Mylan Laboratories Inc. Credit Facilities Commitment Letter with Merrill Lynch, Citigroup, and Goldman Sachs Credit Partners (May 11, 2007)
Mylan Laboratories Inc. has received a commitment from Merrill Lynch, Citigroup, and Goldman Sachs Credit Partners to provide financing for its planned acquisition of certain businesses from Mastermind entities. The lenders have agreed to provide new senior secured credit facilities and, if needed, an interim loan, to fund the acquisition, refinance existing debt, and cover related expenses. The agreement outlines each lender's share of the commitment and is subject to negotiation and execution of final loan documents. The commitment may be reduced if Mylan raises funds through a notes offering before closing.
MERRILL LYNCH CAPITAL CORPORATION | CITIGROUP GLOBAL MARKETS INC. | |
4 World Financial Center | 388 Greenwich Street | |
250 Vesey Street | New York, New York 10013 | |
New York, NY 10080 |
85 Broad Street
New York, New York 10004
1500 Corporate Drive
Canonsburg, Pennsylvania 15317
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Very truly yours, | ||||||
MERRILL LYNCH CAPITAL CORPORATION | ||||||
By: | ||||||
Title: | ||||||
CITIGROUP GLOBAL MARKETS INC. | ||||||
By: | ||||||
Name: | ||||||
Title: | ||||||
GOLDMAN SACHS CREDIT PARTNERS L.P. | ||||||
By: | ||||||
Name: | ||||||
Title: |
the date first written above:
By: | ||||
Title: |
Summary of Additional Conditions Precedent
CONFIDENTIAL | EXHIBIT A |
Borrower: | With respect to the US Term Loan Facility and the Revolving Facility, Mylan Laboratories Inc. (US Borrower). With respect to the Euro Term Loan, a European subsidiary of the US Borrower to be mutually agreed (the Euro Borrower and, together with the US Borrower, the Borrowers). If requested by the US Borrower, one or more additional borrowers (including non-U.S. borrowers) may be added on terms and conditions to be mutually agreed between the US Borrower and the Lead Arrangers. | |
Joint Lead Arrangers and Bookrunners: | Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc. (the Lead Arrangers). | |
Administrative Agent: | A financial institution to be agreed by the US Borrower and Merrill Lynch (the Administrative Agent). | |
Syndication Agent: | Merrill Lynch Capital Corporation (or one of its affiliates). | |
Lenders: | Merrill Lynch Capital Corporation (or one of its affiliates), Citigroup, Goldman Sachs Credit Partners L.P. and a syndicate of financial institutions (the Lenders) arranged by the Lead Arrangers and reasonably acceptable to the US Borrower. |
a | Capitalized terms used herein and not defined shall have the meanings assigned to such terms in the attached Credit Facilities Commitment Letter (the Commitment Letter). |
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Credit Facilities: | Senior secured credit facilities (the Credit Facilities) in an aggregate principal amount of up to $4,850.0 million, such Credit Facilities comprising: |
Incremental Facility: | The US Borrower shall be entitled to incur additional term loan commitments or increases in the amount of the commitments under the Revolving Facility (the Incremental Commitments) in an aggregate principal amount of up to $500,000,000 from Lenders or other financial institutions designated by the US Borrower and |
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reasonably acceptable to the Administrative Agent; provided that (i) no event of default or default exists or would exist after giving effect thereto, (ii) after giving effect to the borrowing in full under such Incremental Commitments, the US Borrower would be in pro forma compliance as of the most recently ended fiscal quarter for which financial statements are available with the financial covenant described under Financial Covenant (as such covenant is in effect on the Closing Date and whether or not such covenant has been amended or waived), (iii) any Incremental Commitments that are revolving commitments shall be of the same class as the commitments under the Revolving Facility in effect on the Closing Date, (iv) the maturity date of any term loans pursuant to any Incremental Commitments shall be no earlier than the maturity date of the US Tranche B Term Loan Facility, (iv) the average life to maturity of any term loans pursuant to any Incremental Commitments shall be no shorter than the average life to maturity of the loans under the US Tranche B Term Loan Facility, (vi) in the case of term loans under any Incremental Commitments, the other terms and documentation in respect thereof, to the extent not materially consistent with the US Tranche B Term Loan Facility shall otherwise be reasonably satisfactory to the Administrative Agent. No existing Lender shall have any obligation to provide any Incremental Commitments. | ||
Documentation: | Usual for facilities and transactions of this type and reasonably acceptable to Borrowers and the Lead Arrangers. The documentation for the Credit Facilities will include, among others, a credit agreement (based on the existing credit agreement of the US Borrower with modifications contemplated hereby and other modifications to be reasonably agreed for comparable financing transactions) (the Credit Agreement), guarantees and, to the extent required under Security below, appropriate pledge, security interest, mortgage and other collateral documents (collectively, the Credit Documents). The US Borrower and the US Guarantors (as defined below under Guarantors) are herein referred to as the US Credit Parties and individually referred to as a US Credit Party. |
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The Euro Borrower and the Euro Guarantors (as defined below under Guarantors) are herein referred to as the Euro Credit Parties and individually referred to as a Euro Credit Party. The US Credit Parties and Euro Credit Parties are collectively referred to herein as the Credit Parties and individually referred to herein as a Credit Party. | ||
Transactions: | As described in the Commitment Letter. | |
Availability/Purpose: | (A) Term Loan Facilities. The Term Loan Facilities will be available in single drawing on the Closing Date to finance the Acquisition and the Refinancing and to pay related fees and expenses. Loans under the Term Loan Facilities that are repaid or prepaid may not be reborrowed. | |
(B) Revolving Facility. The Revolving Facility will be available for working capital and general corporate purposes, including permitted acquisitions, on a fully revolving basis, subject to the terms and conditions set forth in the Credit Documents, in the form of revolving loans, swing line loans and letters of credit on and after the Closing Date until the date that is 6 years after the Closing Date (the R/C Maturity Date). | ||
Guarantors: | Each of US Borrowers direct and indirect wholly owned domestic subsidiaries existing on the Closing Date or thereafter created or acquired (subject to exceptions that may be agreed upon with respect to immaterial subsidiaries and excluding American Triumvirate Insurance Company and any domestic subsidiary that (i) serves solely as a holding company for foreign subsidiaries and (ii) has not incurred any third party indebtedness (other than guarantees of indebtedness of its subsidiaries) (any such subsidiary, a Foreign Holding Company)) shall unconditionally guarantee, on a joint and several basis, all obligations of the US Borrower and the Euro Borrower under the Credit Facilities and under each interest rate protection agreement and cash management arrangement entered into with a person that is or was a Lender or an affiliate of a Lender at the time such agreement or |
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arrangement was entered into (US Guarantors, with their guarantees referred to herein as US Guarantees). Additionally, the US Borrower, each Foreign Holding Company and each of the Euro Borrowers direct and indirect wholly owned subsidiaries formed under the laws of the jurisdiction of organization of the Euro Borrower and such other jurisdictions as may be mutually agreed, existing on the Closing Date or thereafter created or acquired (subject to exceptions that may be agreed upon with respect to immaterial subsidiaries), shall unconditionally guarantee, on a joint and several basis, all obligations of the Euro Borrower under the Credit Facilities (the Euro Guarantors, with their guarantees referred to as the Euro Guarantees and, together with the US Guarantees, the Guarantees), except to the extent a guaranty thereby could reasonably be expected to result in adverse tax consequences, is prohibited or limited by law, including financial assistance rules (subject to compliance with whitewash procedures), would result in a breach of the fiduciary duties of the directors of such subsidiary, could reasonably be expected to result in personal or criminal liability of any director or where the cost of complying with legal requirements to obtain such guarantee are, in the reasonable determination of the Lead Arrangers (in consultation with the US Borrower), excessive in relation to the value to be afforded thereby. Each US Guarantor and Euro Guarantor is herein referred to as a Guarantor and its guarantee is referred to herein as a Guarantee. The US Guarantors and Euro Guarantors are herein referred to collectively as the Guarantors. | ||
Security: | The Credit Facilities, the US Guarantees, and cash management arrangements and the obligations of the US Borrower under each interest rate protection agreement entered into with a person that is or was a Lender or any affiliate of a Lender at the time such arrangement or agreement was entered into will be secured by (A) a perfected lien on, and pledge of, all of the capital stock of each of the direct subsidiaries of the US Credit Parties existing on the Closing Date or thereafter created or acquired (such pledge, to the extent securing any |
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obligations in respect of the US Facilities, to be limited to 65% of the outstanding voting stock of (x) any controlled foreign corporation as defined in Section 956 of the Internal Revenue Code and (y) any Foreign Holding Company) and, (B) a perfected lien on, and security interest in, all of the tangible and intangible properties and assets (including all contract rights, material owned real property interests, patents, trademarks, trade names, equipment and proceeds of the foregoing) of each US Credit Party (collectively, the US Collateral). Additionally, the Euro Credit Facilities and the Euro Guarantees will be secured by (A) a perfected lien on, and pledge of, all of the capital stock of each of the direct subsidiaries of the Euro Credit Parties existing on the Closing Date or thereafter created or acquired and, (B) a perfected lien on, and security interest in, all of the tangible and intangible properties and assets (including all contract rights, material owned real property interests, patents, trademarks, trade names, equipment and proceeds of the foregoing) of each Euro Credit Party (collectively, the Euro Collateral and, together with the US Collateral, the Collateral). Notwithstanding the foregoing, the Euro Collateral will not include assets to the extent the granting of security over such assets is prohibited or limited by law, including financial assistance rules (subject to compliance with whitewash procedures), would result in a breach of the fiduciary duties of the directors of the applicable Euro Credit Party or could reasonably be expected to result in personal or criminal liability of any director. All such security interests will, to the extent required as provided above, be created pursuant to documentation reasonably satisfactory in all respects to the Lead Arrangers. | ||
Notwithstanding anything to the contrary contained herein, the US Collateral and the Euro Collateral shall exclude the following: (i) all leasehold interests (to the extent that mortgages would be required), (ii) motor vehicles and other assets subject to certificates of title, letter of credit rights and commercial tort claims (except for certain commercial tort claims subject to the requirements of the creation and perfection of security interests covenant on after-acquired |
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property), (iii) pledges and security interests prohibited or (to the extent) limited by law and certain agreements (including capital leases, purchase money indebtedness and licenses) (other than prohibitions overridden by the UCC), (iv) assets requiring perfection through control agreements, (v) assets to the extent the granting of security over such assets could reasonably be expected to result in adverse tax consequences as determined by the US Borrower, and (vi) those properties and assets as to which the Lead Arrangers reasonably determine that the costs of obtaining such security interest or perfection thereof are excessive in relation to the practical benefit to the Lenders of the security interest to be afforded thereby (it being understood that none of the foregoing shall be subject to any other liens or security interests, except for certain customary exceptions to be agreed upon). | ||
Termination of Commitments: | The commitments in respect of the Credit Facilities (including pursuant to the Commitment Letter) will terminate in their entirety on the date that is 270 days after the date the Acquisition Agreement is notarized if the initial funding under the Credit Facilities does not occur on or prior to such date. | |
Final Maturity: | (A) US Tranche A Term Loan Facility. The US Tranche A Term Loan Facility will mature on the sixth anniversary of the Closing Date. | |
(B) US Tranche B Term Loan Facility. The US Tranche A Term Loan Facility will mature on the seventh anniversary of the Closing Date. | ||
(C) Euro Term Facility. The Euro Term Loan Facility will mature on the seventh anniversary of the Closing Date. | ||
(B) Revolving Facility. The Revolving Facility will mature on the R/C Maturity Date. |
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Amortization Schedule: | (A) US Tranche A Credit Facility | |
The US Tranche A Term Loan will amortize in quarterly installments in aggregate amounts for each year following the Closing Date in amounts to be mutually agreed. | ||
(B) US Tranche B Credit Facility | ||
The US Tranche B Credit Facility will amortize at a rate of 1.00% per annum on a quarterly basis (beginning with the first full fiscal quarter after the Closing Date) for the first six years and three quarters, respectively, after the Closing Date with the balance paid in full at maturity. | ||
(C) Euro Tranche B Credit Facility | ||
The Euro Tranche B Credit Facility will amortize at a rate of 1.00% per annum on a quarterly basis (beginning with the first full fiscal quarter after the Closing Date) for the first six years and three quarters, respectively, after the Closing Date with the balance paid in full at maturity. | ||
Letters of Credit: | Letters of credit under the Revolving Facility (Letters of Credit) will be issued by a Lender to be agreed by the Lead Arrangers and the US Borrower (in such capacity, the L/C Lender). The issuance of all Letters of Credit shall be subject to the customary procedures of the L/C Lender. | |
No Letter of Credit shall, without the consent of the L/C Lender, have an expiration date after the earlier of (a) one year after the date of issuance and (b) the date that is five business days to the R/C Maturity Date, provided that any Letter of Credit with a one-year tenor may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (b) above). | ||
Drawings under any Letter of Credit shall be reimbursed by the Borrower (whether from its own funds or with the proceeds of the Revolving Facility) following receipt of notice of such drawing and any unreimbursed drawing shall be deemed a request for a Revolving Loan in the amount of |
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such drawing. To the extent the Borrower does not so reimburse the L/C Lender, the Lenders under the Revolving Facility shall be irrevocably and unconditionally obligated to reimburse the L/C Lender on a pro rata basis. | ||
Letter of Credit Fees: | Letter of Credit fees will be payable for the account of the Revolving Facility Lenders on the daily average undrawn face amount of each Letter of Credit at a rate per annum equal to the applicable margin for Revolving Loans that are LIBOR rate loans in effect at such time, which fees shall be paid quarterly in arrears. In addition, an issuing fee on the face amount of each Letter of Credit in an amount per annum to be agreed shall be payable to the L/C Lender for its own account, which fee shall also be payable quarterly in arrears. | |
Interest Rates and Fees: | Interest rates and fees in connection with the Credit Facilities will be as specified on Annex I attached hereto. | |
Default Rate: | Overdue principal, interest and other amounts shall bear interest at a rate per annum equal to 2% in excess of the applicable interest rate (including applicable margin). | |
Mandatory Prepayments/Reductions in Commitments: | The Term Loan Facilities will be required to be prepaid on a pro rata basis with (a) commencing with the first full fiscal year following the Closing Date, an amount equal to (i) 50% of annual Excess Cash Flow (to be defined in a mutually satisfactory manner but to be based on free cash flow, adjusted to take into account, among other things, debt service, certain prepayments of debt, capital expenditures and permitted investments in a manner to be agreed), minus (ii) optional Term Loan prepayments (and Revolving Facility prepayments accompanied by permanent reductions in the Revolving Facility) during such fiscal year, provided that the foregoing percentage shall be reduced to (x) 25% upon achievement of a Leverage Ratio to be agreed and (y) zero upon achievement of a Leverage Ratio to be agreed, (b) 100% of the net cash proceeds (including condemnation and insurance proceeds) of asset sales and other asset dispositions outside of the |
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ordinary course by the US Borrower or any of its subsidiaries (subject to baskets and exceptions to be agreed upon, including, without limitation, an exception for the sale of assets, including inventory, or property in the ordinary course of business, and subject to full rights of reinvestment within 12 months of receipt of net proceeds, provided that if such amounts are committed to be reinvested within such 12 month period, such reinvestment period shall extend for an additional 6 months); provided that no such prepayment shall be required if the US Borrower has a Leverage Ratio below a level to be agreed, and (c) 100% of the net cash proceeds of the issuance or incurrence of debt by the US Borrower or any of its subsidiaries (subject to baskets and exceptions to be agreed upon), including an exception for debt permitted by the Credit Facilities other than debt, if any, which can only be incurred to the extent the proceeds thereof are applied to prepay the Credit Facilities). The Credit Agreement will contain customary provisions designed to reduce the adverse tax consequences resulting from the repatriation of cash of foreign subsidiaries in connection with mandatory prepayments. | ||
Each such mandatory prepayment will be applied to the scheduled amortization payments of the Term Loan Facilities in forward order for the unpaid quarterly amounts due in the next 24 months after such prepayment and thereafter ratably to the remaining scheduled amortization payments under each of the Term Loan Facilities. | ||
Any Lender may elect not to accept any mandatory prepayments (each, a Declining Lender). Any prepayment amount declined by a Declining Lender (to the extent not accepted by other Lenders), subject to any prepayment requirements of the Notes and/or the Interim Loan, may be retained by the Borrowers. | ||
Revolving Loans will be immediately prepaid to the extent that the aggregate extensions of credit under the Revolving Facility exceed the commitments then in effect under the Revolving Facility. To the extent that the amount to be |
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applied to the repayment of the Revolving Loans exceeds the amount thereof then outstanding, Borrower shall cash collateralize outstanding Letters of Credit. | ||
Voluntary Prepayments/Reductions in Commitments: | (A) Term Loan Facilities. Loans under any of the Term Loan Facilities may be prepaid at any time in whole or in part at the option of the US Borrower, in a minimum principal amount and in multiples to be agreed upon, without premium or penalty (except, in the case of LIBOR borrowings, breakage costs (excluding any interest margin) related to prepayments not made on the last day of the relevant interest period). Voluntary prepayments of Loans under the Term Loan Facilities will be applied as directed by the US Borrower. | |
(B) Revolving Facility. The unutilized portion of the commitments under the Revolving Facility may be reduced and loans under the Revolving Facility may be repaid at any time, in each case, at the option of the US Borrower, in a minimum principal amount and in multiples to be agreed upon, without premium or penalty (except, in the case of LIBOR borrowings, breakage costs (excluding any interest margin) related to prepayments not made on the last day of the relevant interest period). | ||
Conditions to Effectiveness and to Initial Loans: | The effectiveness of the credit agreement and the making of the initial loans under the Credit Facilities shall be subject to the conditions precedent set forth on Annex I to the Commitment Letter. | |
Conditions to All Extensions of Credit: | Each extension of credit under the Credit Facilities (other than extensions on the Closing Date) will be subject to the following conditions, subject to the Clean-up Period (as defined below): | |
(i) absence of any continuing Default or Event of Default (to be defined), and (ii) continued accuracy of representations and warranties in all material respects (which materiality exception will not apply to |
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representations and warranties qualified by materiality standards). | ||
Representations and Warranties: | Customary for facilities similar to the Credit Facilities (and applying to the US Borrower and its subsidiaries) to consist of the following representations and warranties: organization; powers; subsidiaries; authorization; enforceability; governmental approvals; no conflicts; financial statements and financial condition; no material adverse change; properties; litigation and environmental matters; labor matters; solvency of the US Borrower and its subsidiaries, taken as a whole, on the Closing Date; intellectual property; compliance with laws and agreements; disclosure; margin regulations; and investment company status. | |
Affirmative Covenants: | The definitive documentation for the Credit Facilities shall contain the following affirmative covenants (in each case applicable to the US Borrower and its subsidiaries, as appropriate and subject to customary materiality thresholds and exceptions to be mutually agreed): financial statements of the US Borrower and other information; notices of material events; existence; conduct of business; payment of obligations; maintenance of properties; insurance; books and records; inspection rights; compliance with laws; compliance with agreements; use of proceeds and letters of credit; subsidiary guarantees; additional collateral; and further assurances. | |
Negative Covenants: | The definitive documentation for the Credit Facilities shall contain the following negative covenants (applying to the US Borrower and its subsidiaries, as applicable) (all such covenants to be subject to customary baskets and exceptions to be agreed upon): limitation on indebtedness (exceptions to include an incurrence-based debt basket based on compliance with a financial ratio); limitation on liens; limitation on restricted payments; limitation on investments; limitation on prepayments of specified indebtedness (with exceptions to be agreed); limitations on transactions with affiliates; limitation on changes in fiscal year; limitation on restrictions on distributions from |
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subsidiaries; and limitation on mergers and certain asset sales. | ||
Financial Covenant: | For the benefit of Lenders under the Revolving Facility, the Revolving Facility will require that at any time following the end of the first full fiscal quarter after the Closing Date any loans and/or letters of credit in an aggregate amount of at least $100,000,000 are outstanding under the Revolving Facility, the Borrower shall maintain a maximum ratio of total debt to trailing four quarter adjusted EBITDA to be agreed. The financial covenant contemplated above will be tested on a quarterly basis when loans and/or letters of credit in an aggregate amount of at least $100,000,000 are outstanding under the Revolving Facility (and on a pro forma basis as of the end of the prior fiscal quarter for any extension of credit under the Revolving Facility which would result in at least $100,000,000 outstanding under the Revolving Facility to the extent such financial covenant was not applicable as of the end of the most recently ended quarter prior to such credit extension) and will apply to Borrower and its subsidiaries on a consolidated basis. | |
Events of Default: | The definitive documentation for the Credit Facilities shall contain the following events of default (in each case applicable to the US Borrower and its subsidiaries, subject to materiality thresholds, baskets, exceptions and customary grace periods to be agreed upon): nonpayment of principal, interest or fees; material inaccuracy of representations and warranties; violation of covenants (subject, in the case of affirmative covenants, to a grace period of 30 days after notice by the Administrative Agent and subject to a grace period to be agreed with respect to the Term Loan Facilities in the case of a default under the financial covenant described above); cross-default to other indebtedness in an amount to be agreed; bankruptcy events; unsatisfied judgment; invalidity or repudiation of any guarantees or security document with respect to a material portion of the collateral; certain ERISA events; and change of control. |
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Clean-up Period: | During the period expiring 90 days following the Closing Date (the Clean-up Period), any matter or circumstance that exists in respect of the Acquired Business and its subsidiaries (collectively, the Target Group) that would otherwise constitute a breach of a representation or warranty or covenant or constitute a default or event of default under the definitive documentation for the Credit Facilities and which: | |
(A) is capable of being cured within the Clean-up Period (and, if any Borrower or any member of the Target Group is aware of the relevant circumstances at the time, reasonable efforts are being used to cure the same); | ||
(B) has not been procured or approved by the US Borrower; | ||
(C) does not constitute a bankruptcy default or bankruptcy event of default; and | ||
(D) has not resulted in a Material Adverse Change (as defined in the Credit Agreement); | ||
shall be deemed not to give rise to such a breach and will not operate as a failure of a condition to the availability of borrowings under the Credit Facilities (and notwithstanding the occurrence of such matter or circumstance, the Lenders shall be required to make extensions of credit available to the Borrowers if all other conditions precedent to such extensions of credit have been satisfied or waived in accordance with the definitive documentation for the Credit Facilities) unless it continues to exist on the date that is 90 days following the Closing Date; provided that if any such matters or circumstances are continuing at the end of such period, there shall be a breach of the applicable representation or warranty or covenant or default or event of default, as the case may be. | ||
Yield Protection and Increased Costs: | Customary provisions (i) protecting the Lenders against increased costs or loss of yield resulting from changes in |
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reserve, capital adequacy and other requirements of law and from the imposition of or changes in withholding or other taxes (subject in each case to limitations on time periods for claims and a right of the Borrowers to replace any Lender making such a claim) and (ii) indemnifying the Lenders for breakage costs (excluding interest margin) in connection with, among other things, prepayment of LIBOR Rate borrowing other than on the last day of an interest period. | ||
Assignments and Participations: | Each assignment (unless to another Lender or its affiliates shall be in a minimum amount of the US dollar equivalent of $1,000,000 (or, in the case of an assignment under the Revolving Facility, $5,000,000) (unless the US Borrower and the Administrative Agent otherwise consent or unless the assigning Lenders exposure is thereby reduced to $0). Assignments (which may be non-pro rata among loans and commitments) of the Loans or commitments shall require the US Borrowers and the Administrative Agents consent (such consents not to be unreasonably withheld, delayed or conditioned), except that (i) no such consent of the US Borrower or the Administrative Agent need be obtained to effect an assignment to any Lender (or its affiliates or approved funds) except with respect to the consent of the Administrative Agent for assignments under the Revolving Credit Facility and (ii) no consent by the US Borrower will be required if a payment or bankruptcy event of default has occurred and is continuing. Participations shall be permitted without restriction. Voting rights and benefits of participants will be subject to customary limitations. | |
Amendments: | Lenders having a majority of the outstanding credit exposure and available commitments (the Required Lenders), subject to amendments of certain customary provisions of the Credit Documents requiring the consent of Lenders having a greater share (or all) of the outstanding credit exposure and available commitments (it being understood that any required approval for purposes of releasing less than all or substantially all of the Guarantors or the Collateral will only require the consent of the Required Lenders). Any amendment or waiver of the |
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financial covenant described above shall only require the consent of lenders with a majority of the commitments under the Revolving Facility. | ||
The Credit Facilities shall contain customary provisions permitting the Borrowers to replace 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 Credit Facilities shall have consented thereto. | ||
Expenses and Indemnification: | In addition to those reasonable out-of-pocket expenses reimbursable under the Commitment Letter, all reasonable out-of-pocket expenses of the Lead Arrangers and the Administrative Agent (and the Lenders for enforcement costs and documentary taxes) associated with the preparation, execution and delivery of any waiver or modification (whether or not effective) requested by the US Borrower of, and the enforcement (as against the Credit Parties) of, any Credit Document (including reasonable fees, disbursements and other charges of a single counsel for the Administrative Agent; provided that reasonable fees, disbursements and other charges of additional counsel shall be reimbursed in the event of a need for local and/or regulatory counsel) are to be paid by the Credit Parties. | |
The Credit Parties will indemnify each of the Lead Arrangers, the Administrative Agent and the other Lenders and hold them harmless from and against all liabilities and related reasonable out-of-pocket costs and expenses (including reasonable fees, disbursements and other charges of a single counsel; provided that additional counsel may be retained in the event of conflict or a need for local counsel) arising out of or relating to any litigation or other proceeding (regardless of whether the Lead Arrangers, the Administrative Agent or any such other Lender is a party thereto) that relate to the Transactions or any transactions related thereto, except to the extent determined by a final judgment of a court of competent |
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jurisdiction to have resulted from the bad faith, gross negligence or willful misconduct of such person or its officers, directors, employees, affiliates, agents or controlling persons. | ||
Governing Law and Forum: | New York. | |
Waiver of Jury Trial: | All parties to the Credit Documents will waive the right to trial by jury. | |
Special Counsel for Lead Arrangers: | Cahill Gordon & Reindel llp (including local counsel as selected by the Lead Arrangers). |
Interest Rates and Fees: | Interest on the loans under the Credit Facilities will accrue at a rate based on, except in the case of loans under the Euro Term Loan Facility, the ABR plus the Applicable Margin or, except in the case of swingline loans, LIBOR plus the Applicable Margin. The Applicable Margin shall mean (i) if the US Borrower shall have delivered the Required Target Financials and the Credit Facilities shall have received ratings from Moodys and S&P, and the US Borrowers corporate credit rating is at least B1 from Moodys and B+ from S&P (x) 2.00% in the case of LIBOR loans and (y) 1.00% in the case of ABR loans, (ii) if the US Borrower shall have delivered the Required Target Financials and the Credit Facilities shall have received ratings from Moodys and S&P, and clause (i) does not apply but the US Borrowers corporate credit rating is at least B2 from Moodys and B from S&P (x) 2.25% in the case of LIBOR loans and (y) 1.25% in the case of ABR loans and (iii) if neither clause (i) nor clause (ii) applies, 2.75% in the case of LIBOR loans and (y) 1.75% in the case of ABR loans; provided, that, from and after the date of delivery of (x) financial statements of the US Borrower for the first full fiscal quarter ending after the Closing Date and (y) all audited and unaudited financial statements of the Acquired Business that the US Borrower is required to file with the SEC pursuant to Item 9.01 of Form 8-K (the Required Target Financials), Applicable Margins under the Revolving Facility and the US Tranche A Term Loan Facility will be based on a grid to be negotiated based on the US Borrowers total leverage ratio. | |
ABR means the higher of (i) the corporate base rate of interest announced by the Administrative Agent from time to time, changing effective on the date of announcement of said corporate base rate changes, and (ii) the Federal Funds Rate plus 0.50% per annum. The corporate base rate is not necessarily the lowest rate charged by the Administrative Agent to its customers. | ||
LIBOR means the rate determined by the Administrative Agent to be available to the Lenders in the London |
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interbank market for deposits in the applicable currency in the amount of, and for a maturity corresponding to, the amount of the applicable LIBOR loan (as such rate appears on, in the case of dollars, page 3750 of the Dow Jones Market Service and, in the case of Euro, page 248 of the Telerate screen (or any successor screen)), as adjusted for maximum statutory reserves and mandatory costs. | ||
Borrower may select interest periods of one, two, three or six months for LIBOR borrowings (or, if agreed to by all applicable Lenders, nine or twelve months). Interest will be payable in arrears (i) in the case of ABR loans, at the end of each quarter and (ii) in the case of LIBOR loans, at the end of each interest period and, in the case of any interest period longer than three months, no less frequently than every three months. Interest on all borrowings shall be calculated on the basis of the actual number of days elapsed over (x) in the case of LIBOR loans, a 360-day year, and (y) in the case of ABR loans, a 365- or 366-day year, as the case may be. | ||
Commitment fees accrue on the undrawn amount of the Revolving Facility (without giving effect to any swingline loans), commencing on the Closing Date. The commitment fee in respect of the Revolving Facility will be 0.50% per annum; provided, that, from and after the date of delivery of (x) financial statements of the US Borrower for the first full fiscal quarter ending after the Closing Date and (y) the Required Target Financials, commitment fees under the Revolving Facility will be based on a grid to be negotiated based on the US Borrowers total leverage ratio. | ||
All commitment fees will be payable in arrears at the end of each quarter and upon any termination of any commitment, in each case for the actual number of days elapsed over a 360-day year. |
CONFIDENTIAL | EXHIBIT B |
Borrower: | Mylan Laboratories, Inc. (Borrower). | |
Joint Lead Arrangers: | Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc. (the Lead Arrangers). | |
Administrative Agent: | A Lender or other financial institution to be agreed between the Borrower and Merrill Lynch (the Administrative Agent). | |
Lenders: | Merrill Lynch Capital Corporation (or one of its affiliates), Citigroup, GSCP and a syndicate of financial institutions (the Lenders) arranged by the Lead Arrangers and reasonably acceptable to Borrower. | |
Interim Loan: | Senior Interim Loan (the Interim Loan). | |
Principal Amount: | $2,850.0 million. | |
Documentation: | Usual for facilities and transactions of this type and reasonably acceptable to Borrower and the Lead Arrangers. The documentation for the Interim Loan will include, among others, a credit agreement (the Interim Loan Agreement), guarantees and other appropriate documents (collectively, the Interim Loan Documents), which shall be reasonably consistent with the documentation for the Senior Credit Facilities, except as to economic terms, provisions pertaining to security and other provisions relating to terms which are different as contemplated herein. | |
Transactions: | As described in the Commitment Letter. |
* | Capitalized terms used herein and not defined shall have the meanings assigned to such terms in the attached Credit Facilities Commitment Letter (the Commitment Letter). |
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Use of Proceeds: | Together with proceeds derived from the Senior Credit Facilities, to finance the Acquisition and the Refinancing and to pay the fees and expenses related to the Transactions. | |
Termination of Commitments: | The commitment in respect of the Interim Loan (including pursuant to the Commitment Letter) will automatically and permanently terminate on the date that is 270 days after the date the Acquisition Agreement is notarized. In addition, the commitments in respect of the Interim Loan will automatically and permanently terminate on the date of the consummation of the Acquisition to the extent not drawn down on such date. | |
Maturity: | The Interim Loan will mature on the date (the Initial Maturity Date) that is twelve months after the initial funding date (the Funding). Upon the satisfaction of the terms and conditions described under Exchange Feature; Rollover Securities and Rollover Loans, the Interim Loan will be exchanged for, at the option of each Lender, either (i) unsecured senior debt securities (Rollover Securities), evidenced by an indenture in a form attached to the Interim Loan Agreement and maturing on the ninth anniversary of the Initial Maturity Date, or (ii) unsecured senior loans maturing on the ninth anniversary of the Initial Maturity Date (the Rollover Loans), evidenced by the Interim Loan Agreement. | |
Interest Rate: | (A) Interim Loan. The Interim Loan will bear interest at a rate per annum expressed as a basis point spread over 3 month LIBOR: |
From the | To the | |||||||||
Beginning | End of | |||||||||
of Month | Month | Spread | ||||||||
1 | 6 | 450 bps | ||||||||
7 | 9 | 500 bps | ||||||||
10 | 12 | 550 bps |
Notwithstanding the foregoing, in no event will the interest rate (without giving effect to default interest) be greater than 11.25% per annum (the Interest Cap). |
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To the extent that LIBOR cannot be determined or any Lender is unable to maintain a LIBOR loan, the Interim Loan shall bear interest at a rate per annum equal to the higher of (x) the Federal Funds Rate plus 0.50% per annum or (y) the Prime Rate (as determined by the Administrative Agent), plus in each case the spread as indicated above (minus 100 bps). | ||
(B) Rollover Securities and Rollover Loans. The Rollover Loans and Rollover Securities (other than Fixed Rate Rollover Securities) will bear interest at a rate equal to the Initial Rate (as defined below) plus the Exchange Spread (as defined below). Notwithstanding the foregoing, the interest rate per annum payable on the Rollover Loans and any Rollover Securities shall not exceed the Interest Cap set forth above with respect to the Interim Loan. | ||
Exchange Spread means 0 basis points during the three-month period commencing on the Initial Maturity Date and shall increase by 50 basis points at the beginning of each subsequent three-month period. | ||
Initial Rate shall be determined on the Initial Maturity Date and shall equal the interest rate borne by the Interim Loan on the day immediately preceding the Initial Maturity Date plus 50 basis points. | ||
Default Rate: | All overdue amounts shall bear interest at a rate per annum equal to 2% in excess of the applicable interest rate (including applicable margin). | |
Interest Payment Dates: | (A) Interim Loan. Quarterly, in arrears. | |
(B) Rollover Securities and Rollover Loans. Quarterly, in arrears (or semi-annually in arrears in the case of Fixed Rate Rollover Securities). | ||
Security: | None (including in respect of the Rollover Securities and Rollover Loans). | |
Guarantee: | The Interim Loan will be guaranteed on an unsecured senior basis by each US subsidiary of Borrower that guarantees the Senior Credit Facilities. Each guarantee of the |
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Interim Loan shall be automatically released upon release of the corresponding guarantee under the Senior Credit Facilities. | ||
Ranking: | The Interim Loan (and the Rollover Securities and Rollover Loans) will be an unsecured senior obligation of Borrower ranking pari passu with other senior indebtedness of Borrower. | |
Optional Prepayment: | The Interim Loan (and Rollover Loans) will be prepayable at par at any time at Borrowers option, in whole or in part, plus accrued and unpaid interest. Breakage costs (excluding interest margin), if any, will be paid by Borrower. | |
Mandatory Prepayment: | To the extent not prohibited by the Senior Credit Facilities, upon the receipt by Borrower or any of its subsidiaries of the net cash proceeds from (i) the issuance of any debt (other than under the Senior Credit Facilities and subject to exceptions and baskets to be negotiated); (ii) any sale for cash of capital stock or any securities convertible into or exchangeable for capital stock or any warrants, rights or options to acquire capital stock (subject to baskets and exceptions to be agreed upon, including, without limitation, an exception for the sale of equity in connection with incentive compensation plans and issuances in connection with acquisitions); and (iii) insurance proceeds or asset sales and other asset dispositions (to the extent such proceeds are not applied to the Senior Credit Facilities and subject to baskets and exceptions to be agreed upon, including, without limitation, an exception for the sale of assets, including inventory, or property in the ordinary course of business, and subject to full rights of reinvestment within 12 months of receipt of net proceeds, provided that if such amounts are committed to be reinvested within such 12 month period, such reinvestment period shall extend for an additional 6 months), Borrower will prepay the Interim Loan in an amount equal to such net proceeds at par, together with accrued interest thereon. Breakage costs (excluding interest margin), if any, will be paid by Borrower. |
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Change of Control: | Upon the occurrence of a Change of Control (to be defined), Borrower will be required to offer to prepay the entire aggregate principal amount of the Interim Loan or Rollover Securities and Rollover Loans, as the case may be, in cash for a purchase price equal to 100% of the principal amount thereof (101% in the case of Fixed Rate Rollover Securities), plus accrued and unpaid interest. | |
Exchange Feature; Rollover Securities and Rollover Loans: | On the Initial Maturity Date, unless Borrower is in bankruptcy, each Lender (and participant) shall have its interest in the Interim Loan automatically exchanged for, at the option of each Lender, either Rollover Securities or Rollover Loans, and each Lender may at any time exchange its Rollover Loans for Rollover Securities. The Rollover Securities (including the Fixed Rate Rollover Securities) and the Rollover Loans will be (i) mandatorily redeemable or repayable (as applicable) from proceeds of certain asset sales on the basis applicable to the Interim Loan, except that, in lieu of mandatory prepayments, Borrower shall be required to make mandatory offers to purchase such Rollover Securities or Rollover Loans and (ii) optionally redeemable or repayable (as applicable) at par plus accrued and unpaid interest, subject to the provisions relating to Fixed Rate Rollover Securities. All mandatory offers to repurchase shall be made pro rata between the Rollover Securities (including Fixed Rate Rollover Securities) and the Rollover Loans, and all optional redemptions and repayments shall be made pro rata between the Rollover Securities (other than Fixed Rate Rollover Securities) and the Rollover Loans and shall be accompanied by either (x) a pro rata redemption of Fixed Rate Rollover Securities at the premium then applicable thereto or (y) a pro rata offer to repurchase Fixed Rate Rollover Securities. | |
The Rollover Securities will contain customary defeasance provisions. | ||
Breakage costs (excluding interest margin), if any, will be paid by Borrower (except in the case of Fixed Rate Rollover Securities). |
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No Rollover Securities will be issued until the Borrower receives requests to issue at least an aggregate of $75.0 million of Rollover Securities. | ||
The Rollover Securities (including any Fixed Rate Rollover Securities) will be evidenced by an indenture in form for qualification under the Trust Indenture Act and will otherwise contain provisions customary for public debt securities, but shall in no event be more restrictive than those contained in the preliminary offering memorandum or private placement memorandum used to market the Senior Notes prior to the Closing Date, and the Rollover Loans will be evidenced by the Interim Loan Agreement. The holders of the Rollover Securities will be entitled to exchange offer and other registration rights to permit resale by the holders of Rollover Securities without restriction under applicable securities laws no less favorable to holders than those customarily applicable to an offering pursuant to Rule 144A. | ||
Fixed Rate Rollover Securities: | Each holder of Rollover Loans or Rollover Securities shall have the right, upon a sale to a third party to fix the interest rate on such Rollover Security or to exchange such Rollover Loan for a fixed rate Rollover Security (each a Fixed Rate Rollover Security) at a rate not higher than the then applicable rate of interest. | |
No Fixed Rate Rollover Securities will be issued until the Borrower receives requests to issue at least an aggregate of $75.0 million of Fixed Rate Rollover Securities. | ||
Each Fixed Rate Rollover Security will be non-callable for five years from the Closing Date (subject to 35% clawback provisions with the proceeds of customary equity offerings at par plus accrued interest plus a premium equal to the coupon) and will be callable thereafter at par plus accrued interest plus a premium equal to one-half the coupon in effect on the date of sale of the Fixed Rate Rollover Securities, which premium shall decline ratably on each anniversary of the Initial Maturity Date to zero two years before the maturity of the Fixed Rate Rollover Securities; provided, however, that any Fixed Rate Rollover Securi- |
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ties will be callable prior to such fifth anniversary at a redemption price equal to par plus accrued interest plus a make whole premium calculated on the basis of a discount rate equal to the then Treasury Rate plus one-half of one percent (0.50%). | ||
Conditions to Effectiveness and to Interim Loan: | As set forth on Annex I to the Commitment Letter. | |
Representations and Warranties: | The definitive documentation shall contain such representations and warranties as are substantially similar to those set forth in the Senior Term Sheet, with modifications and additions as are usual and customary for bridge financings. | |
Affirmative Covenants: | The definitive documentation shall contain such affirmative covenants as are substantially similar to those set forth in the Senior Term Sheet (excluding the covenants pertaining to security), with modifications and additions as are usual and customary for bridge financings. | |
Upon issuance of the Rollover Securities and the Rollover Loans, the affirmative covenants shall conform to affirmative covenants customary in a high-yield indenture, but shall in no event be more restrictive than those contained in the preliminary offering memorandum or private placement memorandum used to market the Senior Notes prior to the Closing Date. | ||
Negative Covenants: | The definitive documentation shall contain such negative covenants as are substantially similar to those set forth in the Senior Term Sheet (excluding the covenants pertaining to security), with modifications and additions as are usual and customary for bridge financings. | |
Upon issuance of the Rollover Securities and the Rollover Loans, the negative covenants shall conform to negative covenants customary in a high-yield indenture, but shall in no event be more restrictive than those contained in the preliminary offering memorandum or private placement memorandum used to market the Senior Notes prior to the Closing Date. |
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Financial Covenants: | None. | |
Events of Default: | The definitive documentation shall contain such events of default as are customary for facilities similar to the Interim Loan and reasonably consistent with those in the Senior Credit Facilities. Upon issuance of the Rollover Securities and the Rollover Loans, the events of default shall conform to events of default customary in a high-yield indenture, but shall in no event be more restrictive than those contained in the preliminary offering memorandum or private placement memorandum used to market the Senior Notes prior to the Closing Date. | |
Clean-up Period: | Same as for Senior Credit Facilities. | |
Refinancing of Interim Loan: | Borrower shall use commercially reasonable efforts to (i) cooperate with the investment banks party to the Engagement Letter (the Take-out Banks) and provide the Take-out Banks with information reasonably required by the Take-out Banks in connection with the offering of debt securities (the Debt Offering) or other means of refinancing the Interim Loan and the Rollover Securities and the Rollover Loans, (ii) assist the Take-out Banks in connection with the marketing of the Take-out Securities (including promptly providing to the Take-out Banks any information reasonably requested to effect the issue and sale of the Take-out Securities and making available senior management of Borrower for investor meetings), (iii) cooperate with the Take-out Banks in the timely preparation of any registration statement or private placement memorandum relating to the Debt Offering and other marketing materials to be used in connection with the syndication of the Interim Loan. | |
Yield Protection and Increased Costs: | For the Interim Loan, as are usual for facilities and transactions of this type and as are substantially similar to the provisions set forth in the Senior Term Sheet. For the Rollover Securities and the Rollover Loans, none. |
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Required Lenders: | Lenders having a majority of the outstanding credit exposure (the Required Lenders), subject to certain customary provisions of the Interim Loan Documents requiring the consent of Lenders having a greater share (or all) of the outstanding credit exposure (it being understood that any required approval for purposes of releasing less than all or substantially all of the Guarantors shall only require the consent of the Required Lenders). | |
The definitive documentation for the Interim Loan and the Rollover Loan shall contain customary provisions permitting the Borrower to replace 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 outstanding credit exposure have consented thereto. | ||
Assignments and Participations: | Each assignment (unless to another Lender or its affiliates) shall be in a minimum amount of $1.0 million (unless Borrower and the Administrative Agent otherwise consent or unless the assigning Lenders exposure is thereby reduced to zero). Prior to the first anniversary of the Closing Date, assignments shall be subject to the consent of each of the Borrower and the Lead Arrangers to the extent that any such assignment would cause Lenders on the Closing Date to hold less than 50.1% of the outstanding credit exposure (such consent not to be unreasonably withheld, delayed or conditioned, provided that Borrowers consent will not be required if a payment or bankruptcy event of default has occurred and is continuing). Following the first anniversary of the Closing Date, assignments shall be permitted with the consent of the Administrative Agent. Participations shall be permitted without restriction. Voting rights and benefits of participants will be subject to customary limitations. | |
Expenses and Indemnification: | In addition to those reasonable out-of-pocket expenses reimbursable under the Commitment Letter, all reasonable out-of-pocket expenses of the Lead Arrangers and the Administrative Agent (and the Lenders for enforcement costs and documentary taxes) associated with the preparation, execution and delivery of any waiver or modification |
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(whether or not effective) requested by the Borrower of, and the enforcement of, any Interim Loan Document (including reasonable fees, disbursements and other charges of a single counsel, provided that reasonable fees, disbursements and other charges of additional counsel may be reimbursed in the event of a need for local and/or regulatory counsel) are to be paid by the Borrower. | ||
Borrower will indemnify each of the Lead Arrangers, the Administrative Agent and the other Lenders and hold them harmless from and against all liabilities and related reasonable out-of-pocket costs and expenses (including reasonable fees, disbursements and other charges of a single counsel, provided that reasonable fees, disbursements and other charges of additional counsel may be reimbursed in the event of a conflict or a need for local and/or regulatory counsel) and liabilities arising out of or relating to any litigation or other proceeding (regardless of whether the Lead Arrangers, the Administrative Agent or any such other Lender is a party thereto) that relates to the Transactions or any transactions related thereto, except to the extent determined by a final judgment of a court of competent jurisdiction to have resulted from the bad faith, gross negligence or willful misconduct of such person or its officers, directors, employees, affiliates, agents or controlling persons. | ||
Governing Law and Forum: | New York. | |
Waiver of Jury Trial: | All parties to the Interim Loan Documents waive right to trial by jury. | |
Special Counsel for Lead Arrangers: | Cahill Gordon & Reindel llp(and such appropriate local counsel as may be selected by the Lead Arrangers). |