such other lenders designated by WFF and/or CapSource with the written consent of Agent (such consent not to be (i) unreasonably withheld or delayed, (ii) required in connection with an assignment by a Lender to one of its affiliates or an approved fund under common control with a Lender, and (iii) required in connection with an assignment for collateral purposes) (the “Lenders”). WFF shall be the administrative agent for the Lenders (in such capacity, the “Agent”).

 

Co-Lead Arranger:

CapSource shall be the co-lead arranger for the Lenders.

 

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Facility:

A senior secured credit facility (the “Facility”) in a maximum credit amount of $65,000,000 (the “Maximum Credit Amount”). Under the Facility, Lenders will severally (up to the limits described below) provide Borrower with a revolving credit facility (the “Revolver”) and a term loan (the “Term Loan”; together with amounts outstanding under the Revolver, the “Loans”).

 

Revolver:

Advances under the Revolver (“Advances”) will be available up to a maximum amount outstanding at any one time of $15,000,000 (the “Maximum Revolver Amount”), of which (a) WFF commits to provide up to a maximum amount of $10,500,000 and (b) CapSource commits to provide up to a maximum amount of $4,500,000. At least $7,500,000 of the Revolver will be unfunded on the Closing Date.

 

Letter of Credit Subfacility:

Under the Revolver, Borrower will be entitled to request that Agent issue guarantees of payment (“Letters of Credit”) with respect to letters of credit issued by Wells Fargo Bank, N.A. in an aggregate amount not to exceed $5,000,000 at any one time outstanding. The aggregate amount of outstanding Letters of Credit will be reserved against the Maximum Revolver Amount.

 

Term Loan:

On the Closing Date, Lenders will provide Borrower the Term Loan in an amount equal to $50,000,000 (of which WFF commits to provide up to a maximum amount of $34,500,000, and CapSource commits to provide up to a maximum amount of $15,500,000), but in no event will the aggregate amount of (x) the Term Loan to be made on the Closing Date and (y) the Advances made under the Revolver on the Closing Date be greater than 2.00 times the Company’s trailing twelve months pro forma EBITDA (“TTM Pro Forma EBITDA”) for the 12 month period ended June 30, 2009.

The parties hereto agree that (x) the pro forma adjustments that are to be added to calculate TTM Pro Forma EBITDA shall be (1) with respect to any reporting period ended on or before the Closing Date (other than the 12 month period ending March 31, 2009, which shall be as set forth in clause (y) below), substantially consistent with the categories of adjustments set forth in the Deloitte consulting report dated as of May 17, 2009 (the “Deloitte Report”) (but including negative adjustments for any capitalized software costs) in

 

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amounts reasonably acceptable to the Lenders, and (2) with respect to any reporting period ending after the Closing Date, as reasonably agreed upon by the parties hereto (but including negative adjustments for capitalized software costs), and (y) the TTM Pro Forma EBITDA for the 12 month period ended March 31, 2009 for the Company and its subsidiaries shall be deemed to be $40,825,000.

In addition, for purposes of calculating TTM Pro Forma EBITDA through the period ending December 31, 2010, the following item shall be added back to EBITDA: any restructuring expenses of Company in an amount not to exceed $18,000,000 and only if incurred during the period from the Closing Date through December 31, 2010.

Commencing on March 31, 2010 (the “First Payment Date”) and thereafter through and including December 31, 2010, the Term Loan will be repayable, on a quarterly basis, by an aggregate amount equal to 10% per annum of the original principal amount of the Term Loan.

Commencing on the first anniversary of the First Payment Date and thereafter through and including December 31, 2011, the Term Loan will be repayable, on a quarterly basis, by an aggregate amount equal to 15% per annum of the original principal amount of the Term Loan.

Commencing on the second anniversary of the First Payment Date and thereafter through and including December 31, 2012, the Term Loan will be repayable, on a quarterly basis, by an aggregate amount equal to 15% per annum of the original principal amount of the Term Loan.

Commencing on the third anniversary of the First Payment Date and thereafter through and including the Maturity Date, the Term Loan will be repayable, on a quarterly basis, by an aggregate amount equal to 20% per annum of the original principal amount of the Term Loan.

Any amount remaining unpaid shall be due and payable in full on the Maturity Date.

 

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Optional Prepayment:

The Advances may be prepaid in whole or in part from time to time without penalty or premium (unless in connection with the prepayment in full of the Facility). The Revolver commitments may be permanently reduced from time to time so long as Borrower pays to Agent (for the benefit of the Lenders) the Prepayment Premium set forth on Annex A-I hereto.

The Term Loan may be prepaid, upon 10 business days prior written notice and in minimum amounts (to be mutually agreed upon), in Borrower’s sole discretion so long as Borrower pays to Agent (for the benefit of the Lenders) the applicable Prepayment Premium set forth herein. All optional prepayments of the Term Loan shall be applied to the installments due in respect thereof on a pro rata basis.

The Facility may be prepaid and the commitments terminated in whole at any time upon 10 business days prior written notice so long as Borrower pays to Agent (for the benefit of the Lenders) the applicable Prepayment Premium set forth on Annex A-I hereto.

 

Mandatory Prepayments:

The Facility will be required to be prepaid as follows:

(a) commencing with the fiscal year ending December 31, 2010, in an amount equal to the result of (i) 50% of the consolidated excess cash flow of Parent and its Subsidiaries for each fiscal year, minus (ii) the aggregate amount of all voluntary prepayments of the Term Loan and the Advances during such fiscal year, to the extent the latter are accompanied by an equivalent reduction in the Maximum Revolver Amount; provided that the foregoing percentage shall be reduced to 25% with respect to any fiscal year of the Company (other than the fiscal year of the Company ending December 31, 2010) in which the Company’s total leverage ratio for such fiscal year is less than 1.00:1.00. (The definition of “excess cash flow” will be defined in a manner mutually reasonably acceptable to the Company and the Lenders), but it will be based on EBITDA (the definition of which shall be mutually reasonably acceptable to the Company and the Lenders) and changes in Working Capital (the definition of which shall be mutually reasonably acceptable to the Company and the Lenders) minus cash interest

 

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expense, principal payments and loan servicing fees, restructuring costs in an amount not to exceed $18,000,000 and only if incurred during the period from the Closing Date through December 31, 2010, taxes, net capital expenditures, and management fees (as and to the extent permitted)). (The definition of “leverage ratio” shall be defined in a manner mutually and reasonably acceptable to the Company and the Lenders, but it will be based on the result of (x) funded senior indebtedness, which shall be measured as of the date of determination, to (y) EBITDA for the relevant fiscal year);

(b) in an amount equal to 100% of the net cash proceeds of asset dispositions (except for dispositions resulting from casualty losses or condemnations and subject to exceptions to the extent mutually agreed upon), provided, however, that such proceeds may be reinvested within a 180 day period or within a 270 day period if Borrower has entered into a binding contract for reinvestment within 180 days), subject to customary reinvestment provisions;

(c) in an amount equal to 100% of the net cash proceeds of any debt issued by Parent or its subsidiaries (other than permitted debt);

(d) in an amount equal to 50% of the net cash proceeds of any equity issuance by Parent or its subsidiaries (other than equity issuances (the “Subject Stock”) by Parent (i) to Sponsor or Elliott or any of their respective affiliate funds, (ii) to management and other employees pursuant to employee stock or option plans approved by the board of directors of Parent, (iii) to the extent the proceeds are used to finance Permitted Acquisitions and capital expenditures, and (iv) to any other person that is a shareholder of Parent prior to such issuance of Stock (the “Subject Holder”) so long as the Subject Holder did not acquire any Stock of Parent so as to become a Subject Holder concurrently with, or in contemplation of, the issuance of the Subject Stock to such Subject Holder and so long as no change of control results therefrom); and

(e) in an amount equal to (i) 50% of the net cash proceeds of tax refunds, and (ii) 100% of the net cash

 

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proceeds of insurance and casualty receipts (subject to exceptions for (A) customary reinvestment rights in assets used or useful in the business of the Borrower and its subsidiaries, and (B) such other exceptions and reinvestment rights to be mutually agreed upon) and other proceeds from extraordinary events (subject to exceptions for payments of indemnification claims and for proceeds of business interruption insurance) received by the Parent or its subsidiaries; provided, however, that such proceeds may be reinvested within a 180 day period (or within a 270 day period if Borrower has entered into a binding contract for reinvestment within 180 days), subject to customary reinvestment provisions.

All mandatory prepayments shall be applied first to the installments due under the Term Loan on a pro rata basis and second to Advances outstanding under the Revolver (with a corresponding permanent reduction in the Maximum Revolver Amount), and third to cash collateralize the Letters of Credit (with a corresponding permanent reduction in the Maximum Revolver Amount).

Any mandatory prepayment pursuant to clause (b), (c), or (d) above shall be accompanied by the applicable Prepayment Premium set forth on Annex A-I hereto.

 

Use of Proceeds:

To (i) fund certain fees and expenses associated with the Facility and the Transaction, and (ii) finance the ongoing general corporate needs of Borrower, including Permitted Acquisitions. In addition, a portion of the proceeds will be used to finance a portion of the consideration payable in connection with the consummation of the Acquisition.

 

Fees and Interest Rates:

As set forth on Annex A-I and in that certain fifth amended and restated fee letter (the “Fifth Amended and Restated WFF Fee Letter”), dated as of even date herewith, executed by WFF and accepted and agreed to by Sponsor. The Fifth Amended and Restated WFF Fee Letter supersedes and amends and restates in its entirety that certain fee letter, dated September 24, 2009, executed by WFF and accepted and agreed to by Sponsor (the “Fourth Amended and Restated WFF Fee Letter”).

 

Term:

4 years from the Closing Date (“Maturity Date”).

 

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Collateral:

A first priority perfected security interest (a) in substantially all of the Loan Parties’ now owned and hereafter acquired property and assets (other than leasehold interests in real property) and all proceeds and products thereof, subject to permitted liens (to be mutually agreeable to the Lenders and Company), including, notwithstanding anything in the Fifth Amended and Restated Commitment Letter or this Fifth Amended and Restated Term Sheet to the contrary and without limitation and without regard to whether the owner thereof is a Loan Party, substantially all of the intellectual property that is material to the business of Parent and/or its subsidiaries, and (b) in 100% of the capital stock of (or other ownership interests in) each Loan Party (other than Parent) and all proceeds and products thereof; provided that only 65% of the stock of (or other ownership interests in) CFCs will be required to be pledged if the pledge of a greater percentage could reasonably be expected to (i) result in adverse tax consequences to Parent and its subsidiaries, (ii) result in costs to Parent and its subsidiaries that are disproportionately large in relation to the benefit to Lenders, as determined by the Lenders in their reasonable discretion, or (iii) be prevented or significantly impaired by foreign laws or regulations.

 

Representations and Warranties:

The credit agreement governing the Facility will be limited to the following representations and warranties with respect to the Loan Parties and their subsidiaries as are usual and customary for financings of this type (certain of which will be subject to materiality thresholds, baskets and customary exceptions and qualifications to be mutually agreed upon): due organization and qualification; subsidiaries; due authorization; no conflict; governmental consents; binding obligations; perfected liens; title to assets; no encumbrances; jurisdiction of organization; location of chief executive office; organizational identification number; commercial tort claims; litigation; compliance with laws; no material adverse change; fraudulent transfer; employee benefits; environmental condition; intellectual property; leases; deposit accounts and securities accounts; complete disclosure; material contracts; Patriot Act and OFAC; indebtedness; payment of taxes; margin stock; governmental regulation; Parent as holding company; government receivables (assignment of claims), and acquisition documents.

 

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Affirmative Covenants:

The credit agreement governing the Facility will be limited to the following affirmative covenants (certain of which will be subject to materiality thresholds, baskets and customary exceptions and qualifications to be mutually agreed upon) applicable to the Loan Parties and their subsidiaries as are usual and customary for financings of this type: financial statements (including monthly financial statements, annual audited financial statements, and projections), reports, and certificates; collateral reporting; existence; maintenance of properties; taxes; insurance; inspection (by WFF, CapSource, or their respective representatives or agents); compliance with laws; environmental; disclosure updates; formation of subsidiaries; further assurances; lender meetings; material contracts; registration of intellectual property; protection of intellectual property; preservation and maintenance of intellectual property; source code escrow (on a post-close basis); employee benefits; government receivables (assignment of claims); the filing or registration of any documents as required to perfect the Agent’s security interest in the Collateral; amendments to overly broad financing statements in favor of Solarcom LLC and IBM Credit LLC (on a post-close basis) in respect of leased equipment to clarify that any software that is subject to an equipment lien is limited to imbedded software (rather than the Company’s licensed software), which amendments shall be in form and substance satisfactory to Agent and the Lenders.

 

Negative Covenants:

The credit agreement governing the Facility will be limited to the following negative covenants (certain of which will be subject to materiality thresholds, baskets and customary exceptions and qualifications to be mutually agreed upon) applicable to the Loan Parties and their subsidiaries as are usual and customary for financings of this type: indebtedness; liens; fundamental changes (including organizational changes); disposal of assets; change of name; nature of business; prepayments and amendments; change of control; distributions (other than annual distributions of management fees to Sponsor and Elliott in an aggregate amount not to exceed $1,000,000 so long as (a) no event of default has occurred and is continuing, (b) excess availability plus qualified cash is at least $10,000,000 after taking into account all such payments to be made on any date, and

 

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(c) the payment of such management fees is subordinated to the obligations under the Facility pursuant to a subordination agreement, which shall be in form and substance reasonably satisfactory to the Lenders); accounting methods; investments (other than Permitted Acquisitions); transactions with affiliates; use of proceeds; Parent as holding company; limitations on cash in foreign jurisdictions acceptable to the Lenders; and restrictions on transferring cash from domestic to foreign Loan Parties and their subsidiaries.

 

Financial Covenants:

Parent, on a consolidated basis, shall be required to maintain a minimum fixed charge coverage ratio, a maximum leverage ratio, a minimum level of recurring maintenance revenue, and will be subject to a limitation on annual capital expenditures. The levels for the financial covenants will be as set forth on Annex C attached hereto.

 

Banking Relationship:

The Loan Parties shall be required to establish and maintain their primary domestic, operating and investment accounts with Wells Fargo Bank.

 

Events of Default:

The credit agreement governing the Facility will include such events of default (certain of which will be subject to materiality thresholds, exceptions and grace periods to be mutually agreed upon) applicable to the Loan Parties and their subsidiaries as are usual and customary for the Lenders’ financings of this type, including: non-payment of obligations; non-performance of covenants and obligations; material judgments; bankruptcy or insolvency; any restrainment against the conduct of all or a material portion of business affairs; default on other material debt (including hedging agreements); breach of any representation or warranty; limitation or termination of any guarantee with respect to the Facility; impairment of security; employee benefits; and actual or asserted invalidity or unenforceability of any Facility documentation or liens securing obligations under the Facility documentation.

 

9


Conditions Precedent to Closing:

Customary for the Lenders’ loans of this type and those additional deemed appropriate by the Lenders for this transaction, including those conditions set forth on Annex B.

 

Assignments:

Each Lender shall be permitted to assign its rights and obligations under the Loan Documents, or any part thereof, to any person or entity with the consent of Agent and Borrower (each such consent not to be unreasonably withheld, delayed, or conditioned); provided that (a) no consent by Agent or Borrower shall be required for assignments to another Lender, an affiliate of a Lender, or an approved fund under common control with a Lender, or assignments for collateral purposes; (b) no consent of Borrower shall be required (i) during the occurrence and continuation of an event of default, or (ii) in connection with the primary syndication of the commitments and the obligations by WFF (provided that WFF shall consult with Borrower in connection with such primary syndication (it being understood that in no event shall WFF be required to obtain Borrower’s consent with respect to any assignment made in connection with such primary syndication)); and (c) during the occurrence and continuation of an event of default, no consent by WFF as Agent shall be required for assignments by CapSource to a prospective Lender so long as (i) WFF’s share of the Revolver plus the Term Loan is less than $20,000,000 (or if the Revolver has been terminated, WFF’s pro rata share of the outstanding principal balance of the obligations under the Facility is less than 30%), and (ii) the prospective Lender is an Eligible Transferee (such definition to be agreed upon by WFF and CapSource).

Each Lender shall be permitted to sell participations in such rights and obligations, or any part thereof to any person or entity without the consent of Borrower or Agent.

 

Required Lenders:

(a) So long as CapSource and its affiliates hold in the aggregate at least $10,000,000 of the Revolver commitment (or if the Revolver commitment has been terminated or reduced to zero, the Advances) and the outstanding principal amount of the Term Loan, the Lenders who hold at least 66% of the sum of (i) the Revolver commitment, or if the Revolver commitment

 

10


 

has been terminated or reduced to zero, the then extant Revolver Usage (as hereinafter defined), and (ii) the outstanding principal amount of the Term Loan; and

(b) at all other times, the Lenders who hold at least 51% of the sum of (i) the Revolver commitment, or if the Revolver commitment has been terminated or reduced to zero, the then extant Revolver Usage (as hereinafter defined), and (ii) the outstanding principal amount of the Term Loan; provided, however, that at any time there are 2 or more Lenders, “Required Lenders” must include at least 2 Lenders which are not affiliates.

Revolver Usage” means, as of any date of determination, the sum of (1) the amount of outstanding Advances, plus (2) the aggregate undrawn amount of all outstanding Letters of Credit.

 

Governing Law and Forum:

State of New York

 

Counsel to Agent:

Paul, Hastings, Janofsky & Walker LLP

 

11


Annex B

The availability of the Facility is subject to the satisfaction of each of the following conditions precedent:

(a) Completion of the following: an assignment agreement, in form and substance satisfactory to Agent and the Lenders, in which each subsidiary of the Company that owns any intellectual property relating to any software products of the Company assigns all of its right, title, and interest in all intellectual property relating to any software products of the Company to the Company;

(b) Delivery of Loan Documents customary for transactions of this type duly executed by the Loan Parties (or applicable third parties as the case may be) including a credit agreement, security agreements, control agreements, landlord waivers for headquarters location only; provided, however, that the Loan Parties shall only be required to use their best efforts (other than any requirement under law that a fee must be paid to meet the “best efforts” standard) to deliver such landlord waivers, mortgages, pledge agreements, intercreditor agreements and subordination agreements, and complete schedules to each of the foregoing documents, and receipt of other documentation customary for transactions of this type including legal opinions, officers’ certificates, instruments necessary to perfect Agent’s first priority security interest in the Collateral, and certificates of insurance policies and/or endorsements naming Agent as additional insured or loss payee, as the case may be, all in form and substance reasonably satisfactory to Agent and the Lenders; and no default or event of default under such Loan Documents shall have occurred or be continuing or would result therefrom;

(c) Receipt of evidence of corporate authority and certificates of status (including certified copies of the governing documents and material agreements) with respect to each Loan Party issued by the jurisdictions of organization of each Loan Party, all in form and substance reasonably satisfactory to Agent and the Lenders;

(d) Completion of (i) confirmatory Patriot Act searches, OFAC/PEP searches, and customary individual background checks for (A) the Loan Parties’ senior management and key principals and (B) majority controlling Sponsor, in each case, the results of which are satisfactory to Agent and the Lenders and (ii) Patriot Act searches, OFAC/PEP searches, and customary individual background checks for individuals that become a member of the senior management or a key principal after the date that the initial searches and background checks were performed, the results of which are satisfactory to Agent and the Lenders;

(e) (i) Not less than $7,500,000 of the Revolver is unfunded at close, and (ii) cash of the Loan Parties at closing, after giving effect to the initial use of proceeds (including the payment of all fees and expenses) is not less than $26,000,000 (of which $10,000,000 must be cash maintained in deposit accounts of the Company located in the United States);

(f) Receipt of evidence satisfactory to Agent and the Lenders that the Loan Parties have EBITDA of at least $34,000,000 for the 12 month period ending on June 30, 2009;

(g) The following transactions shall have occurred prior to or concurrently with the initial extension of credit under the Facility:

(i) Evidence of a cash equity investment of an amount sufficient for Newco to pay the purchase price for the Acquisition, after giving effect to the aggregate amount of (x) the Facility plus (y) the Mezzanine Debt plus (z) the amount of the Company’s cash that will be used to pay the purchase price, and the amount of such cash equity investment shall, in any event, be at least

 

1


$101,920,000 (assuming a price per share of the Company’s common stock of at least $8.40) by parties reasonably satisfactory to the Lenders and on terms reasonably satisfactory to the Lenders, of which $52,960,000 (assuming a price per share of the Company’s common stock of at least $8.40) must be contributed in cash by Sponsor on terms reasonably satisfactory to the Lenders;

(ii) The Acquisition shall be consummated in accordance with all applicable requirements of law and shall have been approved by the Company’s board of directors and (if necessary) shareholders;

(iii) The definitive agreement relative to the Acquisition shall be substantially in the form of the Merger Agreement and all other all documentation associated with the Acquisition (collectively, the “Acquisition Documentation”) shall be in form and substance reasonably satisfactory to the Lenders or subject to subsequent amendments or modifications approved by or consented to by the Lenders in their reasonable discretion;

(iv) the Acquisition shall be completed on the Closing Date in accordance with the terms and conditions of the Acquisition Documentation, and no such terms or conditions (other than any immaterial terms or conditions) shall have been waived other than with the consent of the Lenders; and Agent and the Lenders shall have received a certificate of Borrower executed by an authorized officer of Borrower certifying on behalf of Borrower as to the solvency of Borrower on a consolidated basis after giving effect to the Acquisition;

(v) (A) Evidence of receipt by Borrower of $133,590,000 (the “Mezzanine Debt”) (which Mezzanine Debt may be reduced, dollar for dollar, by the amount of cash equity investment that Sponsor or Elliott contributes in lieu of such Mezzanine Debt) from unsecured mezzanine debt facilities provided by Sponsor, Elliott, or other financial institutions reasonably satisfactory to the Lenders (the “Mezzanine Lenders”), the terms and conditions of which (including but not limited to terms and conditions relating to the interest rate, fees, maturity, subordination, covenants, events of default and remedies) shall be reasonably satisfactory to the Lenders (it being understood and agreed that a maturity date of 5 years and interest that is paid in kind are satisfactory to the Lenders) and (B) delivery of subordination agreements duly executed by the Mezzanine Lenders with respect to such debt, which shall be in form and substance reasonably satisfactory to the Lenders; and

(h) Receipt of all governmental and third party approvals (including shareholder approvals, Hart-Scott-Rodino clearance and other consents) necessary or, in the reasonable opinion of the Lenders, advisable in connection with the Transaction, which shall all be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the Transaction.

 

2


Annex C

[Redacted]

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-----END PRIVACY-ENHANCED MESSAGE-----