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| | | | | A-1 | | | |
| | | | | B-1 | | | |
| | | | | C-1 | | |
|
How can I attend and participate in the Special Meeting?
|
| | The Special Meeting will be a completely virtual meeting of stockholders conducted exclusively via live audio webcast. You will be able to attend the Special Meeting by visiting www.virtualshareholdermeeting.com/AHCO2021SM. To participate in the Special Meeting, you will need the 16-digit control number included on your proxy card or voting instruction card. The Special Meeting will begin promptly at 10:30 am Eastern Time on March 3, 2021. We encourage you to access the virtual meeting website prior to the start time. | |
|
What if I have technical difficulties or trouble accessing the virtual meeting website?
|
| | Technicians will be available to assist you if you experience technical difficulties accessing the virtual meeting website. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual meeting website login page. | |
|
Who is entitled to vote?
|
| | The record date for the Special Meeting is January 4, 2021. This means that holders of our Class A Common Stock or our Class B Common Stock on such date are entitled to vote at the Special Meeting. On January 4, 2021, there were 88,334,106 shares of our Common Stock outstanding and entitled to vote at the Special Meeting, consisting of 88,334,106 shares of Class A Common Stock and no shares of Class B Common Stock. | |
|
How many votes do I have?
|
| | Each share of our Class A Common Stock and Class B Common Stock is entitled to one vote on each matter properly submitted for stockholder action at the Special Meeting, except as noted above. | |
|
What am I voting on?
|
| | You will be voting on the following proposal: | |
| | | |
•
To approve, for purposes of complying with Nasdaq Listing Rule 5635, the issuance of shares of the Company’s Class A Common Stock, representing equal to or greater than 20% of the outstanding common stock or voting power of the Company issuable upon conversion of shares of the Company’s Series C Preferred Stock to be issued by the Company to the AeroCare equityholders pursuant to the Merger Agreement, by removal of the conversion restriction that prohibits such conversion of Series C Preferred Stock.
|
|
| | | | The Company’s board of directors recommends that our stockholders vote “FOR” the Proposal. | |
|
How do I vote?
|
| | You may vote in the following ways: | |
| | | |
•
At the Special Meeting: You may vote your shares electronically at the Special Meeting by using the control number on your proxy card or voting instruction form and following the instructions at
|
|
| | | |
www.virtualshareholdermeeting.com/AHCO2021SM. If you have already voted previously by telephone or Internet, there is no need to vote again at the Special Meeting unless you wish to revoke and change your vote.
|
|
| | | |
•
By Telephone or Internet: If you hold your shares in street name or in an account at a brokerage firm or bank, you may be able to vote your shares by telephone or over the Internet. Please follow the instructions on your proxy or voting instruction card.
|
|
| | | |
•
By Mail: If you requested to receive printed proxy materials, you may vote by marking, dating and signing your proxy card and promptly returning it by mail in the enclosed envelope.
|
|
|
What if I return my proxy or voting instruction card but do not mark it to show how I am voting?
|
| | Your shares will be voted according to the instructions you have indicated on your proxy or voting instruction card. If no direction is indicated, your shares will be voted “FOR” the Proposal. | |
|
How do I change or revoke my proxy?
|
| | Any person signing a proxy in the form accompanying this Proxy Statement has the power to revoke it prior to the Special Meeting or at the Special Meeting prior to the vote pursuant to the proxy. A proxy may be revoked by a writing delivered to us stating that the proxy is revoked, by a subsequent proxy that is signed by the person who signed the earlier proxy and is delivered before or at the Special Meeting, by voting again on a later date on the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the Special Meeting will be counted), or by attendance at the Special Meeting and voting electronically. | |
|
What does it mean if I receive more than one proxy or voting instruction card?
|
| | It means you have multiple accounts at the transfer agent and/or with banks and stockbrokers. Please vote all of your shares. | |
|
What constitutes a quorum?
|
| | Any number of stockholders, together holding at least a majority in voting power of the capital stock of the Company issued and outstanding and generally entitled to vote in the election of directors, present or represented by proxy at any meeting duly called, shall constitute a quorum for the transaction of all business. Abstentions and “broker non-votes” are counted as shares “present” at the meeting for purposes of determining whether a quorum exists. A “broker non-vote” occurs when shares held of record by a bank, broker or other holder of record for a beneficial owner are deemed present at the meeting for purposes of a quorum but are not voted on a particular proposal because that record holder does not have discretionary voting power for that particular matter under the applicable rules of the Nasdaq Stock Market (“Nasdaq”) and has not | |
| | | | received voting instructions from the beneficial owner. | |
|
What vote is required in order to approve the Proposal?
|
| | The Proposal requires the affirmative vote (in person or by proxy) of the holders of a majority of the outstanding shares of Common Stock entitled to vote and actually cast thereon. Abstentions and “broker non-votes,” if any, will not have any effect on the adoption of the proposal. | |
|
May my broker vote my shares?
|
| | Brokers may no longer use discretionary authority to vote shares on the election of directors or non-routine matters if they have not received instructions from their clients. It is important, therefore, that you cast your vote if you want it to count in the approval of the Proposal. | |
|
How will voting on any other business be conducted?
|
| | We do not know of any business or proposals to be considered at the Special Meeting other than those set forth in this Proxy Statement. If any other business is properly presented at the Special Meeting, the proxies received from our stockholders give the proxy holders the authority to vote on the matter in their sole discretion. | |
|
Who will count the votes?
|
| | Broadridge Financial Solutions, Inc. will act as the inspector of elections and will tabulate the votes. | |
|
What will happen if the Proposal is not approved by the stockholders?
|
| | If our stockholders do not approve the Proposal at the Special Meeting, the conversion restrictions applicable to the Series C Preferred Stock will remain in effect and the holder thereof shall not be entitled to convert the Series C Preferred Stock into shares of Class A Common Stock. | |
| | |
Nine Months Ended September 30,
|
| |
Increase / (Decrease)
|
| ||||||||||||||||||
(in thousands, except percentages)
|
| |
2020
|
| |
2019
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
Net revenue
|
| | | $ | 497,664 | | | | | $ | 379,245 | | | | | $ | 118,419 | | | | | | 31% | | |
Costs and expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of net revenue
|
| | | | 201,907 | | | | | | 152,675 | | | | | | 49,232 | | | | | | 32% | | |
Selling, general, and administrative expenses
|
| | | | 228,807 | | | | | | 187,932 | | | | | | 40,875 | | | | | | 22% | | |
Depreciation and amortization expense
|
| | | | 6,055 | | | | | | 4,846 | | | | | | 1,209 | | | | | | 25% | | |
Total costs and expenses
|
| | | | 436,769 | | | | | | 345,453 | | | | | | 91,316 | | | | | | 26% | | |
Operating income
|
| | | | 60,895 | | | | | | 33,792 | | | | | | 27,103 | | | | | | 80% | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | |
Other income
|
| | | | 2,705 | | | | | | 2,208 | | | | | | 497 | | | | | | 23% | | |
Interest expense
|
| | | | (11,486) | | | | | | (9,766) | | | | | | (1,720) | | | | | | 18% | | |
Loss on early extinguishment of debt
|
| | | | — | | | | | | (1,509) | | | | | | 1,509 | | | | | | -100% | | |
Total other expense
|
| | | | (8,781) | | | | | | (9,067) | | | | | | 286 | | | | | | -3% | | |
Income before provision for income taxes
|
| | | | 52,114 | | | | | | 24,725 | | | | | | 27,389 | | | | | | 111% | | |
Provision for income taxes
|
| | | | 8,179 | | | | | | 2,694 | | | | | | 5,485 | | | | | | 204% | | |
Net Income
|
| | | $ | 43,935 | | | | | $ | 22,031 | | | | | $ | 21,904 | | | | | | 99% | | |
| | |
Year Ended December 31,
|
| |
Increase / (Decrease)
|
| ||||||||||||||||||
(in thousands, except percentages)
|
| |
2019
|
| |
2018
|
| |
Dollars
|
| |
Percentage
|
| ||||||||||||
Net revenue
|
| | | $ | 533,649 | | | | | $ | 393,418 | | | | | $ | 140,231 | | | | | | 36% | | |
Costs and expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of net revenue
|
| | | | 218,369 | | | | | | 158,187 | | | | | | 60,182 | | | | | | 38% | | |
Selling, general, and administrative expenses
|
| | | | 261,213 | | | | | | 204,270 | | | | | | 56,943 | | | | | | 28% | | |
Depreciation and amortization expense
|
| | | | 6,868 | | | | | | 5,406 | | | | | | 1,462 | | | | | | 27% | | |
Total costs and expenses
|
| | | | 486,450 | | | | | | 367,863 | | | | | | 118,587 | | | | | | 32% | | |
Operating income
|
| | | | 47,199 | | | | | | 25,555 | | | | | | 21,644 | | | | | | 85% | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | |
Other income
|
| | | | 3,103 | | | | | | 2,207 | | | | | | 896 | | | | | | 41% | | |
Interest expense
|
| | | | (14,370) | | | | | | (7,610) | | | | | | (6,760) | | | | | | 89% | | |
Loss on early extinguishment of debt
|
| | | | (1,509) | | | | | | (1,227) | | | | | | (282) | | | | | | 23% | | |
Total other expense
|
| | | | (12,776) | | | | | | (6,630) | | | | | | (6,146) | | | | | | 93% | | |
Income before provision for income taxes
|
| | | | 34,423 | | | | | | 18,925 | | | | | | 15,498 | | | | | | 82% | | |
Provision for income taxes
|
| | | | 4,001 | | | | | | 3,036 | | | | | | 965 | | | | | | 32% | | |
Net Income
|
| | | $ | 30,422 | | | | | $ | 15,889 | | | | | $ | 14,533 | | | | | | 91% | | |
| | |
Beneficial Ownership Table
|
| |||||||||
| | |
Class A
Common Stock |
| |||||||||
Name and Address of BeneficialOwner(1)
|
| |
# of
Shares |
| |
% of Total
|
| ||||||
Richard Barasch(2)
|
| | | | 857,234 | | | | | | 1.0% | | |
Dr. Susan Weaver
|
| | | | 29,509 | | | | | | * | | |
Alan Quasha(3)
|
| | | | 11,886 | | | | | | * | | |
Terence Connors
|
| | | | 9,509 | | | | | | * | | |
Dale Wolf(4)
|
| | | | 20,009 | | | | | | * | | |
Bradley Coppens(5)
|
| | | | 4,509 | | | | | | * | | |
David Williams III(6)
|
| | | | 4,509 | | | | | | * | | |
Luke McGee(7)
|
| | | | 3,884,050 | | | | | | 4.4% | | |
Joshua Parnes
|
| | | | 223,125 | | | | | | * | | |
Christopher Joyce(8)
|
| | | | 265,228 | | | | | | * | | |
Everest Trust(9)
|
| | | | 16,018,200 | | | | | | 17.9% | | |
Still Water NevadaTrust(10)
|
| | | | 6,906,177 | | | | | | 7.7% | | |
The Mykonos 2019NGCG Nevada Trust(11)
|
| | | | 5,664,954 | | | | | | 6.4% | | |
McLarty Capital Partners SBIC, L.P.(12)
|
| | | | 4,526,189 | | | | | | 5.1% | | |
OEP AHCO Investment Holdings, LLC(13)
|
| | | | 13,818,180 | | | | | | 15.6% | | |
All directors and executive officers as a group
(11 individuals) |
| | | | 5,309,568 | | | | | | 5.9% | | |
| | |
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| | | | A-48 | | | |
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| Exhibit A | | | Definitions | |
| Exhibit B | | | [Intentionally Omitted] | |
| Exhibit C | | | [Intentionally Omitted] | |
| Exhibit D | | | [Intentionally Omitted] | |
| Exhibit E | | | [Intentionally Omitted] | |
| Exhibit F | | | Form of Stock Letter of Transmittal | |
| Exhibit G | | | [Intentionally Omitted] | |
| Exhibit H | | | Form of Stockholder Consent | |
| Exhibit I | | | Form of Company Voting and Support Agreement | |
| Exhibit J | | | Form of Accredited Investor Questionnaire | |
| Exhibit K | | | [Intentionally Omitted] | |
| Exhibit L | | | Form of Certificate of Designations | |
| Exhibit M | | | [Intentionally Omitted] | |
| Exhibit N | | | Preparation Methodology | |
| Exhibit O | | | Form of Parent Voting and Support Agreement | |
| Exhibit P | | | Schedule of Competitors | |
|
401(k) Plans
|
| |
76
|
|
|
Accredited Investor
|
| |
116
|
|
|
Accredited Investor Questionnaire
|
| |
85
|
|
|
Accredited Investor Questionnaire Deadline
|
| |
85
|
|
|
Acquisition Proposal
|
| |
81
|
|
|
Adjustment Escrow Account
|
| |
116
|
|
|
Adjustment Escrow Deposit
|
| |
116
|
|
|
Affiliate
|
| |
116
|
|
|
Affordable Care Act
|
| |
116
|
|
|
Aggregate Exercise Amount
|
| |
116
|
|
|
Aggregate Merger Consideration
|
| |
116
|
|
|
Aggregate Parent Stock Value
|
| |
116
|
|
|
Aggregate Shares
|
| |
116
|
|
|
Aggregate Stimulus Funds
|
| |
117
|
|
|
Agreement
|
| |
11
|
|
|
AI Aggregate Shares
|
| |
117
|
|
|
Amended and Restated Registration Rights Agreement
|
| |
117
|
|
|
AML Laws
|
| |
37
|
|
|
Anti-Corruption Laws
|
| |
117
|
|
|
Antitrust Division
|
| |
71
|
|
|
Antitrust Laws
|
| |
72
|
|
|
Board Representatives
|
| |
85
|
|
|
Borrowed Money Debt
|
| |
117
|
|
|
Business
|
| |
117
|
|
|
Business Day
|
| |
117
|
|
|
Business IP
|
| |
50
|
|
|
Capitalization Date
|
| |
60
|
|
|
CARES Act
|
| |
117
|
|
|
Cash on Hand
|
| |
117
|
|
|
Cash Option Consideration
|
| |
117
|
|
|
Certificate
|
| |
19
|
|
|
Certificate of Designations
|
| |
117
|
|
|
Certificates
|
| |
19
|
|
|
Change in Control Payment
|
| |
118
|
|
|
Charter Documents
|
| |
118
|
|
|
Claim
|
| |
118
|
|
|
Class A Common Stock
|
| |
60
|
|
|
Class B Common Stock
|
| |
60
|
|
|
Closing
|
| |
14
|
|
|
Closing Cash
|
| |
118
|
|
|
Closing Consideration Schedule
|
| |
24
|
|
|
Closing Date
|
| |
15
|
|
|
Closing Indebtedness
|
| |
118
|
|
|
Closing Statement
|
| |
25
|
|
|
Code
|
| |
118
|
|
|
Collection Costs
|
| |
99
|
|
|
Common Per Share Amount
|
| |
118
|
|
|
Common Per Share Cash Amount
|
| |
118
|
|
|
Common Per Share Stock Issuance Amount
|
| |
118
|
|
|
Common Stock
|
| |
60
|
|
|
Common Stock Share Consideration
|
| |
119
|
|
|
Common Stockholder
|
| |
119
|
|
|
Company
|
| |
11
|
|
|
Company Burdensome Condition
|
| |
73
|
|
|
Company Capital Stock
|
| |
119
|
|
|
Company Common Stock
|
| |
119
|
|
|
Company Equity Plan
|
| |
119
|
|
|
Company Equityholders
|
| |
119
|
|
|
Company Financial Statements
|
| |
40
|
|
|
Company Option
|
| |
119
|
|
|
Company Optionholder
|
| |
119
|
|
|
Company Real Property
|
| |
49
|
|
|
Company Related Party
|
| |
52
|
|
|
Company Releasing Related Parties
|
| |
100
|
|
|
Company Series C Preferred Stock
|
| |
119
|
|
|
Company Systems
|
| |
119
|
|
|
Company Voting and Support Agreements
|
| |
84
|
|
|
Company Written Consent
|
| |
84
|
|
|
Company’s Counsel
|
| |
89
|
|
|
Company’s Replacement Counsel
|
| |
92
|
|
|
Compliant
|
| |
119
|
|
|
Confidentiality Agreement
|
| |
120
|
|
|
Consent
|
| |
120
|
|
|
Continuation Period
|
| |
74
|
|
|
Continuing Employee
|
| |
74
|
|
|
Contract
|
| |
120
|
|
|
Conversion Rate
|
| |
120
|
|
|
Covered Person
|
| |
120
|
|
|
COVID-19
|
| |
120
|
|
|
COVID-19 Measures
|
| |
120
|
|
|
Data Treatment
|
| |
120
|
|
|
date hereof
|
| |
11
|
|
|
date of this Agreement
|
| |
11
|
|
|
Deal Communications
|
| |
112
|
|
|
Debt Financing
|
| |
59
|
|
|
Debt Financing Commitment
|
| |
59
|
|
|
Debt Financing Sources
|
| |
120
|
|
|
Derivative Instruments
|
| |
120
|
|
|
DGCL
|
| |
121
|
|
|
Disclosure Schedule
|
| |
30
|
|
|
Dissenting Shares
|
| |
21
|
|
|
Dividend Recapitalization
|
| |
68
|
|
|
DMEPOS
|
| |
35
|
|
|
Employee Option
|
| |
121
|
|
|
Employee Plan
|
| |
121
|
|
|
Enforceability Exceptions
|
| |
31
|
|
|
Environmental Laws
|
| |
121
|
|
|
Equity Securities
|
| |
121
|
|
|
ERISA
|
| |
121
|
|
|
ERISA Affiliate
|
| |
122
|
|
|
Escrow Agent
|
| |
122
|
|
|
Escrow Agreement
|
| |
122
|
|
|
Estimated Aggregate Merger Consideration
|
| |
122
|
|
|
Estimated Closing Cash
|
| |
23
|
|
|
Estimated Closing Indebtedness
|
| |
23
|
|
|
Estimated Closing Statement
|
| |
23
|
|
|
Estimated M&A Adjustment
|
| |
23
|
|
|
Estimated Net Working Capital Adjustment Amount
|
| |
23
|
|
|
Estimated Selling Expenses
|
| |
23
|
|
|
Excess Capital Equipment
|
| |
122
|
|
|
Excess Capital Equipment Adjustment
|
| |
23
|
|
|
Exchange Act
|
| |
57
|
|
|
Exchange Ratio
|
| |
22
|
|
|
Excluded Information
|
| |
122
|
|
|
Ex-Im Laws
|
| |
122
|
|
|
Financing Parties
|
| |
123
|
|
|
First Certificate of Merger
|
| |
14
|
|
|
First Effective Time
|
| |
14
|
|
|
First Merger
|
| |
11
|
|
|
First Surviving Company
|
| |
13
|
|
|
Fraud
|
| |
123
|
|
|
FTC
|
| |
71
|
|
|
Fundamental Representations
|
| |
123
|
|
|
GAAP
|
| |
123
|
|
|
Goodwin
|
| |
111
|
|
|
Governmental Entity
|
| |
123
|
|
|
Grant Date
|
| |
33
|
|
|
Hazardous Substances
|
| |
123
|
|
|
Health Care Laws
|
| |
123
|
|
|
HIPAA Laws
|
| |
55
|
|
|
Holdings Stock Options
|
| |
60
|
|
|
HSR Act
|
| |
124
|
|
|
Indebtedness
|
| |
124
|
|
|
Indemnification Agreement
|
| |
87
|
|
|
Indemnified Parties
|
| |
93
|
|
|
Independent Accounting Firm
|
| |
27
|
|
|
Information Rights Holder
|
| |
125
|
|
|
Intellectual Property
|
| |
125
|
|
|
Interim Company Financial Statements
|
| |
41
|
|
|
IRS
|
| |
125
|
|
|
Joint Instruction Letter
|
| |
30
|
|
|
Knowledge
|
| |
125
|
|
|
Latest Audited Balance Sheet
|
| |
40
|
|
|
Latest Balance Sheet
|
| |
41
|
|
|
Latest Balance Sheet Date
|
| |
41
|
|
|
Leased Real Property
|
| |
49
|
|
|
Legal Proceeding
|
| |
125
|
|
|
Legal Requirement
|
| |
125
|
|
|
Liabilities
|
| |
125
|
|
|
Licenses for Generally Commercially Available Software
|
| |
125
|
|
|
Lien
|
| |
126
|
|
|
Losses
|
| |
126
|
|
|
M&A Adjustment
|
| |
126
|
|
|
M&A Costs
|
| |
126
|
|
|
M&A Purchase
|
| |
126
|
|
|
M&A Target
|
| |
126
|
|
|
Marketing Period
|
| |
126
|
|
|
Material Adverse Effect
|
| |
127
|
|
|
Material Contract
|
| |
47
|
|
|
Material Payor
|
| |
53
|
|
|
Material Permits
|
| |
34
|
|
|
Material Referral Source
|
| |
53
|
|
|
Material Suppliers
|
| |
52
|
|
|
Measurement Time
|
| |
128
|
|
|
Merger Sub
|
| |
11
|
|
|
Merger Sub II
|
| |
11
|
|
|
Mergers
|
| |
11
|
|
|
Multiemployer Plan
|
| |
128
|
|
|
NASDAQ
|
| |
128
|
|
|
Net Working Capital
|
| |
128
|
|
|
Net Working Capital Adjustment Amount
|
| |
129
|
|
|
Net Working Capital Target
|
| |
129
|
|
|
Nomination Right Board Representative
|
| |
85
|
|
|
Nomination Rights Holders
|
| |
85
|
|
|
Non-Employee Option
|
| |
129
|
|
|
Non-Party Affiliates
|
| |
97
|
|
|
Notices
|
| |
102
|
|
|
Objection Notice
|
| |
26
|
|
|
Observer Rights Holder
|
| |
86
|
|
|
Option Cash Amount
|
| |
22
|
|
|
Option Consideration
|
| |
129
|
|
|
Order
|
| |
129
|
|
|
Ordinary Course of Business
|
| |
129
|
|
|
Ordinary Rep
|
| |
129
|
|
|
Other Board Representative
|
| |
85
|
|
|
Outside Date
|
| |
97
|
|
|
Owned Intellectual Property
|
| |
50
|
|
|
Parachute Payment Waivers
|
| |
75
|
|
|
Parent
|
| |
11
|
|
|
Parent Board of Directors
|
| |
85
|
|
|
Parent Burdensome Condition
|
| |
73
|
|
|
Parent Indemnitees
|
| |
93
|
|
|
Parent Material Adverse Effect
|
| |
129
|
|
|
Parent Option
|
| |
22
|
|
|
Parent Plans
|
| |
74
|
|
|
Parent Related Parties
|
| |
99
|
|
|
Parent Stock Awards
|
| |
60
|
|
|
Parent Stock Value
|
| |
129
|
|
|
Parent Stockholder Approval
|
| |
57
|
|
|
Parent Stockholders’ Meeting
|
| |
84
|
|
|
Parent’s Counsel
|
| |
89
|
|
|
Parent’s Replacement Counsel
|
| |
91
|
|
|
Parties
|
| |
11
|
|
|
Party
|
| |
11
|
|
|
Paying Agent
|
| |
19
|
|
|
Payoff Amount
|
| |
15
|
|
|
Payoff Letter
|
| |
15
|
|
|
Per Share Cash Consideration
|
| |
129
|
|
|
Per Share Mixed Consideration
|
| |
129
|
|
|
Permit
|
| |
34
|
|
|
Permitted Liens
|
| |
129
|
|
|
Permitted Transfer
|
| |
82
|
|
|
Person
|
| |
130
|
|
|
Personal Data
|
| |
130
|
|
|
PHI
|
| |
55
|
|
|
Post-Closing Covenants
|
| |
93
|
|
|
Post-Closing Tax Period
|
| |
130
|
|
|
Pre-Closing Covenants
|
| |
93
|
|
|
Preferred Stock
|
| |
60
|
|
|
Preferred Stock Share Consideration
|
| |
130
|
|
|
Preparation Methodology
|
| |
130
|
|
|
Previously Owned Real Property
|
| |
49
|
|
|
Privacy Laws and Requirements
|
| |
54
|
|
|
Privileged Deal Communications
|
| |
112
|
|
|
Prohibited Shares
|
| |
81
|
|
|
Proprietary Software
|
| |
50
|
|
|
Provider Relief Adjustment
|
| |
131
|
|
|
Proxy Statement
|
| |
58
|
|
|
Purchasing Expenses
|
| |
131
|
|
|
Real Property Leases
|
| |
131
|
|
|
Referral Source
|
| |
37
|
|
|
Rental Equipment
|
| |
131
|
|
|
Representative Expense Amount
|
| |
131
|
|
|
Representative Losses
|
| |
110
|
|
|
Required Financial Information
|
| |
131
|
|
|
Restricted Cash
|
| |
132
|
|
|
Restricted Period Termination Date
|
| |
82
|
|
|
SEC
|
| |
61
|
|
|
SEC Reports
|
| |
61
|
|
|
Second Certificate of Merger
|
| |
14
|
|
|
Second Effective Time
|
| |
14
|
|
|
Second Merger
|
| |
11
|
|
|
Second Surviving Company
|
| |
13
|
|
|
Section 280G Approval
|
| |
76
|
|
|
Securities
|
| |
132
|
|
|
Securities Act
|
| |
57
|
|
|
Security Breach
|
| |
132
|
|
|
Selling Expenses
|
| |
132
|
|
|
Series C Preferred Stock
|
| |
133
|
|
|
Series C Preferred Stockholders
|
| |
133
|
|
|
Share Consideration
|
| |
133
|
|
|
Share Consideration Amount
|
| |
133
|
|
|
Shortfall Amount
|
| |
28
|
|
|
Special Escrow Account
|
| |
133
|
|
|
Special Escrow Deposit
|
| |
133
|
|
|
Special Matter
|
| |
133
|
|
|
Special Matter Termination Date
|
| |
93
|
|
|
Special Policy
|
| |
93
|
|
|
Stock Letter of Transmittal
|
| |
19
|
|
|
Stock Plan
|
| |
60
|
|
|
Stockholder
|
| |
133
|
|
|
Stockholder Notice
|
| |
84
|
|
|
Stockholder Representative
|
| |
11
|
|
|
Straddle Period
|
| |
133
|
|
|
Subsidiaries
|
| |
133
|
|
|
Subsidiary
|
| |
133
|
|
|
Substitute Financing
|
| |
77
|
|
|
Substitute Option Consideration
|
| |
134
|
|
|
Surviving Companies
|
| |
134
|
|
|
Tail Policy
|
| |
69
|
|
|
Tangible Personal Property
|
| |
50
|
|
|
Tax
|
| |
134
|
|
|
Tax Representation Letters
|
| |
89
|
|
|
Tax Return
|
| |
134
|
|
|
Taxes
|
| |
134
|
|
|
Taxing Authority
|
| |
134
|
|
|
Termination Fee
|
| |
99
|
|
|
Third Party Payor Programs
|
| |
134
|
|
|
Third Party Payors
|
| |
134
|
|
|
Trade Secrets
|
| |
125
|
|
|
Trading Day
|
| |
134
|
|
|
Transaction Documents
|
| |
134, 135
|
|
|
Transfer
|
| |
135
|
|
|
Transfer Taxes
|
| |
88
|
|
|
Unaffiliated Shareholders
|
| |
135
|
|
|
Value of the Common Per Share Stock Issuance Amount
|
| |
135
|
|
|
VDR
|
| |
13
|
|
|
Vested Cash-Out Options
|
| |
135
|
|
|
Vested Company Option
|
| |
135
|
|
|
Vested Substitute Options
|
| |
136
|
|
|
Voting Debt
|
| |
60
|
|
|
Waived 280G Benefits
|
| |
75
|
|
|
Waiving Party
|
| |
95
|
|
| ATTEST: | | | ADAPTHEALTH CORP. | |
|
|
| |
By:
|
|
|
Name:
Title: |
| |
Name:
Title:
|
|
Date of Conversion (if applicable): |
|
Number of shares of Series C Preferred Stock to be converted: |
|
Share certificate no(s). of Series C Preferred Stock to be converted: |
|
Tax ID Number (if applicable): |
|
Conversion Rate: |
|
Number of shares of Class A Common Stock to be issued: |
|
Issue to: |
|
Address: |
|
Telephone Number: |
|
Email: |
|
Authorization: |
|
Title: |
|
Dated: |
|
Account Number (if electronic book entry transfer): |
|
Transaction Code Number (if electronic book entry transfer): |
|
| I. Parties | | | | |
|
Borrower
|
| | AdaptHealth LLC (the “Borrower”). | |
|
Guarantors
|
| | Holdings and each subsidiary of the Borrower that guarantees indebtedness under the Existing Credit Agreement subject to additional exclusions to be mutually agreed between the Borrower and the Term Loan Administrative Agent (collectively, the “Term Loan Guarantors”). The Borrower and the Term Loan Guarantors are referred to collectively as the “Term Loan Credit Parties”. | |
|
Lead Arrangers and Book Runners
|
| | Jefferies Finance LLC (“Jefferies Finance”) and any additional joint lead arranger appointed pursuant to the Commitment Letter (in such capacities, the “Term Loan Arrangers”). The Term Loan Arrangers will perform the duties customarily associated with such role. | |
|
Term Loan Administrative Agent
|
| | Jefferies Finance and/or one or more of its designees (in such capacity, the “Term Loan Administrative Agent”). The Term Loan Administrative Agent will perform the duties customarily associated with such role. | |
|
Collateral Agent
|
| | Jefferies Finance and/or one or more of its designees (in such capacity, the “Collateral Agent”). The Collateral Agent will perform the duties customarily associated with such role. | |
|
Lenders
|
| | A syndicate of banks, financial institutions and other entities but excluding Disqualified Institutions, (which may include Jefferies Finance, collectively, the “Term Loan Lenders”), subject to the Borrower’s consent (such consent not to be unreasonably withheld, delayed or conditioned). | |
|
Closing Date
|
| | The date, on or before the date on which the Commitments are terminated in accordance with Section 15 of this Commitment Letter, on which the Acquisition is consummated (the “Closing Date”). | |
|
Term Loan Documents
|
| | The Facilities Documentation with respect to the Term Loan Facility (the “Term Loan Facility Documentation”), will be based on and not less favorable than the Existing Credit Agreement (the “Term Loan Precedent”) and (a) will include such modifications as are necessary to reflect the specific terms set forth in the Commitment Letter and the Fee Letters and to give due regard to the Company Model, financial condition, the operational, strategic and geographical requirements of the Company and its subsidiaries in light of the proposed business plan, their size and industries and the disclosure schedules to the Purchase Agreement, (b) will include appropriate modifications to reflect changes in law or accounting standards since the date of such precedent, (c) will include modifications to limit the release of a guarantor that ceases to be a wholly-owned subsidiary, (d) shall be negotiated in good faith to finalize the Term Loan Facility Documentation as promptly as reasonably practicable, (e) will include appropriate modifications to reflect the operational and administrative | |
| | | |
requirements of the Term Loan Administrative Agent as mutually agreed, (f) with respect to all dollar baskets, will include a “grower” component growing off an equivalent percentage of either Consolidated Total Assets (to be defined) or Consolidated EBITDA, to be selected by the Borrower prior to the launch of general syndication of the Term Loan Facility, (g) will include customary “anti-net short” lender provisions and (h) for baskets and exceptions, will provide the Borrower and its Subsidiaries operational flexibility consistent with the Existing Indenture (as defined in Exhibit B) (collectively, the “Term Loan Documentation Principles”). The Term Loan Facility Documentation will contain only those payment provisions, conditions to borrowing, mandatory prepayments, representations and warranties, covenants and events of default expressly set forth in this Exhibit A, in each case, applicable to Holdings, the Borrower and the restricted subsidiaries of Holdings and with standards, qualifications, thresholds, exceptions, “baskets” and grace and cure periods consistent with the provisions of this paragraph.
The “Company Model” means the model provided to the Arrangers party to the Commitment Letter on November 30, 2020 (or such other model as may be mutually agreed by the Borrower and the Arrangers).
|
|
| II. Term Loan Facility | | | | |
|
Term Loan Facility
|
| | A senior secured term loan facility (the “Term Loan Facility”) in an aggregate principal amount of $900.0 million (the “Term Loans”), on the terms and conditions set forth herein (as such amount may, at the option of the Borrower, be increased to fund any “OID” or upfront fees in respect of the Term Loan Facility in connection with the “flex” provisions in the Fee Letter). | |
|
Mandatory Commitment Reduction:
|
| | On or prior to the Closing Date, the commitments in respect of the Term Loan Facility will be automatically reduced (i) on a dollar-for-dollar basis by the incurrence of any indebtedness for borrowed money (including any New Term A Loans and any debt securities) by the Borrower, a parent holding company of the Borrower or any of their respective subsidiaries (other than certain exceptions to be mutually agreed) or the receipt by the Borrower, a parent holding company of the Borrower or any of their respective affiliates of commitments in respect of indebtedness for borrowed money (including commitments in respect of New Term A Loans) so long as the conditions to borrowing of such indebtedness on the Closing Date is not substantially more restrictive than the conditions to borrowing of the Term Loans on the Closing Date; provided that the net proceeds from any direct or indirect public offering or private placement of the Notes or the Securities (as defined in the Fee Letter) on or prior to the Closing Date shall not reduce commitments in respect of the Term Loan Facility, (ii) by $250.0 million if the Borrower receives an amendment to the Existing Credit Agreement to permit the Acquisition (the “Required Amendment”), and (iii) by 50% of the net proceeds from any issuance or sale of equity of the Borrower or a parent holding company of the Borrower or any of their subsidiaries (other than equity issued to the Borrower or any of its subsidiaries) on a dollar-for-dollar basis. | |
| | | | If the Borrower or any of its affiliates receives commitments in respect of any indebtedness for borrowed money (including any New Term A Loans) or incurs any indebtedness for borrowed money (including any New Term A Loans but excluding revolving borrowings under the Existing Credit Agreement, intercompany indebtedness, capital leases, letters of credit and purchase money and equipment financings, performance bonds, surety bonds, working capital indebtedness, local foreign credit lines, draft discounting arrangements, factoring arrangements, floor plan financing arrangements or, in each case, other similar lines of credit), the Borrower shall promptly give the Term Loan Administrative Agent notice thereof. | |
|
Maturity and Amortization
|
| |
The Term Loans will mature on the date that is seven 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 amount of the Term Loan Facility (commencing with the first full fiscal quarter after the Closing Date). The balance of the Term Loans will be repayable on the Term Maturity Date.
|
|
|
Availability
|
| | 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
|
| | The proceeds of the Term Loans will be used on the Closing Date to finance the Acquisition, to finance the Refinancing and the Borrower Debt Refinancing and to pay fees and expenses in connection with the foregoing. | |
|
Incremental Facilities
|
| | The Term Loan Facility Documentation will permit the Borrower from time to time, on one or more occasions, to add one or more incremental term loan facilities denominated in U.S. dollars, or increase any then existing Term Loan Facility (each, an “Incremental Term Loan Facility” and, collectively, the “Incremental Term Loan Facilities”) in an aggregate amount equal to (a) the sum of (i) the greater of 100% of Consolidated EBITDA (as defined below) and an equivalent fixed amount (the “Fixed Term Loan Available Incremental Amount”) plus (ii) all voluntary prepayments of the initial Term Loans and Incremental Equivalent Debt prior to the date of any such incurrence (excluding such prepayments made with the proceeds of indebtedness but including buybacks, with credit given for the cash amount paid if below par) and less any Incremental Equivalent Debt incurred in reliance on this clause (a)(i) (collectively, the “Fixed Incremental Amount”) plus (b) the amount that would result in (x) if such Incremental Term Loan is secured on a pari passu basis with the Term Loan Facility, (1)(I) a First Lien Net Leverage Ratio (as defined below), calculated on a pro forma basis after giving effect to any acquisition or other transaction consummated in connection therewith (but without netting cash constituting proceeds of such indebtedness), equal to or less than the First Lien Net Leverage Ratio as of the Closing Date (the “Closing Date First Lien Net Leverage Ratio”) or (II) at the election of the Borrower, if incurred in connection with a permitted acquisition or another permitted investment, the First Lien Net Leverage Ratio does not increase or (2) the Fixed Charge Coverage Ratio (to be defined in a manner reasonably and mutually | |
| | | |
agreed and subject to the Term Documentation Principles), calculated on a pro forma basis after giving effect to any acquisition or other transaction consummated in connection therewith, is not less than the Fixed Charge Coverage Ratio as of immediately prior to such incurrence or (y) if such Incremental Term Loan is secured on a junior basis with the Term Loan Facility, (1)(I) a Secured Net Leverage Ratio (as defined below), calculated on a pro forma basis after giving effect to any acquisition or other transaction consummated in connection therewith (but without netting cash constituting proceeds of such indebtedness), equal to or less than the Secured Net Leverage Ratio as of the Closing Date (the “Closing Date Secured Net Leverage Ratio”) or (II) at the election of the Borrower, if incurred in connection with a permitted acquisition or another permitted investment, the Secured Net Leverage Ratio does not increase or (2) the Fixed Charge Coverage Ratio, calculated on a pro forma basis after giving effect to any acquisition or other transaction consummated in connection therewith, is not less than the Fixed Charge Coverage Ratio as of immediately prior to such incurrence (clause (b), the “Ratio Incremental Amount”; the sum of the amounts contemplated by clauses (a) and (b), the “Available Incremental Term Loan Facility Amount”).
“First Lien Net Leverage Ratio” shall mean the ratio of (i) consolidated first lien secured net debt (consisting of the principal amount of indebtedness for borrowed money, capitalized lease obligations, purchase money debt and drawn and unreimbursed letters of credit as required to be reflected on the balance sheet of the Borrower and the Term Loan Guarantors in accordance with GAAP, in each case secured by a first lien on Collateral), minus unrestricted cash and cash equivalents to (ii) Consolidated EBITDA for the most recent four fiscal quarter period for which financial statements have been or are required to be delivered pursuant to the Term Loan Facility Documentation.
“Secured Net Leverage Ratio” shall mean the ratio of (i) consolidated secured net debt (consisting of the principal amount of indebtedness for borrowed money, capitalized lease obligations, purchase money debt and drawn and unreimbursed letters of credit as required to be reflected on the balance sheet of the Borrower and the Term Loan Guarantors in accordance with GAAP, in each case secured by liens on Collateral), minus unrestricted cash and cash equivalents to (ii) Consolidated EBITDA for the most recent four fiscal quarter period for which financial statements have been or are required to be delivered pursuant to the Term Loan Facility Documentation.
If the Borrower incurs indebtedness under the Fixed Incremental Amount on the same date that it incurs indebtedness under the Ratio Incremental Amount, then the First Lien Net Leverage Ratio or the Secured Net Leverage Ratio, as applicable, with respect to the amounts incurred under the Ratio Incremental Amount will be calculated without regarding to any incurrence under the Fixed Incremental Amount. Unless the Borrower elects otherwise, each Incremental Facility shall be deemed incurred first as Ratio Incremental Amount to the extent permitted, with the balance incurred under the Fixed Incremental Amount.
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| | | | The availability of the Incremental Term Loan Facilities will be subject solely to the following terms and conditions: (a) no existing Term Loan Lender will be required to participate in any Incremental Term Loan Facility without its consent; (b) subject to the Limited Condition Provision, no event of default under the Term Loan Facility shall have occurred and be continuing or would exist immediately after giving effect thereto; (c) such Incremental Term Loan Facility may, at the discretion of the Borrower, (i) rank pari passu in right of payment with the initial Term Loan Facility, (ii) be subordinated in right of payment to the Term Loan Facility, (iii) be secured on a pari passu basis with the Term Loan Facility or (iv) be secured on a junior basis to the Term Loan Facility; provided that if such Incremental Term Loan Facility is subordinated in right of payment to the Term Loan Facility or secured on a junior lien basis, any intercreditor or payment and/or lien subordination arrangements in a form which shall include terms that are consistent with market terms governing payment subordination and/or security arrangements for the sharing of liens or arrangements relating to the distribution of payments, as applicable, shall be entered into at the time the applicable arrangements are established in light of the type of indebtedness subject thereto or other arrangements the terms of which are reasonably satisfactory to the Term Loan Facility Administrative Agent and the Borrower and consistent with the Term Loan Documentation Principles; (d) except in the case of a bridge loan which provides for an automatic extension of the maturity date thereof, subject to customary conditions, to a date that is not earlier than the latest maturity date of the Term Loan Facility (“Extendable Bridge Loans”), the maturity date of such Incremental Term Loan Facility may be no earlier than the latest maturity date of the Term Loan Facility; provided, that up to $100.0 million in the aggregate (the “Inside Maturity Basket”) of Incremental Term Loan Facility may have a maturity date that is earlier than the maturity of the Term Loan Facility; (e) except in the case of Extendable Bridge Loans, the weighted average life to maturity of such Incremental Term Loan Facility may be no shorter than the then remaining weighted average life to maturity of the Term Loans (other than as necessary in order to make such Incremental Term Loan Facility fungible with any existing Term Loans); provided, that the Inside Maturity Basket may have a weighted average life to maturity that is shorter than the Term Loan Facility; (f) subject to clauses (d) and (e) above, the amortization schedules applicable to such Incremental Term Loan Facility will be as determined by the Borrower and the lenders providing such Incremental Term Loan Facility; (g) subject to the Limited Condition Provision, the representations and warranties in the Term Loan Facility Documentation will be true and correct in all material respects (except for representations and warranties that are already qualified by materiality, which representations and warranties shall be accurate in all respects) immediately prior to, and immediately after giving effect to, the incurrence of such Incremental Term Loan Facility; (h) any fees payable in connection with such Incremental Term Loan Facility will be determined by the Borrower and the arrangers and/or lenders providing such Incremental Term Loan Facility; (i) such Incremental Term Loan Facility may provide for the ability to participate on a pro rata basis or greater than or less than pro rata basis in any voluntary prepayments or refinancings of the Term Loans or on a | |
| | | | pro rata basis or less than pro rata basis in the case of any mandatory prepayments of the Term Loans; (j) the interest rate, upfront fees and original issue discount for any term loans under such Incremental Term Loan Facility will be as determined by the Borrower and the lenders providing such Incremental Term Loan Facility; provided that the yield on any such Incremental Term Loan Facility that is to be secured equally and ratably with the Term Loan Facility (taking into account interest margins, minimum Adjusted LIBOR, minimum ABR, upfront fees and OID on such term loans, with upfront fees and OID being equated to interest margins based on an assumed four-year life to maturity, but exclusive of (x) arrangement fees, structuring fees, commitment fees, underwriting fees, ticking fees and similar fees (regardless of whether paid in whole or in part to any or all lenders) or other fees not paid generally to all lenders of such indebtedness or (y) customary consent fees paid generally to consenting lenders) (the “Incremental Yield”) incurred on or prior to the date that is six months after the Closing Date (other than, for the avoidance of doubt, any such Incremental Term Loan Facility that is subordinated or secured on a junior-lien basis) exceeds the yield on the Term Loan Facility (determined as provided above), by more than 75 basis points, then the interest margins for the initial Term Loans will automatically be increased to a level such that the yield on the initial Term Loans will be 75 basis points below the Incremental Yield (it being agreed that any increase in yield to any existing facility required due to the application of an Adjusted LIBOR or ABR “floor” on any Incremental Term Loan Facility will be effected solely through an increase in such “floor” (or an implementation thereof, as applicable)) (the “MFN Pricing Test”); provided, that the MFN Pricing Test shall not (x) apply to any Incremental Term Loan Facility that (i) has a final maturity one year or more after the final maturity of the Term Loan Facility or (ii) is incurred solely using the Fixed Incremental Amount or (y) apply to Incremental Term Loan Facilities that in the aggregate are less than $100.0 million in principal amount; (k) no subsidiary of Holdings shall guarantee any Incremental Term Loan Facility unless it is a Term Loan Credit Party and no assets shall secure any Incremental Term Loan Facility other than Collateral; and (l) except as otherwise provided in clauses (a) through (k), all other terms of such Incremental Term Loan Facility, if not consistent with the terms of the existing Term Loan Facility (as reasonably determined by the Borrower), will be as agreed between the Borrower and the lenders providing such Incremental Term Loan Facility and shall be reasonably satisfactory to the Term Loan Administrative Agent; provided that, with respect to any prepayment events, negative covenants or events of default, such terms shall not be more favorable, taken as a whole (as reasonably determined by the Borrower), to the lenders providing such Incremental Term Loan Facility than the terms of the Term Loan Facility (other than with respect to terms and conditions applicable after the maturity of the Term Loan Facility) unless such more favorable terms are added for the benefit of the Term Loan Facility, which shall not require the consent of the Lenders and any such Incremental Term Loan Facility may contain any financial maintenance covenants, so long as such covenants are also added for the benefit of the Term Loan Lenders, which shall not require consent of the Term Loan Lenders. | |
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The Borrower may seek commitments in respect of the Incremental Term Loan Facilities from existing Term Loan Lenders (each of which will be entitled to agree or decline to participate in its sole discretion) and additional banks, financial institutions and other institutional lenders or investors who will become Term Loan Lenders in connection therewith; provided that the consent of the Term Loan Facility Administrative Agent (not to be unreasonably withheld, delayed or conditioned) will be required with respect to any such additional lender if such consent would be required under the caption “Assignments and Participations” for an assignment to such additional lender.
The proceeds of Incremental Term Loan Facilities will be used for general corporate purposes of the Borrower and the restricted subsidiaries of Holdings (including for capital expenditures, acquisitions, restricted payments, refinancing of indebtedness and any other transaction not prohibited by the Term Loan Facility Documentation).
The Term Loan Facility Documentation will be amended to give effect to any Incremental Term Loan Facility by documentation executed by the Term Loan Lender or Term Loan Lenders (or such other persons) making the commitments with respect thereto, the Term Loan Facility Administrative Agent and the Borrower and without the consent of any other existing Term Loan Lender.
In addition, the Borrower may, in lieu of adding Incremental Term Loan Facilities, utilize all or any portion of the Available Incremental Term Loan Facility Amount at any time by issuing or incurring Incremental Equivalent Term Debt.
“Incremental Equivalent Term Debt” means indebtedness in an aggregate principal amount not to exceed the then Available Incremental Term Loan Facility Amount for pari or junior secured or unsecured indebtedness in lieu of an Incremental Term Loan Facility, in each case on terms that reflect market terms (as determined by the Borrower in good faith) at the time of incurrence of such indebtedness; provided that (a) Incremental Equivalent Term Debt will not be subject to the “most favored nation” pricing provisions set forth in the proviso of clause (j) of the fourth paragraph in this “Incremental Facilities” section, (b) other than in the case of Extendable Bridge Loans or indebtedness incurred under the Inside Maturity Date Basket, the maturity date of such Incremental Equivalent Term Debt will be no earlier than the maturity date of the Term Loan Facility, (c) other than indebtedness incurred under the Inside Maturity Date Basket, the weighted average life to maturity of such Incremental Equivalent Term Debt may not be shorter than the remaining weighted average life to maturity of the Term Loan Facility, (d) if such Incremental Equivalent Term Debt is secured equally and ratably with the initial Term Loan Facility or by liens that are junior to the liens securing the initial Term Loan Facility, such Incremental Equivalent Term Debt will be subject to the intercreditor arrangements which are consistent with market terms governing security arrangements for the sharing of liens or arrangements relating to the distribution of payments, as applicable, at the time the applicable arrangements are proposed to be established in light of the type of
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| | | | indebtedness subject thereto or other arrangements the terms of which are reasonably satisfactory to the Term Loan Facility Administrative Agent and the Borrower and consistent with the Term Loan Documentation Principles, (e) if such Incremental Equivalent Term Debt is unsecured, the unlimited amount in reliance on the Ratio Incremental Amount will instead of the First Lien Net Leverage Ratio or the Secured Net Leverage Ratio be subject to (1) Total Net Leverage Ratio (to be defined in a manner consistent with the Documentation Principles), calculated on a pro forma basis after giving effect to any acquisition or other transaction consummated in connection therewith (but without netting cash constituting proceeds of such indebtedness), equal to or less than the Total Net Leverage Ratio as of the Closing Date (the “Closing Date Total Net Leverage Ratio”) or (2) at the election of the Borrower, if incurred in connection with a permitted acquisition or another permitted investment, the Total Net Leverage Ratio does not increase and (f) no subsidiary of Holdings shall guarantee any Incremental Equivalent Term Debt unless it is a Term Loan Credit Party and no assets shall secure any Incremental Equivalent Term Debt other than Collateral; provided that clauses (b) and (c) shall not apply to any bridge facility on customary terms if the long-term indebtedness that such bridge facility is to be automatically converted into satisfies the restrictions in such clauses. | |
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For purposes of the Bank Facilities Documentation, “Consolidated EBITDA” and “Consolidated Net Income” (and component definitions, including, without limitation, net income) will be defined consistent with the Term Loan Documentation Principles.
With respect to each Incremental Term Loan Facility or any Incremental Equivalent Term Debt, the Borrower may elect to use the Ratio-Based Available Incremental Term Amount prior to the applicable Fixed Available Incremental Term Amount or any combination thereof, and any portion of any Incremental Term Loan Facility or any Incremental Equivalent Term Debt shall be reclassified, as the Borrower may elect from time to time, as incurred under the applicable Ratio-Base Available Incremental Amount mechanics if the Borrower meets the applicable ratio for such tests applicable to the Ratio-Based Available Incremental Amount at such time on a pro forma basis, and if any applicable ratio for the applicable Ratio-Based Available Incremental Amount would be satisfied on a pro forma basis as of the end of any subsequent fiscal quarter after the initial incurrence of such Incremental Term Loan Facility or any Incremental Equivalent Term Debt, such reclassification shall be deemed to have automatically occurred whether nor not elected by the Borrower.
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Limited Condition Provision
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| | In the case of the incurrence of any indebtedness or liens or the making of any investments, restricted payments, prepayments of junior, unsecured or subordinated debt, asset sales or fundamental changes or the designation of any restricted subsidiaries or unrestricted subsidiaries, in each case in connection with (x) any acquisition or other investment by Holdings or one or more of its restricted subsidiaries permitted pursuant to the Term Loan Facility Documentation whose consummation is not conditioned on the availability of, or on obtaining, third party financing or (y) redemption or repayment of indebtedness permitted pursuant to the Term Loan | |
| | | | Facility Documentation requiring irrevocable notice in advance of such redemption or prepayment (each such transaction described in clause (x) or (y), a “Limited Condition Transaction”), at Holdings’ option, the relevant ratios and baskets shall be determined, the accuracy of representations and warranties in all material (other than the Specified Representations and the applicable Specified Purchase Agreement Representations) respects shall be determined, and any default or event of default blocker shall be tested, as of the date of either (x) the execution of the definitive agreement with respect to such acquisition or investment, or (y) the consummation of such acquisition or investment (or, in the case of a redemption or repayment of indebtedness, as of the date of irrevocable notice thereof), and, subject to the proviso contained in the next paragraph, calculated as if such acquisition or redemption and other pro forma events in connection therewith were consummated on such date; provided that if the Borrower has made such an election, in connection with the calculation of any ratio or basket with respect to the making of any Limited Condition Transaction, on or following such date and prior to the earlier of the date on which such Limited Condition Transaction is consummated or the definitive agreement for such Limited Condition Transaction is terminated, any such ratio or basket shall, be calculated on a pro forma basis assuming (x) such Limited Condition Transaction and other pro forma events in connection therewith (including any incurrence of indebtedness) have been consummated and (y) solely in the case of any restricted payments after such date, such Limited Condition Transaction has not been consummated and the other pro forma events in connection therewith (including any incurrence of indebtedness) have not been incurred. The provisions of this paragraph are referred to herein as the “Limited Condition Provision”. | |
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Refinancing Facilities
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| | The Term Loan Facility Documentation will permit the Borrower to refinance loans under the Term Loan Facility and any Incremental Term Loan Facility from time to time, in whole or in part, with (a) one or more new term loan credit facilities (each, a “Term Refinancing Facility”) under the Term Loan Facility Documentation with the consent of the Borrower and the entities providing such Term Refinancing Facility, (b) one or more series of senior unsecured notes or term loans, (c) one or more series of senior secured notes or term loans that will be secured by the Collateral on an equal and ratable basis with the initial Term Loan Facility, or (d) one or more series of junior lien notes or term loans that will be secured on a subordinated basis to the initial Term Loan Facility, which will be subject to the Intercreditor Agreements and/or other intercreditor arrangements reasonably acceptable to the Term Loan Facility Administrative Agent (any such notes or loans, “Term Refinancing Notes”), subject, in each case, solely to the following terms and conditions: (i) other than Term Refinancing Facility or Term Refinancing Notes incurred under the Inside Maturity Date Basket, no such Term Refinancing Facility or Term Refinancing Notes may mature prior to the maturity date of, or have a shorter weighted average life to maturity than, the loans under the Term Loan Facility or Incremental Term Loan Facility being refinanced; (ii) no Term Refinancing Facility or Term Refinancing Notes may be guaranteed by any person that is not a Term Loan Guarantor; (iii) to the extent secured, no Term Refinancing Facility or | |
| | | | Term Refinancing Notes may be secured by any assets that do not constitute Collateral; (iv) as reasonably determined by the Borrower, the other terms and conditions of such Term Refinancing Facility or Term Refinancing Notes (excluding pricing and optional prepayment or redemption terms as may be agreed to by the Borrower and the lenders or holders party thereto) must be (x) substantially identical to, or not materially more favorable (taken as a whole) to the lenders providing such Term Refinancing Facility or holders of such Term Refinancing Notes, as applicable, than those applicable to the Term Loan Facility or Incremental Term Loan Facility being refinanced are to the Term Loan Lenders or (y) reflect market terms and conditions at the time of incurrence or issuance thereof as determined in good faith by the Borrower (in either case, except for covenants and other provisions applicable only to periods after the latest final maturity date of the Term Loan Facility or Incremental Term Loan Facility existing at the time of such refinancing); (v) the amount of such Term Refinancing Facility or Term Refinancing Notes will be in an amount not in excess of the amount of loans and commitments refinanced plus fees, expenses and premiums payable in connection therewith; (vi) any such Term Refinancing Facility that is pari passu with the Term Loan Facility in right of payment and security shall share ratably in any mandatory prepayment of the Term Loan Facility unless the Borrower and the lenders in respect of such Term Refinancing Facility elect lesser payments; and (vii) the proceeds of such Term Refinancing Facility or Term Refinancing Notes shall be applied, substantially concurrently with the incurrence thereof, to the prepayment of outstanding loans under the applicable Term Loan Facility being so refinanced. The Term Refinancing Facilities and Term Refinancing Notes will not be subject to any “most favored nation” pricing provisions. | |
| Certain Payment Provisions | | | | |
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Fees and Interest Rates
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| | As set forth on Annex A-I hereto. | |
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Optional Prepayments
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Voluntary prepayments of loans under the Term Loan Facility and any Incremental Term Loan Facilities will be permitted at any time, in minimum principal amounts to be agreed, without premium or penalty (except as provided below), subject to reimbursement of the Term Loan Lenders’ usual and customary breakage costs (excluding loss of profit) in the case of a prepayment of Adjusted LIBOR borrowings other than on the last day of the relevant interest period.
The Borrower shall pay a “prepayment premium” in connection with any Repricing Event (as defined below) with respect to all or any portion of the Term Loan Facility that occurs on or before the date that is six months after the Closing Date, in an amount equal to 1.00% of the principal amount of the Term Loan Facility subject to such Repricing Event.
The term “Repricing Event” means (i) any prepayment of the Term Loans with the proceeds of, or any conversion of Term Loans into, any new or replacement tranche of term loans bearing interest at an “effective” interest rate less than the “effective” interest rate applicable to the Term Loans the primary purpose of which is to reduce such “effective” interest rate and (ii) any amendment to the Term Loan Facility that, directly or indirectly, reduces the “effective” interest rate
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applicable to the Term Loans the primary purpose of which it to reduce such “effective” interest rate (in each case, taking into account OID and upfront fees, which will be deemed to constitute like amounts of OID, being equated to interest rate margins based on an assumed four-year life to maturity) (and including the principal amount of any Term Loans of any Term Loan Lender which are required to be assigned in accordance with the “yank-a-bank” provisions set forth in the Term Loan Facility Documentation as a result of such Term Loan Lender’s failure to consent to any such amendment); provided that no prepayment premium will apply if any such Repricing Event is in connection with a change of control, initial public offering, or any transformative acquisitions (to be defined in a manner consistent with the Term Loan Documentation Principles).
All voluntary prepayments of loans under the Term Loan Facility will be applied as directed by the Borrower (and absent such direction, in direct order of maturity thereof).
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Mandatory Prepayments
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Limited to:
(a)
commencing with the end of the fiscal year of the Borrower ending on or about December 31, 2021, 50% of Excess Cash Flow (as defined below) subject to a threshold to be mutually agreed and reduced on a dollar-for-dollar basis by voluntary prepayments and open-market purchases (with credit for any purchases below par given for the cash amount of such purchase) or redemptions (including buybacks and prepayments in connection with “yank-a-bank” rights) of the Term Loans or any loans secured on a pari passu basis with the Term Loans (which Excess Cash Flow shall be set forth in customary detail by the Borrower in a certificate delivered to the Term Loan Administrative Agent), with step-downs to 25% and 0% upon achieving reductions to the Closing Date First Lien Net Leverage Ratio of 0.50x and 1.00x, respectively;
(b)
100% of the net cash proceeds of certain non-ordinary course asset sales by Holdings, the Borrower and other restricted subsidiaries of Holdings, having a fair market value in excess of $10.0 million and the right of the Borrower to reinvest 100% of such proceeds, if such proceeds are reinvested (or committed to be reinvested) within 365 days and, if so committed to be reinvested, so long as such reinvestment is actually completed within 180 days after the expiration of such initial 365-day period; provided that the foregoing percentage shall be reduced to 50% and 0% upon achieving reductions to the Closing Date First Lien Net Leverage Ratio of 0.50x and 1.00x, respectively; and
(c)
100% of the net cash proceeds of issuances of debt obligations of Holdings, the Borrower and other restricted subsidiaries of Holdings after the Closing Date (other than debt permitted under the Term Loan Facility Documentation (excluding the proceeds of any Term Refinancing Facility or Term Refinancing Notes)).
“Excess Cash Flow” will be defined in a manner to be agreed, but in any event to be reduced by, among other things, cash used for capital expenditures, Permitted Acquisitions (as defined below) and certain restricted payments, in each case, other than to the extent funded with
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long-term indebtedness or equity, and made during such fiscal year and, at the option of the Borrower, made prior to the date of such Excess Cash Flow prepayment (without duplication in any other Excess Cash Flow period) or, with respect to capital expenditures and Permitted Acquisitions, cash planned to be expended pursuant to binding contracts within the following 12 months (the “ECF Look Forward Period”) (it being understood that if the aggregate amount of internally generated cash actually utilized to finance such capital expenditures or Permitted Acquisitions is less than the planned expenditure, the amount of such shortfall shall be added to the calculation of Excess Cash Flow at the end of the ECF Look Forward Period). Any amounts treated as planned expenditures (including any tax distributions) that are applied to reduce Excess Cash Flow in an ECF Look Forward Period shall not be taken into account for purposes of determining Excess Cash Flow when such expenditures are made.
Mandatory prepayments will be applied, without premium or penalty, subject to reimbursement of the Term Loan Lenders’ usual and customary breakage costs (excluding loss of profit), in the case of a prepayment of Adjusted LIBOR borrowings other than on the last day of the relevant interest period, as directed by the Borrower (and absent such direction, in direct order of maturity thereof).
Any Term Loan Lender may elect not to accept its pro rata portion of any mandatory prepayment described in clause (a) or (b) above (each, a “Declining Lender”). Any prepayment amount declined by a Declining Lender may be retained by the Borrower.
Prepayments from restricted subsidiaries’ Excess Cash Flow and asset sale proceeds will be limited under the Facilities Documentation to the extent the Borrower determines that such prepayments (including the repatriation of cash in connection therewith) would (a) be prohibited or materially delayed by applicable law or (b) result in materially adverse tax consequences (taking into account any foreign tax credit or benefit that would be realized in connection with such repatriation). All prepayments referred to in clauses (a) and (b) above are subject to permissibility under local law (e.g. financial assistance, corporate benefit, thin capitalization, capital maintenance, liquidity maintenance and similar legal principles, restrictions on upstreaming of cash intra-group and the fiduciary and statutory duties of the directors of the relevant subsidiaries); provided, that the Facilities Documentation will include customary efforts to overcome such prohibitions, delays or restrictions, as applicable; provided further that such amounts shall not increase the Available Amount Basket.
Mandatory prepayments required under the Term Loan Facility Documentation may, if required pursuant to the terms of any other indebtedness secured pari passu with the Term Loan Facility, to be applied to the Term Loans and such other pari passu indebtedness, in each case on a ratable basis based on the outstanding principal amounts thereof.
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| Collateral and Guarantees | | | | |
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Collateral
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| | Subject to the limitations set forth below in this section and subject to the Certain Funds Provision, the obligations of each Term Loan Credit Party in respect of the Term Loan Facility will be secured by the following: a perfected first priority security interest in substantially all of its tangible and intangible assets, including intellectual property, real property, licenses, permits, intercompany indebtedness (which shall be evidenced by a subordinated promissory note), cash and cash equivalents, deposit and securities accounts (including securities entitlements and related assets) and all of the equity interests of each Term Loan Credit Party and each of its subsidiaries (including all of the equity interests of the Borrower) (but limited, in the case of the voting stock of a “controlled foreign corporation” (as such term is defined in Section 957 of the Internal Revenue Code), to 66% of all such voting stock to the extent that the pledge of a greater percentage would result in material adverse tax consequences to the Borrower) (the items described above and all proceeds thereof, but subject to certain exceptions consistent with the Existing Credit Agreement, collectively, the “Collateral”). | |
| | | | Notwithstanding anything to the contrary, the Collateral shall exclude the following: (a) any owned or leased real or personal property (other than capital stock) which is located outside of the United States unless requested by the Term Loan Administrative Agent or the Required Term Loan Lenders (as defined below), (b) any (i) leasehold interests in a real property and (ii) any owned real property with a fair market value not in excess of an amount to be agreed (such included property, “Material Real Property”), (c) any personal property (other than motor vehicles, which are addressed in clause (i) below) in respect of which perfection of a lien is not either (i) governed by the UCC or (ii) effected by appropriate evidence of the lien being filed in either the United States Copyright Office or the United States Patent and Trademark Office, unless requested by the Term Loan Administrative Agent or the Required Term Loan Lenders, (d) any property subject to a purchase money security interest or similar arrangement not prohibited by the Term Loan Facility Documentation to the extent that a grant of a security interest therein would require the consent of a third party, violate or invalidate such purchase money arrangement or create a right of termination in favor of any other party thereto (other than the Borrower or a Subsidiary) after giving effect to the applicable anti-assignment provisions of the UCC, (e) any contract, permit, agreement, lease, license or license agreement covering real or personal property if the grant of a security interest in such contract, permit, agreement, lease, license or license agreement or the asset subject to such contract, permit, agreement, lease, license or license agreement is prohibited by the terms of such contract, permit, agreement, lease, license or license agreement or by law and would result in the termination of or give rise to a right to materially modify such contract, permit, agreement, lease, license or license agreement, but only to the extent that (x) any such prohibition would not be rendered ineffective pursuant to the UCC or any other applicable law (including, if and when applicable, debtor relief laws) or principles of equity and would require the consent a person other than a Term Loan Credit Party or its affiliates to waive such prohibition and | |
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(y) such contract, agreement, lease, license or license agreement was not entered into in contemplation of circumventing any Term Loan Credit Party’s obligation to pledge such contract or agreement as collateral security, (f) any intent-to-use trademark application in the United States prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect thereto, to the extent, if any, that, and solely during the period, if any, in which, the grant, attachment, or enforcement of a security interest therein would impair the validity or enforceability of such intent-to-use trademark application under applicable federal law, (g) any Excluded Account (to be defined in a manner to be agreed); provided that for the avoidance of doubt, any proceeds of Collateral held from time to time in any such Excluded Account shall not cease to be Collateral solely because such proceeds are held in an Excluded Account, (h) any particular asset, if the pledge thereof or the security interest therein is prohibited by applicable laws (but only for so long as such prohibition remains in effect), other than to the extent such prohibition is rendered ineffective under the UCC or other applicable laws, (i) any motor vehicle or other equipment subject to a certificate of title, but only to the extent that a security interest therein cannot be perfected by the filing of a UCC financing statement, (j) any capital stock in joint ventures or any non-wholly owned subsidiary to the extent (i) consent of the minority investor is required pursuant to the organization documents of such entity (and such consent was not required in connection with or in contemplation or anticipation of such pledge) and not obtained after using commercially reasonable efforts and (ii) such non-wholly owned subsidiary is an immaterial subsidiary, (k) any capital stock in any Excluded Foreign Subsidiary (to be defined in a manner consistent with the Existing Credit Agreement) held by the Term Loan Credit Parties in excess of sixty-five percent (65%) of the issued and outstanding capital stock of such Excluded Foreign Subsidiary entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)), and (l) particular assets if and for so long as, in the reasonable judgment of the Collateral Agent and the Borrower (as set forth in a written agreement among the Collateral Agent and the Borrower), the cost of obtaining a security interest in such assets exceeds the practical benefits to the holders of the obligations afforded thereby; (the foregoing described in clauses (a) through (l) are collectively, the “Excluded Assets”); provided, “Excluded Assets” shall not include any proceeds, products, substitutions, or replacements of Excluded Assets (unless such proceeds, products, substitutions, or replacements would otherwise constitute Excluded Assets).
Notwithstanding anything to the contrary set forth above, the Term Loan Credit Parties will not be required, nor will the Term Loan Administrative Agent be authorized, (a) to perfect security interests in the Collateral other than by, (i) “all asset” filings pursuant to the Uniform Commercial Code in the office of the secretary of state (or similar central or local (in the case of fixtures appurtenant to Material Real Property) filing office) of the relevant state(s) and filings in the applicable real estate records with respect to Material Real Property; (ii) customary filings in (A) the United States Patent and Trademark Office with respect to any material U.S. registered patents and trademarks and applications therefor and (B) the United States Copyright Office of the Library of Congress with respect to material
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| | | | copyright registrations, in the case of each of (A) and (B), constituting Collateral; (iii) mortgages in respect of Material Real Property owned by the Term Loan Credit Parties; (iv) delivery to the Term Loan Administrative Agent to be held in its possession of all Collateral consisting of (x) certificated equity securities and (y) debt instruments with a fair market value in excess of an amount to be agreed and (v) actions to perfect Liens with respect to letters of credit rights, commercial tort claims and chattel paper that in each case have a value in excess of an amount to be agreed, (b) to enter into any control agreement, lockbox or similar arrangement with respect to any deposit account, securities account, commodities account or other bank account, or otherwise perfect a security interest with control of Collateral (other than control by possession of pledged equity and/or pledged debt) (provided that the Term Loan Facility Documentation shall include a prohibition on the granting of liens on equity interests constituting Collateral that are perfected by control in favor of other parties); (c) to take any action (i) outside of the United States with respect to any assets located outside of the United States, (ii) in any non-U.S. jurisdiction or (iii) required by the laws of any non-U.S. jurisdiction to create, perfect or maintain any security interest or otherwise; or (d) to take any action with respect to perfecting assets subject to a certificate of title or similar statute (in each case, other than the filing of customary “all asset” UCC-1 financing statements) or to deliver landlord lien waivers, estoppels, bailee letters or collateral access letters, in each case, unless required by the terms of Term Loan Facility Documentation. | |
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Guarantees
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| | The Term Loan Guarantors will unconditionally, and jointly and severally, guarantee the obligations of each Term Loan Credit Party in respect of the Term Loan Facility (the “Term Loan Guarantees”). Such Term Loan Guarantees will be in form and substance satisfactory to the Term Loan Administrative Agent and the Term Loan Arrangers. All Term Loan Guarantees shall be guarantees of payment and performance, and not of collection. | |
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Intercreditor Agreements
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| | The lien priority, relative rights and other creditors’ rights issues in respect of (i) the Term Loan Obligations on the one hand and (ii) obligations under the Existing Credit Agreement and/or in respect of New Term A Loans on the other hand will be subject to an intercreditor agreement reasonably acceptable to the Term Loan Administrative Agent (the “Intercreditor Agreement”). | |
| Other Provisions | | | | |
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Representations and Warranties
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| | Limited to the following (to be applicable to Holdings, the Borrower and its restricted subsidiaries): existence, qualification and power; authorization; no contravention; governmental authorization; other consents; binding effect; financial statements; no material adverse effect; litigation; no default; ownership of property; liens; environmental compliance; insurance; taxes; ERISA compliance; subsidiaries; margin regulations; investment company act; use of proceeds; disclosure; compliance with laws; intellectual property, licenses, etc.; broker’s fees; labor matters; business locations; perfection of security interests in the collateral; solvency as of the Closing Date; holding company status; Patriot Act; regulatory matters; compliance of products; OFAC; affected financial institution. | |
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Conditions Precedent to Initial Borrowing
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| | Subject to the Certain Funds Provision, the incurrence of the Term Loans under the Term Loan Facility on the Closing Date will be subject only to the applicable conditions precedent set forth in Section 3 of the Commitment Letter, the following paragraph and Exhibit D to the Commitment Letter (collectively, the “Closing Conditions”). | |
| | | | Subject on the Closing Date to the Certain Funds Provision, delivery of notice of borrowing. | |
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Affirmative Covenants
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| | Limited to the following (to be applicable to Holdings, the Borrower and the restricted subsidiaries only): delivery of (i) within 120 days of fiscal year end for the fiscal year ended December 31, 2020 and within 90 days after the end of each fiscal year thereafter, annual audited consolidated financial statements, accompanied by management’s discussion and analysis or other narrative discussion of results and (ii) within 60 days of fiscal quarter end for the first two fiscal quarters ended after the Closing Date and within 45 days of the end of each of the first three fiscal quarters ended thereafter of each fiscal year, quarterly unaudited consolidated financial statements, and, in the case of the annual financial statements, an opinion of an independent accounting firm (which opinion shall not be subject to any “going concern” statement, explanatory note or like qualification or exception (other than a “going concern” statement, emphasis of matter paragraph, explanatory note or like qualification or exception resulting solely from an upcoming maturity date occurring within one year from the time such opinion is delivered, the activities, performance, assets or liabilities of unrestricted subsidiaries or any actual or potential inability to satisfy any financial maintenance covenant)); annual budget reports in the form customarily prepared by Holdings within delivery time periods to be consistent with the delivery requirements for the audited financial statements; customary annual and quarterly compliance certificates; delivery of audit letters, public company reporting and additional information consistent with the Existing Credit Agreement; notices of knowledge of default, ERISA events and any matters that could reasonably be expected to result in a material adverse effect and other notices consistent with the Existing Credit Agreement; commercially reasonable efforts to maintain public corporate credit and facility ratings; payment of obligations; tax returns; preservation of existence, material contracts, etc.; maintenance of property and insurance; compliance with laws; books and records; inspection rights; use of proceeds; additional subsidiaries; ERISA compliance; environmental matters; real property; products and compliance with required permits; healthcare operations; Patriot Act, FCPA, OFAC, anti-terrorism laws, anti-money laundering laws and laws related to sanctions; and further assurances (including as to additional guarantors and collateral). | |
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Negative Covenants
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Limited to the following (capitalized terms used in this section shall, unless otherwise defined herein, be defined in a manner consistent with the Term Loan Documentation Principles) and subject, in each case, to exceptions, qualifications and baskets consistent with the Term Loan Documentation Principles and as may otherwise be agreed upon:
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Indebtedness. No Term Loan Credit Party will, nor will it permit any of its restricted subsidiaries to, incur, create, assume or permit
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to exist any indebtedness; provided that the Borrower and the restricted subsidiaries may incur, inter alia (i) revolving indebtedness in an aggregate amount not to exceed $200.0 million, term loan A indebtedness in an aggregate amount (together with the Term Loan Facility) not to exceed $900.0 million and any additional amounts used to fund any “OID” or upfront fees in respect thereof, the Existing Notes, Incremental Equivalent Term Debt, Bridge Loans, Extended Term Loans, Exchange Notes and Notes, (ii) indebtedness contemplated to remain outstanding under the terms of the Purchase Agreement, (iii) working capital facilities and other customary local lines of credit and similar financings incurred by foreign subsidiaries subject to a cap to be mutually agreed, (iv) assumed or acquired indebtedness of an entity that becomes a restricted subsidiary as a result of a Permitted Acquisition or similar investment so long as (y) the relevant indebtedness was not incurred in contemplation of such acquisition and (z) such indebtedness is only secured and guaranteed by assets and entities, as applicable, that were so acquired (and any newly formed acquisition vehicle), (v) indebtedness consisting of the financing of insurance premiums subject to a cap to be mutually agreement, (vi) indebtedness (including capital lease obligations) to finance the acquisition, construction, repair, replacement, installation or improvement of any property subject to a cap to be mutually agreed, (vii) debt of a restricted subsidiary that is not a Term Loan Guarantor subject to a cap to be mutually agreed, (viii) debt incurred in order to finance a Permitted Acquisition subject to a cap to be mutually agreed, (xi) a general debt basket subject to a cap to be mutually agreed, (xii) unlimited indebtedness (“Ratio Debt”) so long as, immediately after giving effect to the issuance, incurrence or assumption of such indebtedness, (x) with respect to indebtedness that is secured pari passu in right of security with the Term Loan Facility, First Lien Net Leverage Ratio calculated on a pro forma basis (but without netting cash constituting proceeds of such indebtedness) is equal to or less than the Closing Date First Lien Net Leverage Ratio, (y) with respect to indebtedness that is secured junior in right of security with the Term Loan Facility, Secured Net Leverage Ratio calculated on a pro forma basis (but without netting cash constituting proceeds of such indebtedness) is equal to or less than the Closing Date Secured Net Leverage Ratio and (z) with respect to all other indebtedness, the Total Net Leverage Ratio calculated on a pro forma basis (but without netting cash constituting proceeds of such indebtedness), is equal to or less than the Closing Date Total Net Leverage Ratio, with a sublimit to be mutually agreed for the Ratio Debt of restricted subsidiaries that are not Term Loan Guarantors and (v) any refinancing indebtedness in respect of the foregoing on terms consistent with the Term Loan Documentation Principles.
•
Liens. No Term Loan Credit Party will, nor will it permit any of its restricted subsidiaries to, create, incur, assume or permit to exist any Lien on any of its property or assets; provided that the Borrower and the restricted subsidiaries shall be permitted to incur, inter alia (i) liens securing Incremental Equivalent Term Debt, (ii) liens in existence on the Closing Date and permitted to remain outstanding under the Purchase Agreement, (iii) liens on assets of a
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restricted subsidiary which is not a Term Loan Credit Party (other than to secure indebtedness for borrowed money of any Term Loan Credit Party) securing permitted indebtedness of such restricted subsidiary, (iv) a general lien basket subject to a cap to be mutually agreed and (v) subject to the Intercreditor Agreements and/or additional intercreditor arrangements that are reasonably satisfactory to the Term Loan Administrative Agent and the Borrower, liens securing indebtedness of any Term Loan Credit Party so long as after giving effect to such lien, in the case of any such lien that (x) is pari passu in right of security with the Term Loan Facility, the First Lien Net Leverage Ratio calculated on a pro forma basis (but without netting cash constituting proceeds of such indebtedness) is equal to or less than the Closing Date First Lien Net Leverage Ratio and (y) is junior in right of security with the Term Loan Facility, the Secured Net Leverage Ratio calculated on a pro forma basis (but without netting cash constituting proceeds of such indebtedness) is equal to or less than the Closing Date Secured Net Leverage Ratio.
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Investments. No Term Loan Credit Party will, nor will it permit any of its restricted subsidiaries to, directly or indirectly, make or hold any investment; provided that the Borrower and the restricted subsidiaries shall be permitted to make, inter alia (i) Permitted Acquisitions (to be defined in a manner consistent with the Documentation Principles), (ii) loans to directors, officers and employees of Holdings, the Borrower and any restricted subsidiary subject to a cap to be agreed, (iii) loans to distributors subject to a cap to be agreed, (iv) a general investments basket subject to a cap to be mutually agreed, (v) unlimited investments so long as, immediately after giving effect to the investment, the Total Net Leverage Ratio, calculated on a pro forma basis, is equal to or less than an amount to be agreed inside of the Closing Date Total Net Leverage Ratio, (vi) in an amount not to exceed the Available Amount Basket (as defined below) on such date such investment is made if no event of default is continuing immediately prior to making such investment or would result therefrom, (vii) investments in unrestricted subsidiaries subject to a cap to be mutually agreed and (viii) intercompany investments by and among the Borrower and its restricted subsidiaries.
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Mergers, Consolidations and Sales of Assets. No Term Loan Credit Party will, nor will it permit any of its restricted subsidiaries to, merge into, or consolidate or amalgamate with, any other person, or permit any other person to merge into or consolidate with it, or sell, transfer or otherwise dispose of (in one transaction or in a series of transactions) all or any part of its assets, or issue, sell, transfer or otherwise dispose of any equity interests of any restricted subsidiary, or purchase, lease or otherwise acquire (in one transaction or a series of transactions) all or any substantial part of the assets of any other person or any division, unit or business of any other person (with exceptions to include, inter alia, (i) the sale of any assets on an unlimited basis for fair market value so long as (x) no event of default has occurred and is continuing or would result from such sale or disposition, and (y) at least 75% of the consideration for asset sales in excess of a threshold amount consists
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of cash or cash equivalents (subject to customary exceptions to the cash consideration requirement to be set forth in the Term Loan Facility Documentation, including a basket in an amount to be mutually agreed for non-cash consideration that may be designated as cash consideration, (ii) a general asset sale basket subject to a cap to be mutually agreed and (iii) intercompany asset sales by and among the Borrower and its restricted subsidiaries).
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Restricted Payments. No Term Loan Credit Party will, nor will it permit any of its restricted subsidiaries to, make any restricted payments; provided that restricted payments shall be permitted, inter alia (i) for redemptions of equity or options issued by the Borrower or any direct or indirect parent company thereof to directors, officers, employees, and consultants in an annual amount to be mutually agreed (with unused amounts carried forward to subsequent years, subject to limitations to be mutually agreed), (ii) a general basket for restricted payments subject to a cap to be mutually agreed, (iii) unlimited restricted payments so long as, immediately after giving effect to the restricted payment, (x) no event of default has occurred and is continuing and (y) the Total Net Leverage Ratio, calculated on a pro forma basis, is equal to or less than an amount to be agreed inside of the Closing Date Total Net Leverage Ratio, (iv) restricted payments made in connection with the Transactions, (v) restricted payments made in connection with the Preferred Notes, the Put/Call Agreement and the Tax Receivable Agreement (in each case, as defined in and consistent with the Existing Indenture) and (vi) in an amount not to exceed the Available Amount Basket on such date such restricted payments are made if (a) no event of default is continuing immediately prior to making such Restricted Payment or would result therefrom and (b) in the case of any use of the retained Excess Cash Flow or consolidated net income (as selected by the Borrower prior to the launch of syndication) component of the Available Amount Basket, the Total Net Leverage Ratio would be equal to or less than an amount to be agreed inside of the Closing Date Total Net Leverage Ratio on a pro forma basis after giving effect thereto.
“Available Amount Basket” shall be defined in accordance with the Term Loan Documentation Principles, but in any event, shall include a “starter” basket equal to the greater of (x) an amount to be mutually agreed and (y) a corresponding percentage of Consolidated EBITDA (as defined above) as of the end of the most recent four quarter period for which financial statements are available. For the avoidance of doubt, use of the “starter” basket, the customary “equity” basket and other non-restricted Excess Cash Flow baskets in the Available Amount Basket shall not be subject to any financial or similar test.
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Transactions with Affiliates. No Term Loan Credit Party will, nor will it permit any of its restricted subsidiaries to, sell or transfer any property or assets to, or purchase or acquire any property or assets from, or otherwise engage in any other transaction with, any of its affiliates in a transaction involving aggregate consideration in excess of an amount to be mutually agreed, unless such transaction is upon terms no less favorable to the Borrower or the restricted subsidiaries, as applicable, than
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would be obtained in a comparable arm’s length transaction with a person that is not an affiliate.
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Business of Borrower and its Subsidiaries. No Term Loan Credit Party will, nor will it permit any of its restricted subsidiaries to, engage at any time in any business or business activity other than any business or business activity conducted by the Borrower or any of the restricted subsidiaries on the Closing Date and any similar, corollary, related, incidental or complementary business or business activities or a reasonable extension, development or expansion thereof or ancillary thereto.
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Limitation on Payments and Negative Pledge Clauses. No Term Loan Credit Party will, nor will it permit any of its restricted subsidiaries to, (a) make any cash payment or other distribution in cash or property in respect of any payment subordinated debt (“Junior Financing”) with an aggregate principal amount in excess of a threshold to be mutually agreed (it being agreed that certain exchange offers will be permitted), except (x) as would be permitted by the Term Loan Precedent, (y) cash payments or other distributions in cash in respect of any Junior Financing with amounts under the Available Amount Basket on such date (a) so long as no event of default has occurred and is continuing immediately prior to making such payment and (b) in the case of any use of the retained Excess Cash Flow or consolidated net income component (as selected by the Borrower prior to the launch of syndication) of the Available Amount Basket, the Total Net Leverage Ratio would be equal to or less than an amount inside of the Closing Date Total Net Leverage Ratio on a pro forma basis after giving effect thereto and (z) a general prepayment basket subject to a cap to be agreed, or (b) permit any Subsidiary to enter into any agreement or instrument that by its terms restricts (i) with respect to any such Subsidiary that is not a Term Loan Credit Party, restricted payments from such subsidiary to the Borrower or any other Term Loan Credit Party that is a direct or indirect parent of such Subsidiary, (ii) with respect to any such Subsidiary that is a Term Loan Credit Party, the granting of liens by such Subsidiary pursuant to the security documents, in each case subject to exceptions to be mutually agreed on terms consistent with the Term Loan Documentation Principles or (iii) any restricted subsidiary from making cash loans or advances to the Borrower or any Term Loan Guarantor.
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Permits. No Term Loan Credit Party will, nor will it permit any of its restricted subsidiaries to (a) permit any transfer, withdrawal, amendment or like change of a Required Permit (as defined in the Existing Credit Agreement) other than with respect to a Voluntary Termination (as defined in the Existing Credit Agreement, (b) an amendment, revocation, termination or like change to a Required Permit except as would not have a material adverse effect and would not materially adversely affect rights and remedies with respect to Collateral or (b) terminate, modify, limit or withdraw any Participation Agreement (as defined in the Existing Credit Agreement) or participation in any other Third Party Payor Program (as defined in the Existing Credit Agreement).
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Passive Holding Company. Holdings will not engage in any operating activities, but may make restricted payments and engage in other non-operating activities under exceptions to be mutually agreed (including the incurrence of certain indebtedness).
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Financial Covenants
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| | None. | |
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Unrestricted Subsidiaries:
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| | The Term Loan Facility Documentation will contain provisions pursuant to which, subject to limitations on loans, advances, guarantees and other investments, the Borrower will be permitted to designate any existing or subsequently acquired or organized subsidiary as an “Unrestricted Subsidiary” and subsequently re-designate any such Unrestricted Subsidiary as a restricted subsidiary so long as, subject to the Limited Condition Provision, (a) no event of default is continuing, (b) such designation or re-designation would not cause an event of default, (c) after giving effect to such designation or re-designation, the Fixed Charge Coverage Ratio would be not less than 2.00 to 1.00 and (d) no Unrestricted Subsidiary owns any material intellectual property. The designation of any Unrestricted Subsidiary as a restricted subsidiary shall be deemed to be an incurrence at the time of such designation of indebtedness of such subsidiary or liens on the assets of such subsidiary, in each case, outstanding on the date of such designation. The designation of any subsidiary as an Unrestricted Subsidiary shall constitute an investment for purposes of the investments negative covenant described under the caption “Negative Covenants” above. Unrestricted Subsidiaries will not be subject to the mandatory prepayment, representation and warranty, affirmative or negative covenant or event of default provisions of the Term Loan Facility Documentation, and the cash held by, the results of operations and indebtedness of Unrestricted Subsidiaries will not be taken into account for purposes of determining compliance with any financial ratio set forth in the Term Loan Facility Documentation. | |
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Events of Default
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| | Nonpayment of principal when due; nonpayment of interest, fees or other amounts after a grace period to be agreed; 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); cross-acceleration 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 any security interest; changes in the passive holding company status of Holdings; a change of control (the definition of which is to be agreed); healthcare proceedings; required permits; enforcement actions. | |
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Voting
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| | Amendments and waivers of the Term Loan Facility Documentation will require the approval of Term Loan Lenders holding not less than a majority of the aggregate amount of the principal amount of the Term Loans (the “Required Term Loan Lenders”), except that (i) the consent of each Term Loan Lender directly and adversely affected thereby will be required with respect to: (A) increases in or extensions of the commitment of such Term Loan Lender (it being understood that a waiver of any condition precedent or the waiver of any default, event of default or mandatory prepayment will not constitute an extension or increase of any commitment); (b) reductions of principal | |
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(it being understood that a waiver of any condition precedent or the waiver of any default, event of default or mandatory prepayment will not constitute a reduction in principal), interest (other than a waiver of default interest) or fees; (c) extensions of scheduled amortization payments, the date for payment of any interest or fees or the final maturity (it being understood that a waiver of any condition precedent or the waiver of any default, event of default or mandatory prepayment will not constitute an extension of any scheduled amortization payment, the date for payment of any interest or fees or the final maturity date); (D) changes to the pro rata sharing provisions (with exceptions for certain transactions to be mutually agreed, including amend and extend transactions and refinancing amendment transactions) and (E) the subordination of any of the obligations in respect of the Term Loan Facility in right of payment or security to any other indebtedness, (ii) the consent of 100% of the Term Loan Lenders will be required with respect to (A) modifications to any of the voting percentages or any reduction of the voting percentage set forth in the definition of “Required Lenders” and (B) releases of all or substantially all the value of the Term Loan Guarantors or releases of all or substantially all of the Collateral (other than in connection with any sale of Collateral or of the relevant Term Loan Guarantor permitted by the Term Loan Facility Documentation), (iii) the consent of the Term Loan Facility Administrative Agent shall be required for any amendment that modifies agency specific provisions and (iv) any amendment or waiver that by its terms affects the rights or duties of Term Loan Lenders holding loans or commitments of a particular class (but not the Term Loan Lenders holding loans or commitments of any other class) will require only the requisite percentage in interest of the affected class of Term Loan Lenders that would be required to consent thereto if such class of Lenders were the only class of Term Loan Lenders.
The Term Loan Facility Documentation will contain customary provisions for replacing Defaulting Lenders, replacing Lenders claiming increased costs, tax gross ups and similar required indemnity payments and replacing non-consenting Term Loan Lenders in connection with amendments and waivers requiring the consent of all Term Loan Lenders or of all Term Loan Lenders directly affected thereby so long as Lenders holding a majority of the aggregate amount of the loans and commitments under the Term Loan Facility will have consented thereto.
The Term Loan Facility Documentation will contain customary (x) provisions for open-market loan-buy back and similar programs, which will allow non-pro-rata distributions in connection therewith and (y) “amend and extend” provisions pursuant to which the Borrower may extend commitments and/or outstandings with only the consent of the respective extending Term Loan Lenders; provided that it is understood that no existing Term Loan Lender will have any obligation to commit to any such extension.
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Assignments and Participations
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| | After the Closing Date, the Term Loan Lenders will be permitted to assign loans under the Term Loan Facility with the consent of the Borrower and the Term Loan Facility Administrative Agent (in each case, not to be unreasonably withheld, delayed or conditioned); provided that (i) no consent of the Borrower will be required (A) if | |
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such assignment is made to another Term Loan Lender or an affiliate or approved fund of such Term Loan Lender or (B) after the occurrence and during the continuance of a payment or bankruptcy event of default, (ii) the Borrower will be deemed to have consented to an assignment if the Borrower has not responded within ten business days after having received written notice thereof from the Term Loan Administrative Agent and (iii) no consent of the Term Loan Administrative Agent will be required with respect to any assignment if such assignment is an assignment to another Term Loan Lender, an affiliate of a Term Loan Lender or an approved fund of a Term Loan Lender; provided, further, that no assignments will be made to any Disqualified Institutions.
Notwithstanding the foregoing, the prohibition on assignments to Disqualified Institutions shall not apply retroactively to disqualify any parties that have previously acquired an assignment or participation interest in the Term Loan Facility to the extent such party was not a Disqualified Institution at the time of the applicable assignment or participation.
The Term Loan Lenders will be permitted to sell participations in loans without restriction in accordance with applicable law and consistent with the Term Loan Documentation Principles (other than, to the extent that a list of the Disqualified Institutions shall have been made available to the applicable Term Loan Lenders prior to the execution of such participation right, to Disqualified Institutions). Voting rights of participants will be limited to matters with respect to which the unanimous vote of all Term Loan Lenders (or all directly and adversely affected Term Loan Lenders, if the participant is directly and adversely affected) would be required.
Assignments of Term Loans (and loans under any Incremental Term Loan Facilities) to, and purchases by, Holdings, the Borrower and its subsidiaries will be permitted without any consent, including, without limitation, through open-market purchases so long as (a) no event of default has occurred and is continuing, (b) the loans purchased are immediately cancelled and (c) all parties to the relevant transaction render customary “big boy” disclaimer letters.
The Term Loan Facility Administrative Agent shall have no duties or responsibilities for monitoring or enforcing prohibitions on assignments to ineligible assignees.
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Defaulting Lenders
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| | The Term Loan Facility Documentation shall contain customary provisions relating to “defaulting” Term Loan Lenders, including provisions relating to the suspension of voting rights and of rights to receive certain fees, and termination or assignment of commitments or Term Loans of such Term Loan Lenders. | |
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Cost and Yield Protection
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| | Each holder of Term Loans will receive cost and interest rate protection customary for facilities and transactions of this type, including compensation in respect of prepayments, taxes (including gross-up provisions for withholding taxes imposed by any governmental authority and income taxes associated with all gross-up payments), changes in capital requirements, guidelines or policies or their interpretation or application after the Closing Date (including, for the avoidance of doubt (and regardless of the date adopted or | |
| | | | enacted), with respect to (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations with respect thereto and (y) all requests, rules, guidelines and directions promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any similar or successor agency, or the United States or foreign regulatory authorities, in each case, pursuant to Basel III)), illegality, change in circumstances, reserves and other provisions deemed necessary by the Term Loan Arrangers to provide customary protection for U.S. and non-U.S. financial institutions and other lenders. | |
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Expenses
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| | If the Closing Date occurs, the Borrower shall pay (i) all reasonable and documented out-of-pocket expenses of the Term Loan Administrative Agent, the Collateral Agent and the Term Loan Arrangers associated with the syndication of the Term Loan Facility and the preparation, negotiation, execution, delivery, filing and administration of the Term Loan Facility Documentation and any amendment or waiver with respect thereto (but limited, in the case of legal fees and expenses, to one counsel selected by us (and, if reasonably necessary, of one regulatory counsel and of one local counsel in any relevant jurisdiction)) and the charges of IntraLinks, SyndTrak or a similar service) and (ii) all reasonable and documented out-of-pocket expenses of the Term Loan Administrative Agent, the Collateral Agent, the Term Loan Arrangers, any other agent appointed in respect of the Term Loan Facility and the Term Loan Lenders (but limited, in the case of legal fees and expenses, to one counsel selected by us to all such persons, taken as a whole, and, in the case of an actual or potential conflict of interest, one additional counsel to the affected persons similarly situated, taken as a whole (and, in each case, if reasonably necessary, of one regulatory counsel and of one local counsel in any relevant jurisdiction) and other charges of external counsel and consultants) in connection with the enforcement of, or protection or preservation of rights under, the Term Loan Facility Documentation. | |
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Indemnification
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| | The Term Loan Facility Documentation will contain customary indemnities to be mutually agreed for (i) the Term Loan Arrangers, the Term Loan Administrative Agent, the Collateral Agent and the Term Loan Lenders, (ii) each affiliate of any of the foregoing persons and (iii) each of the respective officers, directors, partners, trustees, employees, affiliates, shareholders, advisors, agents, attorneys-in-fact and controlling persons of each of the foregoing persons referred to in clauses (i) and (ii) above (other than as a result from (x) such person’s bad faith, gross negligence or willful misconduct, (y) the material breach of the Term Loan Documents by the Term Loan Arrangers, the Term Loan Administrative Agent or the Term Loan Lenders (or such entity’s respective controlled affiliates and controlling persons and the respective directors, officers, employees, partners, advisors, agents and other representatives of each of the foregoing) or (z) any disputes solely among the Term Loan Arrangers, the Term Loan Administrative Agent and the Term Loan Lenders (other than any claims against a Term Loan Arranger or the Term Loan Administrative Agent in its capacity as such) and not arising out of any act or omission of Holdings, the Borrower or any of their subsidiaries, or any of their respective affiliates, in each case, as | |
| | | | determined by a court of competent jurisdiction in a final and non-appealable ruling). | |
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Governing Law and Forum
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| | State of New York. | |
| Counsel to the Term Loan Arrangers, the Collateral Agent and the Term Loan Administrative Agent | | |
Simpson Thacher & Bartlett LLP.
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Interest Rate Options
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| | The Borrower may elect that the Term Loans comprising each borrowing bear interest at a rate per annum equal to: | |
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(i)
the Base Rate plus the Applicable Margin; or
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(ii)
Adjusted LIBOR plus the Applicable Margin.
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| | | | The Borrower may elect interest periods of 1, 2, 3 or 6 months for Adjusted LIBOR Loans (as defined below) (or such other periods as agreed to by the Term Loan Administrative Agent and the Term Loan Lenders). | |
| | | | As used herein: | |
| | | | “Applicable Margin” means (i) 2.25%, in the case of Base Rate Loans and (ii) 3.25%, in the case of Adjusted LIBOR Loans. | |
| | | | “Base Rate” means the highest of (i) the “U.S. Prime Lending Rate” as published in The Wall Street Journal (the “Prime Rate”), (ii) the federal funds effective rate from time to time, plus 0.50%, (iii) the Adjusted LIBOR Rate for a one-month interest period plus 1.00% and (iv) 1.75%. | |
| | | | “Adjusted LIBOR” means the higher of (i) the rate per annum (adjusted for statutory reserve requirements for Eurocurrency liabilities) at which Eurodollar deposits are offered in the interbank Eurodollar market for the applicable interest period and (ii) 0.75%. | |
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Interest Payment Dates
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| | With respect to Term Loans bearing interest based upon the Base Rate (“Base Rate Loans”), quarterly in arrears on the last day of each calendar quarter and on the applicable maturity date. | |
| | | | With respect to Term Loans bearing interest based upon the Adjusted LIBOR Rate (“Adjusted LIBOR 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 and on the applicable maturity date. | |
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Default Rate
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| | Overdue amounts upon a payment or bankruptcy event of default shall bear interest at 2.00% above the rate applicable to Base Rate Loans and shall be payable on demand | |
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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 Base Rate Loans, the interest rate payable on which is then based on the Prime Rate) for the actual number of days elapsed (including the first day but excluding the last day). | |
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I.
Parties
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Borrower
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| | AdaptHealth LLC (the “Borrower”). | |
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Guarantors
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| | Holdings and each subsidiary of the Borrower that guarantees the notes outstanding under the Senior Notes Indenture, dated as of July 29, 2020 (the “Existing Indenture” and the notes thereunder, the “Existing Notes”), among the Borrower, the guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee (such subsidiaries, together with Holdings, the “Bridge Guarantors”; and together with the Term Loan Guarantors, the “Guarantors”). The Borrower and the Bridge Guarantors are referred to collectively as the “Bridge Credit Parties”; and the Bridge Credit Parties, together with the Term Loan Credit Parties, are referred to collectively as the “Credit Parties”. | |
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Lead Arrangers, Syndication Agents and Book-Runners
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| | Jefferies Finance and/or one or more of its designees, and any additional joint lead arranger appointed pursuant to the Commitment Letter (collectively, in such capacities, the “Bridge Arrangers”). The Bridge Arrangers will perform the duties customarily associated with such role. | |
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Bridge Administrative Agent
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| | Jefferies Finance and/or one or more of its designees (in such capacity, the “Bridge Administrative Agent” and together with the Term Loan Administrative Agent, the “Administrative Agents”). The Bridge Administrative Agent will perform the duties customarily associated with such role. | |
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Bridge Lenders
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| | A syndicate of banks, financial institutions and other entities but excluding Disqualified Institutions (which may include the Bridge Arrangers, collectively, the “Bridge Lenders” and together with the Term Lenders, the “Lenders”) arranged by the Bridge Arrangers and reasonably acceptable to the Borrower, and in any event subject to the consent rights of the Borrower noted herein after the Closing Date. | |
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Closing Date
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| | The date, on or before the date on which the Commitments are terminated in accordance with Section 15 of this Commitment Letter, on which the Acquisition is consummated (the “Closing Date”). | |
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Bridge Loan Documents
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| | Subject to the Certain Funds Provision, the documentation in respect of the Bridge Loan Facility (the “Bridge Loan Documents”) shall contain the terms and conditions set forth in the Commitment Letter and such other terms as Borrower and the Bridge Arrangers shall agree (such other terms to be in a manner that is consistent with this Term Sheet), it being understood and agreed that the Bridge Loan Documents shall: (a) not be subject to any conditions to the availability and funding of the Bridge Loan Facility on the Closing Date other than the Closing Conditions and (b) contain only those mandatory prepayments, representations, warranties, affirmative, financial and negative covenants and events of default set forth, or referred to (including by reference to the Existing Credit Agreement), | |
| | | | in this Term Sheet, in each case, applicable to Holdings, the Borrower and each of its subsidiaries (with exceptions substantially consistent with the Existing Credit Agreement) and with exceptions for materiality or otherwise and “baskets” substantially consistent (where applicable) with the Existing Credit Agreement, in each case except as otherwise provided herein; provided that, notwithstanding anything to the contrary set forth in this Term Sheet or in the Commitment Letter, the Bridge Loan Documents will incorporate such changes (x) as may be necessary or appropriate to provide for a bridge term loan facility to be drawn in a single borrowing to be made on the Closing Date (and remove any revolving facility provisions, including the letter of credit subfacility provided for therein) and as otherwise agreed and (y) to limit the release of a guarantor that ceases to be a wholly-owned subsidiary. | |
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In addition, the Bridge Loan Documents will (i) include customary LIBOR successor provisions substantially consistent with the guidance of the Alternative Reference Rate Committee, (ii) include provisions related to divisions and plans of division and (iii) eliminate any provisions related to security interests (including representations and warranties related to the same) in the Existing Credit Agreement. The provisions of the preceding two paragraphs are referred to herein as the “Documentation Principles”.
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II.
Bridge Loan Facility
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Bridge Loans
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An aggregate principal amount of $450.0 million of Senior Unsecured Increasing Rate Bridge Loans (the “Bridge Loans”) (as such amount may be reduced by the gross proceeds from any Notes or other debt securities received by the Borrower on or prior to the Closing Date).
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Use of Proceeds
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The proceeds of the Bridge Loans will be used on the Closing Date to finance the Acquisition, to finance the Refinancing and to pay fees and expenses in connection with the foregoing.
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Maturity
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One year after the initial funding date of the Bridge Loans (the “Bridge Loan Maturity Date”).
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Rollover
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If the Bridge Loans are not repaid in full on or prior to the Bridge Loan Maturity Date, and provided that no Conversion Default (as defined below) has occurred and is continuing, the Bridge Loans shall be automatically converted on the Bridge Loan Maturity Date into senior unsecured term loans due on the seventh anniversary of the Bridge Loan Maturity Date (the “Extended Term Loans”) in an aggregate principal amount equal to the aggregate principal amount of Bridge Loans so converted. The Extended Term Loans will have the terms set forth in Exhibit C to this Commitment Letter.
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At the option of the Bridge Lenders, the Extended Term Loans may be exchanged by the holders thereof for exchange notes (the “Exchange Notes”), which will have the terms set forth in Exhibit C to this Commitment Letter. The Exchange Notes will be issued under an indenture that will have the terms set forth in Exhibit C to this Commitment Letter and will otherwise be
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customary for issuances of notes similar to the Exchange Notes. In connection with each such exchange, if requested by any Bridge Lender that is a Bridge Lender as of the Closing Date (each, a “Senior Unsecured Initial Bridge Lender”), the Borrower shall (i) deliver to the Bridge Lender that is receiving the Exchange Notes, and to such other Bridge Lenders as such Senior Unsecured Initial Bridge Lender requests, an offering memorandum of the type customarily utilized in a Rule 144A offering of high yield securities covering the resale of the Exchange Notes by such Bridge Lenders, in form and substance reasonably acceptable to the Borrower and such Senior Unsecured Initial Bridge Lender, and keep such offering memorandum updated in a manner as would be required pursuant to a customary Rule 144A securities purchase agreement, (ii) execute an exchange agreement containing provisions customary in Rule 144A securities purchase agreements (including indemnification provisions), if requested by such Senior Unsecured Initial Bridge Lender, (iii) deliver or cause to be delivered such opinions and accountants’ comfort letters addressed to such Senior Unsecured Initial Bridge Lender and such certificates as such Senior Unsecured Initial Bridge Lender may request in form and substance reasonably satisfactory to such Senior Unsecured Initial Bridge Lender and (iv) take such other customary actions, and cause its advisors, auditors and counsel to take such customary actions, as are reasonably requested by such Senior Unsecured Initial Bridge Lender in connection with issuances or resales of the Exchange Notes, including providing such customary information regarding the business and operations of the Borrower and its subsidiaries as is reasonably requested by any prospective holder of the Exchange Notes and customarily provided in due diligence investigations in connection with purchases or resales of securities. Notwithstanding the foregoing, (x) the Borrower shall not be required to exchange Extended Term Loans for Exchange Notes until the Borrower shall have received requests to issue at least $100.0 million in aggregate principal amount of Exchange Notes and (y) no subsequent Exchange Notes shall be issued until the Borrower shall have received requests to issue at least $100.0 million in aggregate principal amount of Exchange Notes (or, in the case of either clauses (x) or (y), the entire then-remaining amount of the Extended Term Loans) and (z) the Borrower will not be required to issue Exchange Notes more than a number of times to be agreed in any calendar year.
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“Conversion Default” shall mean a payment or bankruptcy event of default under the Bridge Loan Documents.
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The Extended Term Loans will be governed by the provisions of the Bridge Loan Documents and will have the same terms as the Bridge Loans except as expressly set forth in Exhibit B to this Commitment Letter.
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III.
Certain Payment Provisions
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Interest
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| | The Bridge Loans will bear interest at a rate per annum equal to three month LIBOR, adjusted quarterly, plus a spread of 4.25% (the “Rate”); provided that three month LIBOR shall in no event be less than 0.75%. The Rate will increase by 50 basis at the beginning of each three- month period thereafter (excluding the Bridge Loan Maturity Date); provided, further, that interest on the Bridge Loans (excluding default interest, if any) shall not exceed the Total Cap (as defined in the Fee Letter), in each case, without giving effect to any default interest. Interest will be payable quarterly in arrears, on the Bridge Loan Maturity Date and on the date of any prepayment of the Bridge Loans. For amounts outstanding after the Bridge Loan Maturity Date, interest will be payable on demand at the default rate. | |
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Default Rate
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| | Overdue amounts shall bear interest at 2.00% above the then-applicable Rate and shall be payable in cash on demand. | |
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Optional Repayment
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| | The Bridge Loans may be repaid, in whole or in part, on a pro rata basis, at the option of the Borrower at any time upon three business days’ prior written notice (or such shorter time as is agreed by the Bridge Administrative Agent), at a price equal to 100% of the principal amount thereof, plus all accrued and unpaid interest and fees to the date of repayment. | |
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Mandatory Commitment Reduction and Repayment
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| | On or prior to the Closing Date, the commitments in respect of the Bridge Loan Facility will be automatically reduced on a dollar-for-dollar basis by the gross proceeds from, and after the Closing Date, the Borrower will repay the Bridge Loans (at 100% of the principal amount of the Bridge Loans repaid, plus all accrued and unpaid interest and fees to the date of the repayment) with the net proceeds from any direct or indirect public offering or private placement of the Notes or the Securities (as defined in the Fee Letter). | |
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Change of Control
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| | Each holder of the Bridge Loans will be entitled to require the Borrower, and the Borrower shall offer, to repay the Bridge Loans held by such holder, at a price of 100% of the principal amount thereof, plus all accrued and unpaid interest and fees to the date of repayment, upon the occurrence of a “change of control” (the definition of which is to be mutually agreed). | |
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IV.
Collateral and Guarantees
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Collateral
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| | None. | |
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Guarantees
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| | The Bridge Guarantors will unconditionally, and jointly and severally, guarantee the obligations of the Borrower in respect of the Bridge Loans (the “Bridge Guarantees”). Such Bridge Guarantees will be in form and substance reasonably satisfactory to the Bridge Administrative Agent and the Bridge Arrangers. All Bridge Guarantees shall be guarantees of payment and performance, and not of collection. | |
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V.
Other Provisions
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Conditions Precedent
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| | Subject to the Certain Funds Provision, the incurrence of the Bridge Loans under the Bridge Loan Facility on the Closing Date will be subject only to the applicable conditions precedent set forth in Section 3 of the Commitment Letter, the following paragraph and Exhibit D to the Commitment Letter (collectively, the “Closing Conditions”). | |
| | | | Subject on the Closing Date to the Certain Funds Provision, (i) delivery of notice of borrowing, and (ii) accuracy of representations and warranties in all material respects; provided that any representation and warranty that is qualified as to “materiality,” “material adverse effect” or similar language shall be true and correct in all respects (after giving effect to any such qualification therein). | |
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Representations and Warranties
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| | Same as the Existing Credit Agreement, subject to the Documentation Principles; subject, in the case of certain of the foregoing representations and warranties, to “baskets,” exceptions and qualifications including for materiality to be mutually agreed. | |
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Affirmative Covenants
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| | Same as the Existing Credit Agreement, subject to the Documentation Principles. The affirmative covenants will be subject to “baskets,” exceptions and qualifications to be mutually agreed. | |
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Negative Covenants
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| | Same as the Existing Credit Agreement, subject to the Documentation Principles; provided that (1) there shall be no financial maintenance covenants and (2) there shall be incurrence-style covenants for indebtedness, investments and other “restricted payments”; provided, further, that, prior to the Bridge Loan Maturity Date, the liens, debt and restricted payments covenants of the Bridge Loans may be more restrictive in a manner customary for bridge financings as reasonably agreed by the Bridge Arrangers and the Borrower. | |
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Financial Maintenance Covenants:
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None.
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Events of Default; Remedies
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| | Substantially similar as Existing Credit Agreement, with materiality levels, cure periods and/or exceptions to be mutually agreed; provided there shall be cross- acceleration and cross-default with respect to the material indebtedness of Holdings, the Borrower and its subsidiaries. | |
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Voting
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| | Amendments and waivers with respect to the Bridge Loan Documents will require the approval of the Bridge Lenders holding not less than a majority of the aggregate principal amount of the Bridge Loans, the Extended Term Loans or the Exchange Notes, as the case may be (the “Required Bridge Lenders”), except that (i) the consent of each Bridge Lender directly affected thereby shall be required with respect to (a) reductions in the amount or extensions of the final maturity of any Bridge Loan, Extended Term Loan or Exchange Note, as the case may be, or the reduction of the non-call period for any Exchange Note, as applicable, (b) reductions in the rate of interest (other than a waiver of default interest) or any fee or other amount payable or extensions of any due date thereof, (c) increases in the amount or extensions of the expiration date of any Bridge Lender’s commitment, (d) the subordination of any of the obligations in respect of the Bridge Loans in right of payment to any other indebtedness or (e) modifications to the assignment provisions of the Bridge Loan Documents that further | |
| | | | restrict assignments thereunder and (ii) the consent of 100% of the Bridge Lenders shall be required with respect to (a) reductions of any of the voting percentages, the waterfall or the pro rata provisions, (b) releases of all or substantially all of the value of the guarantees of the Bridge Guarantors, (c) alterations of (or additions to) the restrictions on the ability of Bridge Lenders to exchange Extended Term Loans for Exchange Notes, or (d) modification of the rights to exchange Extended Term Loans into Exchange Notes. | |
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Transferability
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Each holder of Bridge Loans will be free to (x) sell or transfer all or any part of its Bridge Loans to any third party (other than natural persons and other Disqualified Institutions) with the consent of the Bridge Administrative Agent (not to be unreasonably withheld or delayed) in compliance with applicable law (provided that such holder shall give prompt written notice to the Bridge Administrative Agent and the Borrower of any such sale or transfer); provided that, prior to the Bridge Loan Maturity Date, unless a payment or bankruptcy event of default has occurred and is continuing or there has been a Demand Failure (as defined in the Fee Letter), Commitment Parties may not assign more than 49.9% in the aggregate of the principal amount of the Bridge Loans without the consent of the Borrower (not to be unreasonably withheld or delayed) (other than to one another or to an affiliate or approved fund of one another), (y) sell participations in all or a portion of the Bridge Loans (subject to customary voting restrictions), and (z) pledge any or all of the Bridge Loans in accordance with applicable law.
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Cost and Yield Protection
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Each holder of Bridge Loans will receive cost and interest rate protection customary for facilities and transactions of this type, including compensation in respect of prepayments, taxes (including gross-up provisions for withholding taxes imposed by any governmental authority and income taxes associated with all gross-up payments), changes in capital requirements, guidelines or policies or their interpretation or application after the Closing Date (including, for the avoidance of doubt (and regardless of the date adopted or enacted), with respect to (x) the Dodd- Frank Wall Street Reform and Consumer Protection Act and the rules and regulations with respect thereto and (y) all requests, rules, guidelines and directions promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any similar or successor agency, or the United States or foreign regulatory authorities, in each case, pursuant to Basel III)), illegality, change in circumstances, reserves and other provisions reasonably necessary to provide customary protection for U.S. and non-U.S. financial institutions and other lenders.
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Expenses
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If the Closing Date occurs, the Borrower shall pay (i) all reasonable and documented out-of-pocket expenses of the Bridge Administrative Agent and the Bridge Arrangers associated with the syndication of the Bridge Loan Facility and the preparation, negotiation, execution, delivery, filing and administration of the Bridge Loan Documents and any amendment or waiver with respect thereto (but limited, in the case of legal fees and expenses, to one counsel selected by us (and, if reasonably necessary, of one regulatory counsel and of one local counsel in any relevant
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jurisdiction)) and the charges of IntraLinks, SyndTrak or a similar service) and (ii) all out-of-pocket expenses of the Bridge Administrative Agent, the Bridge Arrangers, any other agent appointed in respect of the Bridge Loan Facility and the Bridge Lenders (but limited, in the case of legal fees and expenses, to one counsel selected by us to all such persons, taken as a whole, and, in the case of an actual or potential conflict of interest, one additional counsel to the affected persons similarly situated, taken as a whole (and, in each case, if reasonably necessary, of one regulatory counsel and of one local counsel in any relevant jurisdiction) and other charges of external counsel and consultants) in connection with the enforcement of, or protection or preservation of rights under, the Bridge Loan Documents.
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Indemnification
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The Bridge Loan Documents will contain customary indemnities to be mutually agreed for (i) the Bridge Arrangers, the Bridge Administrative Agent and the Bridge Lenders, (ii) each affiliate of any of the foregoing persons and (iii) each of the respective officers, directors, partners, trustees, employees, affiliates, shareholders, advisors, agents, attorneys-in-fact and controlling persons of each of the foregoing persons referred to in clauses (i) and (ii) above (other than as a result from (x) such person’s bad faith, gross negligence or willful misconduct, (y) the material breach of the Bridge Loan Documents by the Bridge Arrangers, the Bridge Administrative Agent or the Bridge Lenders (or such entity’s respective controlled affiliates and controlling persons and the respective directors, officers, employees, partners, advisors, agents and other representatives of each of the foregoing) or (z) any disputes solely among the Bridge Arrangers, the Bridge Administrative Agent and the Bridge Lenders (other than any claims against a Bridge Arranger or the Bridge Administrative Agent in its capacity as such) and not arising out of any act or omission of Holdings, the Borrower or any of their subsidiaries, or any of their respective affiliates, in each case, as determined by a court of competent jurisdiction in a final and non-appealable ruling).
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Governing Law and Forum
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State of New York.
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Counsel to the Bridge Arrangers and the Bridge Administrative Agent
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Simpson Thacher & Bartlett LLP.
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Maturity
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| | The Extended Term Loans will mature on the seventh anniversary of the Bridge Loan Maturity Date. | |
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Interest Rate
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| | The Extended Term Loans will bear interest at a rate per annum (the “Interest Rate”) equal to the Total Cap. Notwithstanding the foregoing, overdue amounts on the Extended Term Loans will accrue at the then-applicable rate plus 2.0% per annum. | |
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Covenants and Events of Default
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| | From and after the Bridge Loan Maturity Date, the covenants, defaults and events of default will conform to those applicable to the Exchange Notes. | |
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Maturity Date
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| | The Exchange Notes will mature on the seventh anniversary of the Bridge Loan Maturity Date. | |
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Interest Rate
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| | Each Exchange Note will bear interest at a rate per annum equal to the Total Cap. | |
| | | | Interest will be payable in arrears semi-annually. Default interest will be payable on demand. | |
| | | | Notwithstanding the foregoing, overdue amounts will accrue on the Exchange Notes at the then-applicable rate plus 2.0% per annum. | |
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Transferability
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| | If the Extended Term Loans are converted to Exchange Notes, the Borrower, upon request by any holder of such Exchange Notes or the Bridge Administrative Agent, shall be required to ensure that such Exchange Notes are DTC-eligible. | |
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Optional Redemption
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| | The Exchange Notes will have optional redemption terms consistent with those set forth in the Existing Indenture. | |
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Defeasance Provisions
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| | Consistent with the Existing Indenture. | |
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Modification
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| | Consistent with the Existing Indenture. | |
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Change of Control
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| | The Borrower will be required to make an offer to repurchase the Exchange Notes following the occurrence of a “change of control” (such definition to be consistent with the corresponding definition in the Existing Indenture) at 101% of the outstanding principal amount thereof. | |
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Covenants
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| | Consistent with the Existing Indenture. | |
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Events of Default
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| | Consistent with the Existing Indenture. | |
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Registration Rights
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| | None. | |