EXHIBIT 10.6
January 8, 1999 CONFIDENTIAL
MEDE AMERICA CORPORATION
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$25,000,000 SENIOR SECURED CREDIT FACILITIES
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COMMITMENT LETTER
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MedE America Corporation
90 Merrick Avenue, Suite 501
East Meadow, NY 11554
Attention: Mr. Richard Bankosky
Ladies and Gentlemen:
NationsBank N.A. ("NationsBank") is pleased to advise you that it is willing,
subject to credit approval, and 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 $25,000,000 of senior secured credit facilities (the "Senior
Facilities").
It is agreed that NationsBank 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 herein and in the
Term Sheet, NationsBank's commitment to provide financing hereunder is subject
to, among other conditions, (i) approval of the credit facility by NationsBank;
(ii) satisfactory completion of due diligence with respect to the borrower's
operations and business affairs by NationsBank in its sole discretion; (iii) the
negotiation and execution of a definitive credit agreement (the "Credit
Agreement") and other related documentation satisfactory to the Lenders' (iv)
there being no material adverse change in the reasonable opinion of NationsBank
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; (v) there
be no competing offering, placement, or arrangement of any debt securities or
bank financial 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 NationsBank, 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 related 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 NationsBank, 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
January 8, 1999
Page 2
In addition, the Borrower hereby agrees to reimburse NationsBank 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 due diligence and 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 charges 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).
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.
NationsBank's commitment hereunder shall remain in effect until 5:00 p.m. New
York time, on February 15, 1999 when, if not to accepted, NationsBank commitment
hereunder will terminate. This commitment will expire on March 31, 1999 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,
NATIONSBANK N.A.
By: /s/
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Title: Attorney-in-fact
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ACCEPTED AND AGREED TO:
MEDE AMERICA CORPORATION
THIS 8TH DAY OF JANUARY, 1999
By:
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Title:
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CONFIDENTIAL MEDE AMERICA CORPORATION
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SUMMARY OF TERMS AND CONDITIONS (1)
MEDE AMERICA CORPORATION
$25,000,000 SENIOR SECURED CREDIT FACILITIES
BORROWER: MEDE AMERICA CORPORATION ("MedE" or the "Borrower").
GUARANTORS: All material operating subsidiaries and holding companies of
the Borrower.
ADMINSTRATIVE NationsBank N.A. (in such capacity "NationsBank" or
"Administrative Agent")
FACILITIES: Senior Secured Credit Facility (the "Senior Facility") up to
$25,000,000 consisting of a two year non amortizing Revolving
Credit Facility.
LENDERS: NationsBank N.A., and other financial institutions
satisfactory to NationsBank.
PURPOSE: Senior Facility will be used for working capital, general
corporate purposes and acquisitions. All acquisitions shall
be subject to the approval of the Administrative Agent, and
be in a similar line of business, and there shall exist no
Default or Event of Default under the Senior Facility.
AVAILABILITY: Senior Facility will be available on a revolving basis after
the closing ("Closing Date") and prior to the maturity
thereof.
MATURITY DATE: Two year anniversary of the Closing Date, but no later than
February 28, 2001.
MANDATORY
PREPAYMENTS/
COMMITMENT
REDUCTIONS: The Senior Credit Facility will be prepaid by an amount equal
to (i) 100% of the net cash proceeds of all asset sales by
the
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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.
Page 1 January 8, 1999
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BANK OF AMERICA
CONFIDENTIAL MEDE AMERICA CORPORATION
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Company net of all selling expenses and taxes to the extent
that taxes are paid;
(ii) 100% of the net cash proceeds of the issuance of any
debt; and
(iii) 50% of the net cash proceeds of the issuance of any
equity.
Senior Facility will be required to be prepaid or cash
collateralized, as appropriate, if at any time the
outstanding amount thereof exceeds the total commitments, and
the Senior Facility 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 present and future assets of the
Company and its subsidiaries.
(2) Stock of all present and future subsidiaries.
BORROWING
OPTIONS: At the Borrower's option, interest on borrowings shall accrue
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 NationsBank to
prime international banks in the offshore dollar market at
11:00 a.m. New York time two 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 NationsBank 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: Initial pricing with respect to Base Rate Loans will be Base
Rate + 75 bps with a Pricing Grid to be determined.
Initial pricing with respect to Eurodollar Loans will be
LIBOR + 175 bps with a Pricing Grid to be determined.
Interest on Base Rate borrowings are to accrue based on a 365
(6)-day year and actual days elapsed. Interest on Eurodollar
Page 2 January 8, 1999
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BANK OF AMERICA
CONFIDENTIAL MEDE AMERICA CORPORATION
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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 case of Eurodollar Loans, the earlier of the
end of each applicable interest period or quarterly in
arrears.
UPFRONT FEE: 2.0% of the total amount of the Senior Facilities.
COMMITMENT FEE: Commitment Fee equal to 0.50% per annum times the total
amount of the Senior Facility. Commitment Fees shall be
payable quarterly in arrears.
ADMINISTRATIVE
AGENT FEE: $25,000 payable at closing and on each annual anniversary
date therafter.
DEFAULT RATE: 2.00% above the rate otherwise applicable rate of Senior
Facility.
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 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.
TERMINATION OR
VOLUNTARY REDUCTION
OF THE FACILITIES: The Borrower may irrevocably reduce the commitments under
the Senior Facility in amounts of at least $1,000,000 at any
time on three business days advance notice.
DOCUMENTATION: The Senior Facility 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
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BANK OF AMERICA
CONFIDENTIAL MEDE AMERICA CORPORATION
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making advances, affirmative and negative convenants 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 default, corporate
authority, subsidiaries, copyrights, binding effect, ERISA,
taxes, Investment Company Act, and other material agreements,
investments, compliance with laws and regulations, full
disclosure, assets, solvency, labor matters, environmental
manners, proprietary rights, real property, insurance and
Year 2000 compliance.
CONDITIONS TO
CLOSING: 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 on or before March 31, 1999;
o Repayment and cancellation of existing bank credit
facilities and other indebtedness;
o All documents and agreements signed and delivered;
o No Default or Event of Default;
o All representations and warranties are true as of the
date of each advance;
o The Bank having completed (and being satisfied with)
its business, legal, accounting and financial due
diligence with respect to the operations and business
affairs of the Borrower and its subsidiaries and with
respect to the Senior Facility;
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 or any of its subsidiaries to perform their
obligations under the Senior Facilities;
o No material adverse litigation
o Collaterial documents
CONDITIONS TO EACH
ADVANCE (INCLUDING
INITIAL ADVANCE) o No default or event of default under the Senior Facility.
o Continued accuracy in all material respects of the
representations and warranties.
Page 4 January 8, 1999
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BANK OF AMERICA
CONFIDENTIAL MEDE AMERICA CORPORATION
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AFFIRMATIVE
COVENANTS: Standards for the Administrative Agent's similar financings
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.
FINANCIAL
COVENANTS: Usual and customary for transactions of this type including
but not limited to:
(i) Maximum Leverage Ratio of 2.0x:
(ii) Minimum Interest Coverage RAtio of 3.0x;
(iii) Minimum EBITDA TBD;
(iv) Minimum Net Worth TBD
NEGATIVE
COVENANTS: Standard for the Administrative Agent's similar financings
and such others as the Administrtive Agent deems appropriate
in the context of the proposed Senior Facility, including,
but not limited to:
o Year 2000 Compliance required by 9/30/99
o Change of control
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, acquisitons,
dissolutions, etc.
o Restrictions on asset dispostions.
o Restrictions on sale-leaseback transactions.
o Loan proceeds no to be used in violation of Regulation U.
o Restrictions on transactions with affiliates.
o Restrictions on the payment of management fees.
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BANK OF AMERICA
CONFIDENTIAL MEDE AMERICA CORPORATION
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EVENTS OF
DEFAULT: Standard for the Administrative Agent's similar financings
and such others as the Agent deems appropriate in the context
of the proposed Senior Facility.
INCREASED COSTS/
CHANGES OF
CIRCUMSTANCES/
CAPITAL ADQUACY/
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.
EXPENSES: The Borrower will pay all costs and expenses incurred at any
time by the Administrative Agent (including, without
duplication, reasonable attorneys' 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
Facility, regardless of whether the Facility closes. 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).
DOCUMENTATIONS: 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 Share") does not attempt to
describe all of the terms and conditions that would pertain to the Senior
Facility, nor do its terms suggest the specific phrasing of documentation
clauses. This term sheet is not a commitment to provide, close or fund the
Senior Facility. Instead, it is intended to outline certain points of business
understanding around which the Senior Facility will be structured. The closing
of any financial transaction relating to the Senior Facility would be subject to
definitive loan documentation manually 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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BANK OF AMERICA