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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-9
(AMENDMENT NO. 30)
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
ITT CORPORATION
(NAME OF SUBJECT COMPANY)
ITT CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
------------------------
COMMON STOCK, NO PAR VALUE
(INCLUDING THE ASSOCIATED SERIES A PARTICIPATING CUMULATIVE PREFERRED STOCK
PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
450912 10 0
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
RICHARD S. WARD, ESQ.
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND CORPORATE SECRETARY
ITT CORPORATION
1330 AVENUE OF THE AMERICAS
NEW YORK, NY 10019-5490
(212) 258-1000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
------------------------
WITH A COPY TO:
PHILIP A. GELSTON, ESQ.
CRAVATH, SWAINE & MOORE
WORLDWIDE PLAZA
825 EIGHTH AVENUE
NEW YORK, NY 10019-7475
(212) 474-1000
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INTRODUCTION
The Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") originally filed on February 12, 1997, by ITT Corporation, a Nevada
corporation (the "Company"), relates to an offer by HLT Corporation, a Delaware
corporation ("HLT") and a wholly owned subsidiary of Hilton Hotels Corporation,
a Delaware corporation ("Hilton"), to purchase 61,145,475 shares of the common
stock, no par value (including the associated Series A Participating Cumulative
Preferred Stock Purchase Rights), of the Company. All capitalized terms used
herein without definition have the respective meanings set forth in the Schedule
14D-9.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
The response to Item 7 is hereby amended by adding the following after the
final paragraph of Item 7:
The Company has received commitment letters from The Chase Manhattan Bank
("Chase") and Chase Securities Inc. ("CSI") (the "Commitment Letters") whereby
CSI has agreed to structure, arrange and syndicate credit facilities, and Chase
has committed to provide a portion of such facilities, in aggregate principal
amounts of (a) $5 billion for Destinations (the "Destinations Facilities"), (b)
$385 million for ITT Promedia CVA ("Promedia"), a Belgian company and an
indirect, wholly owned subsidiary of the Company (the "Promedia Facilities"),
and (c) $270 million for ITT Publimedia B.V. ("Publimedia"), a Dutch company and
wholly owned subsidiary of Promedia ("Publimedia Facilities"). The terms of
definitive agreements for the Destinations Facilities, the Promedia Facilities
and the Publimedia Facilities have not yet been finalized. The following is a
summary of the anticipated principal terms of such facilities based upon the
Commitment Letters. This summary is subject to completion of definitive
agreements and is qualified in its entirety by reference to the Commitment
Letters which are filed as exhibits to the Schedule 14D-9.
The $5 billion Destinations Facilities will include (a) a $1.5 billion
2 1/2-year term loan facility and a $2.5 billion 5-year term loan facility, each
to be fully drawn at closing, and (b) a $1 billion 5-year revolving credit
facility. Chase has committed to provide up to $500 million of these facilities
and agreed to use commercially reasonable efforts to syndicate the balance. The
Destinations Facilities will be guaranteed by each of Destinations' direct and
indirect domestic subsidiaries other than gaming subsidiaries. The Destinations
Facilities will be secured by a perfected first priority security interest in
all of Destinations' and its subsidiaries' (other than gaming subsidiaries)
tangible (other than mortgages on real property) and intangible assets
(including, without limitation, the Sheraton reservation system, each of the
Sheraton franchise agreements and intellectual property (including the Sheraton
trademark)) and all the capital stock and intercompany obligations of each of
Destinations' direct and indirect domestic subsidiaries (excluding gaming
subsidiaries) and 66% of the capital stock and all the intercompany obligations
of first-tier foreign subsidiaries. The $335 million Promedia Facilities will
include (a) a $210 million 6-year term loan facility, a $65 million 7-year term
loan facility and a $60 million 8-year term loan facility, each to be fully
drawn at closing, and (b) a $50 million 6-year revolving credit facility. All
amounts will be loaned in their equivalent in Belgian francs. Chase has
committed to provide up to $60 million of these facilities and agreed to use
commercially reasonable efforts to syndicate the balance. The Promedia
Facilities will be guaranteed by ITT ISI and ITT World Directories. The Promedia
Facilities will be secured by a security interest in certain tangible and
intangible assets of ITT ISI and ITT World Directories and assets of Promedia as
to which it is commercially reasonable to provide security based on the costs
and legal difficulties of obtaining such a security interest in relation to the
value of the security to be afforded thereby. The $270 million Publimedia
Facilities will include (a) a $120 million 6-year term loan facility, a $50
million 7-year term loan facility and a $50 million 8-year term loan facility,
each to be fully drawn at closing, and (b) a $50 million 6-year revolving credit
facility. All amounts will be loaned in their equivalent in Dutch guilders.
Chase has committed to provide up to $40 million of these facilities and agreed
to use commercially reasonable efforts to syndicate the balance. The Publimedia
Credit Facilities will be secured by a security interest in 100% of the stock of
Publimedia's direct and indirect subsidiaries. The definitive documentation for
each of these credit facilities is expected to contain customary prepayment
provisions, covenants, representations and warranties and events of default.
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The agreements and commitments of Chase and CSI with respect to the
Destinations Facilities, the Promedia Facilities and the Publimedia Facilities
are subject to certain conditions, including conditions relating to (a) material
adverse conditions or changes in or affecting the business, operations, property
or financial condition or prospects of the Company or Destinations, and their
respective subsidiaries, taken as a whole, (b) the satisfaction of Chase and CSI
with the structure and serviceability of the financings of the Company and its
subsidiaries, (c) the disclosure of material and adverse information affecting
the Company or Destinations, as the case may be, (d) material adverse litigation
affecting the Comprehensive Plan or such credit facilities; provided that
litigation or other similar proceedings seeking to challenge the Comprehensive
Plan but which have not had the effect of enjoining any of or all the elements
of the Comprehensive Plan shall not prevent the satisfaction of this condition,
(e) material disruptions or material adverse changes in financial, banking or
capital market conditions, (f) competing offerings, placements or arrangements
by or on behalf of the Company, (g) definitive documentation and (h) certain
other customary conditions. The closings under each of the Destinations Credit
Facilities, Promedia Credit Facilities and Publimedia Credit Facilities will be
conditioned on the closings under the other two credit facilities.
In addition to the Credit Facilities, the Company is currently
contemplating additional debt financing pursuant to the issuance of debt
securities by Promedia and Publimedia (the "Debt Securities"). The Debt
Securities are expected to consist of (i) $320 million of ten-year notes to be
issued by Promedia in two tranches, consisting of a $160 million U.S.
dollar-denominated tranche and a DM 300 million Deutsche mark-denominated
tranche, and (ii) $175 million of ten-year notes to be issued by Publimedia in a
single tranche. The Debt Securities will be unsecured and subordinated and are
expected to have covenants that are typical for high yield offerings.
Copies of the Commitment Letters described above are filed as exhibits 90,
91 and 92 hereto and are incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The response to Item 8 is hereby amended by adding the following after the
final paragraph of Item 8:
On August 25, 1997, Hilton filed a motion in the Nevada federal court for
injunctive and preliminary relief seeking, among other things, to enjoin ITT
from proceeding with the Comprehensive Plan. Hilton requested a hearing date
during the week of September 22, 1997 for its motion. On August 26, 1997, the
Company filled a response to Hilton's request for a hearing during the week of
September 22, contending that Hilton is not entitled to seek preliminary
injunctive relief at this stage and, in the alternative, requesting that a
hearing on Hilton's motion be scheduled during the week of September 8. A copy
of Hilton's motion was filed as an exhibit to Amendment No. 24 to the Hilton
Schedule 14D-1 which was filed with and can be obtained from the Securities and
Exchange Commission. A copy of the Company's response to Hilton's motion is
filed as Exhibit 93 hereto and is incorporated herein by reference.
ITEM 9. EXHIBITS.
The response to Item 9 is hereby amended by adding the following new
exhibits:
90. Commitment Letter dated as of August 22, 1997, among Chase Securities
Inc., The Chase Manhattan Bank and the Company.
91. Commitment Letter dated as of August 22, 1997, among Chase Securities
Inc., The Chase Manhattan Bank and ITT Promedia CVA.
92. Commitment Letter dated as of August 22, 1997, among Chase Securities
Inc., The Chase Manhattan Bank and ITT Promedia CVA.
93. The Company's Response to Hilton's ex parte Motion for Prompt Hearing
on its Motion for Injunctive and Declaratory Relief.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
ITT CORPORATION
By: /s/ RICHARD S. WARD
--------------------------------------
Name: Richard S. Ward
Title: Executive Vice President,
General Counsel and
Corporate Secretary
Dated as of August 27, 1997
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE NO.
- ------- -------------------------------------------------------------------------- --------
<C> <S> <C>
(90) Commitment Letter dated as of August 22, 1997, among Chase Securities
Inc., The Chase Manhattan Bank and the Company............................
(91) Commitment Letter dated as of August 22, 1997, among Chase Securities
Inc., The Chase Manhattan Bank and ITT Promedia CVA.......................
(92) Commitment Letter dated as of August 22, 1997, among Chase Securities
Inc., The Chase Manhattan Bank and ITT Promedia CVA.......................
(93) The Company's Response to Hilton's ex parte Motion for Prompt Hearing on
its Motion for Injunctive and Declaratory Relief..........................
</TABLE>
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EXHIBIT 90
August 22, 1997
ITT DESTINATIONS, INC.
COMMITMENT LETTER
ITT Corporation
1330 Avenue of the Americas
New York, New York 10019-5490
Attention: Elizabeth A. Tuttle, Senior Vice President
and Treasurer
Ladies and Gentlemen:
ITT Corporation ("ITT") has informed Chase that it intends to (i) refinance
(the "Refinancing") approximately $2,000,000,000 par amount of public
indebtedness and a certain amount of other indebtedness of ITT and its
subsidiaries, (ii) repurchase (the "Repurchase") approximately $2,100,000,000 of
its capital stock and (iii) subsequent to the Refinancing and Repurchase,
spin-off (collectively, the "Spin-Offs") to its shareholders its education
services and hotels and gaming businesses. You have also advised CSI and Chase
that you intend to form a new Nevada corporation to be named ITT Destinations,
Inc. ("ITT Destinations") into which ITT Sheraton Corporation, a Delaware
corporation ("ITT Sheraton"), which owns ITT's hotels and gaming operations,
will be merged. In that connection ITT has requested (a) that CSI agree to
structure, arrange and syndicate credit facilities (the "Credit Facilities") for
ITT Destinations of up to $5,000,000,000 and (b) that Chase commit to provide a
portion of the Credit Facilities and agree to serve as administrative agent for
the Credit Facilities, the proceeds of which would be distributed by ITT
Destinations to ITT in order to finance a portion of the Refinancing and the
Repurchase (the Refinancing, the Repurchase and the Spin-Offs, collectively with
the financings and other transactions described herein and all other
transactions related thereto, the "Transactions").
CSI is pleased to advise you that it is willing to act as exclusive advisor
and arranger for the Credit Facilities. Furthermore, Chase is pleased to advise
you of (a) its commitment to provide up to $500,000,000 of the Credit
Facilities, and (b) its agreement to use commercially reasonable efforts to
assemble a syndicate of financial institutions identified by CSI and Chase in
consultation with you (together with Chase, the "Lenders"), to provide the
balance of the necessary commitments for the Credit Facilities, in each case,
upon the terms and subject to the conditions set forth or referred to in this
commitment letter (the "Commitment Letter") and in the Summary of Terms and
Conditions attached as Exhibit A hereto (the "Term Sheet"). It is a condition to
Chase's commitment to provide the portion of the Credit Facilities described
above that the remainder of the Credit Facilities shall be provided by the other
Lenders referred to below.
It is agreed that Chase will act as the sole and exclusive Administrative
Agent, and that CSI will act as the sole and exclusive advisor and arranger, for
the Credit Facilities, and each will, in such capacities, perform the duties and
exercise the authority customarily performed and exercised by it in such roles.
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 and the Fee Letter referred to below) will be
paid in connection with the Credit Facilities unless you and we shall so agree.
It is understood that ITT has significant relationships with many financial
institutions, that ITT may request that one or more of these financial
institutions be given a title or other special status in the Credit Facilities
for relationship reasons and it is agreed that Chase and CSI will reasonably
consider any such request.
We intend to syndicate the Credit Facilities to a group of Lenders
identified by us in consultation with you, and you agree actively to assist CSI
in completing a syndication reasonably satisfactory to it. CSI intends to
commence syndication efforts promptly, and you agree actively to assist CSI in
completing a syndication
<PAGE> 2
reasonably satisfactory to it. Such assistance shall include (a) your using
commercially reasonable efforts to ensure that the syndication efforts benefit
materially from ITT's existing lending relationships, (b) direct contact between
senior management and advisors of ITT and ITT Destinations and the proposed
Lenders, (c) assistance in the preparation of a Confidential Information
Memorandum and other marketing materials to be used in connection with the
syndication and (d) the hosting, with CSI, of one or more meetings of
prospective Lenders.
CSI will manage all aspects of the syndication in consultation with ITT,
including decisions as to the selection of institutions to be approached and
when they will be approached, when their commitments will be accepted, which
institutions will participate, the allocations of the commitments among the
Lenders and the amount and distribution of fees among the Lenders. To assist CSI
in its syndication efforts, you agree promptly to and to cause the other
Borrowers to prepare and provide to CSI and Chase all information with respect
to each Borrower and its subsidiaries, the Transactions and the other
transactions contemplated hereby, including all financial information and
projections (the "Projections"), as we may reasonably request in connection with
the arrangement and syndication of the Credit Facilities. You hereby represent
and covenant that (a) all information other than the Projections (the
"Information") that has been or will be made available to Chase or CSI by any
Borrower or any of their respective representatives is or will be, when
furnished, correct in all material respects and does not or will not contain any
untrue statement of a material fact and at the time of delivery to the
prospective Lenders of a Confidential Information Memorandum and at closing,
taken as a whole, will be complete and will not omit to state a material fact
necessary in order to make the statements contained therein not materially
misleading in light of the circumstances under which such statements are made
and (b) the Projections that have been or will be made available to Chase or CSI
by any Borrower or any of their respective representatives have been or will be
prepared in good faith based upon reasonable assumptions. You understand that in
arranging and syndicating the Credit Facilities we may use and rely on the
Information and Projections without independent verification thereof.
As consideration for Chase's commitment hereunder and CSI's agreement to
perform the services described herein, you agree to pay to Chase the
nonrefundable fees set forth in the Term Sheet and in the fee letter dated the
date hereof and delivered herewith (the "Fee Letter").
Chase's commitment hereunder and CSI's agreement to perform the services
described herein are subject to (a) there not occurring or becoming known to us
any material adverse condition or material adverse change in or affecting the
business, operations, property or financial condition or prospects of ITT or ITT
Destinations and its subsidiaries, taken as a whole, (b) our not becoming aware
after the date hereof of any information or other matter affecting ITT or ITT
Destinations and its subsidiaries or the transactions contemplated hereby
(including matters relating to financial models) which is inconsistent in a
material and adverse manner with any such information or other matter disclosed
to us prior to the date hereof, (c) there not having occurred any material
adverse litigation affecting the Transactions or Credit Facilities that has not
been settled, dismissed, vacated or discharged prior to the proposed closing
date for the Credit Facilities to the reasonable satisfaction of Chase and CSI;
provided, that litigation or other similar proceedings seeking to challenge the
Transactions but which have not had the effect of enjoining any or all of the
Transactions shall not prevent the satisfaction of this condition, (d) there not
having occurred a material disruption of or material adverse change in
financial, banking or capital market conditions that, in our reasonable
judgment, could materially impair the syndication of any of the Credit
Facilities, (e) our satisfaction that prior to and during the syndication of the
Credit Facilities there shall be no competing offering, placement or arrangement
of any debt securities or bank financing by or on behalf of ITT or any of its
subsidiaries (other than the credit facilities or debt offerings (including
bridge financings) entered into by ITT Corporation or any of the direct or
indirect subsidiaries of ITT World Directories, Inc with Chase and/or CSI), (f)
the other conditions set forth or referred to in the Term Sheet and (g) the
negotiation, execution and delivery on or before December 31, 1997 of definitive
documentation with respect to the Credit Facilities reasonably satisfactory to
Chase and its counsel. Any matters not covered by the provisions hereof and of
the Term Sheet are subject to the approval and agreement of Chase, CSI and you.
You agree (a) to indemnify and hold harmless Chase, CSI, their affiliates
and their respective officers, directors, employees, advisors, and agents (each,
an "indemnified person") from and against any and all
2
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losses, claims, damages and liabilities to which any such indemnified person may
become subject arising out of or in connection with this Commitment Letter, the
Credit Facilities, the use of the proceeds thereof, the Transactions or any
related transaction or any claim, litigation, investigation or proceeding
relating to any of the foregoing, regardless of whether any indemnified person
is a party thereto, and to reimburse each indemnified person upon demand for any
legal or other expenses incurred in connection with investigating or defending
any of the foregoing, provided that the foregoing indemnity will not, as to any
indemnified person, apply to losses, claims, damages, liabilities or related
expenses to the extent they are found by a final, non-appealable judgment of a
court to arise from the willful misconduct or gross negligence of such
indemnified person, and (b) to reimburse Chase, CSI and their affiliates on
demand for all reasonable out-of-pocket expenses (including due diligence
expenses, syndication expenses, travel expenses, and reasonable fees, charges
and disbursements of counsel) incurred in connection with the Credit Facilities
and any related documentation (including this Commitment Letter, the Term Sheet,
the Fee Letter and the definitive financing documentation). No indemnified
person shall be liable for any indirect or consequential damages in connection
with its activities related to the Credit Facilities.
You acknowledge that Chase and its affiliates (the term "Chase" as used
below in this paragraph being understood to include such affiliates) may be
providing debt financing, equity capital or other services (including financial
advisory services) to other companies in respect of which you or ITT
Destinations may have conflicting interests regarding the transactions described
herein and otherwise. Chase will not use confidential information obtained from
you or ITT Destinations by virtue of the transactions contemplated by this
Commitment Letter or its other relationships with you or ITT Destinations in
connection with the performance by Chase of services for other companies, and
Chase will not furnish any such information to other companies. You also
acknowledge that Chase has no obligation to use in connection with the
transactions contemplated by this Commitment Letter, or to furnish to you or ITT
Destinations, confidential information obtained from other companies.
This Commitment Letter may not be amended or waived except by an instrument
in writing signed by you, Chase and CSI. This Commitment Letter may be executed
in any number of counterparts. This Commitment Letter and the Fee Letter are the
only agreements that have been entered into among us with respect to the Credit
Facilities and set forth the entire understanding of the parties with respect
thereto. The reimbursement, indemnification and confidentiality provisions
contained herein shall remain in full force and effect regardless of whether any
new commitment letter or definitive financing documentation shall be executed
and delivered. This Commitment Letter shall be governed by, and construed in
accordance with, the laws of the State of New York.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Term Sheet or the Fee Letter nor any of
their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) to your officers, agents and advisors who are directly
involved in the consideration of this matter, (b) as may be compelled in a
judicial or administrative proceeding or as otherwise required by law (in which
case you agree to inform us promptly thereof) or (c) other than the Fee Letter,
in connection with a public filing with the U.S. Securities and Exchange
Commission.
If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms hereof and of the Term Sheet and the Fee Letter by
returning to us executed counterparts hereof and the Fee Letter not later than
5:00 p.m., New York City time, on August 22, 1997. Chase's and CSI's agreements
herein will expire at such time in the event Chase has not received such
executed counterparts. In the event that the initial borrowing in respect of the
Credit Facilities does not occur on or before December 31, 1997, then this
Commitment Letter and the commitments shall automatically terminate unless each
of CSI and Chase shall agree to an extension.
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We are pleased to have been given the opportunity to assist you in
connection with this important financing.
Very truly yours,
THE CHASE MANHATTAN BANK
By: /s/ DEBORAH DAVEY
------------------------------------
Name: Deborah Davey
Title: Vice President
CHASE SECURITIES INC.
By: /s/ NANCY G. MISTRETTA
------------------------------------
Name: Nancy G. Mistretta
Title: Managing Director
Accepted and agreed to as of
the date first written above by:
ITT CORPORATION
By: /s/ ELIZABETH A. TUTTLE
--------------------------------------------------------
Name: Elizabeth A. Tuttle
Title: Senior Vice President and Treasurer
4
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EXHIBIT A
$5,000,000,000 SENIOR SECURED CREDIT FACILITIES
SUMMARY OF TERMS AND CONDITIONS
AUGUST 22, 1997
------------------------------
The following term sheet (the "Term Sheet") sets forth the principal terms
and conditions for the Credit Facilities.
I. PARTIES
Borrower: ITT Destinations (the "Borrower"). On or prior to
the Closing Date (as defined below) ITT Sheraton
Corporation, a Delaware corporation, which owns the
existing hotels and gaming businesses of ITT, shall
be merged into the Borrower.
Guarantors: Each of the Borrower's direct and indirect domestic
subsidiaries other than its gaming subsidiaries
(the "Guarantors"; the Borrower and the Guarantors,
collectively, the "Credit Parties"), in each case
as requested by Chase (as defined below).
Advisor and Arranger: Chase Securities Inc. (in such capacity, the
"Arranger").
Administrative Agent: The Chase Manhattan Bank ("Chase" and, in such
capacity, the "Administrative Agent").
Lenders: A syndicate of banks, financial institutions and
other entities, including Chase, arranged by the
Arranger (collectively, the "Lenders").
II. TYPES AND AMOUNTS OF CREDIT FACILITIES
1. TERM LOAN FACILITY
Types and Amounts of
Facilities: Term Loan Facilities (the "Term Loan Facilities")
in an aggregate amount of $4,000,000,000 (the loans
thereunder, the "Term Loans") as follows:
Term Loan I Facility: A 2 1/2-year term loan
facility (the "Term Loan I Facility") in an
aggregate principal amount equal to $1,500,000,000
(the loans thereunder, the "Term Loan I Loans").
The Term Loan I Loans shall be repayable in
moderate quarterly installments beginning 18 months
after the Closing Date with a larger final
installment upon maturity thereof in amounts to be
agreed.
Term Loan II Facility: A 5-year term loan facility
(the "Term Loan II Facility") in an aggregate
principal amount equal to $2,500,000,000 (the loans
thereunder, the "Term Loan II Loans"). The Term
Loan II Loans shall be repayable in quarterly
installments beginning upon the repayment in full
of the Term Loan I Facility and concluding five
years from the Closing Date in amounts to be
agreed.
Availability: The Term Loans shall be made in a single drawing on
the Closing Date (as defined below).
<PAGE> 6
Purpose: The proceeds of the Term Loans shall be used to
finance the Refinancing and the Repurchase, to pay
related fees and expenses and for general corporate
purposes.
2. REVOLVING CREDIT FACILITY
Type and Amount of
Facility: 5-year revolving credit facility (the "Revolving
Credit Facility"; together with the Term Loan
Facilities, the "Credit Facilities") in the amount
of $1,000,000,000 (the loans thereunder, the
"Revolving Credit Loans").
Availability: The Revolving Credit Facility shall be available on
a revolving basis during the period commencing on
the Closing Date and ending on the fifth
anniversary thereof (the "Revolving Credit
Termination Date").
Letters of Credit: A portion of the Revolving Credit Facility not in
excess of an amount to be agreed shall be available
for the issuance of letters of credit (the "Letters
of Credit") by Chase (in such capacity, the
"Issuing Lender"). No Letter of Credit shall have
an expiration date after the earlier of (a) one
year after the date of issuance and (b) five
business days prior to the Revolving Credit
Termination Date, provided that any Letter of
Credit with a one-year tenor may provide for the
renewal thereof for additional one-year periods
(which shall in no event extend beyond the date
referred to in clause (b) above).
Drawings under any Letter of Credit shall be
reimbursed by the Borrower (whether with its own
funds or with the proceeds of Revolving Credit
Loans) on the same business day. To the extent that
the Borrower does not so reimburse the Issuing
Lender, the Lenders under the Revolving Credit
Facility shall be irrevocably and unconditionally
obligated to reimburse the Issuing Lender on a pro
rata basis.
Swing Line Loans: A portion of the Revolving Credit Facility not in
excess of $25,000,000 shall be available for swing
line loans (the "Swing Line Loans") from Chase (in
such capacity, the "Swing Line Lender") on same-day
notice. Any such Swing Line Loans will reduce
availability under the Revolving Credit Facility on
a dollar-for-dollar basis. Each Lender under the
Revolving Credit Facility shall acquire, under
certain circumstances, an irrevocable and
unconditional pro rata participation in each Swing
Line Loan.
Competitive Loans: The Borrower shall have the option to request that
the Lenders bid for loans ("Competitive Loans") in
U.S. dollars, Canadian dollars, British Pounds
Sterling, French Francs and Mexican Pesos (such
currencies other than U.S. dollars, the "Optional
Currencies") bearing interest at an absolute rate
or a margin over the eurodollar rate, with
specified maturities ranging from 7 to 360 days.
Each Lender shall have the right, but not the
obligation, to submit bids at its discretion. The
Borrower, by notice given four business days in
advance in the case of eurodollar rate bids and one
business day in advance in the case of absolute
rate bids, shall specify the proposed date of
borrowing, the currency to be borrowed, the
interest period, the amount of the Competitive Loan
and the maturity date thereof, the interest rate
basis to be used by the Lenders in bidding and such
other terms as the Borrower may specify. The
Administrative Agent shall advise the Lenders of
the terms of the Borrower's notice, and, subject to
acceptance by the Borrower, bids shall be allocated
to each Lender in ascending order from the lowest
bid to the
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highest bid acceptable to the Borrower. While
Competitive Loans are outstanding, the available
commitments under the Revolving Credit Facility
shall be reduced by the aggregate amount of such
Competitive Loans. Designated subsidiaries of the
Borrower will be permitted to borrow Competitive
Loans in any Optional Currency with a guarantee by
the Borrower.
Multi-Currency
Commitment: A portion of the Revolving Credit Facility not in
excess of an amount to be agreed shall be available
for borrowing in the Optional Currencies to be made
available by a subset of the Lenders under the
Revolving Credit Facility which have access to the
relevant Optional Currency. Designated subsidiaries
of the Borrower will be permitted to borrow under
the Multi-Currency Commitment with a guarantee by
the Borrower.
Maturity: The Revolving Credit Termination Date.
Purpose: The proceeds of the Revolving Credit Loans shall be
used to repay certain existing indebtedness of the
Borrower and its subsidiaries and for general
corporate purposes of the Borrower and its
subsidiaries in the ordinary course of business.
III. CERTAIN PAYMENT PROVISIONS
Fees and Interest Rates: As set forth on Annex I.
Optional Prepayments and
Commitment Reductions: Loans may be prepaid and commitments may be reduced
by the Borrower in minimum amounts to be agreed
upon, provided, that Competitive Loans may not be
prepaid without the consent of the relevant Lender.
Mandatory Prepayments and
Commitment Reductions: The following amounts shall be applied to prepay
the Term Loans:
(a) For so long as the aggregate principal amount
of the Term Loans is greater than $2,500,000,000
and the Borrower does not have an investment grade
rating from both Standard & Poor's and Moody's,
100% of the net proceeds of the incurrence or
issuance of certain indebtedness after the Closing
Date by the Borrower or any of its subsidiaries
(subject to customary exceptions);
(b) 100% of the net after-tax proceeds of any sale
or other disposition (including as a result of
casualty or condemnation) by the Borrower or any of
its subsidiaries of any assets (except for the sale
of inventory in the ordinary course of business,
certain other customary exceptions and sales of
capital assets in each year up to $100,000,000).
The proceeds from a casualty or condemnation will
not be required to prepay the Term Loans to the
extent such proceeds are utilized within a certain
time period to be agreed to replace the damaged or
condemned asset; and
(c) 50% of excess cash flow (to be defined in a
mutually satisfactory manner) for each fiscal year
of the Borrower (commencing with the fiscal year in
which the Closing Date occurs).
Optional Prepayments shall be applied first to the
prepayment of the Term Loan I Loans and then to the
prepayment of the Term Loan II Loans and shall be
applied, first, to the next four installments
coming
3
<PAGE> 8
due from the date of such prepayment, in the case
of prepayments of Term Loan I Loans and to the next
installments coming due within 12 months from the
date of such prepayment, in the case of prepayments
of Term Loan II Loans and, second, ratably to the
remaining installments thereof ratably and may not
be reborrowed.
Mandatory Prepayments shall be applied first to the
prepayment of the Term Loan I Loans and then to the
prepayment of the Term Loan II Loans and shall be
applied, first, to the next two installments coming
due from the date of such prepayment, in the case
of prepayments of Term Loan I Loans and to the next
installments coming due within 6 months from the
date of such prepayment, in the case of prepayments
of Term Loan II Loans and, second, ratably to the
remaining installments thereof ratably and may not
be reborrowed.
IV. COLLATERAL The obligations of each Credit Party (it being
understood that this shall not include any gaming
subsidiaries) in respect of the Credit Facilities
shall be secured by a perfected first priority
security interest in all of such Credit Party's
tangible (other than mortgages on real property)
and intangible assets (including, without
limitation, the Sheraton reservation system, each
of the Sheraton franchise agreements and
intellectual property (including, without
limitation, the Sheraton trademark)) and all of the
capital stock and intercompany obligations of each
of the Borrower's direct and indirect domestic
subsidiaries (excluding gaming subsidiaries) and
66% of the capital stock and all of the
intercompany obligations of first-tier foreign
subsidiaries.
The Collateral shall also secure the Borrower's
obligations under any interest rate and currency
hedging arrangements entered into with any Lender.
V. CERTAIN CONDITIONS
Initial Conditions: The availability of the Credit Facilities shall be
conditioned upon satisfaction of, among other
things, the following conditions precedent (the
date upon which all such conditions precedent shall
be satisfied, the "Closing Date") on or before
December 31, 1997:
(a) Each Credit Party shall have executed and
delivered reasonably satisfactory definitive
financing documentation with respect to the Credit
Facilities (the "Credit Documentation").
(b) The Lenders, the Administrative Agent and the
Arranger shall have received all fees and expenses
required to be paid on or before the Closing Date.
(c) The Transactions other than the Spin-Offs shall
have been consummated contemporaneously with the
funding of the Credit Facilities on the basic terms
and in the respective amounts set forth in the
Commitment Letter and pursuant to documentation in
form and substance reasonably satisfactory to the
Administrative Agent and the Arranger.
(d) All conditions necessary for the closing of (i)
with respect to each of ITT Promedia CVA
("Promedia") and ITT Publimedia BV ("Publimedia")
(A) the senior secured credit facility of each such
party (in an aggregate principal amount of, with
respect to Promedia, approximately $385 million,
and, with respect to Publimedia, approximately $270
mil-
4
<PAGE> 9
lion) and (B) either the senior note offering or
the bridge facility for each such party (in an
aggregate principal amount of, with respect to
Promedia, approximately $320 million, and, with
respect to Publimedia, approximately $175 million)
and (ii) the senior secured interim credit facility
of ITT Corporation (in an aggregate amount to yield
approximately $225 million), shall have been
satisfied or waived.
(e) All outstanding indebtedness of the Borrower
for borrowed money (other than certain intercompany
indebtedness in amounts to be agreed) shall be paid
off or defeased contemporaneously with the funding
of the Credit Facilities or, with the consent of
the Administrative Agent, shall be permitted to
remain outstanding on terms and conditions
reasonably satisfactory to the Administrative
Agent.
(f) All governmental and third party approvals
necessary or, in the discretion of the
Administrative Agent, advisable in connection with
the Transactions, the financing contemplated hereby
and the continuing operations of the Borrower and
its subsidiaries shall have been obtained and be in
full force and effect, and all applicable waiting
periods shall have expired without any action being
taken or threatened by any competent authority
which would restrain, prevent or otherwise impose
adverse conditions on the Transactions or the
financing thereof.
(g) Neither the Borrower nor any of its affiliates
shall be subject to any litigation or other similar
proceedings the effect of which has had or could
reasonably be expected to have a material adverse
effect on (a) the business, assets, property or
financial condition or prospects of the Borrower
and its subsidiaries taken as a whole or (b) the
validity or enforceability of any of the Credit
Documentation or the rights and remedies of the
Administrative Agent and the Lenders thereunder;
provided, that litigation or other similar
proceedings seeking to challenge the Transactions
but which have not had the effect of enjoining any
or all of the Transactions shall not prevent the
satisfaction of this condition.
(h) The Lenders shall have received reasonably
satisfactory pro forma consolidated financial
statements of the Borrower and its subsidiaries for
(i) the two most recent fiscal years ended prior to
the Closing Date and (ii) for each quarterly period
ended subsequent to the date of the latest
financial statements delivered pursuant to clause
(i) of this paragraph as to which such financial
statements are available and such other financial
information as reasonably requested by them.
(i) The Lenders shall have received a reasonably
satisfactory pro forma consolidated balance sheet
of the Borrower and its subsidiaries as of the date
of the latest financial statements delivered
pursuant to paragraph (h) above adjusted to give
effect to the consummation of the Transactions and
the financings contemplated hereby as if the
Transactions and financings had occurred on such
date.
(j) The Lenders shall have received a reasonably
satisfactory business plan of the Borrower and its
subsidiaries for the period from the Closing Date
through the final maturity of the Term Loans.
(k) The Lenders shall have received the results of
a recent lien search in each relevant jurisdiction
with respect to the Borrower and certain material
subsidiaries identified by the Administrative
Agent, and such
5
<PAGE> 10
search shall reveal no material liens on any of the
assets of the Borrower or such subsidiaries except
for liens permitted by the Credit Documentation or
liens to be discharged on or prior to the Closing
Date pursuant to documentation reasonably
satisfactory to the Administrative Agent.
(l) The Lenders shall have received a solvency
certification from the chief financial officer of
the Borrower reasonably satisfactory to the
Administrative Agent which shall document the
solvency of the Borrower and its subsidiaries after
giving effect to the Transactions and the other
transactions contemplated hereby.
(m) All documents and instruments required to
perfect the Administrative Agent's security
interest in the collateral under the Credit
Facilities shall have been executed and be in
proper form for filing.
(n) The Borrower and its affiliates and
subsidiaries (i) shall not be in breach or
violation of any of its obligations under the
documentation relating to the Transactions or the
financing thereof and (ii) shall not be subject to
material contractual or other restrictions that
would be violated by the Transactions which are not
subject to a waiver.
(o) The Lenders shall have received such legal
opinions (including opinions (i) from counsel to
the Borrower and its subsidiaries and (ii) from
such special and local counsel as may be required
by the Administrative Agent), documents and other
instruments as are customary for transactions of
this type or as they may reasonably request.
On-Going Conditions: The making of each extension of credit shall be
conditioned upon (a) the accuracy of all
representations and warranties in the Credit
Documentation (including, without limitation, the
material adverse change and litigation
representations) and (b) there being no default or
event of default in existence at the time of, or
after giving effect to the making of, such
extension of credit. As used herein and in the
Credit Documentation a "material adverse change"
shall mean any event, development or circumstance
that has had or could reasonably be expected to
have a material adverse effect on (a) the
Transactions, (b) the business, assets, property or
financial condition or prospects of the Borrower
and its subsidiaries taken as a whole, or (c) the
validity or enforceability of any of the Credit
Documentation or the rights and remedies of the
Administrative Agent and the Lenders thereunder.
VI. CERTAIN DOCUMENTATION
MATTERS The Credit Documentation shall contain
representations, warranties, covenants and events
of default customary for financings of this type
and other terms deemed appropriate by the Lenders,
including the following:
Representations and
Warranties: Financial statements (including pro forma financial
statements); absence of undisclosed liabilities; no
material adverse change; corporate existence;
compliance with law (to the extent noncompliance
would result in a material adverse effect);
corporate power and authority; enforceability of
Credit Documentation; no conflict with law or
contractual obligations; no material litigation; no
default; ownership of property; liens; intellectual
property; taxes; Federal Reserve regulations;
ERISA; Investment Company Act; Public Utility
Holding Company Act; subsid-
6
<PAGE> 11
iaries; environmental matters; solvency; labor
matters; accuracy of disclosure; and creation and
perfection of security interests.
Affirmative Covenants: Delivery of financial statements, reports,
accountants' letters, projections, officers'
certificates and other information requested by the
Lenders; payment of other obligations; continuation
of business and maintenance of existence and
material rights and privileges; compliance with
laws and material contractual obligations;
maintenance of property and insurance; maintenance
of books and records; right of the Lenders to
inspect property and books and records; notices of
defaults, litigation and other material events;
compliance with environmental laws; and further
assurances (including, without limitation, with
respect to security interests in after-acquired
property).
Financial Covenants: Financial covenants (including minimum interest
coverage (the ratio of EBITDA minus maintenance
capital expenditures to interest expense), maximum
total leverage (Total Debt to EBITDA) and maximum
bank leverage (Bank Debt to EBITDA), with
definitions and levels to be agreed.
Negative Covenants: Limitations (in certain cases with exceptions to be
agreed) on: indebtedness (including indebtedness
and preferred stock of subsidiaries); liens;
guarantee obligations; mergers, consolidations,
liquidations and dissolutions; sales of assets;
leases; dividends and other payments in respect of
capital stock; capital expenditures; acquisitions;
investments, loans and advances; optional payments
and modifications of subordinated and other debt
instruments; transactions with affiliates; sale and
leasebacks; changes in fiscal year; negative pledge
clauses; agreements to restrict distributions from
subsidiaries and joint ventures; and changes in
lines of business.
Events of Default: Nonpayment of principal when due; nonpayment of
interest, fees or other amounts after a grace
period to be agreed upon; material inaccuracy of
representations and warranties; violation of
covenants (subject, in the case of certain
affirmative covenants, to a grace period to be
agreed upon); cross-default; bankruptcy events;
certain ERISA events; material undischarged
judgments; actual or asserted invalidity of any
guarantee or security document or security
interest; and a change of control (the definition
of which is to be agreed).
Voting: Amendments and waivers with respect to the Credit
Documentation shall require the approval of Lenders
holding not less than a majority of the aggregate
amount of the Term Loans, Revolving Credit Loans,
participations in Letters of Credit and Swingline
Loans and unused commitments under the Credit
Facilities, except that (a) the consent of each
Lender directly affected thereby shall be required
with respect to (i) reductions in the amount or
extensions of the scheduled date of amortization or
maturity of any Loan, (ii) reductions in the rate
of interest or any fee or extensions of any due
date thereof and (iii) increases in the amount or
extensions of the expiry date of any Lender's
commitment and (b) the consent of 100% of the
Lenders shall be required with respect to (i)
modifications to any of the voting percentages and
(ii) releases of all or substantially all of the
Guarantors or all or substantially all of the
collateral. In addition, voting require-
7
<PAGE> 12
ments of the respective classes of Term Loans shall
apply to certain modifications affecting prepayment
of the Term Loan Facilities.
Assignments and
Participations: The Lenders shall be permitted to assign and sell
participations in their Loans and commitments,
subject, in the case of assignments (other than to
another Lender or to an affiliate of a Lender), to
the consent of the Administrative Agent, the
Issuing Lender, the Swing Line Lender and the
Borrower (which consent in each case shall not be
unreasonably withheld). Non-pro rata assignments
shall be permitted. In the case of partial
assignments (other than to another Lender or to an
affiliate of a Lender), the minimum assignment
amount shall be an amount to be determined unless
otherwise agreed by the Borrower and the
Administrative Agent. Participants shall have the
same (but not greater) benefits as the Lender from
which it purchased its participation with respect
to yield protection and increased cost provisions.
Voting rights of participants shall be limited to
those matters set forth in clause (a) above with
respect to which the affirmative vote of the Lender
from which it purchased its participation would be
required as described under "Voting" above and
those matters set forth in clause (b) above.
Pledges of Loans in accordance with applicable law
shall be permitted without restriction.
Yield Protection: The Credit Documentation shall contain customary
provisions (a) protecting the Lenders against
increased costs or loss of yield resulting from
changes in reserve, tax, capital adequacy and other
requirements of law and from the imposition of or
changes in withholding or other taxes on a lender
by lender basis as incurred and (b) indemnifying
the Lenders for "breakage costs" incurred in
connection with, among other things, any prepayment
of a Eurodollar Loan (as defined in Annex I) on a
day other than the last day of an interest period
with respect thereto and any prepayment of a
Competitive Loan (to the extent permitted by the
relevant Lender).
Expenses and
Indemnification: The Borrower shall pay (a) all reasonable
out-of-pocket expenses of the Administrative Agent
and the Arranger associated with the syndication of
the Credit Facilities and the preparation,
execution, delivery and administration of the
Credit Documentation and any amendment or waiver
with respect thereto (including the reasonable
fees, disbursements and other charges of counsel of
the Administrative Agent and the Arranger) and (b)
all out-of-pocket expenses of the Administrative
Agent and the Lenders (including the reasonable
fees, disbursements and other charges of counsel)
in connection with the enforcement of the Credit
Documentation.
The Administrative Agent, the Arranger and the
Lenders (and their affiliates and their respective
officers, directors, employees, advisors and
agents) will have no liability for, and will be
indemnified and held harmless against, any loss,
liability, cost or expense incurred in respect of
the financing contemplated hereby or the use or the
proposed use of proceeds thereof (except to the
extent resulting from the gross negligence or
willful misconduct of the indemnified party).
Governing Law and
Forum: State of New York.
8
<PAGE> 13
Counsel to the
Administrative Agent
and the Arranger: Simpson Thacher & Bartlett.
9
<PAGE> 14
ANNEX I
INTEREST AND CERTAIN FEES
Interest Rate Options: The Borrower may elect that the Loans (other than
Competitive Loans) comprising each borrowing bear
interest at a rate per annum equal to:
the ABR plus the Applicable Margin; or
the Eurodollar Rate plus the Applicable
Margin.
provided, that all Swing Line Loans shall bear
interest based upon the ABR and all Loans in any
Optional Currency (other than Competitive Loans)
shall bear interest based upon the Eurodollar Rate.
As used herein:
"ABR" means the highest of (i) the rate of interest
publicly announced by Chase as its prime rate in
effect at its principal office in New York City
(the "Prime Rate"), (ii) the secondary market rate
for three-month certificates of deposit (adjusted
for statutory reserve requirements) plus 1% and
(iii) the federal funds effective rate from time to
time plus 0.5%.
"Applicable Margin" (a) 0%, in the case of Loans
which are based on ABR and (b) 1.00%, in the case
of Loans which are based on the Eurodollar Rate.
The foregoing margins shall be subject to reduction
after the end of the first fiscal quarter of the
Borrower which is six months after the Closing Date
based on the Borrower's Total Debt to EBITDA Ratio
and the Borrower's long-term debt ratings set forth
in the pricing grid attached hereto as Annex I-A
and provided that no event of default has occurred
and is continuing.
"Eurodollar Rate" means the rate (adjusted for
statutory reserve requirements for eurocurrency
liabilities on a Lender by Lender basis as
incurred) at which eurodollar deposits for one,
two, three or six months (as selected by the
Borrower) are offered to Chase in the interbank
eurodollar market.
Interest Payment Dates: In the case of Loans bearing interest based upon
the ABR ("ABR Loans"), quarterly in arrears.
In the case of Loans bearing interest based upon
the Eurodollar Rate ("Eurodollar Loans"), on the
last day of each relevant interest period and, in
the case of any interest period longer than three
months, on each successive date three months after
the first day of such interest period.
Commitment Fees: The Borrower shall pay a commitment fee calculated
at the rate of .30% per annum on the average daily
unused portion of the Revolving Credit Facility,
payable quarterly in arrears. Swing Line Loans and
Competitive Loans shall, for purposes of the
commitment fee calculations only, not be deemed to
be a utilization of the Revolving Credit Facility.
The commitment fee rate shall be subject to
reduction after the end of the first fiscal quarter
of the Borrower which is six months after the
Closing Date based on the Borrower's Total Debt to
EBITDA Ratio and the Borrower's long-term debt
ratings set forth in the pricing grid attached
hereto as Annex I-A and provided that no event of
default has occurred and is continuing.
<PAGE> 15
Letter of Credit Fees: The Borrower shall pay a commission on all
outstanding Letters of Credit at a per annum rate
equal to the Applicable Margin then in effect with
respect to Eurodollar Loans on the face amount of
each such Letter of Credit. Such commission shall
be shared ratably among the Lenders participating
in the Revolving Credit Facility and shall be
payable quarterly in arrears.
A fronting fee equal to .25% per annum on the face
amount of each Letter of Credit shall be payable
quarterly in arrears to the Issuing Lender for its
own account. In addition, customary administrative,
issuance, amendment, payment and negotiation
charges shall be payable to the Issuing Lender for
its own account.
Default Rate: At any time when the Borrower is in default in the
payment of any amount of principal due under the
Credit Facilities, such amount shall bear interest
at 2% above the rate otherwise applicable thereto.
Overdue interest, fees and other amounts shall bear
interest at 2% above the rate applicable to ABR
Loans.
Rate and Fee Basis: All per annum rates shall be calculated on the
basis of a year of 360 days (or 365/366 days, in
the case of ABR Loans the interest rate payable on
which is then based on the Prime Rate) for actual
days elapsed.
2
<PAGE> 16
ANNEX I-A
PRICING GRID
<TABLE>
<CAPTION>
LONG-TERM
TOTAL DEBT TO DEBT RATING EURODOLLAR COMMITMENT
EBITDA RATIO (S&P/MOODY'S) ABR LOANS LOANS FEE RATE
----------------- ------------------ --------- ---------- ----------
<S> <C> <C> <C> <C>
2/3 5.0 to 1.0........................... BB-/Ba3 or lower .25% 1.25% .375%
% 5.0 to 1.0 and 2/3 4.0 to 1.0.......... BB/Ba2 0% 1.00% .30%
% 4.0 to 1.0 and 2/3 3.0 to 1.0.......... BB+/Ba1 0% .75% .25%
% 3.0 to 1.0 and 2/3 2.5 to 1.0.......... BBB-/Baa3 0% .625% .20%
% 2.5 to 1.0.............................. BBB/Baa2 or better 0% .50% .15%
</TABLE>
If the Total Debt to EBITDA Ratio and the Long-Term Debt Rating established
by Moody's and S&P shall correspond to different levels above (or if the
Long-Term Debt Rating established by Moody's shall correspond to a different
level above than the level corresponding to the Long-Term Debt Rating
established by S&P above), the relevant level to be used shall be the level
corresponding to the lower margins and commitment fee rates, as the case may be,
unless such ratio and rating (or such ratings of S&P and Moody's) correspond to
levels which are two or more levels apart (the level which corresponds to the
higher margins and commitment fees being called the "Higher Level" and the level
which corresponds to the lower margins and commitment fees being called the
"Lower Level"), in which case the relevant level to be used shall be the level
which is one level below the Higher Level.
<PAGE> 1
EXHIBIT 91
CHASE SECURITIES INC.
270 PARK AVENUE
NEW YORK, NEW YORK 10017
THE CHASE MANHATTAN BANK
270 PARK AVENUE
NEW YORK, NEW YORK 10017
August 22, 1997
ITT Promedia Commanditaire Vennootschap op Aandelen
Senior Credit Facilities
COMMITMENT LETTER
ITT Promedia Commanditaire Vennootschap op Aandelen
Antwerp Tower
5 de Keyserlei B7
B-2018
Antwerp, Belgium
Attention: Marc Goegebuer, Chief Financial Officer
Ladies and Gentlemen:
ITT Corporation ("ITT") has informed Chase Securities Inc. ("CSI") and The
Chase Manhattan Bank ("Chase") that it intends to (i) refinance (the
"Refinancing") approximately $2,000,000,000 par amount of public indebtedness
and a certain amount of other indebtedness of ITT and its subsidiaries, (ii)
repurchase (the "Repurchase") approximately $2,100,000,000 of its capital stock
and (iii) subsequent to the Refinancing and Repurchase, spin-off (collectively,
the "Spin-Offs") to its shareholders its education services and hotels and
gaming businesses. In order to finance a portion of the Refinancing and the
Repurchase, ITT Promedia Commanditaire Vennootschap op Aandelen (from time to
time referred to herein as "Promedia" or the "Borrower") has requested CSI
arrange and Chase commit to provide to it the Promedia Senior Credit Facilities
more particularly described below and on the Promedia Senior Credit Facilities
Term Sheet (as defined below) attached hereto, the net proceeds of which (after
paying related fees and expenses) would be distributed to ITT. The Refinancing,
the Repurchase and the Spin-Offs, collectively with the other transactions
described herein and the financing thereof with the proceeds of the Promedia
Senior Credit Facilities and the other contemplated credit facilities and note
offerings, are referred to herein as the "Transactions". References herein to
"ITT" are to ITT Corporation (to be renamed ITT Information Services, Inc.)
after giving effect to the Transactions.
In connection with the Transactions, Promedia will continue to be owned by
ITT World Directories, Inc. ("ITTWD") and will be organized so that Promedia is
a company for Belgian tax purposes. ITTWD will sell its direct interests in
Ireland, South Africa and Portugal and certain intangible assets to Promedia for
an amount to be determined, which will be raised in part from the proceeds of
the Promedia Senior Credit Facilities (as defined below) and which, after
payment of related fees, expenses and taxes will be distributed by ITTWD to ITT.
In that connection, you have requested that CSI agree to structure, arrange
and syndicate, and that Chase commit to provide to you a portion of
approximately $385,000,000 of senior secured credit facilities (such credit
facilities, the "Promedia Senior Credit Facilities"), comprised of term loan
facilities aggregating $335,000,000 (the "Promedia Term Loan Facilities") and a
$50,000,000 revolving credit facility (the "Promedia Revolving Credit
Facility"). The Promedia Revolving Credit Facility will be used to finance the
<PAGE> 2
continuing operations of the Borrower and its subsidiaries after the
Transactions. References to dollar amounts of the Promedia Senior Credit
Facilities in this paragraph are to the maximum U.S. dollar equivalent of the
respective amounts to be made available by the Lenders thereunder in the
relevant local currency. As described in the Promedia Senior Credit Facilities
Term Sheet, the actual U.S. dollar equivalents to be made available thereunder
may be less than the U.S. dollar equivalents referenced above.
CSI is pleased to advise you that it is willing to act as exclusive advisor
and arranger for the Promedia Senior Credit Facilities, and Chase is pleased to
advise you of (a) its commitment to provide up to $60,000,000 of the Promedia
Senior Credit Facilities and (b) its agreement to use commercially reasonable
efforts to assemble a syndicate of financial institutions identified by CSI and
Chase in consultation with you (together with Chase, the "Lenders"), to provide
the balance of the necessary commitments for the Promedia Senior Credit
Facilities, in each case, upon the terms and subject to the conditions set forth
or referred to in the Statement of Terms and Conditions attached as Exhibit A
hereto (the "Promedia Senior Credit Facilities Term Sheet"). It is a condition
to Chase's commitment to provide the portion of the Promedia Senior Credit
Facilities described above that the remainder of the Promedia Senior Credit
Facilities shall be provided by the other Lenders referred to below.
It is agreed that Chase will act as the sole and exclusive administrative
agent in respect of the Promedia Senior Credit Facilities, and that CSI will act
as the sole and exclusive advisor and arranger in respect of the Promedia Senior
Credit Facilities, and each will, in such capacities, perform the duties and
exercise the authority customarily performed and exercised by it in such roles.
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 Promedia Senior Credit Facilities Term Sheet and the Fee
Letter referred to below) will be paid in connection with the Promedia Senior
Credit Facilities unless you and we shall so agree. It is understood that ITT
has significant relationships with many financial institutions, that ITT may
request that one or more of these financial institutions be given a title or
other special status in the Promedia Senior Credit Facilities for relationship
reasons, and it is agreed that Chase and CSI will reasonably consider any such
request.
We intend to syndicate the Promedia Senior Credit Facilities to a group of
Lenders identified by us in consultation with you, and you agree actively to
assist CSI in completing a syndication reasonably satisfactory to it. CSI
intends to commence syndication efforts promptly, and you agree actively to
assist CSI in completing a syndication reasonably satisfactory to it. Such
assistance shall include (a) your using commercially reasonable efforts to
ensure that the syndication efforts benefit materially from yours and ITT's
existing lending relationships, (b) direct contact between senior management and
advisors of you and ITT and the proposed Lenders, (c) assistance in the
preparation of a Confidential Information Memorandum and other marketing
materials to be used in connection with the syndication and (d) the hosting,
with CSI, of one or more meetings of prospective Lenders.
CSI will manage all aspects of the syndication in consultation with ITT,
including decisions as to the selection of institutions to be approached and
when they will be approached, when their commitments will be accepted, which
institutions will participate, the allocations of the commitments among the
Lenders and the amount and distribution of fees among the Lenders. To assist CSI
in its syndication efforts, you agree promptly to and to cause ITT to prepare
and provide to CSI and Chase all information with respect to you, ITT and your
respective subsidiaries, the Transactions and the other transactions
contemplated hereby, including all financial information and projections (the
"Projections"), as we may reasonably request in connection with the arrangement
and syndication of the Promedia Senior Credit Facilities. You hereby represent
and covenant that (a) all information other than the Projections (the
"Information") that has been or will be made available to Chase or CSI by
Promedia, ITT or any of your respective representatives is or will be, when
furnished, correct in all material respects and does not or will not contain any
untrue statement of a material fact and at the time of delivery to the
prospective Lenders of a Confidential Information Memorandum and at closing,
taken as a whole, will be complete and will not omit to state a material fact
necessary in order to make the statements contained therein not materially
misleading in light of the circumstances under which such statements are made
and (b) the Projections that have been or will be made available to Chase or CSI
by you, ITT or any of your respective representatives have been or will be
prepared
2
<PAGE> 3
in good faith based upon reasonable assumptions. You understand that in
arranging and syndicating the Promedia Senior Credit Facilities we may use and
rely on the Information and Projections without independent verification
thereof.
As consideration for Chase's commitment hereunder and CSI's agreement to
perform the services described herein, you agree to pay, or to cause ITT to pay,
to Chase the nonrefundable fees set forth in the Promedia Senior Credit
Facilities Term Sheet and in the fee letter dated the date hereof and delivered
herewith (the "Fee Letter").
Chase's commitment hereunder and CSI's agreement to perform the services
described herein are subject to (a) there not occurring or becoming known to us
any material adverse condition or material adverse change in or affecting the
business, operations, property or financial condition or prospects of ITT and
its wholly-owned and non-wholly-owned direct and indirect subsidiaries, taken as
a whole, (b) our satisfaction that the credit structure contemplated for the
Promedia Senior Credit Facilities and the other contemplated financings by ITT
and the Borrower can be achieved without resulting in material adverse tax,
regulatory, legal or other consequences not currently known to us, (c) our
continued satisfaction that the cash flow of any wholly owned or non-wholly
owned subsidiary of the Borrower can be dividended or otherwise distributed (on
a ratable basis), directly or indirectly, to the Borrower without restriction
for the purposes of satisfying the debt service and other obligations of the
Borrower in respect of the Promedia Senior Credit Facilities (it being
understood that we have been provided and are satisfied with the organizational
documents of the joint ventures located in Portugal, Ireland and South Africa),
(d) our not becoming aware after the date hereof of any information or other
matter affecting ITT or its direct or indirect subsidiaries or the transactions
contemplated hereby (including matters relating to financial models) which is
inconsistent in a material and adverse manner with any such information or other
matter disclosed to us prior to the date hereof, (e) there not having occurred
any material adverse litigation affecting the Transactions or any of the
Promedia Senior Credit Facilities that has not been settled, dismissed, vacated
or discharged prior to the proposed closing date for the Promedia Senior Credit
Facilities to the reasonable satisfaction of Chase and CSI; provided, that
litigation or other similar proceedings seeking to challenge the Transactions
but which have not had the effect of enjoining any or all of the Transactions
shall not prevent the satisfaction of this condition, (f) there not having
occurred a material disruption of or material adverse change in financial,
banking or capital market conditions that, in our reasonable judgment, could
materially impair the syndication of any of the Promedia Senior Credit
Facilities, (g) our satisfaction that prior to and during the syndication of the
Promedia Senior Credit Facilities there shall be no competing offering,
placement or arrangement of any debt securities or bank financing by or on
behalf of ITT or any of its subsidiaries (other than (i) the interim credit
facilities for ITT, (ii) the senior credit facilities for ITT Publimedia B.V.
("Publimedia") (iii) either the interim credit facilities for, or the notes to
be offered on behalf of, Promedia and Publimedia and (iv) the senior credit
facilities for ITT Destinations, Inc. with Chase and/or CSI), (h) the other
conditions set forth or referred to in the Promedia Senior Credit Facilities
Term Sheet and (i) the negotiation, execution and delivery on or before December
31, 1997 of definitive documentation with respect to the Promedia Senior Credit
Facilities reasonably satisfactory to Chase and its counsel. It is understood
that Chase and CSI have been advised of the status of the ongoing litigation
with Belgacom and Belgacom Directory Services and the employment litigation in
Puerto Rico; provided that this understanding is not intended to cover any
material adverse changes from the date hereof in the status of any such
litigation which prevents the satisfaction of the conditions set forth in this
paragraph. Any matters not covered by the provisions hereof and of the Promedia
Senior Credit Facilities Term Sheet are subject to the approval and agreement of
Chase, CSI and you.
You agree (a) to indemnify and hold harmless Chase, CSI, their affiliates
and their respective officers, directors, employees, advisors, and agents (each,
an "indemnified person") from and against any and all losses, claims, damages
and liabilities to which any such indemnified person may become subject arising
out of or in connection with this Commitment Letter, the Promedia Senior Credit
Facilities, the use of the proceeds thereof, the Transactions or any related
transaction or any claim, litigation, investigation or proceeding relating to
any of the foregoing, regardless of whether any indemnified person is a party
thereto, and to reimburse each indemnified person upon demand for any legal or
other expenses incurred in connection with investigating or defending any of the
foregoing, provided that the foregoing indemnity will not, as to any indemnified
person,
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<PAGE> 4
apply to losses, claims, damages, liabilities or related expenses to the extent
they are found by a final, non-appealable judgment of a court to arise from the
willful misconduct or gross negligence of such indemnified person, and (b) to
reimburse Chase, CSI and their affiliates on demand for all reasonable
out-of-pocket expenses (including due diligence expenses, syndication expenses,
travel expenses, and reasonable fees, charges and disbursements of counsel)
incurred in connection with the Promedia Senior Credit Facilities and any
related documentation (including this Commitment Letter). No indemnified person
shall be liable for any indirect or consequential damages in connection with its
activities related to the Promedia Senior Credit Facilities.
You acknowledge that Chase and its affiliates (the term "Chase" as used
below in this paragraph being understood to include such affiliates) may be
providing debt financing, equity capital or other services (including financial
advisory services) to other companies in respect of which ITT or the Borrower
may have conflicting interests regarding the transactions described herein and
otherwise. Chase will not use confidential information obtained from ITT or the
Borrower by virtue of the transactions contemplated by this Commitment Letter or
its other relationships with ITT or the Borrower in connection with the
performance by Chase of services for other companies, and Chase will not furnish
any such information to other companies. You also acknowledge that Chase has no
obligation to use in connection with the transactions contemplated by this
Commitment Letter, or to furnish to ITT or the Borrower, confidential
information obtained from other companies.
This Commitment Letter may not be amended or waived except by an instrument
in writing signed by you, Chase and CSI. This Commitment Letter may be executed
in any number of counterparts. This Commitment Letter and the Fee Letter are the
only agreements that have been entered into among us with respect to the
Promedia Senior Credit Facilities and set forth the entire understanding of the
parties with respect thereto. The reimbursement, indemnification and
confidentiality provisions contained herein shall remain in full force and
effect regardless of whether definitive financing documentation shall be
executed and delivered. This Commitment Letter shall be governed by, and
construed in accordance with, the laws of the State of New York.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Promedia Senior Credit Facilities Term Sheet
or the Fee Letter nor any of their terms or substance shall be disclosed,
directly or indirectly, to any other person except (a) to officers, agents and
advisors of ITT or the Borrower who are directly involved in the consideration
of this matter, (b) as may be compelled in a judicial or administrative
proceeding or as otherwise required by law (in which case you agree to inform us
promptly thereof), (c) other than the Fee Letter, in connection with a public
filing with the U.S. Securities and Exchange Commission or (d) to
representatives of Clayton, Dubilier & Rice, Inc. and their counsel so long as
they agree to abide by the confidentiality provisions contained herein.
If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms hereof and of the Promedia Senior Credit Facilities Term
Sheet and the Fee Letter by returning to us executed counterparts hereof and of
the Fee Letter, not later than 5:00 p.m., New York City time, on August 22,
1997. Chase's commitment and CSI's agreements herein will expire at such time in
the event we have not so received such executed counterparts. In the event that
the initial borrowing in respect of the Promedia Senior Credit Facilities does
not occur on or before December 31, 1997, then this Commitment Letter and the
commitments shall automatically terminate unless each of CSI and Chase shall
agree to an extension.
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<PAGE> 5
We are pleased to have been given the opportunity to assist you in
connection with this important financing.
Very truly yours,
CHASE SECURITIES INC.
By /s/ NANCY G. MISTRETTA
------------------------------------
Name: Nancy G. Mistretta
Title: Managing Director
THE CHASE MANHATTAN BANK
By /s/ DEBORAH DAVEY
------------------------------------
Name: Deborah Davey
Title: Vice President
Accepted and agreed to as of
the date first written above by:
ITT PROMEDIA COMMANDITAIRE VENNOOTSCHAP OP AANDELEN
Represented by: PROMEDIA BVBA, its Managing Partner
Represented By /s/ MARC GOEGEBUER
-----------------------------------
Name: Marc Goegebuer
Title: Chief Financial Officer
Represented By /s/ GEORGES SEGHERS
-----------------------------------
Name: Georges Seghers
Title: General Manager, Sales and
Marketing
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<PAGE> 6
EXHIBIT A
SENIOR CREDIT FACILITIES
ITT PROMEDIA COMMANDITAIRE VENNOOTSCHAP OP AANDELEN
STATEMENT OF TERMS AND CONDITIONS
------------------------------
The following term sheet (the "Promedia Senior Credit Facilities Term
Sheet") sets forth the principal terms and conditions for the Promedia Senior
Credit Facilities.
I. PARTIES
Borrower: ITT Promedia Commanditaire Vennootschap op Aandelen
("Promedia").
Guarantors: ITT and its wholly-owned direct subsidiaries.
Advisor and Arranger: Chase Securities Inc. (in such capacity, the
"Arranger").
Administrative Agent: The Chase Manhattan Bank ("Chase" and, in such
capacity, the "Administrative Agent").
Lenders: A syndicate of banks and subsidiaries of foreign
banks and other financial institutions, including
Chase, located in Germany, the Netherlands,
Luxembourg and Belgium and selected by the Arranger
(collectively, the "Lenders"). Participations to
others shall not be permitted to the extent
withholding taxes would be imposed as a result.
II. TYPES AND AMOUNTS OF SENIOR CREDIT FACILITIES
A. TERM LOAN FACILITIES: An aggregate amount in Belgian Francs which on the
Closing Date will be equal to a maximum of
$335,000,000, divided into:
6-Year Tranche A Term Loan Facility equal to the
Belgian Franc equivalent of a maximum of
$210,000,000 (the loans thereunder, the "Tranche A
Term Loans")
7-year Tranche B Term Loan Facility equal to the
Belgian Franc equivalent of a maximum of
$65,000,000 (the loans thereunder, the "Tranche B
Term Loans")
8-Year Tranche C Term Loan Facility equal to the
Belgian Franc equivalent of a maximum of
$60,000,000 (the loans thereunder, the "Tranche C
Term Loans")
The Belgian Franc principal amounts of the Term
Loan Facilities will be computed based on the
exchange rate between Belgian Francs and U.S.
Dollars in a manner and on a day to be determined
by the Administrative Agent prior to the Closing
Date; provided that, notwithstanding the exchange
rate on such day, the respective Belgian Franc
principal amounts of each Term Loan Facility shall
in no event exceed the product of (x) the amount
set forth above as the maximum principal amount in
U.S. Dollars of such Term Loan Facility and (y) the
Belgian Franc/U.S. Dollar exchange rate on August
1, 1997, determined by the Administrative Agent to
be 38.294, which shall be(i) in the case of the
Tranche A Term Loan Facility, 8.04 billion Belgian
Francs, (ii) in the case of the
<PAGE> 7
Tranche B Term Loan Facility, 2.49 billion Belgian
Francs and (iii) in the case of the Tranche C Term
Loan Facility, 2.30 billion Belgian Francs.
The allocation among the Term Loan Facilities shall
be subject to adjustment by Chase in consultation
with ITT to ensure a successful syndication.
Availability: The loans to be made available under the Term Loan
Facilities (the "Term Loans") shall be made in a
single drawing on the Closing Date (as defined
below).
Term Loan Amortization: In each year, in the percentage of the respective
tranche set forth opposite such year beneath such
tranche, as follows:
<TABLE>
<CAPTION>
CALENDAR TRANCHE A TRANCHE B TRANCHE C
YEAR PERCENTAGE PERCENTAGE PERCENTAGE
-------- ---------- ---------- ----------
<S> <C> <C> <C>
1998 7.5% 1.5% 1.5%
1999 7.5% 1.5% 1.5%
2000 17.5% 1.5% 1.5%
2001 17.5% 1.5% 1.5%
2002 25% 1.5% 1.5%
2003 25% 1.5% 1.5%
2004 -- 91% 1.5%
2005 -- -- 89.5%
</TABLE>
Purpose: The proceeds of the Term Loans shall be used by the
Borrower to finance an internal group
restructuring, as a result of which Promedia will
assume a central holding company function.
B. REVOLVING CREDIT
FACILITY: 6-Year Revolving Credit Facility in Belgian Francs
which on the Closing Date will be equal to
$50,000,000.
Availability: The Revolving Credit Facility shall be available on
a revolving basis during the period commencing on
the Closing Date and ending on the date which is
six years after the Closing Date (the "Revolving
Credit Termination Date").
Maturity: The Revolving Credit Termination Date.
Purpose: The proceeds of the loans under the Revolving
Credit Facility (the "Revolving Credit Loans"; and
collectively with the Term Loans, the "Loans")
shall be used to finance the working capital needs
and general corporate purposes of Promedia and its
subsidiaries.
III. CERTAIN PAYMENT PROVISIONS
Base Interest Rate: LIBOR for deposits in the London interbank market
for Belgian Francs (adjusted for statutory reserve
requirements for eurocurrency liabilities on a
lender by lender basis as incurred).
Applicable Margins: Tranche A Term Loans and Revolving Credit Loans
Based on the pricing grid attached as Annex I
hereto determined by reference to (with appropriate
adjustments for minority interests) the ratio of
Total Indebtedness of Promedia and its subsidiaries
(excluding ITT Publimedia B.V. ("Publimedia") and
its subsidiaries) to their EBITDA ("Debt to
EBITDA").
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<PAGE> 8
Tranche A Term Loans and Revolving Credit Loans
The margins for the Tranche A Term and Revolving
Credit Loans will initially be 2.00% and so long as
no event of default shall have occurred and is
continuing will be subject to adjustment at the end
of the first fiscal quarter which is six months
after the Closing Date (and each quarter
thereafter) based on Debt to EBITDA at such quarter
end as set forth on Annex I.
Tranche B and C Term Loans
The margin for the Tranche B Term Loans wil l be
2.25% and the margin for the Tranche C Term Loans
will be 2.50% and in each case so long as no event
of default shall have occurred and is continuing
each of the foregoing margins will be subject to
adjustment at the end of the first fiscal quarter
which is six months after the Closing Date (and
each quarter thereafter) based on Debt to EBITDA at
such quarter end as set forth on Annex I.
Commitment Fee: The commitment fee will initially be .50% based on
the unused portion of the Revolving Credit Facility
and so long as no event of default shall have
occurred and is continuing will be subject to
adjustment at the end of the first fiscal quarter
which is six months after the Closing Date (and
each quarter thereafter) based on Debt to EBITDA at
such quarter end as set forth on Annex I.
Collateral: Tangible and intangible assets (whether now owned
or hereafter acquired) of ITT and its wholly-owned
direct subsidiaries and certain tangible and
intangible assets of Promedia, including, without
limitation:
- Stock of Subsidiaries and Joint Ventures (plus
the corresponding voting rights), subject to
preemptive rights, rights of first refusal and
other similar rights
- Accounts (including intercompany payables)
- Trademarks
- Contracts
- Licenses
The above list shall include only those assets as
to which it is commercially reasonable to provide
security based on the costs and legal difficulties
of obtaining such a security interest in relation
to the value of the security to be afforded
thereby.
The Collateral for the Promedia Senior Credit
Facilities shall also secure Promedia's obligations
under any interest rate and currency hedging
arrangements entered into with any Lender.
In certain circumstances sales of the above
collateral shall trigger the mandatory prepayments
described below.
Mandatory Prepayments: Unless otherwise set forth below, the following
amounts shall be applied to the prepayment of the
Term Loan Facilities and the reduction of the
Revolving Credit Facilities:
(A) 100% of Net After-Tax Cash Proceeds (with
appropriate adjustment for minority interests) of
(i) Asset Sales (excluding individual
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<PAGE> 9
asset sales below $1,000,000 (subject to a maximum
of $5,000,000 during the term of the Promedia
Senior Credit Facilities) and certain customary
exceptions to be agreed) and (ii) issuances and
incurrences of Debt (subject in the case of Debt to
certain customary exceptions and other exceptions
to be agreed), in each case, by the direct
wholly-owned subsidiaries of ITT and their
wholly-owned and non-wholly-owned (to the extent
permissible under the relevant joint venture or
shareholding agreement) subsidiaries (excluding
Publimedia and its subsidiaries), subject, in the
case of any such issuance or incurrence of Debt by
Promedia and its subsidiaries (other than
Publimedia and its subsidiaries), to the prepayment
of the interim credit facility for Promedia if then
outstanding, with such proceeds of any Debt
issuance or incurrence or Asset Sale by any direct
wholly-owned subsidiaries of ITT (after the
prepayment of the interim credit facility for ITT
if then outstanding) being applied to the Promedia
Senior Credit Facilities. It is understood that an
Asset Sale from a joint venture will trigger a
Mandatory Prepayment only to the extent that the
proceeds thereof are dividended or otherwise
distributed and the Borrower agrees to take all
steps it is entitled to under the organizational
documents governing the relevant joint venture to
cause such proceeds (net of taxes and minority
interests) to be so dividended or distributed
(other than with respect to Portugal prior to the
beginning of the year 2000 so long as no Default or
Event of Default has occurred);
(B) 100% of Net After-Tax Cash Proceeds of (i)
Asset Sales (excluding individual asset sales below
$1,000,000 (subject to a maximum of $5,000,000
during the term of the Promedia Senior Credit
Facilities) and certain customary exceptions to be
agreed) and (ii) issuances and incurrences of Debt
(subject to certain customary exceptions and other
exceptions to be agreed), in each case, by ITT,
with such proceeds (after the prepayment of the
interim credit facility for ITT if then
outstanding) being applied to the Promedia Senior
Credit Facilities; and
(C) 75% of Excess Cash Flow of Promedia and its
subsidiaries (excluding Publimedia and its
subsidiaries and Portugal prior to the beginning of
the year 2000 so long as no Default or Event of
Default has occurred and with appropriate
adjustments for taxes and minority interests) with
definitions to be agreed; provided that the
foregoing percentage shall be reduced to 50% based
on the achievement of certain performance targets
to be agreed.
Mandatory Prepayments applied to the Promedia
Senior Credit Facilities shall be applied, first,
to Term Loan Facilities and, second, to reduce the
Revolving Credit Facilities. Subject to the second
immediately succeeding paragraph, applications to
Term Loan Facilities shall be ratable as among the
Tranche A, B and C Term Loan Facilities and shall
be applied, first, to the next installments coming
due within 6 months from the date of such
prepayment and, second, ratably to the remaining
installments thereof.
Optional Prepayments and
Commitment Reductions: Loans may be prepaid and commitments may be reduced
by Promedia in minimum amounts to be agreed upon.
Optional Prepayments applied to the Promedia Senior
Credit Facilities shall be applied, first, to Term
Loan Facilities and, second, to reduce the
Revolving Credit Facilities.
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<PAGE> 10
Subject to the immediately succeeding paragraph,
applications to Term Loan Facilities shall be
ratable as among the Tranche A, B and C Term Loan
Facilities and shall be applied, first, to the next
installments coming due within 12 months from the
date of such prepayment and, second, ratably to the
remaining installments thereof.
The lenders under the Tranche B and C Term Loan
Facilities may be permitted to decline Optional
Prepayments or all or certain of the Mandatory
Prepayments, so long as Tranche A Term Loans are
outstanding, in which case such prepayments shall
be applied to the Tranche A Term Loans.
IV. CONDITIONS, REPRESENTATIONS AND WARRANTIES,
COVENANTS, DEFAULTS
Initial Conditions: The initial availability of the Promedia Senior
Credit Facilities shall be conditioned upon
satisfaction of, among other things, the following
initial conditions precedent (the date upon which
all such initial conditions precedent shall be
satisfied, which must be on or before December 31,
1997, the "Closing Date"):
(a) Promedia shall have executed and delivered
reasonably satisfactory definitive financing
documentation with respect to the Promedia Senior
Credit Facilities (the "Credit Documentation").
(b) The Lenders, the Administrative Agent and the
Arranger shall have received all fees and expenses
required to be paid on or before the Closing Date.
(c) The Transactions other than the Spin-Offs
(including, without limitation, the senior credit
facilities for Publimedia (in an aggregate
principal amount of approximately $270 million),
the interim credit facility for ITT (in an
aggregate amount to yield approximately $225
million) and either the interim credit facilities
for, or the senior subordinated notes to be offered
on behalf of, Promedia (in an aggregate principal
amount of approximately $320 million) and
Publimedia (in an aggregate principal amount of
approximately $175 million)) shall have been
consummated, subject to customary settlement terms,
contemporaneously with the funding of the Promedia
Senior Credit Facilities on the basic terms and in
the respective amounts set forth in the Commitment
Letter and pursuant to documentation in form and
substance reasonably satisfactory to the
Administrative Agent and the Arranger.
(d) All conditions necessary for the closing of the
$5 billion senior secured credit facility for ITT
Destinations, Inc. shall have been satisfied or
waived.
(e) All outstanding indebtedness for borrowed money
(other than certain intercompany indebtedness in
amounts to be agreed, including intercompany
indebtedness of Promedia owing to the Belgian
Coordination Center ("BCC") of $150,000,000) of
Promedia shall be paid off contemporaneously with
the funding of the Promedia Senior Credit
Facilities or, with the consent of the
Administrative Agent, shall be permitted to remain
outstanding on terms and conditions reasonably
satisfactory to the Administrative Agent.
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<PAGE> 11
(f) All material governmental and third party
approvals (including the consent of any joint
venture partner for the pledge of Promedia's
interest in any joint venture) necessary or
advisable in connection with the Transactions and
the financing contemplated hereby and the
continuing operations of Promedia and its
subsidiaries shall have been obtained and be in
full force and effect, and all applicable waiting
periods shall have expired without any action being
taken or threatened by any competent authority
which would restrain, prevent or otherwise impose
adverse conditions on the Transactions or the
financing thereof.
(g) Neither the Borrower nor any of its affiliates
shall be subject to any litigation or other similar
proceedings the effect of which has had or could
reasonably be expected to have a material adverse
effect on (a) the business, operations, property or
financial condition or prospects of the Borrower
and its subsidiaries taken as a whole or (b) the
validity or enforceability of any of the Credit
Documentation or the rights and remedies of the
Administrative Agent and the Lenders thereunder;
provided, that litigation or other similar
proceedings seeking to challenge the Transactions
but which have not had the effect of enjoining any
or all of the Transactions shall not prevent the
satisfaction of this condition. It is understood
that the Lenders have been advised of the status of
the ongoing litigation with Belgacom and Belgacom
Directory Services and the employment litigation in
Puerto Rico; provided that this understanding is
not intended to cover any material adverse changes
from the date hereof in the status of any such
litigation which prevents the satisfaction of the
conditions set forth herein.
(h) The Lenders shall have received reasonably
satisfactory pro forma consolidated statements of
income and cash flows of Promedia and summary
financial statements of Promedia in a form to be
agreed which excludes Publimedia and its
subsidiaries for (i) the two most recent fiscal
years ended prior to the Closing Date and (ii) for
each quarterly period ended subsequent to the date
of the latest financial statements delivered
pursuant to clause (i) of this paragraph as to
which such financial statements are available and
such other financial information as reasonably
requested by them.
(i) The Lenders shall have received a reasonably
satisfactory pro forma consolidated balance sheet
of Promedia and a summary balance sheet in a form
to be agreed which excludes Publimedia and its
subsidiaries, in each case, as of the date of the
latest statements of income and cash flows
delivered pursuant to paragraph (h) above adjusted
to give effect to the consummation of the
Transactions and the financings contemplated hereby
as if the Transactions and such financings had
occurred on such date.
(j) The Lenders shall have received a reasonably
satisfactory business plan and a reasonably
satisfactory written analysis of the business and
prospects of Promedia and its subsidiaries (not
including Publimedia and its subsidiaries) for the
period from the Closing Date through the final
maturity of the Term Loans.
(k) The Administrative Agent shall have received
and be reasonably satisfied with the tax sharing
agreement among ITT Information Services, Inc., ITT
Destinations, Inc. and ITT Educational Services,
Inc.
6
<PAGE> 12
(l) The Administrative Agent shall be reasonably
satisfied that there are no liens on any of the
assets of Promedia or its subsidiaries except for
liens permitted by the Credit Documentation or
liens to be discharged on or prior to the Closing
Date pursuant to documentation reasonably
satisfactory to the Administrative Agent.
(m) The Lenders shall have received a reasonably
satisfactory solvency opinion from an independent
valuation firm reasonably satisfactory to the
Administrative Agent which shall document the
solvency of Promedia and its subsidiaries on a
consolidated basis (excluding Publimedia and its
subsidiaries) after giving effect to the
transactions contemplated hereby.
(n) All documents and instruments required to
perfect the Administrative Agent's security
interest in the collateral under the Promedia
Senior Credit Facilities shall have been executed
and be in proper form for filing.
(o) Promedia and its affiliates and subsidiaries
(i) shall not be in breach or violation of any of
its obligations under the documentation relating to
the Transactions or the financing thereof and (ii)
shall not be subject to material contractual or
other restrictions that would be violated by the
Transactions.
(p) The Lenders shall have received such legal
opinions (including opinions (i) from counsel to
Promedia and its subsidiaries and (ii) from such
special and local counsel as may be required by the
Administrative Agent), documents and other
instruments as are customary for transactions of
this type or as they may reasonably request.
Ongoing Conditions: The making of each extension of credit shall be
conditioned upon (a) the accuracy of all
representations and warranties in the Credit
Documentation (including, without limitation, the
material adverse change and litigation
representations) and (b) there being no default or
event of default in existence at the time of, or
after giving effect to the making of, such
extension of credit. As used herein and in the
Credit Documentation a "material adverse change"
shall mean any event, development or circumstance
that has had or could reasonably be expected to
have a material adverse effect on (a) the business,
operations, property or financial condition or
prospects of Promedia and its subsidiaries
(excluding Publimedia and its subsidiaries) taken
as a whole, or (b) the validity or enforceability
of any of the Credit Documentation or the rights
and remedies of the Administrative Agent and the
Lenders thereunder.
Representations and
Warranties: The Credit Documentation shall contain
representations and warranties customary for
financings of this type, including the following:
Financial statements (including pro forma financial
statements); absence of undisclosed liabilities; no
material adverse change; corporate existence;
compliance with law; corporate power and authority;
enforceability of Credit Documentation; no conflict
with law or contractual obligations; no material
litigation; no default; ownership of property;
liens; intellectual property; no contractual, legal
or tax restrictions on the distribution by
subsidiaries and joint venture companies of their
earnings (other than the restrictions with respect
to retained earnings and net
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<PAGE> 13
income from Portugal to the extent attributable to
periods prior to January 1, 1997, which are
projected to apply until the beginning of 2000)
other than those which have been previously
disclosed and are satisfactory to the
Administrative Agent; taxes; Federal Reserve
regulations; Investment Company Act; subsidiaries;
labor matters; environmental matters; solvency;
accuracy of disclosure; creation, perfection and
priority of security interests; and status of
Promedia Senior Credit Facilities as senior debt.
Financial Covenants: The financial covenants will be calculated on a
consolidated basis for Promedia and its
subsidiaries (excluding Publimedia and its
subsidiaries) and will include Debt to EBITDA and
Interest Coverage Ratio, with definitions and
levels to be agreed.
Affirmative Covenants: Customary, including the following:
Delivery of annual audited U.S. GAAP (within 90
days of year-end) and unaudited quarterly (within
45 days of quarter-end) and monthly financial
statements (in each case, on a consolidated basis
and in a summary format to be agreed which excludes
Publimedia and its subsidiaries), reports,
accountants' letters, annual budget, officers'
certificates and other information reasonably
requested by the Lenders; payment of other
obligations; continuation of business and
maintenance of existence and material rights and
privileges; compliance with laws and material
contractual obligations; maintenance of property
and insurance; maintenance of books and records;
right of the Lenders to inspect property and books
and records; notices of defaults, litigation and
other material events; compliance with
environmental laws; further assurances (including,
without limitation, with respect to security
interests in after-acquired property); agreement to
obtain within a time period and in amount to be
agreed interest rate protection on terms and
conditions reasonably satisfactory to the
Administrative Agent; and agreement to obtain
foreign exchange protection in connection with the
senior subordinated notes to be offered by Promedia
at the times and on terms and conditions reasonably
satisfactory to the Administrative Agent.
Negative Covenants: Customary, including the following:
Restrictions (with exceptions to be agreed) on:
indebtedness and guarantees; liens; acquisitions;
mergers, consolidations, liquidations and
dissolutions; sales and dispositions of assets;
capital expenditures; leases; investments, loans
and advances (other than certain permitted
intercompany debt, any notes evidencing which are
pledged in favor of the Administrative Agent for
the benefit of the Lenders); optional prepayments
and modifications of subordinated and other debt
instruments; amendments to charter and by-laws;
transaction with affiliates; sale-leaseback
transactions; changes in fiscal year; negative
pledge clauses; clauses restricting subsidiary and
joint venture distributions; changes in lines of
business; and ability to create new subsidiaries or
joint ventures.
Restricted payments covenant limiting dividends,
distributions and loans by Promedia and its
subsidiaries (including BCC and Publimedia and its
subsidiaries) to ITT and its wholly-owned direct
subsidiaries, except (i) for certain intercompany
transfers by BCC to ITT in amounts to be agreed,
including the proceeds received by Promedia and
contributed to BCC from the sale of Gouden Gids to
Publimedia and proceeds from the
8
<PAGE> 14
repayment of existing loans to affiliates
contemporaneous with the Closing Date and (ii) to
cover corporate overhead of ITT and its wholly-
owned direct subsidiaries (which shall first be
covered by the cash flow at ITT or any wholly-owned
direct subsidiary of ITT) and, so long as no
default or event of default has occurred and is
continuing, (iii) for payments to ITT beginning in
the sixth year after the Closing Date to fund
interest payments on the interim credit facility
for ITT or any notes offered by ITT to replace such
interim credit facility if either remain
outstanding at such time.
Portugal Cash Flow: The cash flow of Portugal attributable to periods
prior to the beginning of the year 2000 shall, to
the extent not necessary for maintaining the
business of Portugal or for servicing the
indebtedness under the Promedia Senior Credit
Facilities (including upon the occurrence of an
Event of Default) be invested in cash equivalents
and reserved for distribution to Promedia by the
beginning of the year 2000, after which time the
Portugal joint venture shall be treated as the
other joint ventures of Promedia for purposes of
its cash flow.
Events of Default: Customary, including the following:
Nonpayment of principal when due; nonpayment of
interest, fees or other amounts after a grace
period to be agreed upon; material inaccuracy of
representations and warranties; violation of
covenants (subject, in the case of certain
affirmative covenants, to a grace period to be
agreed upon); cross-default; bankruptcy events;
material judgments; actual or asserted invalidity
of any guarantee or security document,
subordination provisions or security interest; a
change of control (including of ITT), with a
definition to be agreed upon; and, if contained in
the interim credit facility for ITT, a change in
the passive holding company status of ITT.
Voting: Customary, including the following:
Amendments and waivers with respect to the Credit
Documentation shall require the approval of Lenders
holding not less than a majority of the aggregate
amount of the Term Loans, Revolving Credit Loans
and unused commitments under the Promedia Senior
Credit Facilities, except that (a) the consent of
each Lender directly affected thereby shall be
required with respect to (i) reductions in the
amount or extensions of the scheduled date of
amortization or maturity of any Loan, (ii)
reductions in the rate of interest or any fee or
extensions of any due date thereof, (iii) increases
in the amount or extensions of the expiry date of
any Lender's commitment, (b) the consent of 80% of
the Lenders shall be required with respect to
releases of significant Guarantors or all or
substantially all of the collateral and (c) the
consent of 100% of the Lenders shall be required
with respect to modifications to any of the voting
percentages. In addition, Tranche voting
requirements shall apply to certain modifications
affecting prepayment of the Term Loan Facilities.
Assignments and
Participations: The Lenders shall be permitted to assign and sell
participations in their Loans and commitments,
subject, in the case of assignments (other than to
another Lender or to an affiliate of a Lender), to
the consent of the Administrative Agent and
Promedia (which consent in each case shall not be
unreasonably withheld). In the case of partial
assignments (other
9
<PAGE> 15
than to another Lender or to an affiliate of a
Lender), the minimum assignment amount shall be an
amount to be determined unless otherwise agreed by
Promedia and the Administrative Agent. Participants
shall have the same (but not greater) benefits as
the Lender from which it purchased its
participation with respect to yield protection and
increased cost provisions. Voting rights of
participants shall be limited to those matters with
respect to which the affirmative vote of the Lender
from which it purchased its participation would be
required as described under "Voting" above. Pledges
of Loans in accordance with applicable law shall be
permitted without restriction.
Yield Protection: The Credit Documentation shall contain customary
provisions (a) protecting the Lenders against
increased costs or loss of yield resulting from
changes in reserve, tax, capital adequacy and other
requirements of law and from the imposition of or
changes in withholding or other taxes on a lender
by lender basis as incurred and (b) indemnifying
the Lenders for "breakage costs" incurred in
connection with, among other things, any prepayment
of a Loan on a day other than the last day of an
interest period with respect thereto.
Expenses and
Indemnification: Promedia shall pay (a) all reasonable out-of-pocket
expenses of the Administrative Agent and the
Arranger associated with the syndication of the
Promedia Senior Credit Facilities and the
preparation, execution, delivery and administration
of the Credit Documentation and any amendment or
waiver with respect thereto (including the
reasonable fees, disbursements and other charges of
counsel to the Administrative Agent and the
Arranger) and (b) all out-of-pocket expenses of the
Administrative Agent and the Lenders (including
documentary taxes and the reasonable fees,
disbursements and other charges of counsel) in
connection with the enforcement of the Credit
Documentation.
Governing Law: New York.
Submission to Jurisdiction: New York, London and Brussels.
Belgian Counsel to Chase: Loeff, Claeys, Verbeke.
10
<PAGE> 16
ANNEX I
PRICING GRID
<TABLE>
<CAPTION>
DEBT TO TRANCHE A AND REVOLVING COMMITMENT
EBITDA RATIO CREDIT MARGIN TRANCHE B MARGIN TRANCHE C MARGIN FEE RATE
- -------------------------------- ----------------------- ---------------- ---------------- ----------
<S> <C> <C> <C> <C>
2/35.5 to 1.0.................. 2.00% 2.25% 2.50% .50%
%5.5 to 1.0 and
2/34.5 to 1.0.................. 1.75% 2.25% 2.50% .375%
%4.5 to 1.0 and
2/33.5 to 1.0.................. 1.50% 2.00% 2.25% .375%
%3.5 to 1.0 and
2/33.0 to 1.0.................. 1.25% 1.75% 2.00% .25%
%3.0 to 1.0..................... 1.00% 1.50% 1.75% .25%
</TABLE>
<PAGE> 1
[CHASE LOGO] EXHIBIT 92
CHASE SECURITIES INC.
270 PARK AVENUE
NEW YORK, NEW YORK 10017
THE CHASE MANHATTAN BANK
270 PARK AVENUE
NEW YORK, NEW YORK 10017
August 22, 1997
ITT PUBLIMEDIA B.V.
SENIOR CREDIT FACILITIES
COMMITMENT LETTER
ITT Promedia Commanditaire Vennootschap op Aandelen
Antwerp Tower
5 de Keyserlei B7
B-2018
Antwerp, Belgium
Attention: Marc Goegebuer, Chief Financial Officer
Ladies and Gentlemen:
ITT Corporation ("ITT") has informed Chase Securities Inc. ("CSI") and The
Chase Manhattan Bank ("Chase") that it intends to (i) refinance (the
"Refinancing") approximately $2,000,000,000 par amount of public indebtedness
and a certain amount of other indebtedness of ITT and its subsidiaries, (ii)
repurchase (the "Repurchase") approximately $2,100,000,000 of its capital stock
and (iii) subsequent to the Refinancing and Repurchase, spin-off (collectively,
the "Spin-Offs") to its shareholders its education services and hotels and
gaming businesses. In order to finance a portion of the Refinancing and the
Repurchase, Promedia (as defined below) has requested CSI arrange and Chase
commit to provide to Publimedia (as defined below) the Publimedia Senior Credit
Facilities more particularly described below and on the Publimedia Senior Credit
Facilities Term Sheet (as defined below) attached hereto, the net proceeds of
which (after paying related fees and expenses) would be distributed to ITT. The
Refinancing, the Repurchase and the Spin-Offs, collectively with the other
transactions described herein and the financing thereof with the proceeds of the
Publimedia Senior Credit Facilities and the other contemplated credit facilities
and note offerings, are referred to herein as the "Transactions". References
herein to "ITT" are to ITT Corporation (to be renamed ITT Information Services,
Inc.) after giving effect to the Transactions.
In connection with the Transactions, ITT Promedia Commanditaire
Vennootschap op Aandelen, a Belgian company (from time to time referred to
herein as "Promedia"), will form a Dutch company, ITT Publimedia B.V.
("Publimedia" or the "Borrower") which will be organized so that it is, for U.S.
income tax purposes, a branch of ITT World Directories, Inc. ("ITTWD") and a
company for Dutch tax purposes. Promedia will sell ITT Gouden Gids B.V. ("Gouden
Gids") to Publimedia for an amount to be determined, and ITTWD will sell
Publitec Research & Development B.V. ("Publitec R&D") and Publitec Services B.V.
("Publitec Services") to Publimedia for an amount to be determined, which will
be raised by Publimedia in part from the proceeds of the Publimedia Senior
Credit Facilities (as defined below) and which, after payment of related fees,
expenses and taxes will be distributed by Promedia to ITTWD and by it to ITT.
In that connection, you have requested that CSI agree to structure, arrange
and syndicate, and that Chase commit to provide a portion of approximately
$270,000,000 of senior secured credit facilities (such credit facilities, the
"Publimedia Senior Credit Facilities") for Publimedia, comprised of term loan
facilities aggregating $220,000,000 (the "Publimedia Term Loan Facilities") and
a $50,000,000 revolving credit facility
<PAGE> 2
(the "Publimedia Revolving Credit Facility"). The Publimedia Revolving Credit
Facility will be used to finance the continuing operations of the Borrower and
its subsidiaries after the Transactions. References to dollar amounts of the
Publimedia Senior Credit Facilities in this paragraph are to the maximum U.S.
dollar equivalent of the respective amounts to be made available by the Lenders
thereunder in the relevant local currency. As described in the Publimedia Senior
Credit Facilities Term Sheet, the actual U.S. dollar equivalents to be made
available thereunder may be less than the U.S. dollar equivalents referenced
above.
CSI is pleased to advise you that it is willing to act as exclusive advisor
and arranger for the Publimedia Senior Credit Facilities, and Chase is pleased
to advise you of (a) its commitment to provide up to $40,000,000 of the
Publimedia Senior Credit Facilities and (b) its agreement to use commercially
reasonable efforts to assemble a syndicate of financial institutions identified
by CSI and Chase in consultation with you (together with Chase, the "Lenders"),
to provide the balance of the necessary commitments for the Publimedia Senior
Credit Facilities, in each case, upon the terms and subject to the conditions
set forth or referred to in the Statement of Terms and Conditions attached as
Exhibit A hereto (the "Publimedia Senior Credit Facilities Term Sheet"). It is a
condition to Chase's commitment to provide the portion of the Publimedia Senior
Credit Facilities described above that the remainder of the Publimedia Senior
Credit Facilities shall be provided by the other Lenders referred to below.
It is agreed that Chase will act as the sole and exclusive administrative
agent in respect of the Publimedia Senior Credit Facilities, and that CSI will
act as the sole and exclusive advisor and arranger in respect of the Publimedia
Senior Credit Facilities, and each will, in such capacities, perform the duties
and exercise the authority customarily performed and exercised by it in such
roles. 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 Publimedia Senior Credit Facilities Term Sheet and the Fee
Letter referred to below) will be paid in connection with the Publimedia Senior
Credit Facilities unless you and we shall so agree. It is understood that ITT
has significant relationships with many financial institutions, that ITT may
request that one or more of these financial institutions be given a title or
other special status in the Publimedia Senior Credit Facilities for relationship
reasons, and it is agreed that Chase and CSI will reasonably consider any such
request.
We intend to syndicate the Publimedia Senior Credit Facilities to a group
of Lenders identified by us in consultation with you, and you agree actively to
assist CSI in completing a syndication reasonably satisfactory to it. CSI
intends to commence syndication efforts promptly, and you agree actively to
assist CSI in completing a syndication reasonably satisfactory to it. Such
assistance shall include (a) your using commercially reasonable efforts to
ensure that the syndication efforts benefit materially from yours and ITT's
existing lending relationships, (b) direct contact between senior management and
advisors of you and ITT and the proposed Lenders, (c) assistance in the
preparation of a Confidential Information Memorandum and other marketing
materials to be used in connection with the syndication and (d) the hosting,
with CSI, of one or more meetings of prospective Lenders.
CSI will manage all aspects of the syndication in consultation with ITT,
including decisions as to the selection of institutions to be approached and
when they will be approached, when their commitments will be accepted, which
institutions will participate, the allocations of the commitments among the
Lenders and the amount and distribution of fees among the Lenders. To assist CSI
in its syndication efforts, you agree promptly to and to cause ITT to prepare
and provide to CSI and Chase all information with respect to you, the Borrower,
ITT and your respective subsidiaries, the Transactions and the other
transactions contemplated hereby, including all financial information and
projections (the "Projections"), as we may reasonably request in connection with
the arrangement and syndication of the Publimedia Senior Credit Facilities. You
hereby represent and covenant that (a) all information other than the
Projections (the "Information") that has been or will be made available to Chase
or CSI by you, the Borrower or ITT or any of your respective representatives is
or will be, when furnished, correct in all material respects and does not or
will not contain any untrue statement of a material fact and at the time of
delivery to the prospective Lenders of a Confidential Information Memorandum and
at closing, taken as a whole, will be complete and will not omit to state a
material fact necessary in order to make the statements contained therein not
materially misleading in light of the circumstances under which such statements
are made and (b) the Projections that have been or will be
2
<PAGE> 3
made available to Chase or CSI by you, the Borrower or ITT or any of your
respective representatives have been or will be prepared in good faith based
upon reasonable assumptions. You understand that in arranging and syndicating
the Publimedia Senior Credit Facilities we may use and rely on the Information
and Projections without independent verification thereof.
As consideration for Chase's commitment hereunder and CSI's agreement to
perform the services described herein, you agree to pay, or to cause ITT or the
Borrower to pay, to Chase the nonrefundable fees set forth in the Publimedia
Senior Credit Facilities Term Sheet and in the fee letter dated the date hereof
and delivered herewith (the "Fee Letter").
Chase's commitment hereunder and CSI's agreement to perform the services
described herein are subject to (a) there not occurring or becoming known to us
any material adverse condition or material adverse change in or affecting the
business, operations, property or financial condition or prospects of ITT and
its wholly-owned and non-wholly-owned direct and indirect subsidiaries, taken as
a whole, (b) our satisfaction that the credit structure contemplated for the
Publimedia Senior Credit Facilities and the other contemplated financings by ITT
and the Borrower can be achieved without resulting in material adverse tax,
regulatory, legal or other consequences not currently known to us, (c) our
continued satisfaction that the cash flow of any wholly-owned or
non-wholly-owned subsidiary of the Borrower can be dividended or otherwise
distributed (on a ratable basis), directly or indirectly, to the Borrower
without restriction for the purposes of satisfying the debt service and other
obligations of the Borrower in respect of the Publimedia Senior Credit
Facilities, (d) our not becoming aware after the date hereof of any information
or other matter affecting ITT or its direct or indirect subsidiaries or the
transactions contemplated hereby (including matters relating to financial
models) which is inconsistent in a material and adverse manner with any such
information or other matter disclosed to us prior to the date hereof, (e) there
not having occurred any material adverse litigation affecting the Transactions
or any of the Publimedia Senior Credit Facilities that has not been settled,
dismissed, vacated or discharged prior to the proposed closing date for the
Publimedia Senior Credit Facilities to the reasonable satisfaction of Chase and
CSI; provided, that litigation or other similar proceedings seeking to challenge
the Transactions but which have not had the effect of enjoining any or all of
the Transactions shall not prevent the satisfaction of this condition, (f) there
not having occurred a material disruption of or material adverse change in
financial, banking or capital market conditions that, in our reasonable
judgment, could materially impair the syndication of any of the Publimedia
Senior Credit Facilities, (g) our satisfaction that prior to and during the
syndication of the Publimedia Senior Credit Facilities there shall be no
competing offering, placement or arrangement of any debt securities or bank
financing by or on behalf of ITT or any of its subsidiaries (other than (i) the
interim credit facilities for ITT, (ii) the senior credit facilities for
Promedia (iii) either the interim credit facilities for, or the notes to be
offered on behalf of, Publimedia and Promedia and (iv) the senior credit
facilities for ITT Destinations, Inc. with Chase and/or CSI), (h) the other
conditions set forth or referred to in the Publimedia Senior Credit Facilities
Term Sheet and (i) the negotiation, execution and delivery on or before December
31, 1997 of definitive documentation with respect to the Publimedia Senior
Credit Facilities reasonably satisfactory to Chase and its counsel. Any matters
not covered by the provisions hereof and of the Publimedia Senior Credit
Facilities Term Sheet are subject to the approval and agreement of Chase, CSI
and you.
You agree to, and agree to cause the Borrower to, (a) indemnify and hold
harmless Chase, CSI, their affiliates and their respective officers, directors,
employees, advisors, and agents (each, an "indemnified person") from and against
any and all losses, claims, damages and liabilities to which any such
indemnified person may become subject arising out of or in connection with this
Commitment Letter, the Publimedia Senior Credit Facilities, the use of the
proceeds thereof, the Transactions or any related transaction or any claim,
litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether any indemnified person is a party thereto, and to
reimburse each indemnified person upon demand for any legal or other expenses
incurred in connection with investigating or defending any of the foregoing,
provided that the foregoing indemnity will not, as to any indemnified person,
apply to losses, claims, damages, liabilities or related expenses to the extent
they are found by a final, non-appealable judgment of a court to arise from the
willful misconduct or gross negligence of such indemnified person, and (b)
reimburse Chase, CSI and their affiliates on demand for all reasonable
out-of-pocket expenses (including due diligence expenses, syndication
3
<PAGE> 4
expenses, travel expenses, and reasonable fees, charges and disbursements of
counsel) incurred in connection with the Publimedia Senior Credit Facilities and
any related documentation (including this Commitment Letter). No indemnified
person shall be liable for any indirect or consequential damages in connection
with its activities related to the Publimedia Senior Credit Facilities.
You acknowledge that Chase and its affiliates (the term "Chase" as used
below in this paragraph being understood to include such affiliates) may be
providing debt financing, equity capital or other services (including financial
advisory services) to other companies in respect of which you, the Borrower or
ITT may have conflicting interests regarding the transactions described herein
and otherwise. Chase will not use confidential information obtained from you,
the Borrower or ITT by virtue of the transactions contemplated by this
Commitment Letter or its other relationships with you, the Borrower or ITT in
connection with the performance by Chase of services for other companies, and
Chase will not furnish any such information to other companies. You also
acknowledge that Chase has no obligation to use in connection with the
transactions contemplated by this Commitment Letter, or to furnish to you, the
Borrower or ITT, confidential information obtained from other companies.
This Commitment Letter may not be amended or waived except by an instrument
in writing signed by you, Chase and CSI. This Commitment Letter may be executed
in any number of counterparts. This Commitment Letter and the Fee Letter are the
only agreements that have been entered into among us with respect to the
Publimedia Senior Credit Facilities and set forth the entire understanding of
the parties with respect thereto. The reimbursement, indemnification and
confidentiality provisions contained herein shall remain in full force and
effect regardless of whether definitive financing documentation shall be
executed and delivered. This Commitment Letter shall be governed by, and
construed in accordance with, the laws of the State of New York.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Publimedia Senior Credit Facilities Term
Sheet or the Fee Letter nor any of their terms or substance shall be disclosed,
directly or indirectly, to any other person except (a) to officers, agents and
advisors of you or ITT who are directly involved in the consideration of this
matter, (b) as may be compelled in a judicial or administrative proceeding or as
otherwise required by law (in which case you agree to inform us promptly
thereof), (c) other than the Fee Letter, in connection with a public filing with
the U.S. Securities and Exchange Commission or (d) to representatives of
Clayton, Dubilier & Rice, Inc. and their counsel so long as they agree to abide
by the confidentiality provisions contained herein.
If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms hereof and of the Publimedia Senior Credit Facilities
Term Sheet and the Fee Letter by returning to us executed counterparts hereof
and of the Fee Letter, not later than 5:00 p.m., New York City time, on August
22, 1997. Chase's commitment and CSI's agreements herein will expire at such
time in the event we have not so received such executed counterparts. In the
event that the initial borrowing in respect of the Publimedia Senior Credit
Facilities does not occur on or before December 31, 1997, then this Commitment
Letter and the commitments shall automatically terminate unless each of CSI and
Chase shall agree to an extension.
4
<PAGE> 5
We are pleased to have been given the opportunity to assist you in
connection with this important financing.
Very truly yours,
CHASE SECURITIES INC.
By: /s/ NANCY G. MISTRETTA
------------------------------------
Name: Nancy G. Mistretta
Title: Managing Director
THE CHASE MANHATTAN BANK
By: /s/ DEBORAH DAVEY
------------------------------------
Name: Deborah Davey
Title: Vice President
Accepted and agreed to as of
the date first written above by:
ITT PROMEDIA COMMANDITAIRE VENNOOTSCHAP OP AANDELEN
Represented by: PROMEDIA BVBA, its Managing Partner
Represented By: /s/ MARC GOEGEBUER
------------------------------------
Name: Marc Goegebuer
Title: Chief Financial Officer
Represented By: /s/ GEORGES SEGHERS
------------------------------------
Name: Georges Seghers
Title: General Manager, Sales and
Marketing
5
<PAGE> 6
[CHASE LOGO] EXHIBIT A
SENIOR CREDIT FACILITIES
ITT PUBLIMEDIA B.V.
STATEMENT OF TERMS AND CONDITIONS
------------------------------
The following term sheet (the "Publimedia Senior Credit Facilities Term
Sheet") sets forth the principal terms and conditions for the Publimedia Senior
Credit Facilities.
I. PARTIES
Borrower................... ITT Publimedia B.V. ("Publimedia").
Advisor and Arranger....... Chase Securities Inc. (in such capacity, the
"Arranger").
Administrative Agent....... The Chase Manhattan Bank ("Chase" and, in such
capacity, the "Administrative Agent").
Lenders.................... A syndicate of banks and other financial
institutions, including Chase, selected by the
Arranger (collectively, the "Lenders") with respect
to which there is no Dutch or U.S. withholding
taxes. Participations to others shall not be
permitted to the extent withholding taxes would be
imposed as a result.
II. TYPES AND AMOUNTS OF SENIOR CREDIT FACILITIES
A. TERM LOAN FACILITIES.... An aggregate amount in Dutch Guilders which on the
Closing Date will be equal to a maximum of
$220,000,000, divided into:
6-Year Tranche A Term Loan Facility equal to the
Dutch Guilder equivalent of a maximum of
$120,000,000 (the loans thereunder, the "Tranche A
Term Loans")
7-year Tranche B Term Loan Facility equal to the
Dutch Guilder equivalent of a maximum of
$50,000,000 (the loans thereunder, the "Tranche B
Term Loans")
8-Year Tranche C Term Loan Facility equal to the
Dutch Guilder equivalent of a maximum of
$50,000,000 (the loans thereunder, the "Tranche C
Term Loans")
The Dutch Guilder principal amounts of the Term
Loan Facilities will be computed based on the
exchange rate between Dutch Guilders and U.S.
Dollars in a manner and on a day to be determined
by the Administrative Agent prior to the Closing
Date; provided that, notwithstanding the exchange
rate on such day, the respective Dutch Guilder
principal amounts of each Term Loan Facility shall
in no event exceed the product of (x) the amount
set forth above as the maximum principal amount in
U.S. Dollars of such Term Loan Facility and (y) the
Dutch Guilder/U.S. Dollar exchange rate on August
1, 1997, determined by the Administrative Agent to
be 2.08915, which shall be (i) in the case of the
Tranche A Term Loan Facility, 250 million Dutch
Guilders, (ii) in the case of the Tranche B Term
Loan Facility, 105 million Dutch Guilders
<PAGE> 7
and (iii) in the case of the Tranche C Term Loan
Facility, 105 million Dutch Guilders.
The allocation among the Term Loan Facilities shall
be subject to adjustment by Chase in consultation
with ITT to ensure a successful syndication.
Availability............. The loans to be made available under the Term Loan
Facilities (the "Term Loans") shall be made in a
single drawing on the Closing Date (as defined
below).
Term Loan Amortization... In each year, in the percentage of the respective
tranche set forth opposite such year beneath such
tranche, as follows:
<TABLE>
<CAPTION>
CALENDAR TRANCHE A TRANCHE B TRANCHE C
YEAR PERCENTAGE PERCENTAGE PERCENTAGE
-------- ---------- ---------- ----------
<S> <C> <C> <C>
1998 5% 2% 2%
1999 5% 2% 2%
2000 10% 2% 2%
2001 20% 2% 2%
2002 30% 2% 2%
2003 30% 2% 2%
2004 -- 88% 2%
2005 -- -- 86%
</TABLE>
Purpose.................. The proceeds of the Term Loans shall be used by the
Borrower to repay an intercompany account created
upon the purchase by the Borrower of the shares of
Gouden Gids, Publitec R&D and Publitec Services,
which proceeds, after payment of related fees,
expenses and taxes will be distributed (by dividend
or otherwise) to ITT to finance the Refinancing and
the Repurchase.
B.REVOLVING CREDIT
FACILITY................. 6-Year Revolving Credit Facility in Dutch Guilders
which on the Closing Date will be equal to
$50,000,000
Availability............. The Revolving Credit Facility shall be available on
a revolving basis during the period commencing on
the Closing Date and ending on the date which is
six years after the Closing Date (the "Revolving
Credit Termination Date").
Maturity................. The Revolving Credit Termination Date.
Purpose.................. The proceeds of the loans under the Revolving
Credit Facility (the "Revolving Credit Loans"; and
collectively with the Term Loans, the "Loans")
shall be used to finance the working capital needs
and general corporate purposes of Publimedia and
its subsidiaries.
III. CERTAIN PAYMENT PROVISIONS
Base Interest Rate......... LIBOR for deposits in the London interbank market
for Dutch Guilders (adjusted for statutory reserve
requirements for eurocurrency liabilities on a
lender by lender basis as incurred).
Applicable Margins......... Tranche A Term Loans and Revolving Credit Loans
Based on the pricing grid attached as Annex I
hereto determined by reference to (with appropriate
adjustments for minority interests) the ratio of
Total Indebtedness of Publimedia and its
subsidiaries to their EBITDA ("Debt to EBITDA").
2
<PAGE> 8
Tranche A Term Loans and Revolving Credit Loans
The margins for the Tranche A Term and Revolving
Credit Loans will initially be 2.00% and so long as
no event of default shall have occurred and is
continuing will be subject to adjustment at the end
of the first fiscal quarter which is six months
after the Closing Date (and each quarter
thereafter) based on Debt to EBITDA at such quarter
end as set forth on Annex I.
Tranche B and C Term Loans
The margin for the Tranche B Term Loans will be
2.25% and the margin for the Tranche C Term Loans
will be 2.50% and in each case so long as no event
of default shall have occurred and is continuing
each of the foregoing margins will be subject to
reduction at the end of the first fiscal quarter
which is six months after the Closing Date (and
each quarter thereafter) based on Debt to EBITDA at
such quarter end as set forth on Annex I.
Commitment Fee: The commitment fee will initially be .50% based on
the unused portion of the Revolving Credit Facility
and so long as no event of default shall have
occurred and is continuing will be subject to
adjustment at the end of the first fiscal quarter
which is six months after the Closing Date (and
each quarter thereafter) based on Debt to EBITDA at
such quarter end as set forth on Annex I.
Collateral: 100% of the stock of Publimedia's direct and
indirect subsidiaries (including Gouden Gids,
Publitec R&D and Publitec Services) whether now
owned or hereafter acquired.
The Collateral for the Publimedia Senior Credit
Facilities shall also secure Publimedia's
obligations under any interest rate and currency
hedging arrangements entered into with any Lender.
Optional Prepayments and
Commitment Reductions: Loans may be prepaid and commitments may be reduced
by Publimedia in minimum amounts to be agreed upon.
Optional prepayments of the Term Loans shall be
applied as described below.
Mandatory Prepayments: Unless otherwise set forth below, the following
amounts shall be applied to the prepayment of the
Term Loan Facilities and the reduction of the
Revolving Credit Facilities:
(A) 100% of Net After-Tax Cash Proceeds (with
appropriate adjustment for minority interests) of
(i) Asset Sales (excluding individual asset sales
below $1,000,000 (subject to a maximum of
$5,000,000 during the term of the Publimedia Senior
Credit Facilities) and certain customary exceptions
to be agreed) and (ii) issuances and incurrences of
Debt (subject in the case of Debt to certain
customary exceptions and other exceptions to be
agreed), in each case, by Publimedia and its
wholly-owned and non-wholly-owned (to the extent
permissible under the relevant joint venture or
shareholding agreement, if any) subsidiaries,
subject, in the case of any such issuance or
incurrence of Debt, to the prepayment of the
interim credit facility for Publimedia if then
outstanding; and
(B) 75% of after-tax Excess Cash Flow of Publimedia
and its subsidiaries with definitions to be agreed;
provided that the foregoing percentage
3
<PAGE> 9
shall be reduced to 50% based on the achievement of
certain performance targets to be agreed.
Optional Prepayments applied to the Publimedia
Senior Credit Facilities shall be applied, first,
to Term Loan Facilities and, second, to reduce the
Revolving Credit Facilities. Subject to the second
immediately succeeding paragraph, applications to
Term Loan Facilities shall be ratable as among the
Tranche A, B and C Term Loan Facilities and shall
be applied, first, to the next installments coming
due within 12 months from the date of such
prepayment and, second, ratably to the remaining
installments thereof.
Mandatory Prepayments applied to the Publimedia
Senior Credit Facilities shall be applied, first,
to Term Loan Facilities and, second, to reduce the
Revolving Credit Facilities. Subject to the
immediately succeeding paragraph, applications to
Term Loan Facilities shall be ratable as among the
Tranche A, B and C Term Loan Facilities and shall
be applied, first, to the next installments coming
due within 6 months from the date of such
prepayment and, second, ratably to the remaining
installments thereof.
The lenders under the Tranche B and C Term Loan
Facilities may be permitted to decline Optional
Prepayments or all or certain of the Mandatory
Prepayments, so long as Tranche A Term Loans are
outstanding, in which case such prepayments shall
be applied to the Tranche A Term Loans.
IV. CONDITIONS, REPRESENTATIONS AND WARRANTIES, COVENANTS, DEFAULTS
Initial Conditions: The initial availability of the Publimedia Senior
Credit Facilities shall be conditioned upon
satisfaction of, among other things, the following
initial conditions precedent (the date upon which
all such initial conditions precedent shall be
satisfied, which must be on or before December 31,
1997, the "Closing Date"):
(a) Publimedia shall have executed and delivered
reasonably satisfactory definitive financing
documentation with respect to the Publimedia Senior
Credit Facilities (the "Credit Documentation").
(b) The Lenders, the Administrative Agent and the
Arranger shall have received all fees and expenses
required to be paid on or before the Closing Date.
(c) The Transactions other than the Spin-Offs
(including, without limitation, the senior credit
facilities for Promedia (in an aggregate principal
amount of approximately $385 million), the interim
credit facility for ITT (in an aggregate amount to
yield approximately $225 million) and either the
interim credit facilities for, or the senior
subordinated notes to be offered on behalf of,
Promedia (in an aggregate principal amount of
approximately $320 million) and Publimedia (in an
aggregate principal amount of approximately $175
million)) shall have been consummated, subject to
customary settlement terms, contemporaneously with
the funding of the Publimedia Senior Credit
Facilities on the basic terms and in the respective
amounts set forth in the Commitment Letter and
pursuant to documentation in form and substance
reasonably satisfactory to the Administrative Agent
and the Arranger.
4
<PAGE> 10
(d) All conditions necessary for the closing of the
$5 billion senior secured credit facility for ITT
Destinations, Inc. shall have been satisfied or
waived.
(e) All outstanding indebtedness for borrowed money
(other than certain intercompany indebtedness in
amounts to be agreed) of Publimedia shall be paid
off contemporaneously with the funding of the
Publimedia Senior Credit Facilities or, with the
consent of the Administrative Agent, shall be
permitted to remain outstanding on terms and
conditions reasonably satisfactory to the
Administrative Agent.
(f) All material governmental and third party
approvals necessary or advisable in connection with
the Transactions and the financing contemplated
hereby and the continuing operations of Publimedia
and its subsidiaries shall have been obtained and
be in full force and effect, and all applicable
waiting periods shall have expired without any
action being taken or threatened by any competent
authority which would restrain, prevent or
otherwise impose adverse conditions on the
Transactions or the financing thereof.
(g) Neither the Borrower nor any of its affiliates
shall be subject to any litigation or other similar
proceedings the effect of which has had or could
reasonably be expected to have a material adverse
effect on (a) the business, operations, property or
financial condition or prospects of the Borrower
and its subsidiaries taken as a whole or (b) the
validity or enforceability of any of the Credit
Documentation or the rights and remedies of the
Administrative Agent and the Lenders thereunder;
provided, that litigation or other similar
proceedings seeking to challenge the Transactions
but which have not had the effect of enjoining any
or all of the Transactions shall not prevent the
satisfaction of this condition.
(h) The Lenders shall have received reasonably
satisfactory pro forma consolidated statements of
income and cash flows of Publimedia for (i) the two
most recent fiscal years ended prior to the Closing
Date and (ii) for each quarterly period ended
subsequent to the date of the latest financial
statements delivered pursuant to clause (i) of this
paragraph as to which such financial statements are
available and such other financial information as
reasonably requested by them.
(i) The Lenders shall have received a reasonably
satisfactory pro forma consolidated balance sheet
of Publimedia as of the date of the latest
statements of income and cash flows delivered
pursuant to paragraph (h) above adjusted to give
effect to the consummation of the Transactions and
the financings contemplated hereby as if the
Transactions and such financings had occurred on
such date.
(j) The Lenders shall have received a reasonably
satisfactory business plan and a reasonably
satisfactory written analysis of the business and
prospects of Publimedia and its subsidiaries for
the period from the Closing Date through the final
maturity of the Term Loans.
(k) The Administrative Agent shall have received
and be reasonably satisfied with a tax sharing
agreement among ITT Information Services, Inc., ITT
Destinations, Inc. and ITT Educational Services,
Inc.
(l) The Administrative Agent shall be reasonably
satisfied that there are no liens on any of the
assets of Publimedia or its subsidiaries except for
5
<PAGE> 11
liens permitted by the Credit Documentation or
liens to be discharged on or prior to the Closing
Date pursuant to documentation reasonably
satisfactory to the Administrative Agent.
(m) The Lenders shall have received a reasonably
satisfactory solvency opinion from an independent
valuation firm reasonably satisfactory to the
Administrative Agent which shall document the
solvency of Publimedia and its subsidiaries on a
consolidated basis after giving effect to the
transactions contemplated hereby.
(n) All documents and instruments required to
perfect the Administrative Agent's security
interest in the collateral under the Publimedia
Senior Credit Facilities shall have been executed
and be in proper form for filing.
(o) Publimedia and its affiliates and subsidiaries
(i) shall not be in breach or violation of any of
its obligations under the documentation relating to
the Transactions or the financing thereof and (ii)
shall not be subject to material contractual or
other restrictions that would be violated by the
Transactions.
(p) The Lenders shall have received such legal
opinions (including opinions (i) from counsel to
Publimedia and its subsidiaries and (ii) from such
special and local counsel as may be required by the
Administrative Agent), documents and other
instruments as are customary for transactions of
this type or as they may reasonably request.
Ongoing Conditions: The making of each extension of credit shall be
conditioned upon (a) the accuracy of all
representations and warranties in the Credit
Documentation (including, without limitation, the
material adverse change and litigation
representations) and (b) there being no default or
event of default in existence at the time of, or
after giving effect to the making of, such
extension of credit. As used herein and in the
Credit Documentation a "material adverse change"
shall mean any event, development or circumstance
that has had or could reasonably be expected to
have a material adverse effect on (a) the business,
operations property or financial condition or
prospects of Publimedia and its subsidiaries taken
as a whole, or (b) the validity or enforceability
of any of the Credit Documentation or the rights
and remedies of the Administrative Agent and the
Lenders thereunder.
Representations and
Warranties: The Credit Documentation shall contain
representations and warranties customary for
financings of this type, including the following:
Financial statements (including pro forma financial
statements); absence of undisclosed liabilities; no
material adverse change; corporate existence;
compliance with law; corporate power and authority;
enforceability of Credit Documentation; no conflict
with law or contractual obligations; no material
litigation; no default; ownership of property;
liens; intellectual property; no contractual, legal
or tax restrictions on the distribution by
subsidiaries and joint venture companies of their
earnings; taxes; Federal Reserve regulations;
Investment Company Act; subsidiaries; labor
matters; environmental matters; solvency; accuracy
of disclosure; creation perfection and priority of
security interests; and status of Publimedia Senior
Credit Facilities as senior debt.
6
<PAGE> 12
Financial Covenants: The financial covenants will be calculated on a
consolidated basis for Publimedia and its
subsidiaries and will include Debt to EBITDA and
Interest Coverage Ratio, with definitions and
levels to be agreed.
Affirmative Covenants: Customary, including the following:
Delivery of annual audited U.S. GAAP (within 90
days of year-end) and unaudited quarterly (within
45 days of quarter-end) and monthly financial
statements (in each case, on a consolidated basis),
reports, accountants' letters, annual budget,
officers' certificates and other information
reasonably requested by the Lenders; payment of
other obligations; continuation of business and
maintenance of existence and material rights and
privileges; compliance with laws and material
contractual obligations; maintenance of property
and insurance; maintenance of books and records;
right of the Lenders to inspect property and books
and records; notices of defaults, litigation and
other material events; compliance with
environmental laws; further assurances (including,
without limitation, with respect to security
interests in after-acquired property); agreement to
obtain within a time period and in amount to be
agreed interest rate protection on terms and
conditions reasonably satisfactory to the
Administrative Agent; and agreement to obtain
foreign exchange protection in connection with the
senior subordinated notes to be offered by
Publimedia at the times and on terms and conditions
reasonably satisfactory to the Administrative
Agent.
Negative Covenants: Customary, including the following:
Restrictions (with exceptions to be agreed) on:
indebtedness and guarantees; liens; acquisitions;
mergers, consolidations, liquidations and
dissolutions; sales and dispositions of assets;
capital expenditures; leases; investments, loans
and advances (other than certain permitted
intercompany debt, any notes evidencing which are
pledged in favor of the Administrative Agent for
the benefit of the Lenders); optional prepayments
and modifications of subordinated and other debt
instruments; amendments to charter and by-laws;
transactions with affiliates; sale-leaseback
transactions; changes in fiscal year; negative
pledge clauses; clauses restricting subsidiary and
joint venture distributions; changes in lines of
business; and ability to create new subsidiaries or
joint ventures.
Restricted payments covenant limiting dividends,
distributions and loans by Publimedia and its
subsidiaries to ITTWD, ITT and Promedia, except to
cover corporate overhead of ITT and ITTWD (which
shall first be covered by the cash flow at ITT or
ITTWD) and, so long as no default or event of
default has occurred and is continuing, for
payments to ITT beginning in the sixth year after
the Closing Date to fund interest payments on the
interim credit facility for ITT or any notes
offered by ITT to replace such interim credit
facility if either remain outstanding at such time.
Events of Default: Customary, including the following:
Nonpayment of principal when due; nonpayment of
interest, fees or other amounts after a grace
period to be agreed upon; material inaccuracy of
representations and warranties; violation of
covenants (subject, in the case of certain
affirmative covenants, to a grace period to be
agreed upon); cross-default; bankruptcy events;
material judgments; actual or
7
<PAGE> 13
asserted invalidity of any guarantee or security
document, subordination provisions or security
interest; a change of control (including of ITT),
with a definition to be agreed upon; and, if
contained in the interim credit facility for ITT, a
change in the passive holding company status of
ITT.
Voting: Customary, including the following:
Amendments and waivers with respect to the Credit
Documentation shall require the approval of Lenders
holding not less than a majority of the aggregate
amount of the Term Loans, Revolving Credit Loans
and unused commitments under the Publimedia Senior
Credit Facilities, except that (a) the consent of
each Lender directly affected thereby shall be
required with respect to (i) reductions in the
amount or extensions of the scheduled date of
amortization or maturity of any Loan, (ii)
reductions in the rate of interest or any fee or
extensions of any due date thereof, (iii) increases
in the amount or extensions of the expiry date of
any Lender's commitment, (b) the consent of 80% of
the Lenders shall be required with respect to
releases of all or substantially all of the
collateral and (c) the consent of 100% of the
Lenders shall be required with respect to
modifications to any of the voting percentages. In
addition, Tranche voting requirements shall apply
to certain modifications affecting prepayment of
the Term Loan Facilities.
Assignments and
Participations: The Lenders shall be permitted to assign and sell
participations in their Loans and commitments,
subject, in the case of assignments (other than to
another Lender or to an affiliate of a Lender), to
the consent of the Administrative Agent and
Publimedia (which consent in each case shall not be
unreasonably withheld). In the case of partial
assignments (other than to another Lender or to an
affiliate of a Lender), the minimum assignment
amount shall be an amount to be determined unless
otherwise agreed by Publimedia and the
Administrative Agent. Participants shall have the
same (but not greater) benefits as the Lender from
which it purchased its participation with respect
to yield protection and increased cost provisions.
Voting rights of participants shall be limited to
those matters with respect to which the affirmative
vote of the Lender from which it purchased its
participation would be required as described under
"Voting" above. Pledges of Loans in accordance with
applicable law shall be permitted without
restriction.
Yield Protection: The Credit Documentation shall contain customary
provisions (a) protecting the Lenders against
increased costs or loss of yield resulting from
changes in reserve, tax, capital adequacy and other
requirements of law and from the imposition of or
changes in withholding or other taxes on a lender
by lender basis as incurred and (b) indemnifying
the Lenders for "breakage costs" incurred in
connection with, among other things, any prepayment
of a Loan on a day other than the last day of an
interest period with respect thereto.
Expenses and
Indemnification: Publimedia shall pay (a) all reasonable
out-of-pocket expenses of the Administrative Agent
and the Arranger associated with the syndication of
the Publimedia Senior Credit Facilities and the
preparation, execution, delivery and administration
of the Credit Documentation and any amendment or
waiver with respect thereto (including the
reasonable fees, disbursements and other charges of
counsel to the Administrative
8
<PAGE> 14
Agent and the Arranger) and (b) all out-of-pocket
expenses of the Administrative Agent and the
Lenders (including documentary taxes and the
reasonable fees, disbursements and other charges of
counsel) in connection with the enforcement of the
Credit Documentation.
Governing Law: New York.
Submission to Jurisdiction: New York, London and Amsterdam.
Dutch Counsel to Chase: Loeff, Claeys, Verbeke.
9
<PAGE> 15
ANNEX I
PRICING GRID
<TABLE>
<CAPTION>
TRANCHE A AND
REVOLVING TRANCHE B TRANCHE C COMMITMENT
DEBT TO EBITDA RATIO CREDIT MARGIN MARGIN MARGIN FEE RATE
- ------------------------------------------------------------------------- ------------- --------- --------- ----------
<S> <C> <C> <C> <C>
Greater than or equal to 5.5 to 1.0...................................... 2.00% 2.25% 2.50% .50%
Less than 5.5 to 1.0 and greater than or equal to 4.5 to 1.0............. 1.75% 2.25% 2.50% .375%
Less than 4.5 to 1.0 and greater than or equal to 3.5 to 1.0............. 1.50% 2.00% 2.25% .375%
Less than 3.5 to 1.0 and greater than or equal to 3.0 to 1.0............. 1.25% 1.75% 2.00% .25%
Less than 3.0 to 1.0..................................................... 1.00% 1.50% 1.75% .25%
</TABLE>
<PAGE> 1
EXHIBIT 93
THOMAS F. KUMMER
VON S. HEINZ
KUMMER KAEMPFER BONNER & RENSHAW
Seventh Floor
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
(702) 792-7000
RORY O. MILLSON
SANDRA C. GOLDSTEIN
ELIZABETH L. GRAYER
CRAVATH, SWAINE & MOORE
825 Eighth Avenue
New York, NY 10019
(212) 474-1000
Attorneys for Plaintiffs/
Counterclaim Defendants
UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
ITT CORPORATION, et al., )
)
Plaintiffs, ) Case No. CV-S-97-00893-PMP(RLH)
)
vs. )
)
HILTON HOTELS CORPORATION )
and HLT CORPORATION, )
Defendants. )
)
)
- ---------------------------------)
)
HILTON HOTELS CORPORATION and ) PLAINTIFFS'/COUNTERCLAIM
HLT CORPORATION, ) DEFENDANTS' RESPONSE TO
) HILTON'S EX PARTE MOTION
Counterclaimants, ) FOR PROMPT HEARING ON ITS
) MOTION FOR INJUNCTIVE AND
vs. ) DECLARATORY RELIEF
)
ITT CORPORATION, )
)
Counterclaim )
Defendants. )
- ---------------------------------)
With its untimely and dilatory motion for a preliminary injunction and
its "ex parte" motion for a "prompt" hearing,
-1-
<PAGE> 2
Hilton is continuing to engage in precisely the sort of abuse of process that
ITT filed this action to avoid. ITT filed its motion for a speedy hearing
pursuant to Fed. R. Civ. P. Rule 57 in order to prevent a last minute Hilton
motion for emergency relief to block implementation of ITT's Plan just before it
is scheduled to be consummated. Hilton has now done exactly that, even though it
previously opposed our request for a speedy hearing.
The September schedule for the Plan has been public knowledge for
nearly a month and a half. We advised the Court in our motion for a speedy
hearing and our other opening papers, filed on July 16, 1997, that, pursuant to
the Plan, the equity tender offer was scheduled to commence promptly, and the
debt tender offer and the distributions required to effectuate the spinoff were
scheduled to take place in September.(1) Hilton knew this.(2)
But Hilton opposed expedition. Not only did Hilton take no action in
this litigation until it had to respond to ITT's motion for a speedy hearing,
but Hilton asked this Court to defer scheduling a hearing until the Plan had
received regulatory approval:
"[A]t this time it is premature to determine the appropriate schedule
for a hearing. This is because [the Plan] is subject to a number of
conditions, including regulatory approval, that render its timing
- ---------------
(1) See Plaintiffs'/Counterclaim Defendants' Reply Memorandum With Respect To
Their Motion Pursuant To Fed. R. Civ. P. Rule 57 ("ITT's Rule 57 Reply"),
at 3 n.3.
(2) See id. Contrary to Hilton's repeated misrepresentations (see Answer and
Counterclaims paragraphs 11, 38, 42; Affidavit of Bernard W. Nussbaum,
sworn to August 25, 1997, paragraph 5), ITT did not say the Plan would be
consummated in late September.
-2-
<PAGE> 3
uncertain". Defendants' Memorandum Of Points And Authorities In
Response To Plaintiffs' Motion Pursuant To Fed. R. Civ. P. Rule 57 For
A Speedy Hearing, at 2 (emphasis added).
Then, on August 4, 1997, Hilton asked the regulators (specifically, the New
Jersey Casino Control Commission) to delay ruling until this Court has ruled:
"Because the Nevada court may rule that ITT shareholder approval is
required for the proposed ITT spin-off, consideration by the Commission
of ITT's petition for declaratory rulings at this time would be
premature.... [T]he Commission and the Division of Gaming Enforcement
need not expend resources on ITT's spin-off petition or Hilton's
consolidation/intervention petition until the issue is ripe. The issue
will not be ripe until the ITT shareholders approve the proposed
spin-off, or until the Nevada court rules that the ITT Board can
preempt the ITT shareholders and effect the spin-off without a
shareholder vote." Affidavit of Von S. Heinz, sworn to August 11, 1997
(submitted with ITT's Rule 57 Reply), Ex. A at 2-3 (emphasis added).
Moreover, Hilton chose not to respond to ITT's proposed opening brief on the
merits.
Thus, on August 11, 1997, we noted that, in light of Hilton's dilatory
conduct and its efforts to obstruct an expedited hearing, we believed that
Hilton could not now seek emergency relief against the Plan. See ITT's Rule 57
Reply, at 9. However, Hilton waited a further two weeks -- a total of almost six
weeks after ITT announced the Plan -- before filing its preliminary injunction
motion. The timing of Hilton's motion is purely strategic: circumstances have
not changed in a way that might have precipitated a motion at this time. And
Hilton moved "ex parte" for a "prompt" briefing schedule which did not
contemplate a hearing on its motion until late September.
Hilton's improper tactics are plainly designed to secure a tactical
advantage with regulators through delay. Hilton is
-3-
<PAGE> 4
trying to cause the regulators to delay the scheduled regulatory hearings by
citing to a subsequently scheduled Court date. ITT respectfully submits that
Hilton's improper tactics should not be condoned. Hilton--with full knowledge of
the schedule for the Plan--has sat on its hands, and indeed has attempted to
obstruct an expedited hearing, for almost six weeks. Under these circumstances,
Hilton should not now be permitted to seek preliminary injunctive relief.(3)
But if the Court is inclined to schedule a hearing despite Hilton's
tactics, we reiterate our request for a prompt hearing, earlier than late
September. ITT intends to consummate the Plan as soon as possible after
receiving the necessary regulatory approvals, which it anticipates will be
obtained by mid-September or shortly thereafter. See Affidavits of Roberto A.
Rivera-Soto and Michael J. Bonner, sworn to August 26, 1997.
If a hearing on Hilton's motion is delayed, ITT will suffer significant
harm. Among other things, Hilton will once more urge the regulators that it is
unnecessary for them to rule on Hilton's regulatory applications until this
Court has ruled on Hilton's motion. In addition, delay may adversely impact
ITT's financing for the Plan. ITT has commenced syndication of bank facilities
in connection with the Plan and is commencing the marketing process for the bond
offerings which will be used for the Plan. See Affidavit of Ann N. Reese ("Reese
Aff."), sworn to
- ---------------
(3) Delay in moving for a preliminary injunction weighs strongly against the
grant of relief. See, e.g., Lydo Enterprises, Inc. v. Las Vegas, 745 F.2d
1211, 1213 (9th Cir. 1984); Oakland Tribune, Inc. v. The Chronicle
Publishing Company, Inc., 762 F.2d 1374, 1377 (9th Cir. 1985); Majorica,
S.A. v. R.H. Macy & Co.,
-4-
<PAGE> 5
August 26, 1997, paragraph 4. Delay would create uncertainty which would
diminish investor focus and would adversely impact execution of these financing
arrangements. Id. Delay would also subject ITT to market risk in at least three
respects. First, delay could prevent ITT from taking advantage of the currently
favorable conditions in the bond market and the bank syndication market. Id.
paragraph 5. Second, since the bond offerings and bank financings involve four
currencies, delay would subject ITT to potential exchange rate fluctuations. Id.
And third, delay would subject ITT to potential interest rate fluctuations. Id.
Hilton, on the other hand, will suffer no harm if a hearing is held in
the week of September 8. The discovery that Hilton has requested will be
completed by then. Not only will ITT have produced documents, but Hilton will
have had the opportunity to depose ITT's Chairman, its President, several
outside directors and one of its investment bankers. Moreover, ITT has made its
view of the law clear. Hilton has had ITT's proposed opening brief on its
declaratory judgment action for nearly a month and a half. Under Nevada law,
Hilton's motion should be denied unless Hilton can show that, in approving the
Plan, the ITT Board has not exercised its powers "in good faith and with a view
to the interests of the corporation" NRS 78.138(1). Under these circumstances,
ITT respectfully requests that, if the Court is minded to entertain Hilton's
motion "ex parte", a
- ---------------
Inc., 762 F.2d 7, 8 (2d Cir. 1985); American Bakeries Co. v. Pan-O-Gold Baking
Co., 650 F. Supp. 563, 564 (D. Minn. 1986).
-5-
<PAGE> 6
hearing be scheduled for the week of September 8, with ITT's opposition brief
due by September 4, and Hilton's reply brief, if any, due by September 8.
DATED this 26th day of August, 1997.
KUMMER KAEMPFER BONNER & RENSHAW,
By/s/THOMAS F. KUMMER
THOMAS F. KUMMER
VON S. HEINZ
Seventh Floor
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
RORY O. MILLSON
SANDRA C. GOLDSTEIN
ELIZABETH L. GRAYER
CRAVATH, SWAINE & MOORE
825 Eighth Avenue
New York, NY 10019
(212) 474-1000
Attorneys for Plaintiffs/
Counterclaim Defendants
