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EXHIBIT 10.1
ANNEX I
TERM SHEET
(Unless otherwise defined, terms used
in this Term Sheet have the meanings
ascribed thereto in the commitment letter
dated January 23, 1998 (the "Commitment Letter"),
to which this Term Sheet is annexed).
I. PARTIES
Borrower: Medaphis Corporation ("Medaphis" or the "Borrower").
Arranger: Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation or one
or more of its affiliates ("DLJ Securities" or the
"Arranger").
Syndication
Agent: DLJ Capital Funding, Inc. or one or more of its affiliates
("DLJ Capital Funding" or the "Syndication Agent").
Administrative
Agent: A financial institution to be identified by the Arranger
and the Syndication Agent and consented to by the Borrower.
The Syndication Agent and the Administrative Agent are
herein collectively referred to as the "Agents".
Lenders: DLJ Capital Funding and a group of financial institutions
(collectively, the "Lenders") as may be acceptable to the
Arranger, the Syndication Agent and the Borrower.
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II. THE REVOLVING FACILITY
Closing Date: No later than March 31, 1998.
General Description
of the Revolving
Facility: A maximum amount of $100,000,000 in senior, first-priority
secured financing to be provided to the Borrower pursuant
to a revolving credit facility (the "Revolving Facility").
Revolving Loans made under the Revolving Facility are
herein collectively referred to as "Revolving Loans". The
Revolving Loans may be borrowed, prepaid and reborrowed by
the Borrower from time to time prior to the Revolving
Facility Commitment Termination Date (as set forth below).
Use of Proceeds: A portion of the proceeds of the Revolving
Loans, together with proceeds from the issuance of the
Senior Unsecured Notes (as defined below) shall be used to
(i) repay (the "Refinancing") the Bridge Notes (as defined
below), (ii) provide for general corporate purposes of the
Borrower and its subsidiaries, and (iii) pay associated
fees and expenses. The Refinancing, the offering of the
Senior Unsecured Notes and all other transactions, if any,
related thereto are collectively referred to as the
"Transaction".
Revolving Facility: Pursuant to the Revolving Facility (i) Revolving
Loans and Swing Line Loans (as defined below) may be
borrowed, prepaid and reborrowed by the Borrower, and (ii)
Letters of Credit (as defined below) may be issued,
extended, reimbursed and reissued on behalf of the
Borrower, in each case from time to time prior to
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the Revolving Facility Commitment Termination Date (as set
forth below).
Revolving Facility
Commitment Amount: $100,000,000.
Revolving Facility
Commitment
Termination Date: The third anniversary of the Closing Date.
Borrowing Base
Restrictions on
Availability: Availability under the Revolving Facility will be subject
to a borrowing base in the amount equal to the lesser of
(a) $100,000,000 and (b) the sum of: (i) 85% of eligible
billed accounts receivables which are 90 days old or less,
(ii) 50% of eligible billed accounts receivables which are
greater than 90 days old but less than 120 days old and
(iii) 65% of unbilled receivables of the Healthcare
Services Group which are less than 90 days old. Eligibility
criteria to be mutually agreed upon.
Letter of Credit
Sub-Facility
Availability: Outstanding Letters of Credit and related reimbursement
obligations may not exceed $10,000,000 in the aggregate.
Each issuance of a Letter of Credit will constitute usage
under the Revolving Facility and will reduce availability
under the Revolving Facility, dollar-for-dollar. Letters of
Credit must expire on the earlier of (i) one year from the
date of issuance (unless extended subject to customary
evergreen provisions) and (ii) unless cash collateralized,
the Revolving Facility Commitment Termination Date.
Swing Line
Sub-Facility
Availability: Up to $7,500,000 of the Revolving Facility will be available
for swing
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line advances ("Swing Line Loans") to be made to the
Borrower by the Administrative Agent. Swing Line Loans will
constitute usage under the Revolving Facility (except for
purposes of computing the Commitment Fee, as defined below)
and will reduce availability under the Revolving Facility,
dollar-for-dollar.
Interest Rate: At the Borrower's option, the Revolving Loans will
bear interest at the Administration Agent's (i) alternate
base rate or (ii) reserve-adjusted LIBO rate, plus, in
each case, the following applicable margins:
Alternate LIBO Rate
Base Rate Loans
---- -----
Loans
-----
1.50% 2.50%
Commencing six months following the Closing Date the
margins set forth above for Revolving Loans will be subject
to the following performance based pricing-grid:
Leverage Alternate LIBO Rate
-------- Base Rate Loans
Ratio ---- -----
----- Loans
-----
> 3.75 1.75% 2.75%
<= 3.75 > 3.00 1.50% 2.50%
<= 3.00 > 2.50 1.25% 2.25%
<= 2.50 > 2.00 0.75% 1.75%
<= 2.00 > 1.50 0.25% 1.25%
<= 1.50 0.00% 1.00%
Swing Line Loans will bear interest at the Administrative
Agent's alternate base rate plus the applicable margin for
Revolving Loans.
Interest
Payment Dates: Interest periods for LIBO rate Revolving Loans shall be, at
the Borrower's option, one, two, three, or six months.
Interest on LIBO rate
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Revolving Loans shall be payable on the last business day
of the applicable interest period for such Revolving Loans
and, if earlier, every three months after the commencement
of such interest period. Interest on alternate base rate
Revolving Loans shall be payable quarterly in arrears.
Letter of Credit
Fees: A Letter of Credit fee shall accrue on the daily average
undrawn portion of all outstanding Letters of Credit in an
amount per annum equal to the then applicable margin for
LIBO rate Revolving Loans, payable quarterly in arrears to
each Lender on the basis of its percentage of the Revolving
Facility Commitment Amount, plus a Letter of Credit
fronting fee shall accrue in an amount equal to 0.25% per
annum on the stated amount of the each Letter of Credit,
payable quarterly in arrears to the Issuer for its own
account, as the Issuer of Letters of Credit. In addition,
customary administrative, issuance, amendment, payment and
negotiation fees shall be payable to the Issuer for its own
account, as the Issuer of the Letters of Credit on the date
of each issuance or extension of such Letter of Credit.
Commitment Fee: Commencing on the Closing Date, a non-refundable fee
(the "Commitment Fee") shall accrue in the amount of 0.5%
per annum on the daily average amount of the unused portion
of the Revolving Facility Commitment Amount (whether or not
then available), payable quarterly in arrears and on the
final maturity of the Revolving Facility (whether by stated
maturity or otherwise).
Commencing six months following the Closing Date, the
Commitment Fee will be subject to the following performance
based pricing-grid:
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Leverage Commitment
-------- Fee
Ratio
-----
>= 2.5 .50%
< 2.5 >= 2.0 .375%
< 2.0 .25%
Optional
Prepayments: Outstanding Revolving Loans are voluntarily pre-payable,
and Xxxxxx's commitments are voluntarily terminable by the
Borrower, in whole or in part, without penalty; provided,
however, that LIBO rate breakage costs, if any, shall be
for the account of the Borrower.
Mandatory
Prepayments: Customary for the type of transaction proposed including,
without limitation, with (i) 100% of net cash proceeds from
the issuance of debt (subject to certain exceptions), (ii)
100% of net cash proceeds from the sale of assets (subject
to certain exceptions), and (iii) 50% of net cash proceeds
from the issuance of equity (subject to certain
exceptions). All such mandatory prepayments shall be
applied to the repayment of the outstanding principal
amount under the Revolving Facility (without reduction of
the Revolving Facility Commitment Amount).
Security: The Revolving Facility will be secured (subject to certain
to be agreed upon exceptions) by a first-priority perfected
lien (subject to permitted liens) on all of the material
property and assets (tangible and intangible) of the
Borrower and each of its direct and indirect domestic
subsidiaries, including, without limitation, all
intercompany indebtedness, and all capital stock (or
similar equity interests) of each of the Borrower's direct
and indirect domestic
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subsidiaries, whenever acquired and wherever located.
Guarantees: To be delivered by all direct and indirect domestic
subsidiaries of the Borrower.
Conditions Precedent
to Initial Extensions
of Credit: Customary for the type of transaction proposed including,
without limitation, the following, which shall be satisfied
prior to or substantially contemporaneous with the making
of the initial extensions of credit:
1. Completion of a due diligence review of the Borrower
and its subsidiaries satisfactory to the Arranger.
2. Execution and delivery of credit, security,
guarantee and other related documentation embodying
the structure, terms and conditions contained herein
reasonably satisfactory to the Arranger.
3. No material adverse change in the financial
condition, operations, assets, business, properties
or prospects of the Borrower or any of its
subsidiaries taken as a whole, since September 30,
1997 (except as disclosed in any filing of the
Borrower on Form 10-Q or Form 8-K with the
Securities and Exchange Commission on or prior to
January 14, 1998).
4. Receipt of closing certificates, resolutions, and
opinions of counsel, customary for the type of
transaction proposed and in each case reasonably
satisfactory
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in form and substance to the Arranger.
5. The Arranger, the Agents and the Lenders shall have
received all fees and, so long as an invoice
therefore has been presented to the Borrower
reasonably prior to the Closing Date, expenses
required to be paid on or before the Closing Date.
6. All governmental and third party approvals necessary
or advisable in connection with the Transaction and
the financing contemplated hereby shall have been
obtained and be in full force and effect.
7. There shall exist no pending or threatened material
litigation, proceedings or investigations which (x)
would contest the consummation of the Transaction or
(y) except as disclosed in any filing of the
Borrower on Form 10-Q or Form 8-K with the
Securities and Exchange Commission on or prior to
January 14, 1998, could reasonably be expected to
have a material adverse effect on the financial
condition, operations, assets, businesses,
properties or prospects of the Borrower and its
subsidiaries taken as a whole.
8. The Administrative Agent, on behalf of the Lenders,
shall have received a first priority perfected lien
and guarantee, as set forth above under the captions
"Security" and "Guarantees", respectively, in each
case to the reasonable satisfaction of the Arranger.
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9. The Borrower shall have received gross proceeds of
$150,000,000 from the issuance of senior unsecured
notes (the "Senior Unsecured Notes") and the
Arranger shall be reasonably satisfied with all
terms and conditions of all documentation related
thereto.
10. The Borrower's senior secured increasing rate notes
(the "Bridge Notes") shall have been repaid.
11. Receipt of (i) consolidated financial statements for
the fiscal year ended December 31, 1997 audited by
Price Waterhouse that are consistent in all material
respects with the disclosures previously made in
writing by the Borrower to the Arranger or its
affiliates in respect thereof or are otherwise
satisfactory in all material respects to the
Arranger.
Additional Conditions
Precedent: The making of each Loan will be conditioned upon (i) all
representations in the Credit Documentation being true and
correct in all material respects and (ii) there being no
event of default or condition which, with the giving of
notice or passage of time (or both), would constitute an
event of default.
Representations
and Warranties: Customary for the type of transaction proposed,
with appropriate materiality carve-outs.
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Affirmative
Covenants: Customary for the type of transaction proposed, with
appropriate materiality carve-outs.
Negative
Covenants: Customary for the type of transaction proposed, including,
but not limited to, the following:
1. Restricting the incurrence of additional debt, sale
leasebacks and contingent liabilities.
2. Restricting the incurrence or sufferance of liens
and similar encumbrances.
3. Restricting the making of cash dividends or similar
distributions in respect of the Borrower's capital
stock, including direct or indirect redemptions of
any such capital stock.
4. Restricting the sale of assets or similar transfers,
other than in the ordinary course of business and
abandoned assets.
5. Restricting the making of investments or
acquisitions (in a single transaction or in a series
of related transactions).
6. Restricting mergers, consolidations and similar
combinations.
7. Restricting transactions with affiliates.
8. Restricting the refinancing, defeasance, repurchase
or prepayment of the Senior Unsecured Notes.
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9. Limiting the making of capital expenditures.
Financial
Covenants: Customary for the type of transaction proposed and
consisting of the financial covenants set forth below (to
be tested quarterly), with the definitions to be mutually
agreed upon (all accounting terms to be interpreted, and
all accounting determinations and computations to be made,
in accordance with generally accepted accounting
principles):
1. Maintenance of a maximum ratio of total debt to
EBITDA (the "Leverage Ratio"), for the periods and
respective levels as follows:
9/98 and 12/98 - 4.00
3/99 - 3.75
6/99 - 3.50
9/99 - 3.25
12/99 - 3.00
3/00 and 6/00 - 2.75
9/00 and 12/00 - 2.50
thereafter - 2.25
2. Maintenance of a minimum ratio of EBITDA to cash
interest expense (the "Interest Coverage Ratio") for
the periods and respective levels as follows:
3/98 and 6/98 - 2.00
9/98 and 12/98 - 2.25
3/99 - 2.50
6/99 - 2.75
9/99 - 3.00
12/99 - 3.25
3/00 - 3.50
6/00 - 3.75
9/00 and
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thereafter - 4.00
3. Maintenance of minimum EBITDA for the periods and
respective levels as follows (1998 to be cumulative,
and 1999 and thereafter to be calculated on a
rolling four-quarter basis):
3/98 - $10.0
6/98 - $25.0
9/98 - $44.0
12/98 - $62.5
3/99 - $67.5
6/99 - $70.0
9/99 - $72.5
12/99 - $75.0
3/00 - $80.0
6/00, thereafter $85.0
4. Maintenance of minimum net worth equal to
$475,000,000 plus 50% of positive net income (and
exclusive of an accelerated write-off of intangible
assets).
Events of
Default: Customary for the type of transaction proposed, including,
without limitation, a cross-default to other indebtedness
of the Borrower and its subsidiaries in excess of a to be
agreed upon amount, and a change of control (to be defined
in a manner reasonably satisfactory to the Borrower and the
Arranger).
Miscellaneous: Customary provisions to be included, including, without
limitation, the following:
1. Customary indemnity and capital adequacy provisions,
including but not limited to gross-up provisions for
changes in U.S. withholding taxes) and decreased
profitability resulting from
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changes in U.S. or foreign capital adequacy
requirements, guidelines or policies or
their interpretation or application,
subject in each case to customary
protection (including rights to substitute
Lenders) provided to borrowers, and any
other customary yield and increased cost
protection deemed necessary by the Lenders
to provide customary protection.
2. The Lenders will be permitted to assign and
participate Revolving Loans, notes and
commitments to financial institutions in a
minimum amount to be agreed upon. Any
assignments would be by novation and, would
require the consent of the Borrower and the
Agents (unless such assignment was to
another Lender or an affiliate of another
Lender and the costs to the Borrower would
not be increased as a result thereof), such
consent not to be unreasonably withheld or
delayed. Participations shall be without
restrictions and participants will have the
same benefits as the Lenders with regard to
increased costs, capital adequacy, etc.,
and provision on a confidential basis of
information on the Borrower; provided, that
the right of participants to vote on
amendments, waivers, etc. will be limited
to certain customary issues such as,
without limitation, extension of the final
scheduled maturity date of the Revolving
Loans participated in by such participant.
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3. Confidentiality obligations on the part of
the Agents and the Lenders.
4. Indemnification of the Arranger, the
Agents, each of the Lenders and each of
their respective affiliates, directors,
officers, agents and employees from and
against any losses, claims, damages,
liabilities or other expenses,
substantially as set forth in Xxxxx XX
hereto.
5. The Borrower shall pay all of the fees and
reasonable out-of-pocket expenses of the
Arranger and the Agents as set forth in
Annex II hereto.
6. Amendments and waivers of the Credit
Documentation will require the approval of
Lenders holding a majority of the Revolving
Loans and commitments, except that the
consent of all the Lenders shall be
required with respect to certain customary
issues.
6. Waiver of jury trial.
7. New York governing law; consent to
non-exclusive New York jurisdiction.
This Term Sheet is intended as an outline only and does not purport to
summarize all the conditions, covenants, representations, warranties and other
provisions which would be contained in the definitive Credit Documentation. The
commitments, undertakings and obligations described herein will be subject to
negotiation and execution of definitive Credit Documentation in form and
substance satisfactory to the Arranger, the Syndication Agent and their legal
counsel.
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ANNEX II
INDEMNIFICATION PROVISIONS
Unless otherwise defined, terms used herein shall have the meanings
assigned thereto in the commitment letter (the "Commitment Letter") and term
sheet (the "Term Sheet") to which this Annex II is attached.
Medaphis Corporation (the "Indemnitor") hereby agrees to pay all fees
and reasonable out-of-pocket costs and expenses (including all reasonable
out-of-pocket costs and expenses arising in connection with the syndication of
the Revolving Facility and any due diligence investigation performed by the
Arranger prior to the date hereof, and fees and expenses of the legal counsel
to the Arranger and the Agents, including any local legal counsel) arising out
of or in connection with the negotiation, preparation, execution, delivery or
administration of the Commitment Letter, the Term Sheet, the Fee Letter and the
definitive Credit Documentation and any amendment, modification or waiver
thereto, and the Indemnitor shall be obligated to pay such fees and expenses
whether or not definitive Credit Documentation is executed or delivered or the
Transaction is consummated.
In addition, the Indemnitor hereby indemnifies and holds harmless all
Indemnified Parties (as defined below) from and against all Liabilities (as
defined below). "Indemnified Party" shall mean the Arranger, the Syndication
Agent, the Administrative Agent, each of the Lenders, each affiliate of any of
the foregoing and the respective directors, officers, trustees, agents and
employees of each of the foregoing, and each other person controlling any of
the foregoing within the meaning of either Section 15 of the Securities Act of
1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as
amended. "Liabilities" shall mean any and all losses, claims, damages,
liabilities or other reasonable out-of-pocket costs or expenses to which an
Indemnified Party may become subject which arise out of or relate to or result
from any action or proceeding relating to or connected with the transaction
described in the Commitment Letter, the Fee Letter or the Term Sheet, except to
the extent such Liabilities result from the gross negligence, bad faith or
willful misconduct of the Indemnified Party seeking indemnification hereunder.
In addition to the foregoing, the Indemnitor agrees to reimburse each
Indemnified Party for all
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reasonable out-of-pocket legal or other expenses incurred in connection with
investigating, defending or participating in any action, suit or other
proceeding relating to any Liabilities (whether or not such Indemnified Party
is a party to any such action, suit or proceeding). With respect to all of the
foregoing, the Indemnified Parties shall be represented by a single legal
counsel so long as no conflict of interest shall result from such counsel's
representation of all Indemnified Parties.
Any terms or provisions of this Xxxxx XX to the contrary
notwithstanding, upon (i) the execution and delivery of definitive Credit
Documentation by the Borrower, the Arranger, the Agents and the Lenders and
(ii) the making of the initial Revolving Loans under the Revolving Facility,
the terms and provisions of this Annex II shall be superseded in their entirety
by the terms and provisions of such Credit Documentation, and the terms and
provisions of this Annex II shall be of no further force or effect.
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