<PAGE>
Exhibit (b)
to Item 12
As of November 13, 2000
Weyerhaeuser Company
33663 Weyerhaeuser Way South
Federal Way, Washington
Attention: Mr. William Stivers
Ladies and Gentlemen:
You have advised Morgan Stanley Senior Funding, Inc. ("MORGAN
STANLEY"), Chase Securities Inc. ("CSI") and The Chase Manhattan Bank ("CHASE")
regarding your proposed acquisition (the "ACQUISITION") of a publicly held
Oregon corporation code-named "South" (the "COMPANY"). In this connection, you
have requested that (a) each of Morgan Stanley and Chase provide you with its
financing commitment for 50% of the $5.4 billion of Senior Bank Financing (as
hereinafter defined) described in this letter and in the summary of terms and
conditions attached as Exhibit A (the "SUMMARY OF TERMS" and, together with this
letter, this "COMMITMENT LETTER") and (b) each of Morgan Stanley and CSI provide
you with its best efforts undertaking to arrange a syndicate (in such capacity,
the "LEAD ARRANGERS") of Lenders (as defined under the section "LENDERS" in the
Summary of Terms) for the Senior Bank Financing.
As we understand the transaction, Weyerhaeuser Company (the
"BORROWER") has organized a single-purpose, wholly owned subsidiary (the
"PURCHASER") that will offer to acquire through a tender offer (the "TENDER
OFFER") for $48 in cash per share all of the shares of the Company's outstanding
common stock (the "COMPANY STOCK"), but in any event not less than sufficient
shares of Company Stock to enable the Purchaser, voting without any other
shareholder of the Company, to approve a Merger of the Purchaser, the Borrower
or one of its wholly owned subsidiaries with the Company. As soon as practicable
after the closing of the Tender Offer, the Purchaser, the Borrower or one of its
wholly owned subsidiaries will consummate a merger (the "MERGER") with the
Company. The Acquisition, the Tender Offer, the Merger, the refinancing of
certain existing debt of the Borrower and the Company and the debt financings
contemplated by the foregoing are collectively referred to as the "TRANSACTION".
We understand that the funding required to effect the Acquisition
shall be provided solely from the incurrence by the Borrower of the Senior Bank
Financing.
We further understand that the senior bank financing (the "SENIOR
BANK FINANCING") will be in the form of (i) a 364-day revolving credit facility
(the "364-DAY FACILITY"), (ii) a 5-year revolving credit facility (the "5-YEAR
FACILITY") and (iii) a bridge revolving credit facility (the "BRIDGE REVOLVING
CREDIT FACILITY", together with the 364-Day
<PAGE>
Facility and the 5-Year Facility, the "CREDIT FACILITIES").
Each of Morgan Stanley and Chase commits to provide, severally and
not jointly, 50% of the Senior Bank Financing on the terms and conditions set
forth herein and in the Summary of Terms. Morgan Stanley and CSI shall act as
exclusive joint lead arrangers and as joint book runners, Morgan Stanley shall
act as syndication agent and Chase shall act as administrative agent for the
Senior Bank Financing. It is understood that the Lead Arrangers shall be
permitted to designate one or more Lenders as agents, managing agents or
co-agents, as the case may be, with respect to the Senior Bank Financing in
their sole discretion, and that no titles may be given, or compensation paid, to
Lenders without the Lead Arrangers' consent. Fees payable to the syndicate shall
be payable from the respective amounts payable to the Lead Arrangers and any
other co-arrangers as described in the fee letter (the "FEE LETTER") executed
simultaneously herewith.
Each of the Lead Arrangers reserves the right, prior to or after
execution of the definitive credit documentation for the Senior Bank Financing,
to syndicate all or part of its commitment for the Senior Bank Financing to one
or more lending institutions that will become parties to such definitive credit
documentation pursuant to a syndication to be managed by the Lead Arrangers, and
the commitment of Morgan Stanley and Chase, respectively, hereunder shall be
reduced ratably as and when commitments are received from the Lenders. The Lead
Arrangers shall commence syndication efforts after the execution of this letter
by you at a time the Lead Arrangers determine to be appropriate, and you agree
actively to assist the Lead Arrangers in achieving a syndication that is
satisfactory to the Lead Arrangers and the Borrower. Such syndication will be
accomplished by a variety of means, including direct contact during the
syndication between senior management and advisors of the Borrower and the
proposed syndicate members. To assist the Lead Arrangers in their syndication
efforts, you hereby agree (a) to provide and cause your advisors to provide the
Lead Arrangers and the other syndicate members upon request with all information
reasonably deemed necessary by the Lead Arrangers to complete syndication,
including but not limited to information and evaluations prepared by you and
your advisors or on your behalf relating to the transactions contemplated
hereby, (b) to assist the Lead Arrangers upon request in the preparation of an
Information Memorandum to be used in connection with the syndication of the
Senior Bank Financing and (c) to make available your senior officers and
representatives, in each case from time to time and to attend and make
presentations regarding the business and prospects of the Borrower at a meeting
or meetings of lenders or prospective lenders. In addition, you agree that no
financing for the Borrower, you or any of your respective subsidiaries or
affiliates shall be syndicated, privately placed or publicly offered to the
extent that such financing would have an adverse effect on the syndication of
the Senior Bank Financing.
Please note that the terms and conditions of the Credit Facilities
are not limited to those set forth in this Commitment Letter. Those matters that
are not covered or made clear herein or in the attached Summary of Terms are
subject to mutual agreement of the parties. The
2
<PAGE>
terms and conditions of this commitment may be modified only in writing. In
addition, this commitment is subject to (a) the preparation, execution and
delivery of mutually acceptable loan documentation, including a credit agreement
incorporating substantially the terms and conditions outlined herein and in the
Summary of Terms, (b) the absence of a material adverse change in the business,
financial condition, operations or properties of (A) you and your subsidiaries,
taken as a whole since September 24, 2000 or (B) the Company and its
subsidiaries, taken as a whole, since September 30, 2000, (c) the condition that
there shall not have occurred and be continuing any material adverse change in
loan syndication or financial or capital market conditions generally from those
currently in effect that adversely affects the syndication of the Credit
Facilities, (d) the completion by each of the Lead Arrangers and Chase of their
limited confirmatory due diligence with respect to the assets and businesses of
the Borrower, the Company and their subsidiaries with results reasonably
satisfactory to them (it being understood that the Lead Arrangers have completed
substantial due diligence to date (including, without limitation, a review of
all publicly available information, with respect to the Company as of the date
hereof), and that, such results have been satisfactory to the Lead Arrangers,
PROVIDED that such limited confirmatory due diligence with respect to the
Company and its subsidiaries shall be limited to publicly available information
unless and until the Borrower shall be able to conduct a more inclusive due
diligence investigation of the Company and its subsidiaries), and (e) the
accuracy and completeness in all material respects of all representations that
you make to us taken as a whole and all information that you furnish to us in
connection with this commitment and your compliance with the terms of this
Commitment Letter. The commitments of Morgan Stanley and Chase set forth in this
Commitment Letter will terminate on the later of (i) the date on which the
Borrower publicly announces that it is abandoning the Acquisition and (ii)
October 31, 2001, unless the Transaction closes on or before such date.
To induce the Lead Arrangers and Chase to issue this letter and to
continue with their due diligence efforts, you hereby agree that all reasonable
out-of-pocket fees and expenses (including the reasonable fees and expenses of
counsel and consultants) of the Lead Arrangers, Chase and their respective
affiliates arising in connection with this letter (and their due diligence and
syndication efforts in connection herewith) and in connection with the Senior
Bank Financing and the other transactions described herein shall be for your
account, whether or not the Transaction is consummated, the Senior Bank
Financing is made available or definitive credit documents are executed. In
addition, you hereby agree to pay when and as due the fees described in the Fee
Letter. You further agree to indemnify and hold harmless each of the Lenders
(including, in any event, each of Morgan Stanley and Chase) and each director,
officer, employee and affiliate thereof (each an "INDEMNIFIED PERSON") from and
against any and all actions, suits, proceedings (including any investigations or
inquiries), claims, losses, damages, liabilities or expenses of any kind or
nature whatsoever which maybe incurred by or asserted against or involve any
such Indemnified Person as a result of or arising out of or in any way related
to or resulting from this letter, the Transaction or the extension or
syndication of the Senior Bank Financing contemplated by this letter, or in any
way arise from any use or intended use of this letter or the proceeds of the
Senior Bank Financing contemplated by this letter, and
3
<PAGE>
you agree to reimburse each Indemnified Person upon demand for any legal or
other out-of-pocket expenses incurred in connection with investigating,
defending or preparing to defend any such action, suit, proceeding (including
any inquiry or investigation) or claim (whether or not Morgan Stanley, Chase or
any such other Indemnified Person is a party to any action or proceeding out of
which any such expenses arise) (collectively, an "ACTION"); PROVIDED, HOWEVER,
that you shall not have to indemnify any Indemnified Person against any loss,
claim, damage, expense or liability to the extent resulting from the gross
negligence or willful misconduct of such Indemnified Person or that are in the
nature of personal injury or damage to property. It is understood and agreed
that, to the extent not precluded by a conflict of interest, the Indemnified
Persons and you shall endeavor to work cooperatively with a view to minimizing
the legal and other expenses associated with any defense and any potential
settlement or judgment. To the extent reasonably practicable and not
disadvantageous to any party, it is anticipated that a single counsel may be
used. Settlement of any claim or litigation involving any material indemnified
amount will require your approval, not to be unreasonably withheld. This letter
is issued for your benefit only and no other person or entity may rely hereon.
Neither Morgan Stanley, nor Chase, nor any other Lender shall be responsible or
liable to you, the Company, the Borrower or any other person for consequential
damages which may be alleged as a result of this letter.
Each Lead Arranger reserves the right to employ the services of its
affiliates in providing services contemplated by this letter and to allocate, in
whole or in part, to such affiliates certain fees payable to such Lead Arranger
in such manner as such Lead Arranger and such affiliates may agree in their sole
discretion. You acknowledge that each Lead Arranger may share with any of its
affiliates, and such affiliates may share with such Lead Arranger, any
information related to the Transaction, the Borrower, any of the Borrower's
subsidiaries, the Company, any of the Company's subsidiaries or any of the
matters contemplated hereby in connection with the Transaction, subject to an
express agreement to keep such information confidential.
The provisions of the immediately preceding two paragraphs shall
survive any termination of this letter.
You represent and warrant that (a) all information that has been or
will hereafter be made available by or on behalf of you or by any of your
representatives in connection with the Transaction and the other transactions
contemplated hereby to the Lead Arrangers and Chase or any of their respective
affiliates or representatives or to any Lender or any potential Lender is and
will be complete and correct in all material respects and does not and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading in
light of the circumstances under which such statements were or are made
considered as a whole, together with publicly available information, and (b) all
financial projections, if any, that have been or will be prepared by you on your
behalf or by any of your representatives and made available to the Lead
Arrangers and Chase or any of their respective affiliates or representatives or
to any Lender or any potential Lender in
4
<PAGE>
connection with the Transaction and the other transactions contemplated hereby
have been or will be prepared in good faith based upon reasonable assumptions
(it being understood that such projections are subject to significant
uncertainties and contingencies, many of which are beyond your control, and that
no assurance can be given that any particular projections will be realized). You
agree to supplement the information and projections from time to time so that
the representations and warranties contained in this paragraph remain complete
and correct.
In issuing this commitment, each Lead Arranger and Chase is relying
on the accuracy of the information furnished to it by you or on your behalf
(collectively, the "PRE-COMMITMENT INFORMATION"). The obligations of the Lead
Arrangers and Chase under this Commitment Letter and of any Lender that issues a
commitment for the Senior Bank Financing are made solely for your benefit and
may not be relied upon or enforced by any other person or entity.
You acknowledge that each of the Lead Arrangers and Chase, and their
respective affiliates (each a "BANK" and, collectively, the "BANKS") may be
providing debt financing, equity capital or other services (including financial
advisory services) to other companies in respect of which you may have
conflicting interests regarding the transactions described herein and otherwise,
PROVIDED that, prior to the date on which the Borrower abandons the Tender
Offer, neither the Lead Arrangers nor Chase will, without the consent of the
Borrower, provide any debt financing, equity capital or other services
(including financial advisory services) for a competing bid for the acquisition
of the Company (other than through any financing commitment existing on the date
hereof). The Banks expressly agree to maintain non-public information received
from you confidential. None of the Banks will use confidential information
obtained from you by virtue of the transactions contemplated by this Commitment
Letter or its other relationships with you in connection with the performance by
such Banks of services for other companies, and none of the Banks will furnish
any such information to other companies. You also acknowledge that none of the
Banks has an obligation to use in connection with the transactions contemplated
by this Commitment Letter, or to furnish to you, confidential information
obtained from other companies.
You are not authorized to show or circulate this letter to any other
person or entity (other than your legal and financial advisors in connection
with your evaluation hereof and except as required by law or stock exchange
requirements) until such time as you have accepted this letter as provided in
the immediately succeeding paragraph. If the letter is not accepted by you as
provided in the immediately succeeding paragraph, you are to immediately return
this letter (and any copies hereof) to the undersigned. This letter may be
executed in any number of counterparts, and by the different parties hereto on
separate counterparts, each of which counterpart shall be an original, but all
of which shall together constitute one and the same instrument.
5
<PAGE>
This letter and the Fee Letter shall be governed by, and construed
in accordance with the laws of the state of New York, and any right to trial by
jury with respect to any claim, action, suit or proceeding arising out of or
contemplated by this letter and/or the related Fee Letter is hereby waived. The
parties hereto hereby submit to the non-exclusive jurisdiction of the federal
and New York State courts located in the City of New York in connection with any
dispute related to this letter or the Fee Letter or any matters contemplated
hereby or thereby. Delivery of an executed counterpart of this Commitment Letter
by telecopier shall be effective as delivery of a manually executed counterpart
of this Commitment Letter.
Very truly yours,
MORGAN STANLEY SENIOR
FUNDING, INC.
By /s/ Todd Vannucci
-----------------------
Title: Vice President
CHASE SECURITIES INC.
By /s/ B. Joseph Lillis
------------------------
Title: Managing Director
THE CHASE MANHATTAN BANK
By /s/ B. Joseph Lillis
------------------------
Title: Managing Director
Agreed to and Accepted as of the
28th day of November, 2000
WEYERHAEUSER COMPANY
By /s/ Richard J. Taggart
------------------------
Title: Vice President
and Treasurer
6
<PAGE>
EXHIBIT A
SUMMARY OF CERTAIN TERMS AND CONDITIONS*
THE PARTIES
BORROWER: Weyerhaeuser Company.
LEAD ARRANGERS AND
JOINT BOOK-RUNNERS: Morgan Stanley and CSI.
SYNDICATION AGENT: Morgan Stanley.
ADMINISTRATIVE AGENT: Chase.
LENDERS: Morgan Stanley, Chase and a syndicate of financial
institutions and institutional lenders arranged by the
Lead Arrangers in consultation with the Borrower.
DESCRIPTION OF CREDIT FACILITIES COMPRISING THE SENIOR BANK FINANCING
364-DAY FACILITY: 364-day Revolving Credit Facility in the amount of
$1.150 billion.
MATURITY AND
AMORTIZATION: The final maturity of the 364-Day Facility shall be the
date which occurs 364 days after the Closing Date,
PROVIDED, HOWEVER, that the date of the final maturity
may by extended by 12 months at the option of the
Borrower so long as, both before and after giving effect
to such extension, no default shall have occurred and be
continuing. Loans made pursuant to the 364-Day Facility
(the "364-DAY LOANS") shall be repaid in full on the
final maturity date.
5-YEAR FACILITY: 5-Year Revolving Credit Facility in the amount of $1.960
billion, with letter of credit and swing line sublimits
to be agreed upon.
MATURITY AND
AMORTIZATION: The final maturity of the 5-Year Facility shall be the
date which occurs five years after the Closing Date. The
loans made pursuant to the 5-Year Facility (the "5-YEAR
LOANS") shall be repaid in full on the final maturity
date, and all letters of credit issued thereunder shall
terminate prior to such time.
----------
* Capitalized terms used herein and not defined herein shall have the
meanings provided in the commitment letter (the "COMMITMENT LETTER")
to which this summary is attached.
<PAGE>
BRIDGE FACILITY: Bridge Revolving Credit Facility in the amount of $2.290
billion.
MATURITY: The final maturity of the Bridge Facility shall be, as
applicable, (a) the date which occurs 18 months after
the Closing Date if the long-term unsecured debt rating
of the Borrower, after giving effect to the Transaction
(the "RATING") by Moody's Investors Service, Inc.
("MOODY'S") as of the Closing Date is at least Baa2, and
if the Rating by Standard & Poor's Ratings Services
("S&P") as of the Closing Date is at least BBB, or (b)
the date which occurs 24 months after the Closing Date
if the Rating of the Borrower as of the Closing Date is
equal to Baa3 by Moody's or equal to BBB- by S&P. Loans
made pursuant to the Bridge Facility (the "BRIDGE
LOANS", and together with the 364-Day Loans and the
5-Year Loans, the "LOANS") shall be repaid in full on
the final maturity date. To the extent the final
maturity of the Bridge Facility shall be 24 months after
the Closing Date as set forth in item (b) above, the
Bridge Loans shall be subject to an amortization payment
of $1.25 billion on the date which occurs 12 months
after the Closing Date.
USE OF PROCEEDS: The Loans shall be utilized solely to finance the
Acquisition.
AVAILABILITY: Loans may be borrowed, repaid and reborrowed on and
after the Closing Date until the final maturity date for
the applicable Credit Facility.
TERMS APPLICABLE TO THE ENTIRE SENIOR BANK FINANCING
CLOSING DATE: On or before October 31, 2001.
INTEREST RATES: At the option of the Borrower, Loans may be maintained
from time to time as (x) Base Rate Loans which shall
bear interest at the Applicable Margin in excess of the
Base Rate in effect from time to time or (y) Eurodollar
Loans which shall bear interest at the Applicable Margin
in excess of the Eurodollar Rate (adjusted for reserves
to the extent incurred) as determined by the
Administrative Agent for the respective interest period.
"BASE RATE" shall mean the higher of (x) 1/2 of 1% in
excess of the federal funds rate and (y) the rate that
the Administrative Agent announces from time to time as
its prime or base commercial lending rate, as in effect
from time to time.
The "APPLICABLE MARGIN" means at any time for each
Credit Facility, the applicable percentage determined
based on the Rating in effect from time to time,
PROVIDED that (x) the Applicable
<PAGE>
Margin for Eurodollar Loans shall not be less than
0.525% and shall not exceed 1.375%, and (y) the
Applicable Margin for Base Rate Loans shall be equal to
or greater than 0.00% and shall not exceed 0.500%.
During the continuance of any payment default under the
loan documentation, the Applicable Margin on all such
defaulted obligations owing under the loan documentation
shall increase by 2% per annum.
Interest periods of 1, 2, 3 and 6 months shall be
available in the case of Eurodollar Loans.
Interest in respect of Base Rate Loans shall be payable
quarterly in arrears on the last business day of each
quarter. Interest in respect of Eurodollar Loans shall
be payable in arrears at the end of the applicable
interest period and every three months in the case of
interest periods in excess of three months. Interest
will also be payable at the time of repayment of any
Loans, and at maturity. Interest in respect of
Eurodollar Loans shall be based on a 360-day year.
Interest in respect of Base Rate Loans and all
commitment fee and other fee calculations shall be based
on a 365-day year.
LEAD ARRANGER AND
ADMINISTRATIVE
AGENT FEES: The Lead Arrangers and the Administrative Agent shall
receive such fees as have been separately agreed upon
with the Borrower.
LETTER OF CREDIT FEES: Applicable Margin for Eurodollar Loans which are 5-Year
Loans on the aggregate outstanding stated amounts of
letters of credit plus an additional 1/8 of 1% on the
aggregate outstanding stated amounts of letters of
credit to be paid as a fronting fee to the issuing bank.
FACILITY FEES: In respect of each Credit Facility a per annum
percentage determined based on the Rating in effect from
time to time, on each Lender's share of the Senior Bank
Financing from the date of acceptance of such Lender's
commitment, payable (a) quarterly in arrears and (b) on
the date of termination or expiration of the
commitments, PROVIDED that the Facility Fee shall not be
less than 0.100% and shall not exceed 0.250%.
VOLUNTARY COMMITMENT
REDUCTIONS: Voluntary reductions to the unutilized portion of any
Credit Facility may be made from time to time by the
Borrower without premium or penalty.
<PAGE>
VOLUNTARY PREPAYMENT: The Borrower may, upon at least one business day's
notice in the case of Base Rate Loans and three business
days' notice in the case of Eurodollar Loans, prepay, in
full or in part, the Senior Bank Financing without
premium or penalty; PROVIDED, HOWEVER, that each partial
prepayment shall be in an amount of $25,000,000 or an
integral multiple of $1,000,000 in excess thereof;
PROVIDED FURTHER that any such prepayment of Eurodollar
Loans shall be made together with reimbursement for any
funding losses of the Lenders resulting therefrom to the
extent such funding losses shall have been claimed
within 6 months after the occurrence thereof.
MANDATORY PREPAYMENT
AND COMMITMENT
REDUCTION: All net cash proceeds from sales of property and assets
of the Borrower and its subsidiaries (excluding (i)
sales of inventory and timberlands in the ordinary
course of business, (ii) other exceptions to be mutually
agreed and (iii) any casualty and condemnation proceeds
and sales proceeds to the extent reinvested in the
business of the Borrower and it subsidiaries or applied
to repair or replace the lost asset within a certain
period of time to be mutually agreed) shall be applied
first to prepay the Bridge Facility, second, to the
5-Year Facility and third to the 364-Day Facility. All
such prepayments made shall result in a permanent
reduction of the commitments under the applicable Credit
Facilities.
All net cash proceeds from the issuance after the
Closing Date of additional debt and equity of the
Borrower and its subsidiaries otherwise permitted under
the loan documentation, except for certain net cash
proceeds from specific issuances to be agreed upon,
shall be applied to prepay the Bridge Facility. All such
prepayments made with respect to the Bridge Facility
shall result in a permanent reduction of the commitments
under the Bridge Facility.
DOCUMENTATION: The commitments of the Lead Arrangers and Chase will be
subject to the negotiation, execution and delivery of
definitive financing agreements consistent with the
terms of this letter and on other terms substantially
similar to those contained in the Borrower's existing
senior credit facilities, in each case prepared by
counsel to the Lead Arrangers. The definitive financing
agreement shall provide that the covenants and
representations and warranties shall include the Company
and its subsidiaries only on and after the date on which
the Borrower directly or indirectly effectively controls
the Company.
<PAGE>
CONDITIONS PRECEDENT
TO INITIAL EXTENSION
OF CREDIT: Those customarily found in credit agreements for similar
financings and other provisions customary for financings
of this type, including, without limitation, the
following:
(i) The Lenders shall be reasonably satisfied with the
final terms and conditions (including any
modifications made thereto from time to time) of
the Tender Offer, including, without limitation,
the price per share and number of shares to be
acquired (unless it consists of at least
sufficient shares of Company Stock to enable the
Purchaser, voting without any other shareholder of
the Company, to approve a Merger of the Purchaser,
the Borrower or one of its wholly owned
subsidiaries with the Company), and with the
proposed terms and conditions (including any
modifications made thereto from time to time) of
the Merger, if any; the Lenders shall be
reasonably satisfied with all legal and tax
aspects of the Tender Offer and the Merger, if
any; and all documentation relating to the Tender
Offer and the Merger, if any, including, without
limitation, the offer to purchase the Company
Stock and the Merger Agreement, if any, shall be
in form and substance satisfactory to the Lenders.
The Lenders shall be satisfied that all of the
existing senior bank credit facilities of the
Borrower have been repaid in full and the
commitments thereunder terminated.
Contemporaneously with a merger of the Company,
the senior bank credit facilities of the Company
shall be repaid.
(ii) All documentation relating to the Senior Bank
Financing, including a credit agreement
incorporating substantially the terms and
conditions outlined herein, and the other parts of
the Transaction shall be in form and substance
reasonably satisfactory to the Lenders.
(iii) Except as otherwise disclosed publicly or to the
Lead Arrangers prior to the date of the Credit
Agreement, there shall not have occurred (i) a
material adverse change in the business, financial
condition, operations, or properties of (A) the
Company and its subsidiaries, taken as a whole,
since September 30, 2000, or (B) the Borrower and
its subsidiaries, taken as a whole, since
September 24, 2000.
(iv) Except as otherwise publicly disclosed prior to
the date of the Commitment Letter, there shall
exist no action, suit,
<PAGE>
investigation, litigation or proceeding pending or
threatened in any court or before any arbitrator
or governmental or regulatory agency or authority
that (i) could reasonably be expected to (A) have
a material adverse effect on the business,
financial condition, operations, or properties of
(1) the Company and its subsidiaries, taken as a
whole, or (2) the Borrower and its subsidiaries,
taken as a whole, (B) adversely affect the ability
of the Borrower or any of its subsidiaries to
perform its obligations under the loan
documentation or (C) adversely affect the rights
and remedies of the Administrative Agent and the
Lenders under the loan documentation or (ii) could
reasonably be expected to have a material adverse
effect on the Transaction or the Senior Bank
Financing (collectively, a "MATERIAL ADVERSE
EFFECT").
(v) All governmental and third party consents and
approvals necessary in connection with the
Transaction and the Senior Bank Financing shall
have been obtained (without the imposition of any
conditions that are not acceptable to the Lenders)
and shall remain in effect, except where the
failure to have obtained such consent or approval,
individually or in the aggregate with any other
consents or approvals, would not reasonably be
expected to result in a Material Adverse Effect;
all applicable waiting periods shall have expired
without any material adverse action being taken by
any competent authority; and no law or regulation
shall be applicable that restrains, prevents or
imposes materially adverse conditions upon the
Transaction or the Senior Bank Financing.
(vi) The Lenders shall have received (i) reasonably
satisfactory opinions of counsel for the Borrower
as to the transactions contemplated hereby
(including, without limitation, the tax aspects
thereof and compliance with all applicable
securities laws) and (ii) such corporate
resolutions, certificates and other documents as
the Lenders shall reasonably request.
(vii) There shall exist no default under any of the loan
documentation, and the representations and
warranties of the Borrower therein shall be true
and correct in all material respects immediately
prior to, and after giving effect to, the initial
extension of credit under the loan documentation.
<PAGE>
(viii) All accrued fees and expenses of the
Administrative Agent, the Lead Arrangers and the
Lenders (including the fees and expenses of
counsel for the Lead Arrangers) shall have been
paid.
(ix) The Borrower's long-term unsecured debt, after
giving effect to the Transaction, shall have been
rated "investment grade" by both Moody's and S&P
and, if the Borrower is rated in the lowest
investment grade category by both Moody's and S&P,
shall not have been placed on credit watch by
either Moody's or S&P with negative implications,
as of the Closing Date.
CONDITIONS PRECEDENT
TO SUBSEQUENT
EXTENSIONS OF CREDIT: There shall exist no default under any of the loan
documentation, and the representations and warranties of
the Borrower (other than the representation set forth in
item (iii) under Conditions Precedent to Initial
Extension of Credit) therein shall be true and correct
in all material respects immediately prior to, and after
giving effect to, such extension of credit.
REPRESENTATIONS AND
WARRANTIES: Representations and warranties substantially similar to
those contained in the Borrower's existing senior credit
agreements and others customary for transactions of this
type.
COVENANTS: Affirmative and negative covenants substantially similar
to those contained in the Borrower's existing senior
credit agreements and others customary for transactions
of this type.
FINANCIAL COVENANTS: A total debt to capitalization ratio and a minimum net
worth covenant to be determined.
EVENTS OF DEFAULT: Events of Default substantially similar to those
contained in the Borrower's existing senior credit
agreements and others customary for transactions of this
type.
EXPENSES: The Borrower shall pay all of the Administrative Agent's
and the Lead Arrangers' due diligence, syndication
(including printing, distribution and bank meetings) and
all other out-of-pocket expenses incurred by the
Administrative Agent or the Lead Arrangers (including
the fees and expenses of counsel for the Lead Arranger),
whether or not any of the transactions contemplated
hereby are consummated. The Borrower shall also pay the
expenses of the Administrative Agent, the Lead Arrangers
and the
<PAGE>
Lenders in connection with the enforcement of any of the
loan documentation.
INDEMNITY: The Borrower will indemnify and hold harmless the
Administrative Agent, the Lead Arrangers, each Lender
and each of their affiliates and their officers,
directors, employees, agents and advisors from claims
and losses relating to the Transaction or the Senior
Bank Financing, subject to customary exceptions.
REQUIRED LENDERS: Lenders holding loans and commitments representing more
than 50% of the aggregate amount of loans and
commitments under the Senior Bank Financing.
WAIVERS &
AMENDMENTS: Amendments and waivers of the provisions of the loan
agreement and other definitive credit documentation will
require the approval of the Required Lenders, except
that the consent of all affected Lenders be required
with respect to (i) increases in commitment amounts,
(ii) reductions of principal, interest, or fees and
(iii) extensions of scheduled maturities.
ASSIGNMENTS AND
PARTICIPATIONS: Assignments may be non-pro rata and must be to Eligible
Assignees and, in each case other than an assignment to
a Lender or an assignment of the entirety of a Lender's
interest in the Senior Bank Financing, in a minimum
amount to be agreed. Each Lender will also have the
right, without consent of the Borrower or the
Administrative Agent, to assign (i) as security all or
part of its rights under the loan documentation to any
Federal Reserve Bank and (ii) all or part of its rights
or obligations under the loan documentation to any of
its affiliates. No participation shall include voting
rights, other than for reductions or postponements of
regularly scheduled amounts payable.
TAXES: All payments to be free and clear of any present or
future taxes, withholdings or other deductions
whatsoever (other than income taxes in the jurisdiction
of the Lender's applicable lending office). The Lenders
will use reasonable efforts (consistent with their
respective internal policies and legal and regulatory
restrictions and so long as such efforts would not
otherwise be disadvantageous to such Lenders) to
minimize to the extent possible any applicable taxes and
the Borrower will indemnify the Lenders and the
Administrative Agent for such taxes paid by the Lenders
or the Administrative Agent; provided that the Borrower
shall have the right to replace any Lender that shall
have claimed such
<PAGE>
indemnification.
MISCELLANEOUS: Standard yield protection (including compliance with
risk-based capital guidelines, increased costs, payments
free and clear of withholding taxes and interest period
breakage indemnities), eurodollar illegality and similar
provisions, defaulting lender provisions, waiver of jury
trial and submission to jurisdiction.
GOVERNING LAW: New York.
COUNSEL FOR THE
LEAD ARRANGERS: Shearman & Sterling.
