EXHIBIT 10.6
CONFIDENTIAL
July 15, 1998
MEDE AMERICA CORPORATION
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$15,000,000 SENIOR SECURED CREDIT FACILITIES
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COMMITMENT LETTER
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MedE America Corporation
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: Xx. Xxxxxxx Xxxxxxxx
Ladies and Gentlemen:
Bank of America National Trust and Savings Association ("Bank of America") is
pleased to advise you that it is willing, subject to the terms and conditions
contained in this letter and in the attached Summary of Terms and Conditions
(the "Term Sheet"), to commit up to $15,000,000 of senior secured credit
facilities (the "Senior Facilities").
It is agreed that Bank of America will act as the sole and exclusive
Administrative Agent for the Senior Facilities. You agree that no other agents,
co-agents or arrangers will be appointed, no other titles will be awarded and no
compensation (other than that expressly contemplated by the Term Sheet) will be
paid in connection with the Senior Facilities unless you and we shall so agree.
In addition to the conditions to funding or closing set forth in the Term Sheet,
Bank of America's commitment to provide financing hereunder is subject to, among
other conditions, (i) the negotiation and execution of a definitive credit
agreement (the "Credit Agreement") and other related documentation satisfactory
to the Lenders; (ii) there being no material adverse change in the reasonable
opinion of Bank of America in the financial condition, business, operations,
properties or prospects of the Borrower and its consolidated subsidiaries from
the date of the audited financial statements most recently provided prior to the
date hereof; (iii) there be no competing offering, placement, or arrangement of
any debt securities or bank financing by or on behalf of the Borrower, until the
closing of the transaction.
Whether or not the transactions contemplated hereby are consummated, the
Borrower hereby agrees to indemnify and hold harmless Bank of America, and their
respective directors, officers, employees and affiliates (each, an "indemnified
person") from and against any and all losses, claims, damages, liabilities (or
actions or other proceedings commenced or threatened in respect thereof) and
expenses that arise out of, result from or in any way relate to this commitment
letter, or the providing of the Senior Facilities, and to reimburse each
indemnified person, upon its demand, for any legal or other expenses (including
the allocated cost of in-house counsel) incurred in connection with
investigating, defending or participating in any such loss, claim, damage,
liability or action or other proceeding (whether or not such indemnified person
is a party to any action or proceeding out of which any such expenses arise),
other than any of the foregoing claimed by any indemnified person to the extent
incurred by reason of the gross negligence or willful misconduct of such person.
Neither Bank of America, nor any of their affiliates, shall be responsible or
liable to the Borrower or any other person for any consequential damages which
may be alleged.
MedE America Corporation
July 15, 1998
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In addition, the Borrower hereby agrees to reimburse Bank of America from time
to time upon demand for their reasonable out-of-pocket costs and expenses
incurred at any time, including (i) attorneys' fees and allocated costs of
internal counsel (without duplication) in connection with the preparation and
delivery of the Credit Agreement and all related documents, and (ii) costs and
expenses in connection with the negotiation, closing, and enforcement of the
Senior Facilities, regardless of whether the Senior Facilities close. The
Borrower shall also pay all costs and expenses of the Administrative Agent
associated with amendments and other changes to the Credit Agreement, and all
costs and expenses of the Lenders in the collection of the obligations of the
Borrower (including reasonable attorney's fees and allocated costs of internal
counsel).
The terms contained in this letter and the Term Sheet are confidential and,
except for disclosure to your board of directors, officers and employees, to
professional advisors retained by you in connection with this transaction, or as
may be required by law, may not be disclosed in whole or in part to any other
person or entity without our prior written consent.
Upon your delivery to us of a signed copy of this letter, this letter shall
become a binding agreement under New York law as of the date so accepted. Bank
of America's commitment hereunder shall remain in effect until 5:00 p.m. Chicago
time, on July 31, 1998 when, if not so accepted, Bank of America's commitment
hereunder will terminate. This commitment will expire on September 1, 1998 if
the Senior Facilities have not closed on or before that date.
We are pleased to have the opportunity to work with you on this important
financing.
Very truly yours,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:
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Title: Vice President
ACCEPTED AND AGREED TO:
MEDE AMERICA CORPORATION
THIS_____DAY OF JULY, 1998
By:
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Title:
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Confidential MEDE AMERICA CORPORATION
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SUMMARY OF TERMS AND CONDITIONS1
MEDE AMERICA CORPORATION
$15,000,000 SENIOR SECURED CREDIT FACILITIES
BORROWER: MEDE AMERICA CORPORATION ("MedE" or the "Borrower").
GUARANTORS: All material operating subsidiaries and holding companies of
the Borrower.
ADMINISTRATIVE
AGENT: Bank of America National Trust and Savings Association (in
such capacity "Bank of America" or "Administrative Agent")
FACILITIES: Senior Secured Credit Facilities (the "Senior Facilities") up
to $15,000,000 consist- ing of:
(1) $7,500,000 2 -- year senior secured non-amortizing
revolving credit facility (the "Revolver").
(2) $7,500,000 2 -- year senior secured term loan ("Term Loan
A").
LENDERS: Bank of America.
PURPOSE: The Revolver will be used for working capital and general
corporate purposes.
The Term Loan A will be used to finance future acquisitions
including related fees and expenses.
AVAILABILITY: The Revolver will be available on a revolving basis after the
closing of the Senior Facilities ("Closing Date") and prior to
the maturity thereof.
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1 Unless otherwise defined herein, capitalized terms used herein shall have
the respective meanings set forth in the Commitment Letter to which this
Exhibit A is attached.
Confidential MEDE AMERICA CORPORATION
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Term Loan A may be drawn at any time up to the expiry date,
and once repaid may not be reborrowed. Availability under the
Term Loan A will be subject to (i) Bank of America's prior
written approval of acquisition target in a parallel line of
business, (ii) proforma covenant compliance and (iii) both
MedE and the acquisition target having Y2K compliant systems.
COVENANTS: The Company shall be at all times compliant with the following
covenants. (i) Debt/EBITDA Maximum 2.0x.
(ii) Interest Coverage Minimum 3.0x.
MATURITY DATE: Two year anniversary of the Closing Date, but no later than
October 31, 1998.
MANDATORY
PREPAYMENTS/
COMMITMENT
REDUCTIONS: Mandatory prepayments of Term Loan A will be made from: (1)
100% of the net cash proceeds of permitted asset sales
(subject to a basket and reinvestment rights to be
negotiated), (2) 100% of the net cash proceeds from any debt
offering, (3) 75% of the net cash proceeds received from the
issuance of equity securities and capital contributions,
exclusive of the August 1998 IPO. (4) 100% of the net cash
proceeds from insurance recovery and condemnation events,
subject to certain reinvestment rights to be agreed upon, and
(5) 100% of annual excess cash flow (to be defined), provided
that so long as no default or event of default exists under
the Senior Facilities, such percentage shall be reduced on a
basis to be determined based upon the achievement of certain
Leverage Ratios to be determined. Each such prepayment of the
Term Loan A shall be applied pro rata to the remaining
scheduled amortization payments of Term Loan A.
In addition, (x) loans under the Revolver will have to be
prepaid or cash collateralized, as appropriate, if at any time
the outstanding amount thereof ex- ceeds the total commitments
for the Revolver and (y) all Term Loan A shall be required to
be repaid, and the Revolver will terminate, upon the
occurrence of a change of control (to be defined) of the
Borrower.
COLLATERAL: Substantially similar to that in existing credit agreement,
including, but not limited to:
(1) A first lien on all the assets of the Company and its
subsidiaries.
(2) Stock of all subsidiaries.
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Confidential MEDE AMERICA CORPORATION
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BORROWING At the Borrower's option, interest on borrowings shall accrue
OPTIONS: on the following indexes plus the applicable spreads.
Eurodollar Rate: The Interbank Offered Rate (IBOR) for 1, 2,
3, 6 month dollar deposits as offered by Bank of America to
prime international banks in the off-shore dollar market at
11:00 a.m. New York time three business days prior to the
borrowing date, adjusted for reserve requirements.
Base Rate: The higher of (a) the rate as publicly announced
from time to time by Bank of America as its "Reference Rate"
or (b) Federal Funds Rate plus one-half of one percent per
annum. Any change in the Base Rate shall take effect at the
opening of business on the date specified in the public
announcement of such change in the case of clause (a) above,
or on a daily basis in the case of clause (b) above.
BORROWING RATE: With respect to Eurodollar Loans, the Eurodollar Rate plus the
Applicable Euro- dollar Margin described below. With respect
to Base Rate Loans, the Base Rate plus the Applicable Base
Rate Margin described below.
All amounts outstanding under the Senior Facilities shall bear
interest, at the Borrower's option, as follows:
A. With respect to the Revolver:
(i) at the Base Rate plus 0.25% per ammum; or
(ii) at the Eurodollar Rate plus 1.25% annum;
B. With respect to Term Loan A:
(i) at the Base Rate plus 0.25% per annum; or
(ii) at the Eurodollar Rate plus 1.25% per annum
Interest on Base Rate borrowings are to accrue base on a 365
(6)-day year and actual days elapsed. Interest on Eurodollar
borrowings and all fees are to accrue based on a 360-day year
and actual days elapsed.
INTEREST PAYMENTS:Interest on Base Rate advances shall be payable quarterly in
arrears. In the base of Eurodollar Loans, the earlier of the
end of each applicable interest period or quarterly in
arrears.
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Confidential MEDE AMERICA CORPORATION
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COMMITMENT FEE: Commitment Fee equal to 0.50% per annum times the total amount
of the Senior Facilities. Commitment Fees shall be payable
quarterly in arrears.
DEFAULT RATE: 2.00% above the rate otherwise applicable rate of Senior
Facilities.
REVOLVER
DRAWDOWNS: Revolver drawdowns are at the Borrower's option with one day
advance notice (by 11:00 a.m. New York time) for Base Rate
Loans and three business days advance notice (by 11:00 a.m.
New York time) for Eurodollar Loans in minimum amounts to be
determined.
VOLUNTARY
PREPAYMENTS: Base Rate Loans may be prepaid at any time, with same day
notice (by 11:00 a.m. New York time). Eurodollar Loans may be
prepaid at any time with at least three business days advance
notice (by 11:00 a.m. New York time), subject to compensating
the Lenders for any funding losses and related expenses in
connection with any prepayment made on a day other than the
last day of an interest period applicable thereto. Voluntary
prepayments shall be subject to minimum amounts to be
determined. Voluntary prepayments of Term Loan A shall be
applied to the outstanding Term Loan A and shall be applied to
reduce the scheduled amortization payments of each such
tranche of Term Loan A.
TERMINATION OR
VOLUNTARY
REDUCTION
OF THE FACILITIES:The Borrower may irrevocably reduce the commitments under the
Revolver in amounts of at least $1,000,000 at any time on
three business days advance notice.
DOCUMENTATION: The Senior Facilities will be subject to the execution of a
credit agreement (the "Credit Agreement") containing suitable
provisions mutually acceptable to the Borrower and the
Administrative Agent, including, without limitation,
representations and warranties, conditions precedent to
effectiveness, conditions precedent to making advances,
affirmative and negative covenants and events of default, as
outlined below.
REPRESENTATIONS
AND WARRANTIES: Those customarily found in credit agreements for similar
financings and such additional representations and warranties
as are appropriate under the circumstances, including but not
limited to representations related to corporate existence,
financial condition, litigation, no breach, corporate
authority, approvals,
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Confidential MEDE AMERICA CORPORATION
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ERISA, taxes, Investment Company Act, credit agreements and
other material agreements, investments, compliance with laws
and regulations, disclosure, assets, solvency, labor matters,
environmental matters, proprietary rights, real property,
insurance and Year 2000 compliance.
CONDITIONS TO THE
CLOSING DATE: Those customarily found in credit agreements for similar
financings and such additional conditions as are appropriate
under the circumstances, including but not limited to:
o MedE's IPO occurs;
o Repayment and cancellation of existing bank credit
facilities and other indebtedness;
o All documents and agreements signed and delivered;
o No Event of Default or incipient default;
o All representations and warranties are true as of the
date of each advance;
o Satisfactory completion of legal due diligence.
o No material adverse change in operations, business,
properties, condition (financial or otherwise) or
prospects of the Borrower or any of its subsidiaries
taken as a whole ("Material Adverse Change");
o No material adverse effect in the ability of the
Borrower to perform their obligations under the
Senior Facilities;
o No material adverse litigation
CONDITIONS TO EACH
ADVANCE (INCLUDING
INITIAL ADVANCE)
o No default of event of default under the Senior Facilities.
o Continued accuracy in all material respects of the
representations and warranties.
o Advances under the Term Loan A will be subject to: (i)
Bank of America's prior written approval of acquisition
target in a parallel line of business, (ii) proforma
covenant compliance and (iii) both MedE and the
acquisition target having Y2K compliant systems.
AFFIRMATIVE
COVENANTS: Standard for the Administrative Agent's similar financing and
such others as the Administrative Agent deems appropriate in
the context of the proposed Transaction, including the
obtaining of interest rate protection in amounts, and for
periods, to be determined.
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Confidential MEDE AMERICA CORPORATION
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FINANCIAL
COVENANTS: Usual and customary for transactions of this type including
but not limited to:
1. Maximum Leverage Ratio of 2.0x
2. Minimum Interest Coverage Ratio of 3.0x
NEGATIVE
COVENANTS: Standard for the Administrative Agent's similar financing and
such others as the Administrative Agent deems appropriate in
the context of the proposed Transaction, including, but not
limited to:
o Year 2000 Compliance required by 8/1/99
o Change of control (i.e. Facilities must be reconfirmed in
the event that an entity other than WCAS and its
affiliates assumes a controlling interest in the Company.)
o Restrictions on lines of business.
o Limitations on additional indebtedness and leasing
obligations.
o Restrictions on liens.
o Limitations on investments.
o Limitations on dividends and repayment of certain other
indebtedness.
o Restrictions on consolidations, mergers, acquisitions,
dissolutions, etc.
o Restrictions on assets dispositions.
o Restrictions on sale-leaseback transactions.
o Loan proceeds not to be used in violation of Regulation U.
o Restrictions on transactions with affiliates.
o Restrictions on the payment of management fees.
EVENTS OF
DEFAULT: Standard for the Administrative Agent's similar financing and
such others as the Agent deems appropriate in the context of
the proposed Transaction.
INCREASED COSTS/
CHANGE OF
CIRCUMSTANCE/
CAPITAL ADEQUACY/
INDEMNITIES: The Credit Agreement shall contain customary provisions
protecting and indemnifying the Lenders in the event of
unavailability of funding, illegality, increased costs,
capital adequacy charges and funding losses, and shall provide
for a withholding tax gross-up, and general indemnification of
the Administrative Agent, by the Borrower.
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Confidential MEDE AMERICA CORPORATION
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EXPENSES: The Borrower will pay all costs and expenses incurred at any
time by the Administrative Agent (including, without
duplication, reasonable attorney's fees and allocated costs of
internal counsel) in connection with the preparation and
delivery of the Credit Agreement and all related documents,
and in the negotiation, closing, and enforcement of the
Facilities, regardless of whether the Facilities close. The
Borrower shall also pay all costs and expenses of the
Administrative Agent associated with amendments and other
changes to the Credit Agreement, and all costs and expenses of
the Lenders in the collection of the obligations of the
Borrower (including reasonable attorneys' fees and allocated
costs of internal counsel).
DOCUMENTATION: Closing is subject to (among other conditions precedent) the
receipt by the Administrative Agent and the Lenders of loan
documentation in form and substance satisfactory to them.
GOVERNING LAW: State of New York.
This Summary of Terms and Conditions (the "Term Sheet") does not attempt to
describe all of the terms and conditions that would pertain to the Facilities,
nor do its terms suggest the specific phrasing of documentation clauses.
Instead, it is intended to outline certain points of business understanding
around which the Facilities will be structured. The closing of any financial
transaction relating to the Facilities would be subject to definitive loan
documentation mutually acceptable to the Borrower and the Administrative Agent
and would include various conditions precedent, including without limitations
the conditions set forth above.
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