| J.P. MORGAN SECURITIES LLC 383 Madison Avenue New York, New York 10017 |
JPMORGAN CHASE BANK, N.A. 270 Park Avenue New York, New York 10017 |
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| Very truly yours, JPMORGAN CHASE BANK, N.A. |
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| By: | /s/ Eric H. Pratt | |||
| Name: | Eric H. Pratt | |||
| Title: | Vice President | |||
| J.P. MORGAN SECURITIES LLC |
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| By: | /s/ Gerry Murray | |||
| Name: | Gerry Murray | |||
| Title: | Managing Director | |||
| BARCLAYS BANK PLC |
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| By: | /s/ Benjamin Burton | |||
| Name: | Benjamin Burton | |||
| Title: | Managing Director | |||
| By: | /s/ Daniel Schwartz | |||
| Name: | Daniel Schwartz | |||
| Title: | Vice President and Secretary | |||
Borrower:
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Initially, Blue Acquisition Sub, Inc., a Delaware corporation and, following the Acquisition, the Target as the survivor of the merger contemplated thereby (the “Borrower”). | |
Guarantors:
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Holdings and each of the Borrower’s direct and indirect, existing and future, domestic material wholly-owned subsidiaries (the “Guarantors”; together with the Borrower, the “Loan Parties”). | |
Lead Arrangers and Bookrunners:
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J.P. Morgan Securities LLC (“JPMSLLC”) and Barclays Capital, the investment banking division of Barclays Bank PLC (“Barclays Capital”; together with JPMSLLC in such capacity, the “Senior Lead Arrangers”). | |
Administrative Agent:
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JPMorgan Chase Bank, N.A. (in such capacity, the “Administrative Agent”). | |
Lenders:
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A syndicate of banks, financial institutions and other entities arranged by the Commitment Parties in consultation with the Borrower (collectively, the “Lenders”). |
Type and Amount:
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A term loan facility (the “Term Loan Facility”) in the amount of $1,750 million (the loans thereunder, the “Term Loans”). | |
Maturity and
Amortization:
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The Term Loans will mature on the date that is six years after the Closing Date (the “Term Maturity Date”). | |
| The Term Loans shall be repayable in equal quarterly installments in an aggregate annual amount equal to 1% of the original principal amount of the Term Loan Facility. The |
| balance of the Term Loans will be payable on the Term Maturity Date. | ||
Availability:
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The Term Loans shall be made in a single drawing on the Closing Date. Repayments and prepayments of the Term Loans may not be reborrowed. | |
Use of Proceeds:
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The proceeds of the Term Loans will be used to finance a portion of the Transactions. |
Type and Amount:
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A five-year revolving facility (the “Revolving Facility”; the commitments thereunder, the “Revolving Commitments”) in the initial amount of $150 million (the loans thereunder, together with (unless the context otherwise requires) the Swingline Loans referred to below, the “Revolving Loans”; and together with the Term Loans, the “Loans”). | |
Availability and
Maturity:
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The Revolving Facility shall be available on a revolving basis during the period commencing on the Closing Date and ending on the date that is five years after the Closing Date (the “Revolving Termination Date”). The Revolving Commitments and the Revolving Loans will mature on the Revolving Termination Date. No more than $50 million of Revolving Loans may be borrowed on the Closing Date to finance the Acquisition and related transactions and to pay the Transaction Costs. Additionally, Letters of Credit may be issued on the Closing Date in order to backstop or replace letters of credit outstanding on the Closing Date under the facilities no longer available to the Borrower or the Target or any of their respective affiliates as of the Closing Date. | |
Letters of Credit:
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A portion of the Revolving Facility not in excess of $75 million shall be available for the issuance of letters of credit (the “Letters of Credit”) by the Administrative Agent or other Lenders reasonably satisfactory to the Borrower (in such capacity, the “Issuing Lender”). No Letter of Credit shall have an expiration date after the earlier of (a) one year after the date of issuance unless consented to by the Issuing Lender and (b) five business days prior to the Revolving Termination 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 with its own funds or with the proceeds of Revolving Loans) within one business day. To the extent that the Borrower does not so reimburse the Issuing Lender, the Lenders under the Revolving Facility shall be irrevocably and |
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| unconditionally obligated to fund participations in the reimbursement obligations on a pro rata basis. | ||
Swingline Loans:
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A portion of the Revolving Facility not in excess of $25 million shall be available for swingline loans (the “Swingline Loans”) from the Administrative Agent (in such capacity, the “Swingline Lender”) on same-day notice. Any Swingline Loans will reduce availability under the Revolving Facility on a dollar-for-dollar basis. Each Lender under the Revolving Facility shall be irrevocably and unconditionally required to purchase, under certain circumstances, a participation in each Swingline Loan on a pro rata basis. | |
Use of Proceeds:
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The proceeds of the Revolving Loans shall be used to finance a portion of the Transactions and finance the working capital needs and general corporate purposes of the Borrower and its subsidiaries. |
C. Incremental Facility:
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The Senior Secured Facilities will permit the Borrower to add one or more incremental term loan facilities to the Senior Facilities (each, an “Incremental Term Facility”) and/or increase commitments under the Revolving Facility (any such increase, an “Incremental Revolving Facility”; together with any Incremental Term Facilities, the “Incremental Facilities”) in an aggregate principal amount of up to (a) $450 million plus (b) the amount of any voluntary prepayments of the Term Loan Facility or voluntary permanent reduction of the Revolving Commitments; provided that (i) no Lender will be required to participate in any such Incremental Facility, (ii) no event of default or default exists or would exist after giving effect thereto, (iii) after giving effect to the borrowings thereunder to be made on the effective date thereof and other permitted pro forma adjustment events and any permanent repayment of indebtedness after the beginning of the relevant determination period but prior to or simultaneous with such borrowing, (x) the Borrower shall be in compliance on a pro forma basis with the financial covenants in the Senior Secured Credit Documentation for the most recently ended fiscal quarter of the Borrower for which such covenants were calculated and (y) the Senior Secured Leverage Ratio (to be defined in a manner to be mutually agreed) of the Borrower shall be no greater than the Senior Secured Leverage Ratio of the Borrower on the Closing Date, (iv) the representations and warranties shall be true and correct in all material respects immediately prior to, and after giving effect to, the incurrence of such Incremental Facility, (v) the maturity date and weighted average life to maturity of any such Incremental Term Facility shall be no earlier than the maturity date and weighted average life to maturity, respectively, of the Term Loan Facility, (vi) the interest rates and amortization |
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| schedule applicable to any Incremental Term Facility shall be determined by the Borrower and the lenders thereunder; provided that the all-in yield (whether in the form of interest rate margins, original issue discount, upfront fees or LIBOR/ABR floors) applicable to any Incremental Facility will not be more than 0.25% higher than the corresponding all-in yield (giving effect to interest rate margins, original issue discount, upfront fees and LIBOR/ABR floors) for the existing Term Loan Facility or Revolving Facility, as the case may be, unless the interest rate margins with respect to the existing Term Loan Facility or Revolving Facility, as the case may be, is increased by an amount equal to the difference between the all-in yield with respect to the Incremental Facility and the corresponding all-in yield on the existing Term Loan Facility or Revolving Facility, as the case may be, minus, 0.25% and (vii) any Incremental Revolving Facility shall be on terms (other than pricing) and pursuant to documentation applicable to the Revolving Facility (including the maturity date in respect thereof) and any Incremental Term Facility shall be on terms and pursuant to documentation to be determined, provided that, to the extent such terms and documentation are not consistent with, in the case of an Incremental Term Facility the Term Loan Facility (except to the extent permitted by clause (v) or (vi) above), they shall be reasonably satisfactory to the Administrative Agent. |
Fees and Interest Rates:
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As set forth on Annex I. | |
Optional Prepayments and
Commitment Reductions:
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Loans may be prepaid and commitments may be reduced, in whole or in part without premium or penalty, in minimum amounts to be agreed, at the option of the Borrower at any time upon one day’s (or, in the case of a prepayment of Eurodollar Loans, three days’) prior notice, subject to reimbursement of the Lenders’ redeployment costs in the case of a prepayment of Eurodollar Loans (as defined in Annex I) prior to the last day of the relevant interest period. Optional prepayments of the Term Loans shall be applied as directed by the Borrower. |
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Mandatory Prepayments:
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Mandatory repayments of Term Loans shall be required from: | |
| (a) 100% of the net cash proceeds from any non-ordinary course sale or other disposition of assets (including as a result of casualty or condemnation) by the Loan Parties and their restricted subsidiaries in excess of an amount to be agreed and subject to the right of the Borrower to reinvest such proceeds if such proceeds are reinvested (or committed to be reinvested) within 12 months and, if so committed to reinvestment, reinvested within 180 days thereafter, and other exceptions to be agreed; |
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| (b) 100% of the net cash proceeds from issuances or incurrences of debt by the Loan Parties and their restricted subsidiaries (other than indebtedness permitted by the Senior Secured Credit Facilities); and | ||
| (c) 50% (with stepdowns to 25% and 0% based upon achievement of a Total Leverage Ratio (to be defined in a manner to be mutually agreed) to be agreed) of annual Excess Cash Flow (to be defined in a manner to be mutually agreed) of the Loan Parties and their restricted subsidiaries; provided that any voluntary prepayments of Term Loans, other than prepayments funded with the proceeds of incurrences of indebtedness, shall be credited against Excess Cash Flow prepayment obligations on a dollar-for-dollar basis. | ||
| All mandatory repayments of Term Loans will be applied first to scheduled installments thereof occurring within the next 12 months in direct order of maturity and second ratably to the remaining respective installments thereof. Mandatory prepayments of the Term Loans may not be reborrowed. |
Collateral:
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Subject to exclusions and limitations to be agreed and subject to the Conditionality Provision, the obligations of the Borrower and each Guarantor in respect of the Credit Facilities and any swap agreements and cash management arrangements provided by any Lender (or any affiliate of a Lender) shall be secured by a perfected first priority security interest in all of its tangible and intangible assets (collectively, the “Collateral”) (including, without limitation, U.S. registered intellectual property, real property and all of the capital stock of the Borrower and each of its direct and indirect subsidiaries (limited, in the case of foreign subsidiaries, to 65% of the capital stock of first tier foreign subsidiaries). | |
| Notwithstanding anything to the contrary, the Collateral shall exclude the following: (i) fee owned real properties with a value of less than an amount to be agreed (with any required mortgages being permitted to be delivered post-closing) and all leasehold interests, (ii) motor vehicles and other assets subject to certificates of title, letter of credit rights and commercial tort claims, (iii) assets specifically requiring perfection through control agreements (i.e., cash, deposit accounts or other bank or securities accounts, etc.), (iv) those assets over which the granting of security interests in such assets would be prohibited by contract, applicable law or regulation or the organizational documents of any non-wholly owned subsidiary (including permitted liens, leases and licenses) (in each case only to the extent that such contractual provisions are not rendered ineffective by applicable law or otherwise unenforceable), (v) |
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| those assets as to which the Administrative Agent and the Borrower agree that the cost of obtaining a security interest therein or perfection thereof are excessive in relation to the value to the Lenders of the security to be afforded thereby and (vi) other exceptions to be mutually agreed upon. | ||
| All the above-described pledges, security interests and mortgages shall be created on terms, and pursuant to customary documentation, and none of the Collateral shall be subject to any other pledges, security interests or mortgages, subject to customary exceptions (including customary permitted liens) as otherwise agreed upon. |
Initial Conditions:
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The availability of the Senior Secured Facilities on the Closing Date will be subject only to (a) the conditions precedent set forth in Section 6 of the Commitment Letter and on Exhibit D, and (b) the accuracy in all material respects of the representations and warranties (subject to the Conditionality Provision). | |
On-Going Conditions:
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After the Closing Date, the making of each Loan or the issuance of a Letter of Credit shall be conditioned upon (a) the accuracy in all material respects (and in all respects if qualified by materiality) of all representations and warranties in the definitive documentation for the Senior Secured Facilities and (b) there being no default or event of default in existence at the time of, or after giving effect to the making of, such extension of credit. |
Senior Secured Credit
Documentation:
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The definitive documentation for the Senior Secured Facilities (the “Senior Secured Credit Documentation”) shall be consistent with this Term Sheet, shall contain mandatory prepayments, representations, warranties, affirmative and negative covenants and events of default expressly set forth in this Term Sheet and shall otherwise be consistent with the Target’s existing Amended and Restated Credit Agreement, dated as of February 15, 2006, (the “Existing Credit Agreement”) with materiality thresholds, exceptions, qualifications and baskets to be mutually agreed, giving due regard to (i) the Existing Credit Agreement, (ii) then prevailing market conditions and practices, (iii) the operational requirements of the Borrower and its subsidiaries in light of their size, industry and practices and the Projections and (iv) the Sponsor Model. | |
Financial Covenants:
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Limited to: | |
(a) A maximum Total Leverage Ratio (to be defined in a
manner to be mutually agreed) at levels to be agreed and |
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with a Covenant Cushion (as defined in Annex III
to the Fee Letter) above the EBITDA levels set forth
in the Sponsor model delivered to the Senior Lead
Arrangers on August 30, 2010 (the “Sponsor
Model”). |
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(b) A minimum
Interest Coverage Ratio (to be defined in a manner to be
mutually agreed) at levels to be agreed and with a
Covenant Cushion above the EBITDA levels set forth in
the Sponsor Model. |
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| The first test date for the foregoing financial covenants shall be the last day of the first full fiscal quarter of the Borrower following the Closing Date. The foregoing levels shall be adjusted to take into account any “flex” imposed by the Commitment Parties pursuant to the Fee Letter. | ||
| For purposes of determining compliance with the financial covenants, any cash equity contribution (which equity shall be common equity or qualified preferred equity) made to the Borrower on or prior to the day that is 10 business days after the day on which financial statements are required to be delivered for any fiscal quarter will, at the request of the Borrower, be included in the calculation of EBITDA for the purposes of determining compliance with such financial covenants at the end of such fiscal quarter and applicable subsequent periods which include such fiscal quarter (any such equity contribution so included in the calculation of EBITDA, a “Specified Equity Contribution”); provided that, (a) there shall be no more than two quarters in each four consecutive fiscal quarter period in respect of which a Specified Equity Contribution is made and no more than four Specified Equity Contributions shall be made during the term of the Senior Secured Facilities, (b) the amount of any Specified Equity Contribution shall be no more than the amount required to cause the Borrower to be in pro forma compliance with the financial covenants specified above, (c) the Specified Equity Contributions shall be counted solely for the purposes of the financial covenants and shall not be included for the purposes of determining the availability or the amount of any covenant baskets or carve-outs and (d) Specified Equity Contributions may not reduce debt for purposes of calculating the financial covenants. | ||
Unrestricted Subsidiaries:
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The Senior Secured Credit Documentation will contain provisions pursuant to which, subject to limitations on investments, loans, advances and guarantees and other customary conditions and provisions to be agreed, the Borrower will be permitted to designate any existing or subsequently acquired or organized subsidiary as an “unrestricted subsidiary” and subsequently re-designate any such unrestricted subsidiary as a restricted subsidiary. Unrestricted subsidiaries will not be subject to the affirmative or negative covenant or event of |
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| default provisions of the definitive credit documentation, and the results of operations and indebtedness of unrestricted subsidiaries will not be taken into account for purposes of determining compliance (to the extent applicable) with the negative covenants and financial ratios contained in the Senior Secured Credit Documentation. | ||
Representations and Warranties:
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Limited to the following to be applicable to the Borrower and its restricted subsidiaries: financial statements (including pro forma financial statements); no material adverse change; corporate existence; compliance with law; corporate power and authority; enforceability of Senior Secured Credit Documentation; no conflict with law or contractual obligations; no material litigation; no default; ownership of property; intellectual property; taxes; Federal Reserve regulations; labor matters; ERISA; Investment Company Act and other regulations; subsidiaries; use of proceeds; environmental matters; accuracy of disclosure; creation and perfection of security interests; solvency; status of Senior Secured Facilities as senior debt; Regulation H; and delivery of certain documents, subject, in the case of each of the foregoing representations and warranties, to qualifications and limitations for materiality to be agreed. | |
Affirmative Covenants:
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Limited to the following to be applicable to the Borrower and its restricted subsidiaries: delivery of financial statements, reports, accountants’ letters, projections, officers’ certificates and other information requested by the Lenders; payment of taxes; maintenance of existence and material rights and privileges; compliance with laws; maintenance of property and insurance; maintenance of books and records; right of the Lenders to inspect property and books and records; notices of defaults, litigation and other material events; compliance with environmental laws; ERISA; and further assurances (including, without limitation, with respect to security interests in after-acquired property), subject, in the case of each of the foregoing covenants, to exceptions and qualifications to be agreed. | |
Negative Covenants:
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Limited to the following to be applicable to the Borrower and its restricted subsidiaries: limitations on: indebtedness (including guarantee obligations); liens; mergers, consolidations, liquidations and dissolutions; sales of assets (provided that the Borrower shall be permitted to sell company-owned restaurants to franchisees, subject to restrictions to be agreed); dividends and other payments in respect of capital stock; capital expenditures (with an annual limit of $160 million (if the Rent-Adjusted Leverage Ratio (as defined in the Existing Credit Agreement) is greater than or equal to 5.0 to 1.0), $180 million (if the Rent-Adjusted Leverage Ratio is greater than or equal to 4.0 to 1.0 but less than 5.0 to 1.0) and $220 million (if the Rent-Adjusted Leverage Ratio is less than 4.0 to 1.0) in each case with non-cumulative carry forwards of 50% of unused capital |
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| expenditures); acquisitions, investments, loans and advances; payments and modifications of the Senior Notes and subordinated debt instruments (with exceptions for AHYDO “catch-up” payments, if applicable); transactions with affiliates; speculative hedging arrangements (with exceptions for hedging of interest rates, commodities, currencies, general economic conditions, raw materials prices, revenue streams and business performance and other exceptions to be agreed); negative pledge clauses and clauses restricting subsidiary distributions; and changes in lines of business, subject, in the case of each of the foregoing covenants, to exceptions, qualifications and, as appropriate, baskets to be agreed. | ||
Events of Default:
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Limited to the following to be applicable to the Borrower and its restricted subsidiaries: nonpayment of principal when due; nonpayment of interest, fees or other amounts after a grace period to be agreed upon; material inaccuracy of a representation or warranty when made; violation of a covenant (subject, in the case of certain affirmative covenants, to a grace period to be agreed upon); cross-default to material indebtedness; bankruptcy events; certain ERISA events; material judgments; actual or asserted invalidity of any guarantee, security document or subordination provisions or non-perfection of security interest; changes in the passive holding company status of Holdings; and a change of control (the definition of which is to be agreed upon). | |
Voting, Assignments and
Participations, Yield
Protection:
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The Lenders will be permitted to assign (a) loans under the Term Loan Facility with the consent of the Borrower (not to be unreasonably withheld or delayed) and (b) loans and commitments under the Revolving Facility with the consent of the Borrower (not to be unreasonably withheld or delayed), the Swingline Lender and the principal Issuing Lenders; provided that no consent of the Borrower shall be required (i) after the occurrence and during the continuance of a payment or bankruptcy event of default (with respect to the Borrower) or (ii) in the case of Term Loans, for assignments of loans to any existing Lender or an affiliate of an existing Lender. All assignments will require the consent of the Administrative Agent unless such assignment is an assignment of loans under the Term Loan Facility to another Lender, an affiliate of a Lender or an approved fund, not to be unreasonably withheld or delayed. Each assignment will be in an amount of an integral multiple of $1 million with respect to the Term Loan Facility and $5 million with respect to the Revolving Facility or, in each case, if less, all of such Lender’s remaining loans and commitments of the applicable class. Assignments will be by novation and will not be required to be pro rata among the Senior Secured Facilities. |
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| The Lenders will be permitted to sell participations in Term Loans without restriction, other than as set forth in the next sentence, and in accordance with applicable law. Voting rights of participants shall be limited to matters in respect of (a) increases in commitments participated to such participants, (b) reductions of principal, interest or fees, (c) extensions of final maturity and (d) releases of all or substantially all of the value of the Guarantees or all or substantially all of the Collateral. | ||
| Amendments and waivers with respect to the Senior Secured Credit Documentation shall require the approval of Lenders holding more than 50% of the aggregate amount of the Term Loans and Revolving Commitments (the “Required Lenders”), except that (a) the consent of each Lender directly affected thereby shall be required with respect to (i) reductions in the amount or extensions of the scheduled date of any amortization or final maturity of any Loan, (ii) reductions in the rate of interest or any fee or extensions of any due date thereof and (iii) increases in the amount or extensions of the expiry date of any Lender’s commitment and (b) the consent of 100% of the Lenders shall be required with respect to (i) reductions of any of the voting percentages, (ii) releases of all or substantially all the Collateral (other than in connection with any sale of Collateral permitted by the Senior Secured Facilities) and (iii) releases of all or substantially all of the Guarantors (other than in connection with the release or sale of the relevant Guarantor permitted by the Senior Secured Facilities). | ||
| The Senior Secured Credit Documentation shall provide that, so long as no payment or bankruptcy (with respect to the Borrower) event of default is continuing and not more than $50 million of Revolving Loans (but excluding for purposes of such calculation any issued and undrawn Letters of Credit) are outstanding, (a) Term Loans may be purchased and assigned on a non-pro rata basis through Dutch auction or similar procedures to be agreed that are offered to all Lenders on a pro rata basis in accordance with procedures to be agreed and subject to restrictions to be agreed and (b) the Sponsor, the Borrower and any other affiliates of the Borrower shall be eligible assignees; provided that (i) Term Loans owned or held by the Sponsor and its affiliates shall not, in the aggregate, exceed 25% of the Term Loan Facility, (ii) Term Loans owned or held by the Sponsor or any of its affiliates shall be excluded in the determination of any Required Lender votes, (iii) neither the Sponsor nor any of its affiliates shall be permitted to attend any “lender-only” conference calls or meetings or receive any related “lender-only” information and (iv) any such loans acquired by the Borrower or any of its subsidiaries shall be cancelled promptly upon acquisition thereof. |
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| The Senior Secured Credit Documentation shall contain customary provisions for replacing non-consenting Lenders in connection with amendments and waivers requiring the consent of all Lenders or of all Lenders directly affected thereby so long as the Required Lenders shall have consented thereto. | ||
| The Senior Secured Credit Documentation shall contain customary provisions relating to “defaulting” Lenders (including provisions relating to providing cash collateral to support Swingline Loans or Letters of Credit, the suspension of voting rights, rights to receive certain fees, and termination or assignment of commitments or Loans of such Lenders). | ||
Expenses and Indemnification:
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If the Closing Date occurs, the Borrower shall pay (a) all reasonable out-of-pocket expenses of the Administrative Agent and the Lead Arrangers associated with the syndication of the Senior Secured Facilities and the preparation, execution, delivery and administration of the Senior Secured Credit Documentation and any amendment or waiver with respect thereto (including the reasonable fees, disbursements and other charges of one counsel to the Administrative Agent and the Commitment Parties taken as a whole and, if necessary, of one local counsel and one regulatory counsel in any applicable jurisdiction (and, solely in the case of any conflict of interest, one additional counsel to the affected indemnified persons, taken as a whole)) and (b) all out-of-pocket expenses of the Administrative Agent and the Lenders (including the fees, disbursements and other charges of one counsel to the Administrative Agent and the Lenders taken as a whole and, if necessary, of one local counsel and one regulatory counsel in any applicable jurisdiction (and, solely in the case of any conflict of interest, one additional counsel to the affected indemnified persons, taken as a whole)) in connection with the enforcement of the Senior Secured Credit Documentation. | |
| The Administrative Agent, the Lead Arrangers and the Lenders (and their affiliates and their respective officers, directors, employees, advisors and agents) will have no liability for, and will be indemnified and held harmless against, any losses, claims, damages, liabilities or expenses (including the reasonable fees, disbursements and other charges of one counsel to the indemnified persons taken as a whole (and, in the case of any conflict of interest, one additional counsel to the affected indemnified persons, taken as a whole) and, if necessary, one local counsel and one regulatory counsel in any applicable jurisdiction) incurred in respect of the financing contemplated hereby or the use or the proposed use of proceeds thereof, except (i) to the extent they are found by a final, nonappealable judgment of a court of competent jurisdiction to arise from the gross negligence, bad faith or willful misconduct of the relevant indemnified person (or its related parties) or (ii) to the extent they are found by a final, non-appealable judgment of a court of competent jurisdiction to arise from a material breach of the obligations of such indemnified person under the Senior Secured Credit Documentation. |
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Governing Law and Forum:
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New York. | |
Counsel to the Administrative
Agent and the Commitment Parties:
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Simpson Thacher & Bartlett LLP. |
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Interest Rate Options:
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The Borrower may elect that the Loans comprising each borrowing bear interest at a rate per annum equal to (a) the ABR plus the Applicable Margin or (b) the Eurodollar Rate, plus the Applicable Margin; provided that all Swingline Loans shall bear interest at a rate per annum equal to the ABR plus the Applicable Margin. | |
| As used herein: | ||
| “ABR” means the highest of (i) the rate of interest publicly announced by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City (the “Prime Rate”), (ii) the federal funds effective rate from time to time plus 0.50% and (iii) the Eurodollar Rate applicable for an interest period of one month plus 1.00%; provided, however, that notwithstanding the rate calculated in accordance with the foregoing, at no time shall the ABR for the Term Loan Facility be deemed to be less than 2.75% per annum. | ||
| “ABR Loans” means Loans bearing interest based upon the ABR. | ||
| “Applicable Margin” means (a) with respect to Revolving Loans (including Swingline Loans), (i) 3.75% in the case of ABR Loans and (ii) 4.75% in the case of Eurodollar Loans and (b) with respect to Term Loans (i) 3.75%, in the case of ABR Loans and (ii) 4.75%, in the case of Eurodollar Loans. The foregoing margins applicable to Revolving Loans shall be subject to reduction after financial statements have been delivered for the first full fiscal quarter after the Closing Date of in amounts and at Total Leverage Ratios to be agreed. | ||
| “Eurodollar Rate” means the rate (adjusted for statutory reserve requirements for eurocurrency liabilities) for eurodollar deposits for a period equal to one, two, three or six months (as selected by the Borrower) appearing on LIBOR01 Page published by Reuters; provided, however, that notwithstanding the rate calculated in accordance with the foregoing, at no time shall the Eurodollar Rate for the Term Loan Facility be deemed to be less than 1.75% per annum. | ||
| “Eurodollar Loans” means Loans bearing interest based upon the Eurodollar Rate. | ||
Interest Payment Dates:
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In the case of ABR Loans, quarterly in arrears. |
| In the case of Eurodollar Loans, on the last day of each relevant interest period and, in the case of any interest period longer than three months, on each successive date three months after the first day of such interest period. | ||
| At the Borrower’s option, an AHYDO “catch-up” payment provision may be included and any payments thereunder will be permitted under the Credit Facilities. | ||
Commitment Fees:
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The Borrower shall pay a commitment fee calculated at a rate per annum equal to 0.75% on the average daily unused portion of the Revolving Facility, payable quarterly in arrears. Swingline Loans shall, for purposes of the commitment fee calculations only, not be deemed to be a utilization of the Revolving Facility. | |
| The foregoing commitment fees under the Revolving Facility shall be subject to reduction after financial statements have been delivered for the first full fiscal quarter after the Closing Date to 0.625% per annum and 0.50% per annum based upon Total Leverage Ratios to be agreed. | ||
Letter of Credit Fees:
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The Borrower shall pay a fee on all outstanding Letters of Credit at a per annum rate equal to the Applicable Margin then in effect with respect to Eurodollar Loans under the Revolving Facility on the face amount of each such Letter of Credit. Such fee shall be shared ratably among the Lenders participating in the Revolving Facility and shall be payable quarterly in arrears. | |
| A fronting fee in an amount equal to 0.25% on the face amount of each Letter of Credit shall be payable quarterly in arrears to the Issuing Lender for its own account. In addition, customary administrative, issuance, amendment, payment and negotiation charges shall be payable to the Issuing Lender for its own account. | ||
Default Rate:
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At any time when the Borrower is in default in the payment of any amount under the Senior Secured Facilities, after giving effect to any applicable grace period, such overdue amounts shall bear interest at 2.00% per annum above the rate otherwise applicable thereto (or, in the event there is no applicable rate, 2.00% per annum in excess of the rate otherwise applicable to Revolving Loans maintained as ABR Loans from time to time). | |
Rate and Fee Basis:
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All per annum rates shall be calculated on the basis of a year of 360 days (or 365/366 days, in the case of ABR Loans, the interest rate payable on which is then based on the Prime Rate) for actual days elapsed. |
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Borrower:
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Initially, Blue Acquisition Sub, Inc., a Delaware corporation, and, following the Acquisition, the Target as the survivor of the merger contemplated thereby (the “Borrower”). | |
Guarantors:
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The Bridge Facility shall be jointly and severally guaranteed by the persons required to guarantee the obligations of the Borrower under the Senior Secured Facilities. | |
| The guarantees of the Initial Bridge Loans and the Extended Term Loans shall rank pari passu with all senior indebtedness and shall rank senior to all subordinated indebtedness of such Guarantors. | ||
Lead Arrangers and Bookrunners:
|
J.P. Morgan Securities LLC (“JPMSLLC”) and Barclays Capital, the investment banking division of Barclays Bank PLC (“Barclays Capital”; together with JPMSLLC in such capacity, the “Bridge Lead Arrangers”). | |
Administrative Agent:
|
JPMorgan Chase Bank, N.A. (in such capacity, the “Administrative Agent”) will act as the Administrative Agent for the Lenders holding the Initial Bridge Loans (as defined below) from time to time. | |
Lenders:
|
A syndicate of banks, financial institutions and other entities arranged by the Commitment Parties in consultation with the Borrower (collectively, the “Lenders”). | |
| 2. TYPE AND AMOUNT OF BRIDGE FACILITY | ||
Initial Bridge Loans:
|
The Lenders will make senior unsecured loans (the “Initial Bridge Loans”) to the Borrower on the Closing Date in an aggregate principal amount not to exceed $900 million. | |
Availability:
|
The Lenders will make the Initial Bridge Loans on the Closing Date. | |
Use of Proceeds:
|
The proceeds of the Initial Bridge Loans will be used to finance a portion of the Transactions. | |
Maturity/Exchange:
|
The Initial Bridge Loans will initially mature on the first anniversary of the Closing Date (the “Initial Bridge Loan Maturity Date”), which shall be extended as provided below. If any of the Initial Bridge Loans have not been previously repaid in full on or prior to the Initial Bridge Loan Maturity Date and no bankruptcy (with respect to the Borrower) event of default then exists, such Initial Bridge Loans shall automatically be extended to the eighth anniversary of the Closing Date (the “Extended Term Loans”). The Lenders in respect of such Extended Term Loan will have the option at any time or from time to time after the Initial Bridge Loan Maturity Date to receive Exchange Notes (the “Exchange Notes”) in exchange for such Extended Term Loans having the terms set forth in the term sheet attached hereto as Annex I; provided that a Lender may not elect to exchange its outstanding Extended Term Loans for Exchange Notes unless the conditions set forth in Annex I under “Principal Amount” have been satisfied. | |
| The Initial Bridge Loans, the Extended Term Loans and the Exchange Notes shall be pari passu for all purposes. | ||
Interest:
|
Prior to the Initial Bridge Loan Maturity Date, the Initial Bridge Loans will accrue interest at a rate per annum equal to the Adjusted LIBOR (as defined below) plus 875 basis points (the “Initial Margin”). Such spread over Adjusted LIBOR will increase by 50 basis points at the end of each three-month period after the Closing Date. Notwithstanding the foregoing, the interest rate in effect on the Initial Bridge Loans at any time prior to the Initial Bridge Loan Maturity Date shall not exceed an amount that causes either the weighted average per annum yield to maturity payable by the Borrower with respect to the Bridge Facility, the Senior Notes and any debt securities substituted therefor (calculated in accordance with the Fee Letter) to exceed the Weighted Average Bridge Cap (as defined in the Fee Letter) or the weighted average per annum yield to maturity payable by the Borrower with respect to the Debt Financing (as defined in the Fee Letter) to exceed the Weighted Average Financing Cap (as defined in the Fee Letter). At any time when the Borrower is in default in the payment of any amount under the Bridge Facility, such overdue amount shall bear interest at 2.00% per annum above the rate otherwise applicable thereto. | |
| Following the Initial Bridge Loan Maturity Date, all outstanding Extended Term Loans will accrue interest at the rate provided for Exchange Notes in Annex I hereto. | ||
| Calculation of interest shall be on the basis of actual days elapsed in a year of 360 days. |
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| “Adjusted LIBOR” on any date, means the greater of (i) 1.75% and (ii) the rate (adjusted for statutory reserve requirements for eurocurrency liabilities) for eurodollar deposits for a three-month (or six-month, in the case of Extended Term Loans) period appearing on the LIBOR01 Page published by Reuters two business days prior to such date. | ||
| Interest will be payable (or shall accrue) in arrears, (a) for the Initial Bridge Loans, at the end of each fiscal quarter of the Borrower following the Closing Date and on the Initial Bridge Loan Maturity Date, and (b) for the Extended Term Loans, semi-annually, commencing on the date that is six months after the Initial Bridge Loan Maturity Date and on the final maturity date. | ||
| 3. CERTAIN PAYMENT PROVISIONS | ||
Optional Prepayment:
|
The Initial Bridge Loans may be prepaid, in whole or in part in minimum amounts to be agreed, at the option of the Borrower, at any time upon three business days’ prior notice, at par plus accrued and unpaid interest. | |
Mandatory Redemption:
|
The Borrower will be required to prepay Initial Bridge Loans on a pro rata basis, at par plus accrued and unpaid interest, in each case subject to exceptions and baskets to be agreed that are not less favorable to the Borrower than those applicable to the Senior Secured Facilities, from 100% of (i) net cash proceeds of the issuance of the Senior Notes, (ii) the net cash proceeds from the issuance of any Refinancing Debt (to be defined), (iii) the net cash proceeds from an initial public offering and (iv) net cash proceeds of all non-ordinary course asset sales or dispositions (including as a result of casualty or condemnation) by the Borrower or any of its subsidiaries in excess of amounts either reinvested in accordance with the Senior Secured Credit Facilities or required to repay the Senior Secured Credit Facilities. | |
| The Borrower will also be required to make a mandatory offer to purchase the Initial Bridge Loans following the occurrence of a change of control (to be defined) at 100% of the outstanding principal amount thereof plus accrued and unpaid interest. | ||
| 4. CERTAIN CONDITIONS | ||
Conditions Precedent:
|
The availability of the Bridge Facility on the Closing Date will be subject only to (a) the conditions precedent set forth in Section 6 of the Commitment Letter and on Exhibit D, and (b) the accuracy in all material respects of the representations and warranties (subject to the Conditionality Provision). | |
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| 5. DOCUMENTATION | ||
Senior Bridge Credit
Documentation:
|
The definitive documentation for the Bridge Facility (the “Senior Bridge Credit Documentation”) shall contain the terms and conditions set forth in this Commitment Letter and such other terms as the Borrower and the Bridge Lead Arrangers shall agree, it being understood and agreed that such documentation will give due regard to (i) the operational requirements of the Borrower and its subsidiaries in light of their size, industry and practices and the Projections, (ii) the Sponsor Model and (iii) the description of notes used to market the Senior Notes prior to the Closing Date as it may be modified in light of then prevailing market conditions and practices ((i), (ii) and (iii) collectively, the “Documentation Considerations”). |
|
Representations and
Warranties:
|
Usual for facilities and transactions of this type, and others as reasonably agreed by the Bridge Lead Arrangers and the Lenders and consistent, to the extent applicable, with those in the Senior Secured Credit Documentation. | |
Covenants:
|
The Senior Bridge Credit Documentation will contain such affirmative and incurrence-based negative covenants (but not financial maintenance covenants) as are usual and customary for bridge loan financings of this type (consistent with the Documentation Considerations), it being understood and agreed that the covenants of the Initial Bridge Loans (and the Extended Term Loans and the Exchange Notes) shall in no event be more restrictive than the corresponding covenants in the Senior Secured Facilities; prior to the Initial Bridge Loan Maturity Date, certain covenants of the Initial Bridge Loans will be more restrictive than those of the Extended Term Loans and the Exchange Notes, as reasonably agreed by the Bridge Lead Arranger and the Borrower. | |
Voting:
|
Amendments and waivers of the Senior Bridge Credit Documentation will require the approval of Lenders holding more than 50% of the outstanding Initial Bridge Loans, except that (a) the consent of each affected Lender will be required for (i) reductions of principal, interest rate or spreads, (ii) except as provided under “Maturity/Exchange” above, extensions of the Initial Bridge Loan Maturity Date and (iii) additional restrictions on the right to exchange Extended Term Loans for Exchange Notes or any amendment of the rate of such exchange and (b) the consent of 100% of the Lenders shall be required with respect to (i) reductions of any of the voting percentages set forth in the definition of “required lenders” or any similar defined term and (ii) releases of all or substantially all of the Guarantors (other than in connection with the release or sale of the relevant | |
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| Guarantor permitted by the Senior Bridge Credit Documentation). | ||
Assignment and Participation:
|
Subject to the prior approval of the Administrative Agent, the Lenders will have the right to assign Initial Bridge Loans and commitments without the consent of the Borrower; provided that, prior to the Initial Bridge Loan Maturity Date, the consent of the Borrower shall be required with respect to any assignment that would result in the Commitment Parties holding less than 50.1% of the aggregate outstanding principal amount of the Initial Bridge Loans. Assignments will be by novation that will release the obligation of the assigning Lender. | |
| The Lenders will have the right to participate their Initial Bridge Loans to other financial institutions without restriction, other than customary voting limitations. Participants will have the same benefits as the selling Lenders would have (and will be limited to the amount of such benefits) with regard to yield protection and increased costs, subject to customary limitations and restrictions. | ||
Yield Protection:
|
Substantially similar to those contained in the Senior Secured Facilities. | |
Expenses and Indemnification:
|
If the Closing Date occurs, the Borrower shall pay (a) all reasonable out-of-pocket expenses of the Administrative Agent and the Bridge Lead Arrangers associated with the syndication of the Bridge Facility and the preparation, execution, delivery and administration of the Senior Bridge Credit Documentation and any amendment or waiver with respect thereto (including the reasonable fees, disbursements and other charges of one counsel to the Administrative Agent and the Commitment Parties taken as a whole and, if necessary, of one local counsel and one regulatory counsel in any applicable jurisdiction) and (b) all out-of-pocket expenses of the Administrative Agent and the Lenders (including the fees, disbursements and other charges of one counsel to the Administrative Agent and the Lenders taken as a whole and, if necessary, of one local counsel and one regulatory counsel in any applicable jurisdiction) in connection with the enforcement of the Senior Bridge Credit Documentation. | |
| The Administrative Agent, the Bridge Lead Arrangers and the Lenders (and their affiliates and their respective officers, directors, employees, advisors and agents) will have no liability for, and will be indemnified and held harmless against, any losses, claims, damages, liabilities or expenses (including the reasonable fees, disbursements and other charges of one counsel to the indemnified persons taken as a whole (and, in the case of any conflict of interest, one additional counsel to the affected indemnified persons, taken as a whole) and, if necessary, one local counsel and one regulatory counsel in any applicable |
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| jurisdiction) incurred in respect of the financing contemplated hereby or the use or the proposed use of proceeds thereof, except (i) to the extent they are found by a final, nonappealable judgment of a court of competent jurisdiction to arise from the gross negligence, bad faith or willful misconduct of the relevant indemnified person (or its related parties) or (ii) to the extent they are found by a final, non-appealable judgment of a court of competent jurisdiction to arise from a material breach of the obligations of such indemnified person under the Senior Bridge Credit Documentation. | ||
Governing Law and Forum:
|
New York. | |
Counsel to the Administrative Agent and the Commitment Parties: |
Simpson Thacher & Bartlett LLP. |
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Issuer:
|
The Borrower (in its capacity as issuer, the “Issuer”) will issue Exchange Notes under an indenture that complies with the Trust Indenture Act (the “Indenture”). | |
Guarantors:
|
Same as the Initial Bridge Loans. | |
| The guarantees of the Exchange Notes shall rank pari passu with all senior indebtedness and shall rank senior to all subordinated indebtedness of such Guarantors. | ||
Principal Amount:
|
The Exchange Notes will be available only in exchange for the Extended Term Loans on or after the Initial Bridge Loan Maturity Date. The principal amount (plus any accrued interest not required to be paid in cash) of any Exchange Note will equal 100% of the aggregate principal amount of the Extended Term Loan for which it is exchanged; provided that no Exchange Notes shall be issued until the Borrower shall have received requests to issue at least $50 million in aggregate principal amount of Exchange Notes. | |
Maturity:
|
The Exchange Notes and the Extended Term Loans will mature on the 8th anniversary of the Closing Date. | |
Interest Rate:
|
The Exchange Notes and the Extended Term Loans will bear interest at a rate (the “Extended Interest Rate”) equal to the Initial Rate (as defined below) plus the Exchange Spread (as defined below) ; provided that the Extended Interest Rate shall not at any time exceed a rate equal to an amount that causes either the weighted average per annum yield to maturity payable by the Borrower with respect to the Bridge Facility (including the Extended Term Loans and the Exchange Notes), the Senior Notes and any debt securities substituted therefor (calculated in accordance with the Fee Letter) to exceed the Weighted Average Bridge Cap (as defined in the Fee Letter) or the weighted average per annum yield to maturity payable by the Borrower with respect to the Debt Financing (as defined in the Fee Letter) to exceed the Weighted Average Financing Cap (as defined in the Fee Letter). | |
| At any time when the Borrower is in default in the payment of any amount under the Exchange Notes or Extended Term Loans, such overdue amount shall bear interest at 2.00% per annum above the rate otherwise applicable thereto. |
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| “Exchange Spread” shall equal 0 basis points during the three-month period commencing on the Initial Bridge Loan 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 Bridge Loan Maturity Date and shall equal the interest rate borne by the Initial Bridge Loans on the day immediately preceding the Initial Bridge Loan Maturity Date plus 50 basis points. | ||
| Interest will be payable in arrears semi-annually commencing on the date that is six months following the Initial Bridge Loan Maturity Date and on the final maturity date. | ||
| At the Issuer’s option, an AHYDO “catch-up” payment provision may be included and any payments thereunder will be permitted under the Extended Term Loans, the Exchange Notes and the Senior Notes. | ||
Optional Redemption:
|
Subject to the following paragraph, the Extended Term Loans and the Exchange Notes may be redeemed, in whole or in part, at the option of the Issuer, at any time at par plus accrued and unpaid interest to the redemption date. | |
| Any Lender that surrenders an Extended Term Loan for an Exchange Note shall have the right at such time to fix the interest rate on such Exchange Note (a “Fixed Rate Exchange Note”) at a rate equal to the then applicable rate of interest on such Exchange Note; provided that if such election is necessary for a bona fide sale of such Fixed Rate Exchange Note to a non-affiliated third party at par plus all accrued and unpaid interest to the date of such sale, the interest rate on the Fixed Rate Exchange Note shall be set at a rate that at the time of such sale does not exceed an amount that causes the weighted average per annum yield to maturity payable by the Borrower with respect to the Bridge Facility (including the Exchange Notes), the Senior Notes and any debt securities substituted therefor (calculated in accordance with the Fee Letter) to exceed the Weighted Average Bridge Cap (as defined in the Fee Letter) or the weighted average per annum yield to maturity payable by the Borrower with respect to the Debt Financing (as defined in the Fee Letter) to exceed the Weighted Average Financing Cap (as defined in the Fee Letter). If such Lender exercises such right, such Fixed Rate Exchange Note will be (a) non-callable for the first four years from the Closing Date (subject to a 35% equity clawback within the first three years after the Initial Bridge Loan Maturity Date and make-whole provisions); and (b) thereafter, callable at par plus accrued interest plus a premium equal to 50% of the coupon in effect on such Fixed Rate Exchange Note, which premium shall decline ratably on each yearly anniversary of the date of such sale to zero one year prior to the maturity of the |
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| Fixed Rate Exchange Notes; provided that so long as any such Fixed Rate Exchange Notes are held by the Initial Bridge Lenders or their affiliates (excluding any Asset Management Affiliates (as defined in the Fee Letter)), such notes shall be callable at par plus accrued and unpaid interest. | ||
Mandatory Offer to Purchase:
|
The Issuer will be required to offer to repurchase the Extended Term Loans and the Exchange Notes upon the occurrence of a change of control (which offer shall be at (i) in the case of Extended Term Loans, 100% of the principal amount of such Extended Term Loans, (ii) in the case of Exchange Notes the interest rate for which has not been fixed in accordance with the terms hereof, 100% of the principal amount of such Exchange Notes and (iii) in the case of Fixed Rate Exchange Notes, 101% of the principal amount of such Fixed Rate Exchange Notes, in each case plus accrued and unpaid interest). | |
Registration Rights:
|
The Issuer will use commercially reasonable efforts to file within 90 days after the date of the first issuance of the Exchange Notes (the “Issue Date”), and will use its commercially reasonable efforts to cause to become effective as soon thereafter as practicable, a shelf registration statement with respect to the Exchange Notes (a “Shelf Registration Statement”) and/or a registration statement relating to a Registered Exchange Offer (as described below). If a Shelf Registration Statement is filed, the Issuer will keep such registration statement effective and available (subject to customary exceptions) until it is no longer needed to permit unrestricted resales of Exchange Notes but in no event longer than 1 year from the issuance of any Exchange Note. | |
| If within 210 days from the Issue Date, a Shelf Registration Statement for the Exchange Notes has not been declared effective or the Issuer has not effected an exchange offer (a “Registered Exchange Offer”) whereby the Issuer has offered registered notes having terms identical to the Exchange Notes (the “Substitute Notes”) in exchange for all outstanding Exchange Notes (it being understood that a Shelf Registration Statement is required to be made available in respect of Exchange Notes the holders of which could not receive Substitute Notes through the Registered Exchange Offer that, in the opinion of counsel, would be freely saleable by such holders without registration or requirement for delivery of a current prospectus under the Securities Act of 1933, as amended (other than a prospectus delivery requirement imposed on a broker-dealer who is exchanging Exchange Notes acquired for its own account as a result of a market making or other trading activities)), then the Issuer will pay liquidated damages of 0.25% per annum on the principal amount of Exchange Notes and Extended Term Loans outstanding to holders thereof who are, or would be, unable freely to transfer Exchange Notes from and |
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| including the 211th day after the Issue Date (the “Default Registration Date”) to but excluding the earlier of the effective date of such Shelf Registration Statement or the date of consummation of such Registered Exchange Offer (such damages may be payable, at the option of the Borrower, in the form of additional Exchange Notes). Such liquidated damages shall increase by 0.25% per annum on the date that is 3 months after the Default Registration Date to a maximum of 1.00% per annum. The Issuer will also pay such liquidated damages for any period of time (subject to customary exceptions) following the effectiveness of a Shelf Registration Statement that such Shelf Registration Statement is not available for resales thereunder. In addition, unless and until the Issuer has consummated the Registered Exchange Offer and, if required, caused the Shelf Registration Statement to become effective, the holders of the Exchange Notes will have the right to “piggy-back” the Exchange Notes in the registration of any debt securities (subject to customary scale-back provisions) that are registered by the Issuer (other than on a Form S-4) unless all the Exchange Notes and Extended Term Loans will be redeemed or repaid from the proceeds of such securities. | ||
Right to Transfer
Exchange Notes:
|
The holders of the Exchange Notes shall have the absolute and unconditional right to transfer such Exchange Notes in compliance with applicable law to any third parties. | |
Covenants:
|
Customary for high yield senior debt offerings after giving due regard to the Documentation Considerations, subject to modifications to reflect current market conditions and other changes to be mutually agreed. | |
Events of Default:
|
Customary for high yield senior debt offerings after giving due regard to the Documentation Considerations, subject to modifications to reflect current market conditions and other changes to be mutually agreed. | |
Governing Law and Forum:
|
New York. |
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| a. | customary closing certificates; | ||
| b. | customary legal opinions; and | ||
| c. | a certificate from the chief financial officer or chief executive officer of Holdings or the Borrower in the form attached hereto as Annex I, certifying that Holdings and its subsidiaries, on a consolidated basis after giving effect to the Transactions and the other transactions contemplated hereby, are solvent. |
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D-3
| 1 | Describe Credit Agreement |
| By: | ||||
| Name: | [ ______ ] | |||
| Title: | [Chief Financial Officer] [Chief Executive Officer] |
|||