November 29,2000
Triad Hospitals Holdings, Inc.
00000 Xxxx Xxxx
00xx Xxxxx
Xxxxxx, XX 00000
Re: Project Quarterback -- Credit Facilities Commitment Letter
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Ladies and Gentlemen:
This Commitment Letter amends and restates in its entirety the
Commitment Letter dated October 18, 2000 by and between Triad Hospitals
Holdings, Inc. and Xxxxxxx Xxxxx Capital Corporation (the "Original Commitment
-------------------
Letter") and supersedes it in all respects.
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Triad Hospitals Holdings, Inc. ("you" or "Company" or "Borrower") has
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advised Xxxxxxx Xxxxx Capital Corporation ("Xxxxxxx Xxxxx"), Bank of America,
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N.A. ("BofA"), Banc of America Securities LLC ("BAS") and Banc of America Bridge
---- ---
LLC ("BAB" and together with BofA and BAS, "Bank of America", and BofA, BAS, BAB
---
and Xxxxxxx Xxxxx, collectively, "we" or "us") that (i) Triad Hospitals, Inc.,
-- --
the parent of Company ("Triad"), intends to enter into a merger agreement (the
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"Merger Agreement") with a company previously identified to us and code-named
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Titans ("Target") pursuant to which Triad will acquire (the "Acquisition") all
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of the capital stock of Target; (ii) immediately prior to the consummation of
the Acquisition, Company will merge with and into Triad, at which time the
separate corporate existence of Company shall cease and Triad shall continue as
the surviving corporation; (iii) Triad will issue in partial consideration for
the Acquisition common equity of Triad as set forth in the Merger Agreement (the
"Equity Issuance"); (iv) Borrower will use a portion of the proceeds of the debt
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financings contemplated hereby to pay part of the purchase price for the
Acquisition; and (v) the sources and uses of the funds necessary to consummate
the Acquisition and the other transactions contemplated hereby are set forth on
Annex I to this Commitment Letter.
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In addition, you have advised us that in connection with the
consummation of the Acquisition, (a) Borrower will raise gross cash proceeds of
not less than $300.0 million from either (A) the issuance by it of $300.0
million of unsecured senior notes (the "Notes") all of which shall be due not
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earlier than eight years from the date of issuance (but in no event no later
than May 15, 2009) and have no scheduled principal payments prior to maturity
(the "Note Offering") or (B) the draw down under an unsecured senior interim
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loan (the "Interim Loan") which would be anticipated to be refinanced with debt
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securities substantially similar to the Notes (the "Take-out Securities"); and
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(b) Borrower will enter into senior secured credit facilities in the amount of
$1,375.0 million (the "Senior Secured Credit Facilities" and, together with the
--------------------------------
Interim Loan, the "Credit Facilities").
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In addition, you have advised us that, on the date of consummation of
the Acquisition (the "Closing Date"), Borrower will refinance its existing
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senior credit facility and Target and its subsidiaries will repay all
indebtedness and preferred stock outstanding prior to the Closing Date and
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terminate all commitments to make extensions of credit (such actions by
Borrower, Target and its subsidiaries, the "Refinancing") under their respective
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existing indebtedness (all such debt of Borrower, Target and its subsidiaries,
the "Existing Indebtedness").
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The Acquisition, the Equity Issuance, the Note Offering (if
consummated), the Refinancing and the entering into and borrowings under the
Credit Facilities by the parties herein described are herein referred to as the
"Transactions".
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You have requested that each of Xxxxxxx Xxxxx and BofA severally and
not jointly commit to provide a portion of the Credit Facilities to finance the
Acquisition and the Refinancing and to pay certain related fees and expenses.
Accordingly, subject to the terms and conditions set forth below,
Xxxxxxx Xxxxx, BofA, BAS and XXX hereby agree with you as follows:
1. Commitment. Each of Xxxxxxx Xxxxx and BofA severally and not
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jointly hereby commits to provide to Borrower 50% of the Senior Secured Credit
Facilities upon the terms and subject to the conditions set forth or referred to
herein, in the Fee Letter (the "Fee Letter") dated the date hereof and delivered
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to you, and in the Senior Secured Credit Facilities Summary of Terms and
Conditions attached hereto (and incorporated by reference herein) as Exhibit A
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(the "Senior Secured Term Sheet"). Each of Xxxxxxx Xxxxx and BAB severally and
-------------------------
not jointly hereby also commits to provide to Borrower 75% and 25%,
respectively, of the Interim Loan upon the terms and subject to the conditions
set forth or referred to herein, in the Fee Letter, and in the Interim Loan
Summary of Terms and Conditions attached hereto (and incorporated by reference
herein) as Exhibit B (the "Interim Loan Term Sheet" and, together with the
--------- -----------------------
Senior Secured Term Sheet, the "Term Sheets"). To the extent that an
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underwriting or purchase agreement is entered into in respect to the Note
Offering, the commitments hereunder shall be terminated on the date of execution
thereof in an amount equal to the expected aggregate gross proceeds from the
Notes covered thereby, first, in respect of the Interim Loan, and second, in
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respect of the Senior Secured Credit Facilities (and first to the Asset Sale
Facility thereunder and thereafter in amounts among the other tranches thereof
as determined by Xxxxxxx Xxxxx and Bank of America in consultation with
Xxxxxxxx).
2. Syndication. We reserve the right and intend, prior to or after
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the execution of the definitive documentation for the Credit Facilities (the
"Credit Documents"), to syndicate all or a portion of our commitments to one or
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more financial institutions (together with Xxxxxxx Xxxxx, BofA and BAB, the
"Lenders"). Xxxxxxx Xxxxx'x commitment hereunder is subject to Xxxxxxx Xxxxx
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(or one of its affiliates) acting as a co-lead arranger and co-book-runner for
the Senior Secured Credit Facilities and co-lead arranger and sole book-runner
for the Interim Loan. BofA's and XXX's commitment hereunder is subject to BAS
acting as co-lead arranger and co-book runner for the Senior Secured Credit
Facilities and co-lead arranger for the Interim Loan and BofA acting as
Administrative Agent for the Senior Secured Credit Facilities and BAB acting as
Administrative Agent for the Interim Loan. We (or one of our respective
affiliates) will manage all aspects of the syndication (in consultation with
you), including decisions as to the selection of potential Lenders to be
approached and when they will be approached, when their commitments will be
accepted, which Xxxxxxx will participate and the
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final allocations of the commitments among the Lenders (which are likely not to
be pro rata across facilities among Lenders), and we will perform all functions
--- ----
and exercise all authority as customarily performed and exercised in such
capacities, including selecting counsel for the Lenders and negotiating the
Credit Documents. Notwithstanding anything herein to the contrary, Borrower may
designate other financial institutions reasonably acceptable to Xxxxxxx Xxxxx
and Bank of America to function in connection with the underwriting and
syndication of the Credit Facilities with titles and responsibilities to be
designated by Borrower and reasonably acceptable to Xxxxxxx Xxxxx and Bank of
America. Subject to the foregoing, any other agent or arranger titles (including
co-agents) awarded to other Lenders are subject to our prior approval and shall
not entail any role with respect to the matters referred to in this paragraph
without our prior consent. You agree that no Lender will receive compensation
outside the terms contained herein and in the Fee Letter in order to obtain its
commitment to participate in the Credit Facilities.
You understand that we intend to commence the separate syndication of
each of the Senior Secured Credit Facilities and the Interim Loan promptly, and
you agree actively to assist us in achieving a timely syndication that is
satisfactory to us. The syndication efforts will be accomplished by a variety
of means, including direct contact during the syndication between senior
management and advisors of Borrower and Target on the one hand, and the proposed
Lenders on the other hand and Borrower hosting, with Xxxxxxx Xxxxx and Bank of
America, meetings with prospective Lenders at such times and places as we may
reasonably request. You agree to, upon our request, (a) provide, and cause your
advisors to provide, and use your reasonable best efforts to have Target
provide, to us all information reasonably requested by us to successfully
complete the syndication, including the information and projections (including
updated projections) contemplated hereby, and (b) assist, and cause your
advisors to assist, and use your reasonable best efforts to have Target assist,
us in the preparation of a Confidential Information Memorandum and other
marketing materials (the contents of which you shall be solely responsible for)
to be used in connection with the syndication, including making available
representatives of Target. You also agree to use your commercially reasonable
best efforts to ensure that our syndication efforts benefit materially from your
existing lending relationships.
3. Fees. As consideration for our commitment hereunder and our
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agreement to arrange, manage, structure and syndicate the Credit Facilities, you
agree to pay to us the fees as set forth in the Fee Letter.
4. Conditions. Each of Xxxxxxx Xxxxx'x, XxxX's and XXX's commitment
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hereunder, and each of Xxxxxxx Xxxxx'x and BAS's agreement to act in any
capacity hereunder, is subject to the conditions set forth elsewhere herein and
in the Term Sheets. For purposes of this Commitment Letter and the Term Sheets,
the "subsidiaries" of Borrower shall be deemed to include those who will become
subsidiaries of Borrower in connection with the Transactions.
Each of Xxxxxxx Xxxxx'x, XxxX's and XXX's commitment hereunder, and
each of Xxxxxxx Xxxxx'x and BAS's agreement to act in any capacity hereunder, is
also subject to (a) no disruption or adverse change (or development that could
reasonably be expected to result in an adverse change) shall have occurred and
be continuing in or affecting the loan syndication or financial, bank-
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ing or capital market conditions generally from those in effect on the date
hereof that, individually or in the aggregate in our reasonable judgment would
materially adversely affect our ability to syndicate the Credit Facilities or
the ability of Borrower to effect the sale of the Take-out Securities; (b) we
shall be satisfied that, after the date hereof and prior to and during the
syndication of the Credit Facilities, none of Borrower or any of its
subsidiaries shall have syndicated or issued, attempted to syndicate or issue,
announced or authorized the announcement of, or engaged in discussions
concerning the syndication or issuance of any debt facility or debt security of
any of them, including renewals thereof, other than the Credit Facilities and
the Notes and other than the amendment of Borrower's existing senior credit
facility to add a delayed draw term loan tranche of $200 million; (c) none of
the Information and Projections (each as defined below in Section 5 hereof)
shall be misleading or incorrect in any material respect taken as a whole, in
light of the circumstances under which such statements were made; and (d) the
consummation of the Transactions not violating, conflicting with or resulting in
a breach of, or constituting a default under (or resulting in an event which,
with notice or lapse of time or both, would constitute a default under) any
note, bond, mortgage, indenture, deed of trust, concession, lease, contract or
other instrument, obligation or agreement to which Borrower or any of its
subsidiaries is a party of by which Borrower or any of its subsidiaries or any
of their respective assets may be bound or affected.
5. Information and Investigations. You hereby represent and
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covenant that (a) all information and data (excluding financial projections)
that have been or will be made available by you or any of your representatives
or advisors to us or any Lender (whether prior to or on or after the date
hereof) in connection with the Transactions, taken as a whole (the
"Information"), is (or with respect to Information concerning Target, to the
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best of Borrower's knowledge, is) and will be (or with respect to Information
concerning Target, to the best of Borrower's knowledge, will be) complete and
correct in all material respects and does not (or with respect to Information
concerning Target, to the best of Borrower's knowledge, does not) and will not
(or with respect to Information concerning Target, to the best of Borrower's
knowledge, will not), taken as a whole, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements contained therein not misleading in light of the circumstances under
which such statements are made, and (b) all financial projections concerning
Borrower and its subsidiaries and the transactions contemplated hereby (the
"Projections") that have been made or will be prepared by or on behalf of you or
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any of your representatives or advisors and that have been or will be made
available to us or any Lender in connection with the transactions contemplated
hereby have been and will be prepared in good faith based upon assumptions
believed by you to be reasonable. You agree to supplement the Information and
the Projections from time to time until the Closing Date and, if requested by
us, for a reasonable period thereafter necessary to complete the syndication of
the Credit Facilities so that the representation and covenant in the preceding
sentence remain correct in all material respects. In syndicating the Credit
Facilities we will be entitled to use and rely primarily on the Information and
the Projections without responsibility for independent check or verification
thereof.
6. Indemnification. You agree (i) to indemnify and hold harmless
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Xxxxxxx Xxxxx, BofA, BAS and BAB and each of the other Lenders and their
respective officers, directors, employees, affiliates, agents and controlling
persons (Xxxxxxx Xxxxx, BofA, BAS and BAB and each such other person being an
"Indemnified Party") from and against any and all losses, claims, damages,
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costs, expenses
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and liabilities, joint or several, to which any Indemnified Party may become
subject under any applicable law, or otherwise related to or arising out of or
in connection with this Commitment Letter, the Fee Letter, the Term Sheets, the
Credit Facilities, the loans under the Credit Facilities, the use of proceeds of
any such loan, any of the Transactions and the performance by any Indemnified
Party of the services contemplated hereby and will reimburse each Indemnified
Party for any and all reasonable expenses (including reasonable counsel fees and
expenses) as they are incurred in connection with the investigation of or
preparation for or defense of any pending or threatened claim or any action or
proceeding arising therefrom, whether or not such Indemnified Party is a party
and whether or not such claim, action or proceeding is initiated or brought by
or on behalf of you, Target, or any of your or Target's respective affiliates
and whether or not any of the Transactions are consummated or this Commitment
Letter is terminated, except to the extent resulting solely from such
Indemnified Party's bad faith, gross negligence or willful misconduct and (ii)
not to assert any claim against any Indemnified Party for consequential,
punitive or exemplary damages on any theory of liability in connection in any
way with the transactions described in or contemplated by this Commitment
Letter.
You agree that, without our prior written consent, neither you nor any
of your affiliates or subsidiaries will settle, compromise or consent to the
entry of any judgment in any pending or threatened claim, action or proceeding
in respect of which indemnification has been or could be sought under the
indemnification provisions hereof (whether or not any other Indemnified Party is
an actual or potential party to such claim, action or proceeding), unless such
settlement, compromise or consent (i) includes an unconditional written release
in form and substance satisfactory to the Indemnified Parties of each
Indemnified Party from all liability arising out of such claim, action or
proceeding and (ii) does not include any statement as to or an admission of
fault, culpability or failure to act by or on behalf of any Indemnified Party.
You will not be obligated to indemnify an Indemnified Party with respect to any
loss, claim, damage, or liability settled, compromised or consented to without
your prior written consent (not to be unreasonably withheld, delayed or
conditioned).
In the event that an Indemnified Party is requested or required to
appear as a witness in any action brought by or on behalf of or against you or
any of your subsidiaries or affiliates in which such Indemnified Party is not
named as a defendant, you agree to reimburse such Indemnified Party for all
expenses incurred by it in connection with such Indemnified Party's appearing
and preparing to appear as such a witness, including, without limitation, the
fees and expenses of its legal counsel.
7. Expenses. You agree to reimburse each of Xxxxxxx Xxxxx and Bank
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of America and their respective affiliates for their reasonable expenses upon
our request made from time to time (including, without limitation, all
reasonable due diligence investigation expenses, fees of consultants engaged
with your consent (not to be unreasonably withheld), syndication expenses
(including printing, distribution, and bank meetings), appraisal and valuation
fees and expenses, travel expenses, duplication fees and expenses, audit fees,
search fees, filing and recording fees and the reasonable fees, disbursements
and other charges of counsel (and any local counsel) and any sales, use or
similar taxes (and any additions to such taxes) related to any of the foregoing)
incurred in connection with the negotiation, preparation, execution and
delivery, waiver or modification, collection and enforcement of this Commitment
Letter, the Term Sheets, the Fee Letter and the Credit Documents and
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the security arrangements (if any) in connection therewith and whether or not
such fees and expenses are incurred before or after the date hereof or any loan
documentation is entered into or the Transactions are consummated or any
extensions of credit are made under the Credit Facilities or this Commitment
Letter is terminated or expires, except that Borrower shall have no obligation
to reimburse Xxxxxxx Xxxxx or Bank of America for any such expenses relating to
any offering of Senior Notes which is consummated to the extent excluded from
being for the account of Borrower in any underwriting or purchase agreement
relating thereto that is executed and delivered by Xxxxxxxx, Xxxxxxx Lynch,
Xxxxxx, Xxxxxx & Xxxxx Incorporated and BAS.
8. Confidentiality. This Commitment Letter, the Term Sheets, the
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contents of any of the foregoing and our and/or our affiliates' activities
pursuant hereto or thereto are confidential and shall not be disclosed by or on
behalf of you or any of your affiliates to any person without our prior written
consent, except that you may disclose this Commitment Letter and the Term Sheets
(i) to your and Target's and your and its respective officers, directors,
employees and advisors, and then only in connection with the Transactions and on
a confidential need-to-know basis, (ii) to ratings agencies in connection with
the Credit Facilities or the Senior Notes, and (iii) as you are required to make
by applicable law or compulsory legal process (based on the advice of legal
counsel); provided, however, that in the event of any such compulsory legal
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process you agree to use best efforts to give us prompt notice thereof and to
cooperate with us in securing a protective order in the event of compulsory
disclosure and that any disclosure made pursuant to public filings shall be
subject to our prior review. You agree that you will permit us to review and
approve any reference to any of us or any of our affiliates in connection with
the Credit Facilities or the transactions contemplated hereby contained in any
press release or similar public disclosure prior to public release. You agree
that we and our respective affiliates may share information concerning you,
Target and your and Target's respective subsidiaries and respective affiliates
solely among ourselves on a confidential and "need-to-know" basis solely in
connection with the performance of our services hereunder and the evaluation and
consummation of financings and Transactions contemplated hereby.
9. Termination. Each of Xxxxxxx Xxxxx'x, XxxX's and BAB's
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commitment hereunder, and each of Xxxxxxx Xxxxx'x and BAS's agreement to act in
any capacity hereunder, is based upon the financial and other information
regarding Target previously provided to us. In the event that by means of
continuing review or otherwise we become aware of or discover material new
information or developments concerning conditions or events previously disclosed
to us that is inconsistent in any material adverse respect with the Projections
or the Information provided to us prior to the date hereof, or if any event or
condition has occurred or become known that in our reasonable judgment has had
or could reasonably be expected to have a material adverse effect on the
business, operations, financial condition, liabilities (contingent or otherwise)
or prospects of Borrower and its subsidiaries taken as a whole (after giving
effect to the Transactions) since December 31, 1999, this Commitment Letter and
each of Xxxxxxx Xxxxx'x, XxxX's and XXX's commitment hereunder, and each of
Xxxxxxx Xxxxx'x and BAS's agreement to act in any capacity hereunder, shall
terminate upon written notice by Xxxxxxx Xxxxx and Bank of America. In
addition, each of Xxxxxxx Xxxxx'x, XxxX's and XXX's commitment hereunder, and
each of Xxxxxxx Xxxxx'x and BAS's agreement to act in any capacity hereunder,
shall terminate in its entirety (A) on June 30, 2001 if the Credit Documents are
not executed and delivered by Xxxxxxxx and the Lenders by such date and (B) on
the date of execution and delivery of the
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Credit Documents by Xxxxxxxx and the Lenders. Notwithstanding the foregoing, the
provisions of Sections 6, 7, 8 and 11 hereof shall survive any termination
pursuant to this Section 9.
10. Assignment; etc. This Commitment Letter and our commitment
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hereunder shall not be assignable by any party hereto without the prior written
consent of the other parties hereto, and any attempted assignment shall be void
and of no effect; provided, however, that nothing contained in this Section 10
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shall prohibit us (in our sole discretion) from (i) performing any of our duties
hereunder through any of our respective affiliates, and you will owe any related
duties (including those set forth in Section 2 above) to any such affiliate, and
(ii) granting (in consultation with you) participations in, or selling (in
consultation with you) assignments of all or a portion of, the commitments or
the loans under the Credit Facilities pursuant to arrangements satisfactory to
us. This Commitment Letter is solely for the benefit of the parties hereto and
does not confer any benefits upon, or create any rights in favor of, any other
person.
11. Governing Law; Waiver of Jury Trial. This Commitment Letter
-----------------------------------
shall be governed by, and construed in accordance with, the laws of the State of
New York. Each of the parties hereto waives all right to trial by jury in any
action, proceeding or counterclaim (whether based upon contract, tort or
otherwise) related to or arising out of any of the Transactions or the other
transactions contemplated hereby, or the performance by us or any of our
respective affiliates of the services contemplated hereby.
12. Amendments; Counterparts; etc. No amendment or waiver of any
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provision hereof or of the Term Sheets shall be effective unless in writing and
signed by the parties hereto and then only in the specific instance and for the
specific purpose for which given. This Commitment Letter, the Engagement
Letter, the Term Sheets and the Fee Letter are the only agreements between the
parties hereto with respect to the matters contemplated hereby and thereby and
set forth the entire understanding of the parties with respect thereto. This
Commitment Letter may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart by telecopier shall
be effective as delivery of a manually executed counterpart.
13. Public Announcements; Notices. Following your public
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announcement of the Transactions, we may, subject to your prior consent (not to
be unreasonably withheld, delayed or conditioned) at our expense, publicly
announce as we may choose the capacities in which we or our affiliates have
acted hereunder. Any notice given pursuant hereto shall be mailed or hand
delivered in writing, if to (i) you, at your address set forth on page one
hereof, with a copy to Xxxxxx X. Xxxxxx, Esq., at Xxxxx Xxxxxxxxxx LLP, 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000; (ii) Xxxxxxx Xxxxx, at World
Financial Center, North Tower, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxxxxxx X. Xxxxxxx; and (iii) BofA, BAS and BAB, at 000 Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xxxxxx Xxxxxxxxx, and
in the case of clauses (ii) and (iii) with a copy to Xxxxxxx X. Xxxxxxxx, Esq.,
at Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
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(Signature Page Follows)
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Please confirm that the foregoing correctly sets forth our agreement
of the terms hereof and the Fee Letter by signing and returning to Xxxxxxx Xxxxx
(on behalf of Xxxxxxx Xxxxx and Bank of America) the duplicate copy of this
letter and the Fee Letter enclosed herewith. Unless we receive your executed
duplicate copies hereof and thereof by 5:00 p.m., New York City time, on
December 4, 2000, our commitment hereunder will expire at such time.
We are pleased to have this opportunity and we look forward to working
with you on this transaction.
Very truly yours,
XXXXXXX XXXXX CAPITAL CORPORATION
By: /s/ Xxxxxxxxxxx Xxxxxxx
______________________________
Name: Xxxxxxxxxxx Xxxxxxx
Title: Vice President
BANK OF AMERICA, N.A.
By: /s/ Xxxxxxx Xxxxxx
______________________________
Name: Xxxxxxx Xxxxxx
Title: Vice President
BANC OF AMERICA SECURITIES LLC
By: /s/ Xxxx X. Xxxxx
______________________________
Name: Xxxx X. Xxxxx
Title: Managing Director
BANC OF AMERICA BRIDGE LLC
By: /s/ Xxxx X. Xxxxx
______________________________
Name: Xxxx X. Xxxxx
Title: Senior Vice President
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Accepted and agreed to as of
the date first written above:
TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxxx
________________________
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
Annex I
Sources and Uses of Funds
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(in $ in millions)
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Sources Uses
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Term Loan Facilities $1,125.0 Purchase price of equity of Target/1/ $1,457.3
Revolving Facility/2/ 205.3 Refinance Debt 1,133.7
Notes or Interim Loan 300.0 Severance Costs 25.0
Equity Issuance 1,148.9 Qui Tam Settlement 91.0
Estimated fees and expenses 72.3
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Total Sources $2,779.3 Total Uses $2,779.3
======== ========
___________________________
/1/ Assumes a purchase price for each share of Target stock of $3.50 and 0.4107
shares of Triad stock, a 78.8% stock, 21.2% cash transaction and a closing
as if it had occurred as of December 31, 2000.
/2/ $250.0 of commitments at closing.
EXHIBIT A
CONFIDENTIAL
SENIOR SECURED CREDIT FACILITIES
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SUMMARY OF TERMS AND CONDITIONS/a/
Borrower: Triad Hospitals Holdings, Inc. ("Borrower").
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Co-Book-Runners and
Co-Lead Arrangers Xxxxxxx Xxxxx & Co. ("ML&Co.") and Banc of America
Securities LLC ("BAS") (together, the "Lead
--- ----
Arrangers").
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Syndication Agent: ML&Co.
Administrative Agent: Bank of America, N.A. (the "Administrative Agent").
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Lenders: Xxxxxxx Xxxxx Capital Corporation (or one of its
affiliates selected by Xxxxxxx Xxxxx), Bank of
America, N.A. and a syndicate of financial
institutions (the "Lenders") arranged by the
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Lead Arrangers and reasonably acceptable to
Borrower (including financial institutions
designated by Borrower and reasonably acceptable to
the Lead Arrangers).
Credit Facilities: Senior secured credit facilities (the "Credit
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Facilities") in an aggregate principal amount of
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up to $1,375,000,000, such Credit Facilities
comprising:
(A) Term Loan Facilities. Term loan
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facilities in an aggregate principal amount
of $1,125,000,000 (the "Term Loan Facilities"),
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such aggregate principal amount to be
allocated among (i) a Term Loan A Facility in
an aggregate principal amount of $400,000,000
(the "Term Loan A Facility"), (ii) an
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Asset Sale Facility in an aggregate principal
amount of $225,000,000 (the "Asset Sale
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Facility"), (iii) a Term Loan B Facility in an
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aggregate principal amount of
_______________________
/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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[SENIOR SECURED]
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$250,000,000 (the "Term Loan B Facility"),
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and (iv) a Term Loan C Facility in an
aggregate principal amount of $250,000,000
(the "Term Loan C Facility"). Loans under the
--------------------
Term Loan Facilities are herein referred to
as "Term Loans".
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(B) Revolving Credit Facility. A reducing
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revolving credit facility in an aggregate
principal amount of $250,000,000 (the
"Revolving Facility"). Loans under the
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Revolving Facility are herein referred to as
"Revolving Loans"; the Term Loans and the
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Revolving Loans are herein referred to
collectively as "Loans". An amount to be
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agreed of the Revolving Facility will be
available as a letter of credit subfacility
and as a swing line subfacility.
Documentation: Usual for facilities and transactions of this type
and reasonably acceptable to Borrower and the
Lenders. The documentation for the Credit
Facilities will include, among others, a credit
agreement (the "Credit Agreement"), guarantees and
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appropriate pledge, security interest, mortgage
and other collateral documents (collectively, the
"Credit Documents").
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Borrower and the Guarantors (as defined below
under "Guarantors") are herein referred to as the
"Credit Parties" and individually referred to as
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a "Credit Party".
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Transactions: As described in the Commitment Letter.
Availability/Purpose: (A) Term Loan Facilities. Term Loans will be
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available to finance the Acquisition and the
Refinancing and to pay related fees and expenses,
subject to the terms and conditions set forth in
the Credit Documents, on the date of consummation
of the Acquisition in one draw (the "Closing
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Date"). Term Loans repaid or prepaid may not be
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reborrowed.
(B) Revolving Facility. The Revolving Facility
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will be available for the purposes described
above and for working capital and general
corporate purposes 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
six years after the Closing Date (the "R/C
---
Maturity Date").
-------------
[SENIOR SECURED]
-3-
Guarantors: Each of Borrower's direct and indirect wholly-owned
domestic subsidiaries existing on the Closing Date or
thereafter created or acquired and each other direct or
indirect subsidiary (whether or not wholly-owned) of
Borrower that guarantees any other debt or other
obligation of Borrower or any of its subsidiaries shall
unconditionally guarantee, on a joint and several
basis, all obligations of Borrower under the Credit
Facilities and (to the extent relating to the Loans as
designated therein) under each interest rate protection
agreement entered into with a Lender or an affiliate of
a Lender. Each guarantor of any of the Credit
Facilities is herein referred to as a "Guarantor" and
---------
its guarantee is referred to herein as a "Guarantee".
---------
Security: The Credit Facilities, the Guarantees, and (to the
extent relating to the Loans as designated therein) the
obligations of Borrower under each interest rate
protection agreement entered into with a Lender or any
affiliate of a Lender will be secured by (A) a
perfected lien on, and pledge of, all of the capital
stock and intercompany notes of each of the direct and
indirect subsidiaries of Borrower existing on the
Closing Date or thereafter created or acquired which
capital stock or intercompany notes are owned by
Borrower or any of its wholly owned subsidiaries, and
(B) a perfected lien on, and security interest in, all
of the tangible and intangible properties and assets
(including all contract rights, real property interests
(other than real property interests of Target),
trademarks, trade names, equipment and proceeds of the
foregoing) of each Credit Party (collectively, the
"Collateral"), except in each case for those properties
----------
and assets as to which the Lead Arrangers shall
determine in their sole discretion that the costs of
obtaining such security interest are excessive in
relation to the value of the security to be afforded
thereby (it being understood that none of the foregoing
shall be subject to any other liens or security
interests, except for customary exceptions and others
to be agreed upon). All such security interests will be
created pursuant to documentation reasonably
satisfactory in all respects to the Lead Arrangers, and
on the Closing Date, such security interests shall have
become perfected (or arrangements for the perfection
thereof reasonably satisfactory to the Lead Arrangers
shall have been made) and the Lead Arrangers shall have
received reasonably satisfactory evidence as to the
enforceability and priority thereof.
[SENIOR SECURED]
-4-
Termination of Commitments: The commitments in respect of the Credit
Facilities (including pursuant to the Commitment
Letter) will terminate in their entirety on June
30, 2001 if the initial funding under the Credit
Facilities does not occur on or prior to such
date.
Final Maturity: (A) Term Loan Facilities. The Term Loan A
--------------------
Facility will mature on the sixth anniversary of
the Closing Date, the Asset Sale Facility will
mature on the second anniversary of the Closing
Date, the Term Loan B Facility will mature on the
seventh anniversary of the Closing Date and the
Term Loan C Facility will mature on the seven and
one-half anniversary of the Closing Date.
(B) Revolving Facility. The Revolving Facility
------------------
will mature on the R/C Maturity Date.
Amortization Schedule: The Term Loan A Facility will amortize on a
quarterly basis (beginning with six months after
the Closing Date) in amounts to be agreed.
The Asset Sale Facility will amortize from net
cash proceeds of asset sales as they occur with
the balance paid in a single bullet payment at
final maturity.
The commitments under the Revolving Facility will
reduce after the Closing Date pursuant to a
schedule to be agreed upon (but such mandatory
reductions will not result in the commitments
being reduced below an amount to be agreed).
Each of the Term Loan B Facility and the Term Loan
C Facility will amortize at a rate of 1.00% per
---
annum on a quarterly basis (beginning with six
-----
months after the Closing Date) for the first six
and six and one-half years, respectively, after
the Closing Date with the balance paid in four
equal quarterly installments thereafter.
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 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.
Letter of Credit Fees: Letter of Credit fees will be payable for the
account of the Revolving Facility Lenders on the
daily average undrawn
[SENIOR SECURED]
-5-
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 equal to 0.250%
per annum 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/ Subject to the next paragraph, the Credit
Reductions in Commitments: Facilities will be required to be prepaid with (a)
75% (50% after the Asset Sale Facility has been
repaid in full) of annual Excess Cash Flow (to be
defined), (b) 100% of the net cash proceeds
(including insurance proceeds) of asset sales and
other asset dispositions by Borrower or any of its
subsidiaries (subject to baskets and exceptions to
be agreed upon (including exclusions for (i)
amounts reinvested within 12 months and (ii) an
annual amount per annum to be agreed)), (c) 100%
of the net cash proceeds of the issuance or
incurrence of debt or of any sale and lease-back
by Borrower or any of its subsidiaries (subject to
baskets and exceptions to be agreed upon), and (d)
50% (or 100% so long as the Asset Sale Facility is
outstanding) of the net cash proceeds from any
issuance of equity securities in any public
offering or private placement or from any capital
contribution (subject to baskets and exceptions to
be agreed upon); provided, however, that there
-------- -------
shall be no such obligation to prepay the Credit
Facilities with Excess Cash Flow as described in
the foregoing clause (a) so long as the Total
Leverage Ratio is less than 3.25:1.0.
The proceeds of the Notes and of any equity
issuance shall be applied to reduce to zero the
commitments in respect of or, if after the Closing
Date, to reduce to zero the funded amount of,
first, the Interim Loan, and second, the Credit
----- ------
Facilities.
[SENIOR SECURED]
-6-
Mandatory prepayments to be applied to the Credit
Facilities will be applied first to the Asset Sale
Facility and after it has been repaid in full pro
---
rata among the remaining Term Loan Facilities
----
based on the aggregate principal amount of Term
Loans then outstanding under each such Term Loan
Facility. Any application to any Term Loan
Facility shall be applied pro rata to the
--- ----
remaining scheduled amortization payments in
respect thereof. Notwithstanding the foregoing,
any holder of Term Loans under the Term Loan B
Facility or Term Loan C Facility may, to the
extent that Term Loans are then outstanding under
the Term Loan A Facility, elect not to have
mandatory prepayments applied to such holder's
Term Loans under the Term Loan B Facility or Term
Loan C Facility, in which case the aggregate
amount so declined shall be applied to the
remaining scheduled amortization payments under
the Term Loan A Facility pro rata. To the extent
--- ----
that the amount to be applied to the prepayment of
Term Loans exceeds the aggregate amount of Term
Loans then outstanding, such excess shall be
applied to the Revolving Facility to permanently
reduce the commitments thereunder (first pro rata
to scheduled reductions and thereafter the
remaining commitments).
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
applied to the repayment of the Revolving Loans
exceeds the amount thereof then outstanding,
Borrower shall cash collateralize outstanding
Letters of Credit.
Voluntary Prepayments/ (A) Term Loan Facilities. Term Loans may be
Reductions in Commitments: --------------------
prepaid at any time in whole or in part at the
option of 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 related to prepayments
not made on the last day of the relevant interest
period). Voluntary prepayments will be applied
first to the Asset Sale Facility and after it has
been repaid in full pro rata among the remaining
--- ----
Term Loan Facilities based on the aggregate
principal amount of Term Loans then outstanding
under each such Term Loan Facility. Any
application to (x) the Term Loan A Facility shall
be applied pro rata to the
--- ----
[SENIOR SECURED]
-7-
remaining scheduled amortization payments
thereunder, and (y) the Term Loan B Facility or
Term Loan C Facility shall be applied to the
remaining scheduled amortization payments in
respect thereof pro rata among the amortization
payments in the last year prior to final maturity
and thereafter in inverse order of maturity.
(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 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 related to prepayments
not made on the last day of the relevant interest
period).
Conditions to Effectiveness The effectiveness of the credit agreement and the
and to Initial Loans: making of the initial Loans under the Credit
Facilities shall be subject to conditions
precedent that are usual for facilities and
transactions of this type, to those specified
herein and in the Commitment Letter and to such
additional conditions precedent as may reasonably
be required by the Lead Arrangers (all such
conditions to be satisfied in a manner reasonably
satisfactory to the Lead Arrangers and the Lenders
or the Required Lenders (as the case may be) (as
defined below under "Required Lenders")),
including, but not limited to, execution and
delivery of the Credit Documents acceptable in
form and substance to the Lenders by each Credit
Party party thereto prior to the Closing Date;
delivery of reasonably satisfactory borrowing
certificates and other customary closing
certificates; receipt of valid security interests
as contemplated hereby; absence of defaults,
prepayment events or creation of liens under debt
instruments or other material agreements as a
result of the transactions contemplated hereby;
absence of material litigation; evidence of
authority; compliance with applicable laws and
regulations in all material respects; delivery of
reasonably satisfactory legal opinions; and
adequate insurance.
The making of the initial Loans will be subject to
the following conditions:
[SENIOR SECURED]
-8-
(A) The delivery, on or prior to the Closing Date, of a
certificate on behalf of Xxxxxxxx from the chief
financial officer of Xxxxxxxx and in form and substance
reasonably satisfactory to the Lead Arrangers with
respect to the solvency (on a consolidated basis) of
each Credit Party immediately after the consummation of
the Transactions to occur on the Closing Date.
(B) Simultaneously with the making of the initial Loans,
either (i) the Note Offering shall be consummated for
gross proceeds of not less than $300,000,000, or (ii)
the drawdown of the Interim Loan shall be consummated
for gross proceeds of not less than $300,000,000
pursuant to documentation and on terms and conditions
reasonably satisfactory to the Lead Arrangers.
(C) The Equity Issuance shall have been consummated on
terms and conditions pursuant to documentation
reasonably satisfactory to the Lead Arrangers.
(D) To the extent requested by the Lead Arrangers, the Lead
Arrangers shall have received copies, certified by
Borrower, of all filings made with any governmental
authority in connection with the Transactions.
(E) The Transactions and the financing therefor shall be in
compliance with all laws and regulations in all
material respects or the Lead Arrangers shall have
determined such to be inapplicable to the Transactions.
(F) Simultaneously with the making of the initial Loans,
the Acquisition shall have been consummated in all
material respects in accordance with the terms of the
Merger Agreement (without the waiver or amendment of
any material condition unless consented to by the Lead
Arrangers and the Lenders). Each of the parties thereto
shall have complied in all material respects with all
covenants set forth in the Merger Agreement to be
complied with by it on or prior to the Closing Date
(without the waiver or amendment of any of the material
terms thereof unless consented to by the Lead
Arrangers).
[SENIOR SECURED]
-9-
(G) Simultaneously with the making of the initial Loans,
Borrower shall have effected the Refinancing on terms
and conditions and pursuant to documentation reasonably
satisfactory to the Lead Arrangers. All liens in
respect of the Existing Indebtedness (excluding capital
leases and other currently secured debt permitted to
remain outstanding) shall have been released and the
Lead Arrangers shall have received evidence thereof
satisfactory to the Lead Arrangers (or arrangements for
such release reasonably satisfactory to the Lead
Arrangers shall have been made) and a "pay-off" letter
or letters reasonably satisfactory to the Lead
Arrangers with respect to such Existing Indebtedness.
(H) No law or regulation shall be applicable in the
reasonable judgment of the Lead Arrangers that
restrains, prevents or imposes material adverse
conditions upon the Transactions or the financing
thereof, including the Credit Facilities.
(I) After giving effect to the Transactions, Borrower and
its subsidiaries shall have outstanding no indebtedness
or preferred stock (or direct or indirect guarantee or
other credit support in respect thereof) other than the
Loans, the Notes or the Interim Loan, $325,000,000
aggregate principal amount of senior subordinated notes
due May 2009 of Borrower and such other debt or
preferred stock as is reasonably acceptable to the Lead
Arrangers.
(J) There shall not have occurred or become known any
material adverse change or any condition or event that
could reasonably be expected to result in a material
adverse change in the business, operations, financial
condition, liabilities (contingent or otherwise) or
prospects (each, a "Material Adverse Change") of
-----------------------
Borrower and its subsidiaries taken as a whole (after
giving effect to the Transactions) since December 31,
1999.
(K) The Lead Arrangers shall have received reasonably
satisfactory evidence (including satisfactory
supporting schedules and other data) that the ratio of
pro
[SENIOR SECURED]
-10-
forma consolidated debt to pro forma EBITDA (to be
defined) of Borrower and its subsidiaries
calculated in a manner reasonably acceptable to
the Lead Arrangers and after giving effect to the
Transactions for the trailing four quarters ended
immediately prior to the Closing Date was not
greater than 4.25:1.0.
(L) All requisite governmental authorities and
material third parties shall have approved or
consented to the Transactions and the other
transactions contemplated hereby to the extent
required (without the imposition of any materially
burdensome condition or qualification in the
reasonable judgment of the Lead Arrangers) and all
such approvals shall be in full force and effect,
all applicable waiting periods shall have expired
and there shall be no governmental or judicial
action, actual or threatened, that has or could
have a reasonable likelihood of restraining,
preventing or imposing materially burdensome or
materially adverse conditions on any of the
Transactions.
(M) All accrued fees and expenses (including the
reasonable fees and expenses of counsel to the
Lead Arrangers) of the Lead Arrangers in
connection with the Credit Documents shall have
been paid.
(N) The Lenders shall have received such other
customary legal opinions, corporate documents and
other instruments and/or certificates as they may
reasonably request.
Conditions to All Each extension of credit under the Credit Facilities
Extensions of Credit: will be subject to customary conditions, including the
(i) absence of any Default or Event of Default (to be
defined), and (ii) continued accuracy of
representations and warranties in all material
respects.
Representations and Customary for facilities similar to the Credit
Warranties: Facilities and such additional representations and
warranties as may reasonably be required by the Lead
Arrangers.
Affirmative Covenants: Customary for facilities similar to the Credit
Facilities and such affirmative covenants as may
reasonably be required by the Lead Arrangers.
[SENIOR SECURED]
-11-
Negative Covenants: Customary for facilities similar to the Credit
Facilities and such others as may reasonably be
required by the Lead Arrangers (all such covenants
to be subject to customary baskets and exceptions
and such others to be agreed upon), including, but
not limited to, limitation on indebtedness;
limitation on liens and further negative pledges;
limitation on investments; limitation on
contingent obligations; limitation on dividends,
redemptions and repurchases of equity interests;
limitation on mergers, acquisitions and asset
sales; limitation on capital expenditures;
limitation on sale-leaseback transactions;
limitation on transactions with affiliates;
limitation on dividend and other payment
restrictions affecting subsidiaries; limitation on
changes in business conducted; limitation on
amendment of documents relating to other material
indebtedness and other material documents;
limitation on creation of subsidiaries; and
limitation on prepayment or repurchase of
subordinated indebtedness.
Financial Covenants: The Credit Facilities will contain financial
covenants appropriate in the context of the
proposed transaction based upon the financial
information provided to the Lead Arrangers,
including, but not limited to (definitions and
numerical calculations to be set forth in the
Credit Agreement): minimum net worth; minimum
ratio of trailing four quarter EBITDA (to be
defined) to total interest expense for the same
period; minimum ratio of trailing four quarter
EBITDA to the sum of interest expense, scheduled
principal payments, capital expenditures and tax
expenses for the same period; maximum ratio (the
"Total Leverage Ratio") of total debt to trailing
--------------------
four quarter EBITDA; and maximum ratio of total
senior debt to trailing four quarter EBITDA. The
financial covenants contemplated above will be
tested on a quarterly basis and will apply to
Borrower and its subsidiaries on a consolidated
basis.
Interest Rate Management: An amount designated by the Lead Arrangers of the
projected outstandings under the Credit Facilities
and the Interim Loan must be hedged on terms and
for a period of time reasonably satisfactory to
the Lead Arrangers with a counterparty reasonably
acceptable to the Lead Arrangers.
Events of Default: Customary for facilities similar to the Credit
Facilities and others as may reasonably be
required by the Lead Arrangers.
[SENIOR SECURED]
-12-
Yield Protection and Usual for facilities and transactions of this type.
Increased Costs:
Assignments and Each assignment (unless to another Lender or its
Participations: affiliates) shall be in a minimum amount of $1.0
million (unless Borrower and the Lead Arrangers
otherwise consent or unless the assigning Lender's
exposure is thereby reduced to $ 0). Assignments
(which may be non-pro rata among loans and
--- ----
commitments) shall be permitted with Borrower's and
the Lead Arrangers' consent (such consent not to be
unreasonably withheld, delayed or conditioned),
except that no such consent of Borrower need be
obtained to effect an assignment to any Lender (or
its affiliates) or if any default has occurred and
is continuing. Participations shall be permitted
without restriction. Voting rights of participants
will be subject to customary limitations.
Required Lenders: Xxxxxxx having a majority of the outstanding credit
exposure (the "Required Lenders"), subject to
----------------
amendments of certain provisions of the Credit
Documents requiring the consent of Lenders having a
greater share (or all) of the outstanding credit
exposure.
Expenses and In addition to those out-of-pocket expenses
Indemnification: 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) of, and the enforcement of, any
Credit Document (including the reasonable fees,
disbursements and other charges of counsel for the
Lead Arrangers) 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
costs, expenses (including reasonable fees,
disbursements and other charges of counsel for the
Lead Arrangers) 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 relate to the Transactions or
any transactions related thereto (excluding
[SENIOR SECURED]
-13-
litigation among the Lenders), except to the extent
arising solely from such person's bad faith, gross
negligence or willful misconduct.
Governing Law and Forum: New York.
Waiver of Jury Trial: All parties to the Credit Documents waive the right
to trial by jury.
Special Counsel for the Xxxxxx Xxxxxx & Xxxxxxx (including local counsel as
Lead Arrangers: selected by the Lead Arrangers).
[SENIOR SECURED]
ANNEX I
-------
Interest Rates and Fees: Borrower will be entitled to make borrowings based
on the ABR plus the Applicable Margin or LIBOR plus
the Applicable Margin. The "Applicable Margin"
shall be (A) with respect to LIBOR Loans under the
(i) Revolving Facility, 3.00% per annum; (ii) Term
--- -----
Loan A Facility, 3.00% per annum; (iii) Asset Sale
--- -----
Facility, 3.00% per annum; (iv) Term Loan B
--- -----
Facility, 3.50% per annum; and (v) Term Loan C
--- -----
Facility, 3.75% per annum; and (B) with respect to
--- -----
ABR Loans under the (i) Revolving Facility, 2.00%
per annum; (ii) Term Loan A Facility, 2.00% per
--- ----- ---
annum; (iii) Asset Sale Facility, 2.00% per annum;
----- --- -----
(iv) Term Loan B Facility, 2.50% per annum; and (v)
--- -----
Term Loan C Facility, 2.75% per annum.
--- -----
Notwithstanding the foregoing, on and after the
date (the "Trigger Date") which is the latest of
------------
(A) if the Interim Loan is drawn down, the date of
issuance of Take-out Securities generating gross
proceeds to Borrower of at least $300.0 million,
(B) the repayment in full of the Asset Sale
Facility, and (C) the first date after the Closing
Date on which Borrower delivers financial
statements and a computation of the Total Leverage
Ratio for the first fiscal quarter ended at least
six months after the Closing Date in accordance
with the Credit Agreement, the Applicable Margins
for the Revolving Facility and Term Loan A Facility
shall be subject to a grid based on the most recent
Total Leverage Ratio to be negotiated.
"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 interbank market for
deposits in US Dollars in the amount of, and for a
maturity corresponding to, the amount of the
applicable LIBOR Loan, as adjusted for maximum
statutory reserves.
[SENIOR SECURED]
-2-
Borrower may select interest periods of one, two,
three or six (or if available from all Lenders, 9
or 12) months for LIBOR borrowings. 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; provided, however, that if the
------- -------
Interim Loan is drawn down, interest shall be paid
not less frequently than interest is paid on the
Interim Loan and in any event at least 15 days
prior to payment of interest on the Interim Loan.
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 Credit Facilities, commencing on the date of
the execution and delivery of the Credit
Documents. The commitment fee in respect of the
Credit Facilities will initially be 0.50% per
---
annum subject to a stepdown after the Trigger Date
-----
to subject to a grid based on the most recent
Total Leverage Ratio to be negotiated.
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.
[SENIOR SECURED]
CONFIDENTIAL EXHIBIT B
INTERIM LOAN
------------
SUMMARY OF TERMS AND CONDITIONS*
Borrower: Triad Hospitals Holdings, Inc. ("Borrower").
--------
Sole Book-Runner and Xxxxxxx Xxxxx & Co. (the "Lead Arranger").
-------------
Co-Lead Arranger:
Co-Lead Arranger: Banc of America Securities LLC ("BAS").
---
Syndication Agent: Xxxxxxx Xxxxx & Co.
Administrative Agent: Banc of America Bridge LLC (the
"Administrative Agent").
--------------------
Lenders: Xxxxxxx Xxxxx Capital Corporation (or one of
its affiliates selected by Xxxxxxx Xxxxx),
Banc of America Bridge LLC and a syndicate of
financial institutions (the "Lenders")
-------
arranged by the Lead Arranger and reasonably
acceptable to Borrower.
Interim Loan: Senior Unsecured Interim Loan (the "Interim
-------
Loan").
----
Principal Amount: Up to $300,000,000.
Documentation: Usual for facilities and transactions of this
type and reasonably acceptable to Borrower
and the Lenders. 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").
---------
Transactions: As described in the Commitment Letter.
Use of Proceeds: Together with proceeds derived from the
Senior Secured 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
------------------------------
* 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").
-----------------
[INTERIM LOAN]
-2-
permanently terminate on June 30, 2001 if not
drawn down on or prior to such date. 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 seventh
anniversary of the Initial Maturity Date (but
in no event no later than May 15, 2009), or
(ii) unsecured senior loans maturing on the
seventh 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 30-day LIBOR (as
adjusted every 30 days and adjusted for all
applicable reserve requirements):
From the To the
Beginning End of
of Month Month Spread
------------ ----------- ----------
1 3 550 bps
4 6 600 bps
7 9 700 bps
8 12 800 bps
(B) Rollover Securities and Rollover Loans.
--------------------------------------
The Rollover Securities and the Rollover
Loans will bear interest at a rate per annum
---------
equal to the then-applicable six-month LIBOR
rate (as adjusted each six months and as
adjusted for all applicable reserves) plus
900 bps. Any holder of Rollover Securities or
Rollover Loans may elect, at its sole option,
to fix the interest rate per annum on its
---------
Rollover Securities or Rollover Loans at the
then effective rate of interest per annum (in
---------
which case interest shall then be paid semi-
annually in arrears).
[INTERIM LOAN]
Interest Cash Cap - 14% per annum; Total
---------
Interest Cap - 17% per annum (in each case
---------
exclusive of any additional interest payable
due to an event of default and any fees paid
by adding the amount thereof to principal).
To the extent that the accrued interest
exceeds the interest that would accrue at the
maximum cash interest rate, the excess will
be paid by adding the amount thereof to the
outstanding principal.
Notwithstanding the foregoing, in no event
will the interest rate be less than 12% per
---
annum.
-----
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).
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).
Interest Payment Dates: (A) Interim Loan. Monthly, in arrears.
------------
(B) Rollover Securities and Rollover Loans.
--------------------------------------
Quarterly, in arrears.
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 subsidiary of
Borrower that guarantees the Senior Secured
Credit Facilities. Each such guarantee is
herein referred to as a "Guarantee" and each
---------
such guarantor, a "Guarantor." The Guarantors
---------
and Borrower are herein referred to as the
"Credit Parties."
--------------
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, and senior to all subordinated
indebtedness of Borrower which is not pari
----
passu therewith.
-----
[INTERIM LOAN]
-4-
Optional Prepayment: The Interim Loan will be prepayable at par at
any time at Borrower's option, in whole or in
part, plus accrued and unpaid interest.
Breakage costs, if any, will be paid by
Xxxxxxxx.
Mandatory Prepayment: To the extent not prohibited by the Senior
Secured 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 Secured
Credit Facilities and subject to exceptions
and baskets to be negotiated), (ii) any
capital contribution or the sale or issuance
of any 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); and (iii)
insurance proceeds or asset sales and other
asset dispositions (subject to baskets and
exceptions to be agreed upon), Borrower will
prepay the Interim Loan in an amount equal to
such net proceeds not previously applied to
such prepayments at par, together with
accrued interest thereon. In addition, 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 the Rollover
Securities and Rollover Loans) in cash for a
purchase price equal to 101% of the principal
amount thereof, plus accrued and unpaid
interest. Breakage costs, if any, will be
paid by Xxxxxxxx.
Exchange Feature; Rollover On the Initial Maturity Date, unless
Securities and Rollover Loans: Borrower is in bankruptcy or there has been
an acceleration of the Senior Secured Credit
Facilities (or any refinancing thereof) or
the Interim Loan and subject to the receipt
of all fees due to the Lenders, each Lender
(and participant) shall have its interest in
the Interim Loan exchanged for, at the option
of each Lender, either Rollover Securities or
Rollover Loans. The Rollover Securities and
the Rollover Loans will be (i) mandatorily
redeemable or repayable (as the case may be)
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
the case may be) at declining premiums on
terms customary for high-yield debt
securities, including four year no-call
provisions. All mandatory offers to purchase
and all optional prepayments shall be made
pro rata between the Rollover Securities and
--- ----
the Rollover Loans.
[INTERIM LOAN]
-5-
The Rollover Securities will be evidenced by
an indenture in form for qualification under
the Securities Act and will otherwise contain
provisions customary for public debt
securities 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.
Conditions to Effectiveness The making of the Interim Loan shall be
and to Interim Loan: subject to the same conditions precedent
that are set forth in Exhibit A to the
Commitment Letter with respect to the Senior
Secured Credit Facilities and to the
following additional conditions:
(a) Borrower shall have provided to the
Lead Arranger not later than 25 days prior to
the Closing Date a printed preliminary ("red
xxxxxxx") offering memorandum or prospectus
usable in a customary high-yield road show
relating to the issuance of the Notes, which
contains all financial statements and other
data to be included therein (including all
audited financial statements, all unaudited
financial statements (each of which shall
have undergone a SAS 71 review)) and all
appropriate pro forma financial statements
prepared in accordance with, or reconciled
to, generally accepted accounting principles
in the United States and prepared in
accordance with Regulation S-X under the
Securities Act of 1933, as amended (the
"Securities Act"), and substantially all
--------------
other data (including selected financial
data) that the Securities and Exchange
Commission would require in a registered
offering of the Senior Notes (collectively,
the "Required Information").
--------------------
(b) Borrower shall have cooperated
reasonably and in good faith with the
marketing effort for the Note Offering with
the view towards effecting the issuance of
the Notes in lieu of the draw down of the
Interim Loan. Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx &
Xxxxx Incorporated and BAS shall have had a
period of not less than 25 days to market the
Notes prior to the Closing Date.
(c) If requested in the reasonable
judgment of the Lead Arranger, there shall
have been provided in any confi-
[INTERIM LOAN]
-6-
dential information memorandum relating to
syndication of the Interim Loan, or in any
other document relating to the syndication of
the Interim Loan, reasonably detailed pro
forma consolidated financial projections
prepared by or on behalf of Borrower for
Borrower and its consolidated entities for
1999 and the five subsequent fiscal years
that are not different in a materially
adverse manner as compared with those
previously made available to the Lenders.
(d) Xxxxxxxx shall have entered into
the Senior Secured Credit Facilities with
Xxxxxxx Xxxxx and BofA providing for
$1,375,000,000 under the Senior Secured
Credit Facilities pursuant to agreements and
on terms and conditions thereunder, in form
and substance reasonably satisfactory to the
Lead Arranger.
Representations and Warranties: Customary for facilities similar to the
Interim Loan and such additional
representations and warranties as may
reasonably be required by the Lead Arranger.
Affirmative Covenants: Customary for facilities similar to the
Interim Loan and such affirmative covenants
as may reasonably be required by the Lead
Arranger.
In addition, the Interim Loan Agreement will
contain provisions pursuant to which Borrower
shall undertake to (i) cooperate with the
Take-out Banks (as defined below under
"Refinancing of Interim Loan") and provide
the Take-out Banks with information required
by the Take-out Banks in connection with the
Debt Offering (as defined below under
"Refinancing of Interim Loan") 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), and (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.
[INTERIM LOAN]
-7-
Upon issuance of the Rollover Securities and
the Rollover Loans, the affirmative covenants
shall conform to a customary high-yield
indenture and, subject to market conditions,
shall be substantially similar to those
contained in the 11% Senior Subordinated
Notes due 2009 of Borrower (the "Existing
--------
Notes").
-----
Negative Covenants: Customary for facilities similar to the
Interim Loan and such others as may
reasonably be required by the Lead Arranger
(with customary baskets and exceptions to be
agreed upon), including, but not limited to,
limitation on indebtedness; limitation on
liens; limitation on investments; limitation
on contingent obligations; limitation on
dividends, redemptions and repurchases of
equity interests; limitation on mergers,
acquisitions and asset sales; limitation on
issuance, sale or other disposition of
subsidiary stock; limitation on sale-
leaseback transactions; limitation on
transactions with affiliates; limitation on
dividend and other payment restrictions
affecting subsidiaries; limitation on changes
in business conducted; and limitation on
prepayment or repurchase of subordinated or
other pari passu indebtedness.
---- -----
Upon issuance of the Rollover Securities and
the Rollover Loans, the negative covenants
shall conform to a customary high-yield
indenture and, subject to market conditions,
shall be substantially similar to the
Existing Notes.
Events of Default: Customary for facilities similar to the
Interim Loan and such others as may
reasonably be required by the Lead Arranger.
Refinancing of Interim Loan: Borrower shall undertake to use its
reasonable best efforts to (i) prepare an
offering memorandum for a private placement
through resale pursuant to Rule 144A or (ii)
file a registration statement under the
Securities Act with respect to the Take-out
Securities (in each case, the "Debt
----
Offering"), to refinance in full the Interim
--------
Loan or the Rollover Securities and the
Rollover Loans and consummate such Debt
Offering as soon as practicable thereafter in
an amount sufficient to refinance the Interim
Loan or the Rollover Securities and the
Rollover Loans. Such Debt Offering shall be
on such terms and conditions (including
(without limitation) covenants, events of
default, interest rate, yield and redemption
prices and dates) as the financial
institutions party to the Engagement Letter
(the "Take-out Banks") may in their judgment
--------------
determine to be appropriate in light of
prevailing circumstances and market
con-
[INTERIM LOAN]
-8-
ditions and the financial condition and
prospects of Borrower and its subsidiaries at
the time of sale and reasonably acceptable to
Borrower and containing such other customary
terms as determined by the Take-out Banks and
reasonably acceptable to Borrower. If any
Take-out Securities are issued in a
transaction not registered under the
Securities Act, all such Take-out Securities
shall be entitled to the benefit of a
registration rights agreement to be entered
into by the relevant issuer (and any
guarantor thereof) in respect of indebtedness
being refinanced in customary form reasonably
acceptable to the Take-out Banks (which shall
include provisions for a customary registered
exchange offer with respect to any Take-out
Securities).
Yield Protection and Increased Usual for facilities and transactions of this
Costs: type.
Required Lenders: Xxxxxxx having a majority of the outstanding
credit exposure (the "Required Lenders"),
----------------
subject to amendments of certain provisions
of the Interim Loan Documents requiring the
consent of Lenders having a greater share (or
all) of the outstanding credit exposure.
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 Lead
Arranger otherwise consent or unless the
assigning Lender's exposure is thereby
reduced to $0). Assignments shall be
permitted with Xxxxxxxx's and the Lead
Arranger's consent (such consent not to be
unreasonably withheld, delayed or
conditioned), except that no such consent of
Borrower need be obtained to effect an
assignment to any Lender (or its affiliates)
or if any default or event of default has
occurred and is continuing for any assignment
by Xxxxxxx Xxxxx and BAB or any of their
respective affiliates. Participations shall
be permitted without restriction. Voting
rights of participants will be subject to
customary limitations.
Expenses and Indemnification: In addition to those out-of-pocket expenses
reimbursable under the Commitment Letter, all
reasonable out-of-pocket expenses of the Lead
Arranger 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) of, and the enforcement of, any
Interim Loan Document (including the
reasonable
[INTERIM LOAN]
-9-
fees, disbursements and other charges of
counsel for the Lead Arranger) are to be paid
by Xxxxxxxx.
Borrower will indemnify each of the Lead
Arranger, the Administrative Agent and the
other Lenders and hold them harmless from and
against all costs, expenses (including
reasonable fees, disbursements and other
charges of counsel for the Lead Arranger) and
liabilities arising out of or relating to any
litigation or other proceeding (regardless of
whether the Lead Arranger, the Administrative
Agent or any such other Lender is a party
thereto) that relates to the Transactions
(excluding litigation among Lenders), except
to the extent arising solely from such
person's bad faith, gross negligence or
willful misconduct.
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 the Xxxxxx Xxxxxx & Xxxxxxx (and such local
Lead Arranger: counsel as may be selected by the Lead
Arranger).
[INTERIM LOAN]
