Commitment Letter for Senior Secured and Bridge Facilities – MedAssets, Inc., Barclays Bank PLC, and JPMorgan Chase Bank, N.A.
This agreement is between MedAssets, Inc. and a group of financial institutions led by Barclays Bank PLC and JPMorgan Chase Bank, N.A. The lenders commit to provide financing for MedAssets’ planned acquisition of Broadlane Intermediate Holdings, Inc. The letter outlines the roles of each party, the structure of the financing (including senior secured and bridge loan facilities), and the conditions that must be met for the funding to occur. The agreement also covers syndication rights and restrictions on appointing additional agents or arrangers.
Barclays Capital 745 Seventh Avenue New York, New York 10019 | JPMorgan Chase Bank, N.A. J.P. Morgan Securities LLC 383 Madison Avenue New York, New York 10179 |
100 North Point Center, East; Suite 200
Alpharetta, GA 30022
Commitment Letter
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Very truly yours, BARCLAYS BANK PLC | ||||
By | /s/ John Skrobe | |||
Name: | Johm Skrobe | |||
Title: | Managing Director | |||
JPMORGAN CHASE BANK, N.A. | ||||
By | /s/ Dawn L. LeeLum | |||
Name: | Dawn L. LeeLum | |||
Title: | Executive Director | |||
J.P. MORGAN SECURITIES LLC | ||||
By | /s/ Stas Byhovsky | |||
Name: | Stas Byhovsky | |||
Title: | Executive Director | |||
Accepted and agreed to as of the date first above written: MEDASSETS, INC | ||||
By | /s/ Neil Hunn | |||
Name: | Neil Hunn | |||
Title: | Executive Vice President and CFO | |||
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Transaction Description
a) | Pursuant to a stock purchase agreement (together with all exhibits, schedules and disclosure letters thereto, collectively, the Purchase Agreement) to be entered into with the Company and Broadlane Holdings, LLC (the Seller), MedAssets will acquire 100% of the outstanding capital stock of the Company. Pursuant to the Acquisition, the Seller shall have the right to receive the consideration for its equity interests in the Company (the Acquisition Consideration) in accordance with the terms of, and subject to adjustment as provided in, the Purchase Agreement. |
b) | MedAssets will obtain up to $750 million in senior secured first-lien loan facilities described in Exhibit B to the Commitment Letter (the Senior Secured Facilities). |
c) | MedAssets will (i) issue and sell senior unsecured notes (the Notes) in a Rule 144A or other private placement on or prior to the Closing Date yielding up to $360 million in gross cash proceeds and/or (ii) if and to the extent that less than $360 million in Notes are issued on or prior to the Closing Date, up to $360 million of senior unsecured increasing rate loans (the Bridge Loans) under a senior unsecured credit facility described in Exhibit C to the Commitment Letter (the Bridge Facility and, together with the Senior Secured Facilities, the Credit Facilities) such that the aggregate face amount of outstanding Notes and the principal amount of the Bridge Loans does not exceed $360 million. |
d) | All the existing third party indebtedness for borrowed money of MedAssets and the Company and their respective subsidiaries (which shall exclude existing capital leases and letters of credit and certain other indebtedness in an aggregate amount not to exceed $3 million that the Initial Lenders and MedAssets reasonably agree may remain outstanding after the Closing Date) will be refinanced or repaid, all commitments thereunder shall be terminated and all security interests therefor shall be released (the Refinancing). |
e) | The proceeds of the Credit Facilities and/or the Notes and cash on hand at MedAssets and the Company on the Closing Date will be applied (i) to pay the Acquisition |
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Consideration, (ii) to pay the fees and expenses incurred in connection with the Transactions and (iii) to pay for the Refinancing (the amounts set forth in clauses (i) through (iii) above, collectively, the Acquisition Costs). |
f) | MedAssets will have a deferred payment obligation to the Seller pursuant to the Purchase Agreement (the Deferred Payment Obligation) in an initial principal amount (if paid by the second business day following January 1, 2012 (the Deferred Payment Date)) of up to $125.0 million (subject to reduction as provided in the Purchase Agreement) (the Deferred Payment Amount). In the event the Deferred Payment Amount due is not paid on or prior to the Deferred Payment Date, and the Seller does not elect to exchange its rights to the Deferred Payment Obligation for common equity of MedAssets in accordance with the Purchase Agreement, the Deferred Payment Amount shall automatically be converted to a subordinated note (the Deferred Payment Subordinated Note) which Deferred Payment Subordinated Note shall (i) not mature earlier than 8 years and 6 months after the Closing Date, (ii) contain no financial maintenance covenants and contain negative covenants that are not more restrictive than those set forth in the Notes or the Exchange Notes (as defined in Exhibit C), as applicable, and otherwise contain terms and conditions, including, without limitation, covenants and transferability provisions, substantially identical to the Notes or the Exchange Notes, as applicable, and which shall be guaranteed by the Guarantors (as defined in Exhibit B) subject to equivalent subordination provisions to those set forth below, (iii) provide for no amortization or mandatory prepayments except to the extent such payments are permitted by the Senior Secured Facilities (as contemplated by Exhibit B) and the Bridge Facility, the Notes or Exchange Notes, as applicable, (iv) provide for no required cash interest payments in excess of 13% per annum (the Deferred Payment Cash Cap) of the principal amount thereof, (v) provide for total interest payments not to exceed 18% per annum (the Total Deferred Payment Cap) with MedAssets having the right to pay any amount of interest in excess of the Deferred Payment Cash Cap through an increase in the principal amount of the Deferred Payment Subordinated Note and (vi) provide for the subordination of all amounts owing (including principal, interest and other amounts) to all Senior Indebtedness (which shall be defined in a customary manner and, in any event, shall include the Senior Secured Facilities, the Bridge Loans, the Exchange Notes and the Notes) and Designated Senior Indebtedness (which shall be defined in a customary manner and include all obligations under the Senior Secured Facilities) on terms customary for recent 144A offerings of senior subordinated notes placed by the Arrangers; provided that such subordination terms shall not prevent the payment of any interest of up to the Total Deferred Payment Cap in excess of the Deferred Payment Cash Cap solely through the increase in the principal amount of the Deferred Payment Subordinated Note or the exercise of rights of set-off, indemnification or purchase price adjustment provided for in the Purchase Agreement. |
Senior Secured Credit Facilities
Summary of Principal Terms and Conditions1
Borrower: | MedAssets, Inc., a Delaware corporation (MedAssets). | |
Transaction: | As set forth in Exhibit A to the Commitment Letter. | |
Administrative Agent and Collateral Agent: | Barclays Bank will act as sole administrative agent and collateral agent (in such capacities, the Administrative Agent) for a syndicate of banks, financial institutions and other entities (excluding any Disqualified Lender) (together with the Initial Senior Lenders, the Lenders), and will perform the duties customarily associated with such roles. | |
Joint Lead Arrangers: | Barclays Capital and J.P. Morgan will act as joint lead arrangers (the Lead Arrangers) for the Senior Secured Facilities and each will perform the duties customarily associated with such roles. | |
Senior Secured Facilities: | (A) A senior secured first-lien term A loan facility (the Term A Facility) in an aggregate principal amount of $150.0 million (the loans thereunder, the Term A Loans); provided that in the event the Borrowers corporate credit ratings are less than Ba3(stable) from Moodys and BB-(stable) from S&P on the Closing Date, the Term A Loans will be eliminated and the amount of the Term B Facility (as defined below) will be increased by $150.0 million. | |
(B) A senior secured first-lien term B loan facility (the Term B Facility and together with the Term A Facility, the Term Facilities) in an aggregate principal amount of $450.0 million, subject to increase as provided above (the loans thereunder, the Term B Loans and together with the Term A Loans, the Term Loans). |
1 | All capitalized terms used but not defined herein shall have the meaning given them in the Commitment Letter to which this Term Sheet is attached, including Exhibit A thereto. |
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(C) A senior secured first-lien revolving credit facility (the Revolving Facility and, together with the Term Facilities, the Senior Secured Facilities) in an aggregate principal amount of $150.0 million. Lenders with commitments under the Revolving Facility are collectively referred to as Revolving Lenders and the loans thereunder, together with (unless the context otherwise requires) the swingline borrowings referred to below, are collectively referred to as Revolving Loans; and together with the Term Loans, the Loans. | ||
Swingline Loans: | In connection with the Revolving Facility, Barclays Bank (in such capacity, the Swingline Lender) will make available to the Borrower a swingline facility under which the Borrower may make short-term borrowings upon same-day notice (in minimum amounts to be mutually agreed upon and integral multiples to be agreed upon) of up to $25 million. Except for purposes of calculating the commitment fee described below, any such swingline borrowings will reduce availability under the Revolving Facility on a dollar-for-dollar basis. | |
Upon notice from the Swingline Lender, the Revolving Lenders will be unconditionally obligated to purchase participations in any swingline loan pro rata based upon their commitments under the Revolving Facility. | ||
If any Lender becomes a defaulting Lender, then the swingline exposure of such defaulting Lender will automatically be reallocated among the non-defaulting Lenders pro rata in accordance with their commitments under the Revolving Facility up to an amount such that the revolving credit exposure of such non-defaulting Lender does not exceed its commitments. In the event such reallocation does not fully cover the exposure of such defaulting Lender, the Swingline Lender may require the Borrower to repay such uncovered exposure in respect of the swingline loans and will have no obligation to make new swingline loans to the extent such swingline loans would cause the exposure of the non-defaulting Lenders to exceed the commitments of the non-defaulting Lenders if such swingline loan was fully allocated to non-defaulting Lenders. | ||
Incremental Facilities: | The Senior Secured Facilities will permit the Borrower to add one or more incremental term loan facilities to the |
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Senior Secured Facilities (each, an Incremental Term Facility) and/or increase commitments under the Revolving Facility (any such increase, an Incremental Revolving Increase) and/or add one or more incremental revolving credit facility tranches (each, an Incremental Revolving Facility; the Incremental Term Facilities, the Incremental Revolving Increases and the Incremental Revolving Facilities are collectively referred to as Incremental Facilities) in an aggregate amount of up to $200 million; provided that (i) no existing Lender will be required to participate in any such Incremental Facility without its consent, (ii) no event of default under the Senior Secured Facilities would exist after giving effect thereto, (iii) on a pro forma basis after giving effect to the incurrence of any such Incremental Facility (and after giving effect to any acquisition consummated simultaneously therewith and all other appropriate pro forma adjustment events and assuming any Incremental Revolving Facility was fully drawn), the Borrower (x) is in compliance with the financial maintenance covenants in the Senior Secured Facilities Documentation (as defined below) and (y) has a Secured Leverage Ratio (to be defined) that is not greater than 3.5 to 1.0, in each case, recomputed as of the last day of the most recently ended fiscal quarter of the Borrower for which financial statements are available, (iv) the maturity date of any such Incremental Term Facility shall be no earlier than the maturity date of the Term B Facility and the weighted average life of such Incremental Term Facility shall be not shorter than the then remaining weighted average life of the Term B Facility and no portion of any Incremental Revolving Facility shall mature prior to the Revolving Facility, (v) in the case of an Incremental Revolving Increase, the maturity date of such Incremental Revolving Increase shall be the same as the maturity date of the Revolving Facility, such Incremental Revolving Increase shall require no scheduled amortization or mandatory commitment reduction prior to the final maturity of the Revolving Facility and the Incremental Revolving Increase shall be on the exact same terms and pursuant to the exact same documentation applicable to the Revolving Facility, (vi) the interest rate margins and (subject to clause (iv)) amortization schedule applicable to any Incremental Facility shall be determined by the Borrower and the lenders thereunder; provided that to the extent (a) the yield (to be defined to include all upfront fees and |
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OID) on any Incremental Revolving Facility exceeds the yield on the Revolving Facility by more than 50 basis points, then the interest margins for the Revolving Facility, shall be increased to the extent required so that the yield for the Revolving Facility shall be 50 basis points less than the yield for such Incremental Facility and (b) the average annual amortization on any Incremental Term Facility (prior to the final year of maturity of such Incremental Term Facility) (i) is less than 5% per annum and the yield (to be defined to include all upfront fees and OID) on such Incremental Term Facility exceeds the yield on the Term B Facility by more than 50 basis points, then the interest margins for the Term B Facility shall be increased to the extent required so that the yield for the Term B Facility shall be 50 basis points less than the yield for such Incremental Facility and (ii) is 5% or more per annum and the yield (to be defined to include all upfront fees and OID) on such Incremental Term Facility exceeds the yield on the Term A Facility by more than 50 basis points, then the interest margins for the Term A Facility, shall be increased to the extent required so that the yield for the Term A Facility shall be 50 basis points less than the yield for such Incremental Facility, and (vii) any Incremental Facility shall be on terms and pursuant to documentation to be determined; provided that, to the extent such terms and documentation are not consistent with the Term Facilities (except to the extent permitted by clause (iv), (v) and (vi) above), they shall be reasonably satisfactory to the Administrative Agent. | ||
The Borrower may seek commitments in respect of the Incremental Facilities from existing Lenders (each of which shall be entitled to agree or decline to participate in its sole discretion) and additional banks, financial institutions and other institutional lenders or investors who will become Lenders in connection therewith (Additional Lenders); provided that the Administrative Agent, the Swingline Lender and the Issuing Bank (as defined below) shall have consent rights (not to be unreasonably withheld) with respect to such Additional Lender, if such consent would be required under the heading Assignments and Participations for an assignment of loans or commitments, as applicable, to such Additional Lender). | ||
Refinancing Facilities: | The Senior Secured Facilities Documentation will permit the Borrower to refinance loans under the Term Facilities |
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or commitments under the Revolving Facility from time to time, in whole or part, with one or more new term facilities (each, a Refinancing Term Facility) or new revolving credit facility (each, a Refinancing Revolving Facility; the Refinancing Term Facilities and the Refinancing Revolving Facilities are collectively referred to as Refinancing Facilities), respectively, under the Facilities Documentation with the consent of the Borrower, the Administrative Agent (and in the case of any Refinancing Revolving Facility, the Swingline Lender and the Issuing Lender) and the institutions providing such Refinancing Term Facility or Refinancing Revolving Facility or with one or more additional series of senior unsecured notes or senior secured notes that will be secured by the Collateral on a pari passu basis with the Senior Secured Facilities or second lien secured notes that will be secured on a silent subordinated basis to the Senior Secured Facilities and to the obligations under any senior secured notes, which will be subject to customary intercreditor arrangements (any such notes, Refinancing Notes); provided that (i) any Refinancing Term Facility or Refinancing Notes do not mature prior to the maturity date of, or have a shorter weighted average life than, loans under the Term B Facility being refinanced, (ii) any Refinancing Revolving Facility does not mature prior to the maturity date of the revolving commitments being refinanced and (iii) the other terms and conditions of such Refinancing Term Facility, Refinancing Revolving Facility or Refinancing Notes (excluding pricing and optional prepayment or redemption terms) are substantially identical to, or less favorable to the investors providing such Refinancing Term Facility, Refinancing Revolving Facility or Refinancing Notes, as applicable, than, those applicable to the Term Facilities or Revolving Facility being refinanced (except for covenants or other provisions applicable only to periods after the latest final maturity date of the Term B Facility and revolving credit commitments existing at the time of such refinancing). | ||
Purpose: | (A) The proceeds of borrowings under the Term Facilities will be used by the Borrower on the Closing Date, together with the proceeds from the issuance of the Notes and/or incurrence of the Bridge Loans, the proceeds from borrowings under the Revolving Facility and cash on hand at the Company, solely to pay the Acquisition Costs. |
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(B) The letters of credit and proceeds of Revolving Loans (except as set forth below) will be used by the Borrower and its subsidiaries for working capital and other general corporate purposes, including the financing of permitted acquisitions, and to finance a portion of the Acquisition Costs (including to make payments in respect of the Deferred Payment Obligation and/or the Deferred Payment Subordinated Note to the extent contemplated below). | ||
Availability: | (A) The Term Facilities will be available in a single drawing on the Closing Date. Amounts borrowed under the Term Facilities that are repaid or prepaid may not be reborrowed. | |
(B) The Revolving Facility (exclusive of letter of credit usage) will be made available on the Closing Date to finance a portion of the Acquisition Costs, which portion shall be limited on the Closing Date to an amount sufficient to fund any OID or upfront fees required to be funded on the Closing Date pursuant to the flex provisions of the Fee Letter. Additionally, letters of credit in an amount to be mutually agreed upon may be issued on the Closing Date in order to, among other things, backstop or replace letters of credit outstanding on the Closing Date under facilities no longer available to MedAssets or the Company or their respective subsidiaries as of the Closing Date. Otherwise, letters of credit and Revolving Loans will be available after the Closing Date at any time prior to the final maturity of the Revolving Facility, in minimum principal amounts to be mutually agreed upon. Amounts repaid under the Revolving Facility may be reborrowed. Notwithstanding anything to the contrary in this Exhibit B, in no event shall any extension of credit be made under the Revolving Facility prior to the second business day following January 1, 2012 if, after giving effect thereto and to the application of proceeds therefrom, the amount of the undrawn commitments under the Revolving Facility plus unrestricted cash of the Borrower and its restricted subsidiaries would be less than the maximum potential amount of the Deferred Payment Obligation at such time (the Minimum Liquidity Condition). |
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Interest Rates and Fees: | As set forth on Annex I to the Fee Letter. | |
Default Rate: | With respect to overdue principal, the applicable interest rate plus, 2.00% per annum, and with respect to any other overdue amount (including overdue interest), the interest rate applicable to ABR loans (as defined in Annex I) plus 2.00% per annum and in each case, shall be payable on demand. | |
Letters of Credit: | Up to $25 million of the Revolving Facility will be available to the Borrower for the purpose of issuing letters of credit. Letters of credit under the Revolving Facility will be issued by Barclays Bank and/or other Lenders (or designated affiliates of Barclays Bank or such other Lenders) reasonably acceptable to the Borrower and the Administrative Agent (each an Issuing Bank). Each letter of credit shall expire not later than the earlier of (a) 12 months after its date of issuance and (b) the fifth business day prior to the final maturity of the Revolving Facility; provided that any letter of credit may provide for renewal thereof for additional periods of up to 12 months (which in no event shall extend beyond the date referred to in clause (b) above). The face amount of any outstanding letter of credit (and, without duplication, any unpaid drawing in respect thereof) will reduce availability under the Revolving Facility on a dollar-for dollar basis. | |
Drawings under any letter of credit shall be reimbursed by the Borrower (whether with its own funds or with the proceeds of loans under the Revolving Facility) within one business day after notice of such drawing is received by the Borrower from the relevant Issuing Bank. The Revolving Lenders will be irrevocably and unconditionally obligated to acquire participations in each letter of credit, pro rata in accordance with their commitments under the Revolving Facility, and to fund such participations in the event the Borrower does not reimburse an Issuing Bank for drawings within the time period specified above. | ||
If any Lender becomes a defaulting Lender, then the letter of credit exposure of such defaulting Lender will automatically be reallocated among the non-defaulting Lenders pro rata in accordance with their commitments under the Revolving Facility up to an amount such that the |
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revolving credit exposure of such non-defaulting Lender does not exceed its commitments. In the event that such reallocation does not fully cover the exposure of such defaulting Lender, the applicable Issuing Bank may require the Borrower to cash collateralize such uncovered exposure in respect of each outstanding letter of credit and will have no obligation to issue new letters of credit, or to extend, renew or amend existing letters of credit to the extent necessary that the exposure of the non-defaulting Lenders does not exceed the revolving commitments of the non-defaulting Lenders (if such participations were fully allocated to the non-defaulting Lenders), unless such uncovered exposure is cash collateralized to the Issuing Banks reasonable satisfaction. | ||
Final Maturity and Amortization: | (A) Term A Facility. | |
The Term A Loans will mature on the date that is five years after the Closing Date and will amortize in quarter installments prior to such time resulting in aggregate annual amortization (expressed as a percentage of the original principal amount of Term A Loans borrowed) as set forth below: | ||
Year 1: 2.5% | ||
Year 2: 15.0% | ||
Year 3: 20.0% | ||
Year 4: 20.0% | ||
Year 5: 42.5% | ||
; provided that the Senior Secured Facilities Documentation shall provide the right for individual Lenders to agree to extend the maturity date of the outstanding Term A Loans upon the request of the Borrower and without the consent of any other Lender on terms to be agreed. | ||
(B) Term B Facility. | ||
The Term B Loans will mature on the date that is six years after the Closing Date and will amortize in equal quarterly installments in aggregate annual amounts equal to 1% of the original principal amount of the Term B Facility, with the balance payable on the sixth anniversary of the Closing Date; provided that the Senior Secured Facilities Documentation shall provide the right for individual Lenders to agree to extend the maturity date of the |
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outstanding Term B Loans upon the request of the Borrower and without the consent of any other Lender on terms to be agreed. | ||
(C) Revolving Facility | ||
The Revolving Facility will mature, and lending commitments thereunder will terminate, on the date that is five years after the Closing Date; provided that the Senior Secured Facilities Documentation shall provide the right of individual Lenders to agree to extend the maturity of such Lenders Revolving Commitments (which may include an increase in the interest rate and undrawn fees payable with respect to such extended Revolving Commitments) upon the request of the Borrower and without the consent of any other Lender. | ||
Guarantees: | Subject to the Closing Date Conditions Provision, all obligations of the Borrower (the Borrower Obligations) under the Senior Secured Facilities and under any interest rate protection or other swap or hedging arrangements or cash management arrangements entered into with a Lender, the Administrative Agent or any affiliate of a Lender or the Administrative Agent (Hedging/Cash Management Arrangements) will be unconditionally guaranteed jointly and severally on a senior secured first-lien basis (the Guarantees) by each existing and subsequently acquired or organized direct or indirect wholly-owned restricted subsidiary of the Borrower (the Guarantors), provided that Guarantors shall not include, (a) unrestricted subsidiaries, (b) immaterial subsidiaries (to be defined in a mutually acceptable manner as to individual and aggregate revenues or assets excluded), (c) any subsidiary that is prohibited by applicable law, rule or regulation from guaranteeing the Senior Secured Facilities or which would require governmental (including regulatory) consent, approval, license or authorization to provide a Guarantee unless such consent, approval, license or authorization has been received or which would result in adverse tax consequence to the Borrower or one of its subsidiaries as a result of the operation of Section 956 of the IRS Code and (d) not-for-profit subsidiaries, if any. | |
Notwithstanding the foregoing, subsidiaries may be excluded from the guarantee requirements in circumstances where the Borrower and the Administrative |
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Agent reasonably agree that the cost of providing such a guarantee is excessive in relation to the value afforded thereby. | ||
Security: | Subject to the limitations set forth below in this section and subject to the Closing Date Conditions Provision, the Borrower Obligations, the Guarantees and the Hedging/Cash Management Arrangements will be secured by: (a) a perfected pledge of the equity securities of each direct wholly-owned restricted subsidiary of the Borrower and of each subsidiary Guarantor (limited in the case of foreign subsidiaries to 65% of the equity securities of such subsidiaries) and (b) perfected, security interests in, and mortgages on, substantially all tangible and intangible personal property and material fee-owned real property of the Borrower and each subsidiary Guarantor (including but not limited to accounts receivable, inventory, equipment, general intangibles (including contract rights), investment property, intellectual property, material fee-owned real property, material intercompany notes and proceeds of the foregoing) (the items described in clauses (a) and (b) above, but excluding the Excluded Assets (as defined below), collectively, the Collateral). | |
Notwithstanding anything to the contrary, the Collateral shall exclude the following: (i) any fee-owned real property with a fair market value of less than an amount to be agreed and all leasehold interests (including requirements to deliver landlord lien waivers, estoppels and collateral access letters), (ii) motor vehicles and other assets subject to certificates of title, letter of credit rights (except to the extent perfection can be obtained by filing of uniform commercial code financing statements) and commercial tort claims with a value of less than an amount to be agreed, (iii) pledges and security interests prohibited by applicable law, rule or regulation; (iv) equity interests in any person other than wholly owned restricted subsidiaries to the extent not permitted by the terms of such subsidiarys organizational or joint venture documents; (v) assets to the extent a security interest in such assets would result in adverse tax consequences (including as a result of the operation of Section 956 of the IRS Code) (it being understood that the Lenders shall not require the Borrower or any of its subsidiaries to enter into any security agreements or pledge agreements governed under foreign law); (vi) any lease, license or other agreement or any property subject to a purchase |
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money security interest or similar arrangement to the extent that a grant of a security interest therein would violate or invalidate such lease, license or agreement or purchase money arrangement or create a right of termination in favor of any other party thereto (other than the Borrower or a Guarantor) after giving effect to the applicable anti-assignment provisions of the Uniform Commercial Code, other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under the Uniform Commercial Code notwithstanding such prohibition and (vii) those assets as to which the Administrative Agent and the Borrower reasonably agree that the cost of obtaining such a security interest or perfection thereof are excessive in relation to the benefit to the Lenders of the security to be afforded thereby (the foregoing described in clauses (i), (ii), (iii), (iv), (v), (vi) and (vii) are, collectively, the Excluded Assets). In addition, in no event shall control agreements or control or similar arrangements be required with respect to deposit or securities accounts. | ||
All the above-described pledges, security interests and mortgages shall be created on terms to be set forth in the Senior Secured Facilities Documentation; and none of the Collateral shall be subject to other pledges, security interests or mortgages (except permitted liens) and other, exceptions and baskets to be set forth in the Senior Secured Facilities Documentation. | ||
Mandatory Prepayments: | Loans under the Term Facilities shall be prepaid with: | |
(A) commencing with the first full fiscal year of the Borrower to occur after the Closing Date, 50% of Excess Cash Flow (to be defined in a manner reasonably acceptable to you and the Initial Senior Lenders but to include a deduction for permitted payments of the Deferred Payment Obligation from internally generated cash flow prior to the second business day after January 1, 2012), with step-downs to 25% upon achievement of a ratio of Consolidated Total Debt to Consolidated EBITDA (the, Total Leverage Ratio) equal or less than a level to be agreed upon and to 0% upon achievement of a Total Leverage Ratio equal or less than a level to be agreed upon; provided that, in any fiscal year, any voluntary prepayments of loans under the Term Facilities and loans under the |
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Revolving Facility to the extent commitments thereunder are permanently reduced by the amount of such prepayments, other than prepayments funded with the proceeds of incurrences of indebtedness, shall be credited against excess cash flow prepayment obligations on a dollar-for-dollar basis for such fiscal year; | ||
(B) 100% of the net cash proceeds of all non-ordinary course asset sales or other dispositions of property by the Borrower and its restricted subsidiaries (including (x) insurance and condemnation proceeds and sale leaseback proceeds and (y) to the extent not actually applied to repay amounts outstanding under the Bridge Facility, the net cash proceeds received after the Closing Date from any disposition of assets required to be undertaken pursuant to Section 6.4 of the Purchase Agreement (a Required Divestiture)) subject, except in the case of proceeds of a Required Divestiture, to the right of the Borrower to reinvest 100% of such proceeds within 12 months and, if so committed to be reinvested, so long as such reinvestment is actually completed within 180 days thereafter, and other exceptions to be set forth in the Senior Secured Facilities Documentation; and | ||
(C) 100% of the net cash proceeds of issuances of debt obligations of the Borrower and its restricted subsidiaries after the Closing Date (other than debt permitted under the Senior Secured Facilities Documentation). | ||
Mandatory prepayments shall be applied, without premium or penalty, subject to reimbursement of the Lenders redeployment costs in the case of a prepayment of Adjusted LIBOR borrowings other than on the last day of the relevant interest period, on a pro rata basis to the Term A Facility and the Term B Facility and to the scheduled installments of principal under each such facility in direct order of maturity. | ||
Any Lender may elect not to accept its pro rata portion of any mandatory prepayment (each a Declining Lender). Any prepayment amount declined by a Declining Lender, may be retained by the Borrower. |
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The loans under the Revolving Facility shall be prepaid and the letters of credit cash collateralized to the extent such extensions of credit exceed the amount of the commitments under the Revolving Facility. | ||
Voluntary Prepayments and Reductions in Commitments: | Voluntary reductions of the unutilized portion of the Revolving Facility commitments and voluntary prepayments of borrowings under the Senior Secured Facilities will be permitted at any time, in minimum principal amounts to be mutually agreed upon, without premium or penalty, subject to reimbursement of the Lenders redeployment costs in the case of a prepayment of Adjusted LIBOR borrowings other than on the last day of the relevant interest period. Notwithstanding the foregoing, in no event shall any optional reduction in the amount of commitments under the Revolving Facility be permitted prior to the second business day following January 1, 2012 unless after giving effect thereto the Minimum Liquidity Condition would be satisfied. | |
All voluntary prepayments of the Term A Facility, Term B Facility and any Incremental Term Facility will be applied to the remaining amortization payments under such facility, in any case, as directed by the Borrower (and absent such direction, in direct order of maturity thereof); provided that the Term B Facility may not be prepaid on a greater amount than pro rata basis with the Term A Facility. | ||
Call Premium: | In the event all or any portion of the Term B Facility is repaid, repriced or effectively refinanced through any amendment of the Term B Facility which results in reduction in the weighted average yield prior to the first anniversary of the Closing Date (other than in connection with a refinancing in full of the Senior Secured Facilities in connection with a change of control), such repayments (or repricings or effective refinancings) will be made at (i) 101.0% of the principal amount repaid (or repriced or effectively refinanced) if such repayment (or repricing or effective refinancing) occurs on or prior to the first anniversary of the Closing Date and (ii) at par thereafter. | |
Documentation: | The definitive documentation for the Senior Secured Facilities (the Senior Secured Facilities Documentation) will contain only those conditions to borrowing, representations, warranties, covenants and |
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events of default expressly set forth in this Term Sheet, together with other customary loan document provisions and other terms and provisions to be mutually agreed upon (it being understood and agreed that only the terms expressly set forth herein are being committed to), the definitive terms of which will be negotiated in good faith (including as to operational requirements of the Borrower and its subsidiaries in light of their industries, businesses and business practices and current market conditions), and shall be consistent with this Term Sheet. | ||
Representations and Warranties: | Limited to the following (to be applicable to the Borrower and its restricted subsidiaries only): | |
organizational status and good standing; power and authority, execution, delivery and enforceability of Senior Secured Facilities Documentation; with respect to Senior Secured Facilities Documentation, no violation of, or conflict with, law, organizational documents or agreements; compliance with law; litigation; margin regulations; material governmental approvals with respect to the Senior Secured Facilities; Investment Company Act; accurate and complete disclosure; accuracy of historical financial statements (including pro forma financial statements based on historical balance sheets), no material adverse change; taxes; ERISA; subsidiaries; intellectual property; insurance; environmental laws; use of proceeds; ownership of properties; creation, perfection and priority of liens and other security interests; consolidated Closing Date solvency of the Borrower and its subsidiaries; and status of the Senior Secured Facilities as senior debt and designated senior debt, subject, in the case of each of the foregoing representations and warranties, to customary qualifications and limitations for materiality to be provided in the Senior Secured Facilities Documentation. | ||
Conditions to Initial Borrowing: | The availability of the initial borrowing and other extensions of credit under the Senior Secured Facilities on the Closing Date will be subject solely to the applicable conditions set forth in Section 6 of the Commitment Letter, the Conditions to All Borrowings section below and in Exhibit D to the Commitment Letter. | |
Conditions to All Borrowings: | The making of each extension of credit under the Senior Secured Facilities shall be conditioned upon (a) delivery of a customary borrowing notice, (b) the accuracy of representations and warranties in all material respects (subject, on the Closing Date, to the Closing Date |
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Conditions Provision) and (c) after the Closing Date, the absence of defaults or events of default at the time of, or after giving effect to the making of, such extension of credit. | ||
Affirmative Covenants: | Limited to the following (to be applicable to the Borrower and its restricted subsidiaries only): delivery of annual and quarterly financial statements (accompanied by an unqualified audit opinion in the case of annual financial statements), annual budget reports (with delivery time periods to be consistent with the delivery requirements for the audited financial statements), accountants letters, officers certificates and other information reasonably requested by the Administrative Agent; notices of defaults, litigation and ERISA events; inspections (subject to frequency (so long as there is no ongoing event of default) and cost reimbursement limitations); maintenance of property (subject to casualty, condemnation and normal wear and tear) and customary insurance; maintenance of existence and corporate franchises; rights and privileges; maintenance and inspection of books and records; payment of taxes and similar claims; compliance with laws and regulations (including ERISA, environmental and PATRIOT Act); additional Guarantors and Collateral (subject to limitations set forth above in Security); use of proceeds; changes in lines of business; commercially reasonable efforts to maintain public corporate credit/family ratings of Borrower and ratings of the Senior Secured Facilities from Moodys and S&P (but not to maintain a specific rating); obtaining interest rate protection with respect to the Term Facilities on terms reasonably satisfactory to the Administrative Agent to the extent necessary to ensure that at least 50% of the Borrowers consolidated indebtedness effectively bears interest at a fixed rate for a period of three years from the Closing Date; and further assurances on collateral matters, subject, in the case of each of the foregoing covenants, to exceptions and qualifications to be provided in the Senior Secured Facilities Documentation. | |
Negative Covenants: | Limited to the following (to be applicable to the Borrower and its restricted subsidiaries) limitations on: | |
a) the incurrence of debt (which shall permit, among other things, the incurrence and/or existence of indebtedness under (i) the Senior Secured Facilities (including Incremental Facilities), (ii) |
B-15
non-speculative hedging arrangements entered into in the ordinary course of business, (iii) the Notes and/or the Bridge Facility, (iv) certain indebtedness existing on the Closing Date (including the Deferred Payment Obligation and the Deferred Payment Subordinated Note), (v) secured or unsecured notes to be issued in lieu of the Incremental Facilities so long as the Borrower is in pro forma compliance with the financial maintenance covenants after giving pro forma effect to the issuance of such notes and has a Secured Leverage Ratio of less than 3.5 to 1.0 and (v) Refinancing Facilities and/or Refinancing Notes); | ||
b) liens; | ||
c) fundamental changes; | ||
d) asset sales (including sales of subsidiaries) and sale leasebacks (which, in each case, shall be permitted on the terms set forth in the second succeeding paragraph); | ||
e) investments (which shall permit, among other things, intercompany investments, re-organizations and other activities related to tax planning and re-organization, subject to limitations to be agreed), and acquisitions (which shall be permitted on the terms set forth in the third succeeding paragraph); | ||
f) dividends or distributions on, or redemptions of, the Borrowers equity; | ||
g) (A) prepayments or redemptions of unsecured or subordinated debt (including, without limitation, (x) the Deferred Payment Obligation (including any payment at maturity) and payments of cash interest on the Deferred Payment Subordinated Note at a rate in excess of the Deferred Payment Cash Cap, subject to an exception permitting repayment at any time on or prior to the second business day after January 1, 2012 so long as no default or event of default has occurred and is continuing and subject to pro forma compliance with the financial covenants and minimum liquidity (to be defined to include unrestricted cash and unused commitments under the |
B-16
Revolving Facility) of at least $40.0 million (Liquidity Condition) and (y) the Deferred Payment Subordinated Note subject to exceptions permitting repayment at any time so long as no default or event of default has occurred and is continuing (i) using the Available Amount Basket (as defined below and subject to the conditions set forth below), (ii) from the proceeds of any other indebtedness (other (x) than intercompany indebtedness and (y) unless the Liquidity Condition would be satisfied, borrowings under the Revolving Facility) so long as on a pro forma basis the Total Leverage Ratio is less than 4.5 to 1.0 and (iii) from the proceeds of subordinated indebtedness constituting Permitted Refinancing Indebtedness (to be defined in a customary manner)); provided that in the case of clauses (x) and (y) above, partial repayments shall be permitted up to the amount that would satisfy the conditions set forth in such clauses and provided, further, that this covenant shall not prohibit the payment of interest in respect of the Deferred Payment Subordinated Note up to the Total Deferred Payment Cap through an increase in the Deferred Payment Subordinated Note or the right of the holder thereof to exchange its right under the Deferred Payment Obligation or Deferred Payment Subordinated Note for common equity of MedAssets in accordance with the Purchase Agreement and the Deferred Payment Subordinated Note; provided that nothing in this clause (A) shall prohibit the exercise of rights of set-off, indemnification or purchase price adjustments pursuant to the Purchase Agreement and (B) amendments of unsecured or subordinated debt documents, the Purchase Agreement (including the provisions relating to the Deferred Payment Obligation) or organization documents, in each case, in a manner material and adverse to the Lenders; | ||
h) negative pledge clauses; | ||
i) transactions with affiliates; and | ||
j) changes in fiscal year. | ||
The negative covenants will be subject, in the case of each of the foregoing covenants to exceptions, qualifications and baskets to be set forth in the Senior Secured |
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Facilities Documentation (including an available basket amount (the Available Amount Basket) that will also be built by retained Excess Cash Flow and new equity (which shall be common equity or other qualified equity on terms to be mutually agreed and excluding Specified Equity Contributions) that may be used, subject to the absence of any continuing event of default and pro forma compliance with all applicable maintenance covenants and a Total Leverage Ratio on a pro forma basis of not more than 4.5 to 1.0, for, among other things, certain investments, restricted payments and the prepayment or redemption of unsecured or subordinated debt, including the Deferred Payment Subordinated Note). | ||
The Borrower or any restricted subsidiary will be permitted to dispose or sell any of its assets of up to an amount to be agreed for fair market value so long as (a) at least 75% of the consideration for asset sales consists of cash (subject to customary exceptions to the cash consideration requirement to be set forth in the Senior Secured Facilities Documentation, including a basket in an amount to be agreed for non-cash consideration that may be designated as cash consideration) and (b) such asset sale is subject to the terms set forth in the section entitled Mandatory Prepayments hereof. | ||
The Borrower or any restricted subsidiary will be permitted to (1) make acquisitions for consideration not to exceed $200.0 million in the aggregate (provided that such limitation shall not apply to the extent that on a pro forma basis, the Total Leverage Ratio is less than or equal to 4.5 to 1.0) (each, a Permitted Acquisition) so long as (a) there is no event of default after giving pro forma effect to such acquisition and the incurrence of indebtedness in connection therewith, (b) the Borrower would be in compliance, on a pro forma basis after giving effect to the consummation of such acquisition, with the financial maintenance covenants in the Senior Secured Facilities Documentation recomputed as of the last day of the most recently ended fiscal quarter of the Borrower for which financial statements are available, (c) the acquired company or assets are in the same or a generally related line of business as the Borrower and its subsidiaries and (d) subject to the limitations set forth in Guarantees and Security above, the acquired company and its subsidiaries will become Guarantors and pledge their Collateral to the Administrative Agent and (2) incur or |
B-18
assume indebtedness in connection with such Permitted Acquisitions that was not created in contemplation of such Permitted Acquisition so long as the Borrower is in pro forma compliance with the financial maintenance covenants in the Senior Secured Facilities Documentation recomputed as of the last day of the most recently ended fiscal quarter of the Borrower for which financial statements are available and before and after giving effect thereto, no default or event of default has occurred and is continuing (and, in the case of any newly incurred indebtedness, such indebtedness is indebtedness of the Borrower or a Guarantor that matures at least 6 months after the Term Loans and the Total Leverage Ratio is less than 4.5 to 1.0 on a pro forma basis). Acquisitions of entities that do not become Guarantors and made with the proceeds of any consideration provided by the Borrower or a Guarantor will be limited to an aggregate amount to be agreed upon in the Senior Secured Facilities Documentation. | ||
Financial Maintenance Covenants: | The Senior Secured Facilities Documentation will contain the following financial covenants with regard to the Borrower and its restricted subsidiaries on a consolidated basis: (a) a maximum Total Leverage Ratio and (b) a minimum ratio of Consolidated EBITDA to Cash Consolidated Interest Expense (to be defined), in each case with levels providing a 25-30% cushion (calculated on a static basis) in Consolidated EBITDA above the Consolidated EBITDA levels set forth in the MedAssets model (the MedAssets Model), which model shall be dated September 13, 2010 and delivered to the Joint Lead Arrangers prior to the date hereof; provided that at no time during the term of the Senior Secured Facilities shall the levels of the Total Leverage Ratio covenant be lower than a ratio to be agreed or the Cash Consolidated Interest Expense covenant be greater than a ratio to be agreed. | |
For purposes of determining compliance with the financial covenants, any cash equity contribution (which shall be common equity or otherwise in a form reasonably acceptable to the Administrative Agent) made to the Borrower after the last day of the relevant fiscal quarter and on or prior to the day that is 10 days after the day on which financial statements are required to be delivered for such fiscal quarter will, at the request of the Borrower, be included in the calculation of Consolidated EBITDA solely for the purposes of determining compliance with |
B-19
the financial maintenance covenants at the end of such fiscal quarter and applicable subsequent periods which include such fiscal quarter (any such equity contribution so included in the calculation of Consolidated EBITDA, a Specified Equity Contribution); provided that (a) in each four fiscal quarter period, there shall be at least two fiscal quarters in respect of which no Specified Equity Contribution is made and no more than four Specified Equity Contributions may be made during the term of the Senior Secured Credit Facilities, (b) the amount of any Specified Equity Contribution shall be no greater than the amount required to cause the Borrower to be in pro forma compliance with the financial maintenance covenants, (c) all Specified Equity Contributions shall be disregarded for purposes of determining any baskets with respect to the covenants contained in the Senior Secured Facilities Documentation and (d) there shall be no pro forma reduction in indebtedness with the proceeds of any Specified Equity Contribution for determining compliance with the financial maintenance covenants for the fiscal quarter in which such Specified Equity Contribution is made. | ||
The financial covenants will be tested with respect to the Borrower and its restricted subsidiaries on a consolidated basis beginning with the last day of the first full fiscal quarter of the Borrower completed after the Closing Date. | ||
Unrestricted Subsidiaries: | The Senior Secured Facilities Documentation will contain provisions pursuant to which, subject to limitations on loans, advances, guarantees and other investments in, unrestricted subsidiaries, the Borrower will be permitted to designate any existing or subsequently acquired or organized subsidiary as an unrestricted subsidiary and subsequently re-designate any such unrestricted subsidiary as a restricted subsidiary so long as, after giving effect to any such designation or re-designation, the Borrower shall be in pro forma compliance with the financial maintenance covenants in the Senior Secured Facilities Documentation recomputed as of the last day of the most recently ended fiscal quarter of the Borrower for which financial statements are available and the fair market value of such subsidiary at the time it is designated as an unrestricted subsidiary shall be treated as an investment by the Borrower at such time. No unrestricted subsidiary that is redesignated as a restricted subsidiary may subsequently be designated as an unrestricted subsidiary. |
B-20
Unrestricted subsidiaries will not be subject to the representation and warranties, affirmative or negative covenant or event of default provisions of the Senior Secured Facilities Documentation and the results of operations and indebtedness of unrestricted subsidiaries will not be taken into account for purposes of determining compliance with the financial covenants contained in the Senior Secured Facilities Documentation. When designated as an unrestricted subsidiary, each such unrestricted subsidiary, in the aggregate with all unrestricted subsidiaries previously designated (at the time of designation thereof) that continue to be unrestricted subsidiaries, shall not constitute more than a percentage to be agreed of (x) pro forma EBITDA of the Borrower and it subsidiaries for the four-quarter period ended immediately prior to the date of such designation and (y) the pro forma total assets of the Borrower and its subsidiaries at the time of such designation. | ||
Event of Default: | Limited to the following (to be applicable to the Borrower and its restricted subsidiaries only): nonpayment of principal when due; nonpayment of interest or other amounts after a customary five business day grace period; violation of covenants (subject, in the case of certain of such covenants, to a thirty day grace period); incorrectness of representations and warranties in any material respect; cross default and cross acceleration to material indebtedness; bankruptcy or other insolvency events of the Borrower or its material subsidiaries (with a customary grace period for involuntary events); material monetary judgments; ERISA events; actual or asserted invalidity of material guarantees or security documents; and change of control. | |
Voting: | Amendments and waivers of the Senior Secured Facilities Documentation will require the approval of Lenders holding more than 50% of the aggregate amount of the loans and commitments under the Senior Secured Facilities (the Required Lenders), except that (i) the consent of each Lender directly and adversely affected thereby shall be required with respect to: (A) increases in the commitment of such Lender, (B) reductions of principal, interest or fees, (C) extensions of scheduled amortization payments or final maturity, (D) provisions relating to pro rata sharing and payments (other than pro rata offers as set forth below) and (E) voting requirements, (ii) the consent of 100% of the Lenders will be required |
B-21
with respect to (A) modifications to any of the voting percentages and (B) releases of all or substantially all Guarantors (or the value of their guarantees) or releases of all or substantially all of the Collateral, and (iii) customary protections for the Administrative Agent, the Swingline Lender and the Issuing Banks will be provided. | ||
For the avoidance of doubt, in connection with below par offers to prepay Loans, the Facilities Documentation may be amended in order to modify any provision relating to pro rata sharing of payments among the Lenders with the consent of Lenders holding more than 50% of the advances and commitments under each of the Term Facilities and the Revolving Facility. In the event that any provision relating to pro rata sharing of payments among the Lenders is modified in favor of any class of Lenders holding loans with a maturity date longer than the maturity date of the Revolving Facility, the Term A Facility or the Term B Facility, a majority vote of the Lenders under the Facilities directly and adversely affected thereby shall be required. | ||
The Senior Secured Facilities Documentation shall contain customary provisions for replacing non-consenting Lenders in connection with amendments and waivers requiring the consent of all Lenders or of all Lenders directly affected thereby so long as Lenders holding more than 50% of the aggregate amount of the loans and commitments under the Senior Secured Facilities shall have consented thereto. | ||
Cost and Yield Protection: | The Senior Secured Facilities Documentation will include customary tax gross-up, cost and yield protection provisions. | |
Assignments and Participations: | After the Closing Date, the Lenders will be permitted to assign (except to Disqualified Lenders) (a) loans and/or commitments under the Term Facilities with the consent of the Borrower and the Administrative Agent (in each case not to be unreasonably withheld or delayed), and (b) loans and commitments under the Revolving Facility with the consent of the Borrower, the Swingline Lender, the Issuing Banks and the Administrative Agent (in each case not to be unreasonably withheld or delayed); provided that (A) no consent of the Borrower shall be required (i) (x) prior to a Successful Syndication and (y) thereafter, after the occurrence and during the continuance of a payment or |
B-22
bankruptcy Event of Default or (ii) with respect to any Term Loans, if such assignment is an assignment to another Lender, an affiliate of a Lender or an approved fund and (B) no consent of the Administrative Agent shall be required with respect to assignment of any Term Loans, if such assignment is an assignment to another Lender, an affiliate of a Lender or an approved fund. Each assignment (other than to another Lender, an affiliate of a Lender or an approved fund) will be in an amount of an integral multiple of $1,000,000 in the case of the Term Facilities and $5,000,000 in the case of the Revolving Facility (or lesser amounts, if agreed between the Borrower and the Administrative Agent) or, if less, all of such Lenders remaining loans and commitments of the applicable class. Assignments will be by novation and will not be required to be pro rata among the Senior Secured Facilities. The Administrative Agent shall receive a processing and recordation fee of $3,500 for each assignment (it being understood that such recordation fee shall not apply to assignments by the Initial Senior Lenders in connection with the initial syndication of the Senior Secured Facilities). For any assignments for which the Borrowers consent is required, such consent shall be deemed to have been given if the Borrower has not responded within 5 business days of a request for such consent. | ||
The Lenders will be permitted to sell participations in loans and commitments without restriction in accordance with applicable law. Voting rights of participants shall be limited to matters set forth under Voting above with respect to which the unanimous vote of all Lenders (or all directly and adversely affected Lenders, if the participant is directly and adversely affected) would be required. | ||
Assignments to and purchases of Term Loans by affiliates of the Borrower (other than the subsidiaries of the Borrower) (each, an Affiliated Lender) will be permitted without any consent, including through open-market purchases, subject to the following limitations: | ||
(i) Affiliated Lenders will not receive information provided solely to Lenders by the Administrative Agent or any Lender and will not be permitted to attend/participate in meetings not attended by the Borrower; |
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(ii) for purposes of any amendment, waiver or modification of the Senior Secured Facilities Documentation or any plan of reorganization that in either case does not require the consent of each Lender or each affected Lender or does not adversely affect such Affiliated Lender in any material respect as compared to other Lenders, Affiliated Lenders will be deemed to have voted in the same proportion as non-affiliated Lenders voting on such matter; | ||
(iii) Affiliated Lenders may not purchase Revolving Loans; | ||
(iv) the amount of Term Loans purchased by Affiliated Lenders may not exceed 20% of the original principal amount of the Term Loans; and | ||
(v) Affiliated Lenders may not purchase Term Loans at any time they have material non public information with respect to the Borrower. | ||
Assignments of Term Loans to the Borrower and its subsidiaries shall be permitted so long as (i) any offer to purchase or take by assignment any Term Loans by the Borrower or any of its subsidiaries shall have been made to all Lenders pro rata (with buyback mechanics to be agreed), (ii) no default or event of default has occurred and is continuing, (iii) the loans purchased are immediately cancelled and (iv) no proceeds from any loan under the Revolving Facility shall be used to fund such assignments. | ||
Expenses and Indemnification: | The Borrower shall pay all reasonable and documented or invoiced out-of-pocket costs and expenses of the Administrative Agent and the Commitment Parties (without duplication) associated with the syndication of the Senior Secured Facilities and the preparation, execution and delivery, administration, amendment, modification, waiver and/or enforcement of the Senior Secured Facilities Documentation (including the reasonable fees, disbursements and other charges of counsel identified herein and local counsel in each applicable jurisdiction or otherwise retained with the Borrowers consent (such consent not to be unreasonably withheld or delayed)). |
B-24
The Borrower will indemnify the Administrative Agent, the Commitment Parties, the Lenders and their affiliates, and the officers, directors, employees, advisors, agents, controlling persons and other representatives and their successors and permitted assigns of each of the foregoing, and hold them harmless from and against all losses, claims, damages, liabilities and reasonable and documented or invoiced out-of-pocket fees and expenses (including reasonable fees, disbursements and other charges of one counsel for all indemnified parties and, if necessary, one firm of local counsel in each appropriate jurisdiction (which may include a single special counsel acting in multiple jurisdictions) for all indemnified parties (and, in the case of an actual or perceived conflict of interest, where the indemnified person affected by such conflict informs the Borrower of such conflict and thereafter retains its own counsel, of another firm of counsel for such affected indemnified person)) of any such indemnified person arising out of or relating to the Transactions, including the financings contemplated thereby (including, without limitation, any claim or any litigation or other proceeding (regardless of whether such indemnified person is a party thereto and whether or not such proceedings are brought by the Borrower, its equity holders, its affiliates, creditors or any other third person) that relates to the Transactions, including the financing contemplated hereby); provided that no indemnified person will be indemnified for any loss, claim, damage, liability, cost or expense to the extent it has resulted from (i) the gross negligence or willful misconduct of such person or any of its affiliates or controlling persons or any of the officers, directors, employees, agents, advisors, or members of any of the foregoing (as determined by a court of competent jurisdiction in a final and non-appealable decision) or (ii) a material breach by any such person or one of its affiliates (as determined by a court of competent jurisdiction in a final and non-appealable decision). | ||
Governing Law and Forum: | New York. | |
Counsel to the Administrative Agent and Lead Arrangers: | Cahill Gordon & Reindel LLP. |
B-25
Senior Unsecured Bridge Facility
Summary of Principal Terms and Conditions2
Borrower: | The Borrower under the Senior Secured Facilities. | |
Transaction: | As set forth in Exhibit A to the Commitment Letter. | |
Administrative Agent | JPMCB will act as sole administrative agent (in such capacity, the Administrative Agent) for a syndicate of banks, financial institutions and other entities excluding Disqualified Lenders (together with the Initial Bridge Lenders, the Lenders), and will perform the duties customarily associated with such role. | |
Joint Lead Arrangers: | J.P. Morgan and Barclays Capital will act as joint lead arrangers (the Lead Arrangers) for the Bridge Facility, and each will perform the duties customarily associated with such roles. | |
Initial Bridge Loans: | The Lenders will make senior unsecured increasing rate loans (the Initial Bridge Loans) to the Borrower on the Closing Date in an aggregate principal amount of up to $360 million minus the aggregate amount of Notes issued on or prior to the Closing Date. | |
Availability: | The Lenders will make the Initial Bridge Loans on the Closing Date simultaneously with (a) the consummation of the Acquisition and (b) the initial funding under the Senior Secured Facilities. | |
Purpose: | The proceeds of borrowings of the Initial Bridge Loans will be used by the Borrower on the Closing Date, together with the proceeds of borrowings under the: Senior Secured Facilities, the proceeds of the issuance of the Notes, if any, and cash on hand at the Company, solely to pay the Acquisition Costs. | |
Ranking: | The Initial Bridge Loans will rank pari passu with the Senior Secured Facilities and other senior indebtedness of the Borrower. |
2 | All capitalized terms used but not defined herein shall have the meanings given to them in the Commitment Letter to which this term sheet is attached, including Exhibit A thereto. |
Exhibit C-1
Guarantees: | The Initial Bridge Loans will be jointly and severally guaranteed by each Guarantor (as defined in Exhibit B to the Commitment Letter) on a senior basis (such guarantees, the Guarantees). The Guarantees will rank pari passu with guarantees of the Senior Secured Facilities. The Guarantees will automatically be released upon the release of the corresponding guarantees of the Senior Secured Facilities with exceptions for repayment, termination or refinancing of the Senior Secured Facilities. | |
Maturity: | All Initial Bridge Loans will have an initial maturity date that is the one-year anniversary of the Closing Date (the Initial Bridge Loan Maturity Date), which shall be extended as provided below. If any of the Initial Bridge Loans have not been previously repaid in full on or prior to the Initial Bridge Loan Maturity Date and no payment or bankruptcy (with respect to the Borrower) event of default then exists, such Initial Bridge Loans shall automatically be extended into senior unsecured term loans (each an Extended Term Loan) due on the date that is eight years after the Closing Date (the Extended Maturity Date) having the terms set forth on Annex I hereto. The date on which Initial Bridge Loans are extended as Extended Term Loans is referred to as the Extension Date. At any time or from time to time on or after the Extension Date, at the option of the Lenders, the Extended Term Loans may be exchanged in whole or in part for senior unsecured exchange notes (the Exchange Notes) having an equal principal amount and having the terms set forth in Annex II hereto; provided that the Borrower may defer the first issuance of Exchange Notes until such time as the Borrower shall have received requests to issue an aggregate of at least $50 million in aggregate principal amount of Exchange Notes. | |
In connection with any Lenders exchange of Initial Bridge Loans for Exchange Notes, or at any time prior thereto if reasonably requested by the Initial Bridge Lenders, the Borrower shall use its commercially reasonable efforts to take such actions and deliver such documents as may be deemed reasonably necessary or otherwise advisable to permit such Lender to resell Exchange Notes (which may include customary opinions, accountants comfort letters and other offering documents and agreements); provided that, in no event, shall the Borrower be required to register the Exchange Notes other than pursuant to the terms under the |
Exhibit C-2
heading Registration Rights below. | ||
The Initial Bridge Loans, the Extended Term Loans and the Exchange Notes shall be pari passu for all purposes. | ||
Interest Rates: | Prior to the Initial Bridge Loan Maturity Date, the Initial Bridge Loans will accrue interest at the rate provided in Annex II to the Fee Letter. | |
Default Rate: | Overdue principal, interest, fees and other amounts shall bear interest at the applicable interest rate plus 2.00% per annum. | |
Mandatory Prepayment: | The Borrower will be required to prepay the Initial Bridge Loans on a pro rata basis at 100% of the outstanding principal amount thereof plus accrued and unpaid interest with (i) the net cash proceeds from the issuance of Securities, provided, that in the event any Initial Bridge Lender or affiliate of an Initial Bridge Lender purchases debt securities from the Borrower pursuant to a securities demand under the Fee Letter at an issue price above the level at which such Initial Bridge Lender or affiliate has determined such debt securities can be resold by such Initial Bridge Lender or affiliate to a bona fide third party at the time of such purchase that is not a lender under the Bridge Facility or affiliate thereof or a participant in the Bridge Facility at such time (and notifies the Borrower thereof), the net cash proceeds received by the Borrower in respect of such debt securities may, at the option of such Initial Bridge Lender or affiliate, be applied first to prepay the Initial Bridge Loans of such Initial Bridge Lender or affiliate (provided that if there is more than one such Initial Bridge Lender or affiliate then such net cash proceeds will be applied pro rata to prepay the Initial Bridge Loans of all such Initial Bridge Lenders or affiliates in proportion to such Initial Bridge Lenders or affiliates principal amount of debt securities purchased from the Borrower) prior to being applied to prepay the Initial Bridge Loan held by other Initial Bridge Lenders; (ii) the net proceeds from the issuance of any Refinancing Debt (to be defined) by the Borrower or any of its restricted subsidiaries; (iii) net cash proceeds from any issuance of equity, subject to exceptions to be agreed and (iv) the net cash proceeds from (x) any Required Divestiture received after the Closing Date and (y) any non-ordinary course asset sales or dispositions (including as a result of casualty or condemnation but excluding Required Divestitures) by the Borrower or any of its restricted subsidiaries in excess of amounts either reinvested in the |
Exhibit C-3
business of the Borrower or its restricted subsidiaries in accordance with the Senior Secured Facilities or required to be paid to the lenders under the Senior Secured Facilities, in the case of any such prepayments pursuant to the foregoing clause (iv)(y) above with exceptions and baskets usual and customary for financings of this type. | ||
The Borrower will also be required to offer to prepay the Initial Bridge Loans following the occurrence of a change of control (to be defined in a manner consistent with the Applicable Bond Standard (as defined below) and in any event not less favorable to the Borrower than the definition in the Senior Secured Facilities Documentation)) at 100% of the outstanding principal amount thereof, plus accrued and unpaid interest to the date of repayment. | ||
Optional Prepayment: | The Initial Bridge Loans may be prepaid, in whole or in part, at par plus accrued and unpaid interest upon not less than one business days prior written notice, at the option of the Borrower at any time. | |
Documentation: | The definitive documentation for the Bridge Facility (the Bridge Facility Documentation) will contain only those conditions to borrowing, representations, warranties, covenants and events of default expressly set forth in this Term Sheet and consistent with the Senior Secured Facilities Documentation with modifications to reflect bridge loan terms and provisions that are usual and customary for facilities of this type, the definitive terms of which will be negotiated in good faith (including as to operational requirements of the Borrower and its subsidiaries in light of their industries, businesses and business practices and current market conditions), and shall be consistent with this Term Sheet and in any event, other than as set forth herein, not less favorable to the Borrower than the provisions of the Senior Secured Facilities. | |
Conditions to All Borrowings: | The availability of the initial borrowing under the Bridge Facility on the Closing Date shall be conditioned solely upon the satisfaction of the applicable conditions set forth in Section 6 of the Commitment Letter and Exhibit D to the Commitment Letter and the accuracy of the representations and warranties in the Bridge Facility Documentation (subject to the Closing Date Conditions Provision). | |
Representations and Warranties: | The Bridge Facility Documentation will contain representations and warranties as are substantially similar to |
Exhibit C-4
those in the Senior Secured Facilities Documentation, with additional representations and warranties usual and customary for high yield financings consistent with the Applicable Bond Standard and to the extent necessary to reflect differences in documentation. | ||
Covenants: | The Bridge Facility Documentation will contain such affirmative and negative covenants applicable to the Borrower and its restricted subsidiaries usual and customary for publicly traded high yield securities and based on and consistent with similar offerings in light of market conditions (it being understood and agreed that only the terms expressly set forth herein are being committed to), the definitive terms of which will be negotiated in good faith (including as to operational requirements of the Borrower and its subsidiaries in light of their industries, businesses, and business practice and current market conditions) (the Applicable Bond Standard), will be incurrence-based covenants, and, in no event, except as set forth herein, shall be more restrictive than, or include any covenants not included in the Senior Secured Facilities. The Bridge Facility Documentation will include an affirmative covenant regarding compliance with the go to market provisions of the Fee Letter. Prior to the Initial Bridge Loan Maturity Date, the debt and lien incurrence and the restricted payment covenants of the Bridge Loans may be more restrictive than those of the Senior Secured Facilities, Extended Term Loans and the Exchange Notes, as reasonably agreed by the Administrative Agent and the Borrower. The Bridge Facility Documentation will provide that the Borrower shall be prohibited from paying the Deferred Payment Obligation, the principal of the Deferred Payment Subordinated Note or any cash interest (but not the payment of interest up to the Total Deferred Payment Cap through an increase in principal amount of the Deferred Payment Subordinated Note) in respect of the Deferred Payment Subordinated Note in excess of the Deferred Payment Cash Cap (other than through the conversion of any such amounts into common equity of MedAssets and the exercise of rights of set-off, indemnification or purchase price adjustments, in each case, in accordance with the terms of the Purchase Agreement and the Deferred Payment Subordinated Note) (each such payment, a Deferred Restricted Payment) except for (A) such Deferred Restricted Payments if after giving effect to each such payment (and any incurrence of debt or related transactions to occur on the date of such payment) on a pro forma basis (i) no default or event of default shall have |
Exhibit C-5
occurred and is continuing under the Bridge Facility Documentation and (ii) the Total Leverage Ratio would be less than 5.0 to 1.0 (it being understood that any such payment shall reduce the amount available for future restricted payments pursuant to the restricted payments build up basket but shall not affect the ability to make future Deferred Restricted Payments pursuant to the provisions described herein), (B) Deferred Restricted Payments required pursuant to the terms of the Purchase Agreement and the Deferred Payment Subordinated Notes upon any asset sale or change of control provided that the Borrower has first complied with its obligations set forth above under Mandatory Prepayments and (C) the making of Deferred Restricted Payments out of the proceeds of subordinated indebtedness constituting Permitted Refinancing Indebtedness (to be defined in a customary manner). | ||
Financial Maintenance Covenants: | None. | |
Events of Default: | Limited to: nonpayment of principal, interest or other amounts; violation of covenants; incorrectness of representations and warranties in any material respect; cross acceleration to material indebtedness; bankruptcy or insolvency of the Borrower or its significant subsidiaries; material monetary judgments; ERISA events; and actual or asserted invalidity of guarantees. | |
Cost and Yield Protection: | The Bridge Facility Documentation will include customary tax gross-up, cost and yield protection provisions. | |
Assignments and Participation: | Subject to the prior notification of the Administrative Agent, the Lenders will have the right to assign Initial Bridge Loans after the Closing Date (other than to Disqualified Lenders) in consultation with, but without the consent of, the Borrower; provided, however, that prior to the Initial Bridge Loan Maturity Date, unless there has been a Demand Failure Event or a payment or bankruptcy event of default, the consent of the Borrower shall be required with respect to any assignment by any Initial Bridge Lender if, subsequent thereto, such Initial Bridge Lender would hold, in the aggregate, less than 51% of the outstanding Initial Bridge Loans made by it on the Closing Date and not subsequently repaid. | |
The Lenders will have the right to participate their Initial Bridge Loans to other financial institutions without |
Exhibit C-6
restriction, other than customary voting limitations. Participants will have the same benefits as the selling Lenders would have (and will be limited to the amount of such benefits) with regard to yield protection and increased costs, subject to customary limitations and restrictions. | ||
Voting: | Amendments and waivers of the Bridge Facility Documentation will require the approval of Lenders holding more than 50% of the outstanding Initial Bridge Loans, except that (a) the consent of each directly and adversely affected Lender will be required for (i) reductions of principal, interest rates or the Applicable Margin, (ii) extensions of the Initial Bridge Loan Maturity Date (except as provided under Maturity above) or the Extended Maturity Date, (iii) additional restrictions on the right to exchange Extended Term Loans for Exchange Notes or any amendment of the rate of such exchange and (iv) pro rata payment and sharing provisions (except any amendment to allow pro rata prepayment offers on terms similar to those provided in Exhibit B), and (b) the consent of 100% of the Lenders will be required with respect to modifications to any of the voting percentages and releases of all or substantially all of the value of the Guarantees (other than in connection with any release or sale of the relevant Guarantor permitted by the Senior Secured Facilities Documentation or the Bridge Facility Documentation). | |
Expenses and Indemnification: | The Borrower shall pay all reasonable and documented or invoiced out-of-pocket costs and expenses of the Administrative Agent and the Commitment Parties (without duplication) associated with the syndication of the Bridge Facility and the preparation, execution and delivery, administration, amendment, modification, waiver and/or enforcement of the Bridge Facility Documentation (including the reasonable fees, disbursements and other charges of counsel identified herein or otherwise retained with the Borrowers consent)). | |
The Borrower will indemnify the Administrative Agent, the Commitment Parties, the Lenders and their affiliates, and the officers, directors, employees, advisors, agents, controlling parties and other representatives and their successors and permitted assigns of each of the foregoing, and hold them harmless from and against all losses, claims, damages, liabilities and reasonable and documented or invoiced out-of-pocket fees and expenses (including reasonable fees, disbursements and other charges of one counsel for all |
Exhibit C-7
indemnified parties and, if necessary, one firm of local counsel in each appropriate jurisdiction (which may include a single special counsel acting in multiple jurisdictions) for all indemnified parties (and, in the case of an actual or perceived conflict of interest, where the indemnified person affected by such conflict informs the Borrower of such conflict and thereafter retains its own counsel, of another firm of counsel for such affected indemnified person)) of any such indemnified person arising out of or relating to any claim or any litigation or other proceeding to the Transactions, including the financing contemplated hereby (regardless of whether such indemnified person is a party thereto and whether or not such proceedings are brought by the Borrower, its equity holders, its affiliates, creditors or any other third person) that relates to the Transactions, including the financing contemplated hereby; provided that no indemnified person will be indemnified for any loss, claim, damage, liability, cost or expense to the extent it has resulted from (i) the gross negligence or willful misconduct of such person or any of its affiliates or controlling persons or any of the officers, directors, employees, advisors, agents or members of any of the foregoing (as determined by a court of competent jurisdiction in a final and non-appealable decision) or (ii) a material breach by any such person or one of its affiliates (as determined by a court of competent jurisdiction in a final and non-appealable decision). | ||
Governing Law and Forum: | New York. | |
Counsel to the Administrative Agent and Lead Arrangers: | Cahill Gordon & Reindel LLP. |
Exhibit C-8
EXHIBIT C
Maturity | The Extended Term Loans will mature on the date that is eight years after the Closing Date. | |
Interest Rate: | The Extended Term Loans will bear interest at an interest rate per annum equal to the Total Cap. | |
Interest shall be payable in arrears semi-annually commencing on date that is six months following the Initial Bridge Loan Maturity Date and ending on the maturity date of the Extended Term Loans, computed on the basis of a 360 day year. | ||
Default Rate: | Overdue principal, interest, fees and other amounts shall bear interest at the applicable interest rate plus 2.00% per annum. | |
Guarantees: | Same as the Initial Bridge Loans. | |
Covenants, Defaults and Mandatory Prepayments: | Upon and after the Extension Date, the covenants, mandatory prepayments and defaults that would be applicable to the Exchange Notes, if issued, will also be applicable to the Extended Term Loans in lieu of the corresponding provisions of the Bridge Facility Documentation. | |
Optional Prepayment: | The Extended Term Loans may be prepaid, in whole or in part, at par, plus accrued and unpaid interest upon not less than one business days prior written notice, at the option of the Borrower at any time. |
C-I-1
EXHIBIT C
Exchange Notes | ||
Issuer: | The Borrower will issue the Exchange Notes under an indenture capable of being qualified under the Trust Indenture Act of 1939, as amended. The Borrower, in its capacity as the issuer of the Exchange Notes, is referred to as the Issuer. | |
Principal Amount: | The Exchange Notes will be available only in exchange for the Extended Term Loans on or after the Extension Date. The principal amount of any Exchange Note will equal 100% of the aggregate principal amount of the Extended Term Loan for which it is exchanged. In the case of a partial exchange, the minimum amount of Extended Term Loans to be exchanged for Exchange Notes will be $50 million. | |
Maturity: | The Exchange Notes will mature on the date that is eight years after the Closing Date. | |
Interest Rate: | The Exchange Notes will bear interest payable semi-annually, in arrears, at a rate equal to the Total Cap. | |
Guarantees: | Same as Initial Bridge Loans and Extended Term Loans. | |
Offer to Purchase from Asset Sale Proceeds: | The Issuer will be required to make an offer to repurchase the Exchange Notes (and, if outstanding, prepay the Extended Term Loans) on a pro rata basis, which offer shall be at 100% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase with a portion of the net cash proceeds from any non-ordinary course asset sales or dispositions (including as a result of casualty or condemnation) by the Borrower or any of its restricted subsidiaries in excess of amounts either reinvested in the business of the Borrower or its restricted subsidiaries or required to be paid to the lenders under the Senior Secured Facilities or the holders of certain other indebtedness, with such proceeds being applied to the Extended Term Loans, the Exchange Notes and the Notes in a manner to be agreed, subject to other exceptions and baskets usual and customary for financings of this type and consistent with the Applicable Bond Standard and in any event not less favorable to the Borrower than those applicable to the Senior Secured Facilities. |
C-II-1
Offer to Purchase upon Change of Control: | The Issuer will be required to make an offer to repurchase the Exchange Notes following the occurrence of a change of control (to be defined in a manner consistent with the Applicable Bond Standard) at a price in cash equal to 101% of the outstanding principal amount thereof, plus accrued and unpaid interest to the date of repurchase. | |
Optional Redemption: | Exchange Notes will be non callable until the fourth anniversary of the Closing Date. Thereafter, each such Exchange Note will be callable at par plus accrued interest plus a premium equal to one half of the coupon on such Exchange Note, which premium shall decline ratably on each subsequent anniversary of the Closing Date to zero on the date that is two years prior to the maturity of the Exchange Notes. | |
Prior to the fourth anniversary of the Closing Date, the Issuer may redeem such Exchange Notes at a make-whole price based on U.S. Treasury notes with a maturity closest to the fourth anniversary of the Closing Date plus 50 basis points. | ||
Prior to the third anniversary of the Closing Date, the Issuer may redeem up to 35% of such Exchange Notes with proceeds from an equity offering at a price equal to par plus the coupon on such Exchange Notes. | ||
The optional redemption provisions will be otherwise customary for publicly traded high yield transactions. | ||
Defeasance and Discharge Provisions: | Customary for publicly traded high yield debt securities and consistent with the Applicable Bond Standard. | |
Modification: | Customary for publicly traded high yield debt securities and consistent with the Applicable Bond Standard. | |
Registration Rights: | The Issuer shall use commercially reasonable efforts to file, within 180 days after the first issuance of Exchange Notes (the date of such issuance, the Issue Date), and will use commercially reasonable efforts to cause to become effective, as soon thereafter as practicable on or prior to the date which is 360 days following the Issue Date, a shelf registration statement with respect to the Exchange Notes (such registration statement, a Shelf Registration Statement), which Shelf Registration Statement shall contain all financial statements required under the Securities Act of 1933, as amended (the Act). If a Shelf Registration Statement is filed, the Issuer will keep such Shelf Registration Statement effective and available (subject to |
C-II-2
customary exceptions) until it is no longer needed to permit unrestricted resales of the Exchange Notes; provided that in no event shall the Issuer be required to keep such Shelf Registration Statement effective and available for more than two years after the Issue Date. If within 360 days from the Issue Date, a Shelf Registration Statement has not been declared effective, then the Issuer will pay additional interest of 0.25% per annum on the principal amount of Exchange Notes (which rate of additional interest shall increase by 0.25% per annum after 90 days to a maximum of 1.00% per annum) to the holders of such Exchange Notes. The Issuer will also pay such additional interest to the holder of an Exchange Note for any period of time (subject to customary exceptions) following the effectiveness of the Shelf Registration Statement with respect to such Exchange Note that such Shelf Registration Statement is not available for sales thereunder, subject to the time limitations set forth in the second sentence of this paragraph. All accrued additional interest will be paid in arrears on each semi-annual interest payment date. | ||
Right to Transfer Exchange Notes: | The holders of the Exchange Notes shall have the absolute and unconditional right to transfer such exchange notes in compliance with applicable law to any third parties. | |
Covenants: | Customary for publicly traded high yield debt securities and consistent with the Applicable Bond Standard and with provisions applicable to the making of Deferred Restricted Payments identical to those applicable under the Bridge Facility Documentation as described above. | |
Events of Default: | Customary for publicly traded high yield debt securities and consistent with the Applicable Bond Standard. | |
Governing Law and Forum: | State of New York. |
C-II-3
Summary of Additional Conditions3
3 | Capitalized terms used in this Exhibit D shall have the meanings set forth in the other Exhibits attached to the Commitment Letter to which this Exhibit D is attached (the Commitment Letter). In the case of any such capitalized term that is subject to multiple and differing definitions, the appropriate meaning thereof in this Exhibit D shall be determined by reference to the context in which it is used. |
D-1
D-2
D-3
D-4
D-5