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EXHIBIT (b)(2)
BEAR STEARNS CORPORATE LENDING INC.
245 PARK AVENUE
NEW YORK, NEW YORK 10167
June 22, 2000
CONFIDENTIAL
HB Finance LLC
c/o Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
(p) Dallas, Texas 75201
Attention: Mr. Jack Furst
and
c/o Bear Stearns Merchant Fund Corp.
245 Park Avenue
(q) New York, New York 10167
Attention: Mr. John Howard
BRIDGE COMMITMENT LETTER
Ladies and Gentlemen:
HB Finance LLC ("Financeco"), an affiliate of Hicks, Muse, Tate & Furst
Incorporated ("Hicks Muse") and Bear Stearns Merchant Fund Corp. (together with
Hicks Muse, the "Sponsors"), formed to effect the transactions described herein
with HB Merger LLC ("Mergerco"), has advised Bear Stearns Corporate Lending Inc.
("BSCL" and, together with BSCL's assigns, the "Bridge Lenders") that Financeco
and Mergerco intend to enter into a merger agreement (the "Merger Agreement")
with Johns Manville Corporation (the "Target"), pursuant to which the Sponsors,
certain existing stockholders and members of management of the Target (the
"Rollover Shareholders" and, collectively with the Sponsors, the "Investor
Group"), would acquire all of the common stock and options of the Target for
approximately $2,344,000,000 (excluding any tax settlement payments). You have
further advised us that the Merger (as defined below) will be effected pursuant
to a recapitalization, and in connection therewith, the Target will transfer all
of its assets to a wholly-owned subsidiary, reasonably acceptable to BSCL (the
"Company"), of the Target (the "Recapitalization"). Mergerco will be merged with
and into the Target (the "Merger") with the Target being the surviving entity.
Financeco has further informed BSCL that in order to: (a) pay for the Target's
stock in the Merger, (b) refinance certain of the Target's and its subsidiaries'
existing bank debt concurrently with the Merger (the "Refinancing"), and (c) pay
certain fees, expenses and tax settlement costs associated with the
Recapitalization, the Merger and the financing thereof (collectively, the
"Transactions"), Financeco expects that (i) the Company will borrow
approximately $1,558,400,000 under a $1,750,000,000 senior secured bank credit
facility consisting of: (a) a $300,000,000 six and one-half year revolving
credit facility (the "Revolver") (of which approximately $108,400,000 is
expected to be drawn on the Closing Date (as defined in Annex 1 hereto), subject
to changes in (i) the Target's and its subsidiaries' existing bank debt in the
ordinary course of business and (ii) the amount of excess cash on the Target's
balance sheet as of the Closing Date), (b) a six and one-half year amortizing
term loan A of $500,000,000, (c) a seven and one-half year amortizing term loan
B of $650,000,000, and (d) an eight and one-half year amortizing term loan C of
$300,000,000 (collectively, the "Senior Term Loans" and, together with the
Revolver, the "Senior Credit Facility"), (ii) the Target will issue to the
Sponsors no less than $500,000,000 of equity on the terms and conditions
described in the Transaction Documentation (as defined in Annex 3) or as
otherwise reasonably satisfactory to BSCL (the "Sponsor Equity Financing"),
(iii) the existing Shareholders will roll over certain of their existing common
equity of the Target into approximately $353,100,000 (based on liquidation
preference in the case of preferred
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stock and based on the consideration paid per share in the case of the common
stock) consisting of a combination of pay-in-kind preferred stock (the "Rollover
PIK Preferred Stock"), junior preferred stock and common stock of the Target
(collectively with the Sponsor Equity Financing, the "Equity Financing"); (iv)
the Company will issue $600,000,000 of senior subordinated notes due 2010 (the
"Permanent Debt Financing") and (v) the Company will utilize approximately
$54,300,000 of excess cash on the Target's balance sheet expected to be
available as of the Closing Date. Immediately following the Transactions: (a)
the Target will have a single class of common stock outstanding, all of which
will be owned by the Sponsors and the Rollover Shareholders and, except as
described in this paragraph will not have any debt outstanding and (b) the
Company will be a wholly-owned subsidiary of the Target, with no debt
outstanding except as described in this paragraph. As used below, the defined
term "Mergerco" shall mean both Mergerco prior to the Merger and Mergerco
together with the Target, after giving effect to the Merger.
You and Bear, Stearns & Co. Inc. ("Bear Stearns") have entered into an
engagement letter of even date herewith (the "Bridge Engagement Letter")
pursuant to which Bear Stearns was exclusively engaged to provide certain
services, including assisting Financeco, the Company and/or one or more of its
subsidiaries in their efforts to structure and obtain any and all debt financing
(and/or certain equity financings) required in connection with the Merger and
the Refinancing, including, without limitation, the Permanent Debt Financing
(including, without limitation, any Permanent Debt Financing, including Take-Out
Securities, used to refinance, refund or replace any Bridge Loans, Term Loans or
Exchange Notes (each as defined below)) (collectively, the "Permanent
Financings").
Accordingly, in reliance on the description of the Transactions set forth
above, the parties hereto agree as follows:
1. Bridge Financing Commitment. In the event that the placement of the
Permanent Debt Financing cannot be consummated by the date on which the Merger
is to be consummated for any reason other than a breach or default by Financeco
or the Company under the documents governing the Permanent Debt Financing, BSCL
hereby commits that it and/or one or more other Bridge Lenders (as permitted by
the terms of this Bridge Commitment Letter) will provide, on the date on which
the Merger is consummated, senior subordinated increasing rate exchangeable
loans (the "Bridge Loans") to the Company and to such of the Company's
affiliates as may be borrowers under the Senior Credit Facility (the "Borrower")
in an aggregate principal amount of $600.0 million (the "Aggregate Commitment"),
on the terms set forth in this letter (together with the summary of principal
terms and conditions attached as Annex 1, Annex 2 and Annex 3 hereto and hereby
made a part hereof as though fully set forth herein, the "Bridge Commitment
Letter"). The Bridge Loans will mature one year from their date of issuance and,
provided that no Conversion Default (as defined in Annex 1 hereto) exists on
such date, shall be automatically converted into term loans maturing on the
tenth anniversary of the funding date of the Bridge Loans (the "Term Loans").
The Bridge Lender in respect of such Term Loan will have the option, at any time
or from time to time, to request senior subordinated increasing rate exchange
notes (the "Exchange Notes" AND, TOGETHER WITH THE BRIDGE LOANS AND THE TERM
LOANS, THE "Bridge Financing") of the Borrower, maturing on the tenth
anniversary of the funding date of the Bridge Loans, in exchange for such Term
Loan in an aggregate principal amount equal to the then outstanding principal
amount of the Term Loan being exchanged, plus any capitalized interest added
thereto; provided, however, that a Bridge Lender may not elect to exchange only
a portion of its outstanding Term Loans for Exchange Notes unless such Bridge
Lender intends at the time of such partial exchange of Term Loans promptly to
sell the Exchange Notes received in such exchange.
BSCL shall be entitled, subject to the agreement of the lenders under the
Senior Credit Facility, if such agreement is required under the terms of the
Senior Credit Facility, on or after the Closing Date, to cause the Target to
issue senior or senior subordinated bridge loans on the terms and conditions set
forth in this Bridge Commitment Letter in lieu of an equivalent principal amount
of Bridge Loans of the Company if BSCL determines that such modification is
advisable to ensure a successful syndication of the Bridge Loans. The
commitments under this Bridge Commitment Letter are subject to the agreements in
this paragraph.
2. Conditions Precedent. The several obligations of BSCL and any other
Bridge Lender(s) under this Bridge Commitment Letter to make any Bridge Loans
are subject to: (i) the satisfaction of the conditions
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precedent set forth in Annex 3 hereto; (ii) our reasonable satisfaction that
there shall not have occurred or become known to us after the date hereof any
event, development, condition or circumstance that has had or could reasonably
be expected to have a material adverse effect on the Transactions or on the
business, assets, property, condition (financial or otherwise), results of
operations or prospects of the Target and its subsidiaries, taken as a whole;
(iii) our not becoming aware after the date hereof of any information or other
material matter (including any matter relating to financial models and
underlying assumptions relating to the projections delivered to BSCL) affecting
the Target or the Transactions that in our reasonable judgment is inconsistent
in a material and adverse manner to the Target and its subsidiaries, taken as a
whole, with any such information or other matter disclosed to us prior to the
date hereof; (iv) no event shall have occurred and be continuing after the date
hereof that has caused or could be reasonably expected to cause any material
disruption or material adverse change, as determined by BSCL, in the markets for
bank debt, high yield debt or the financial or capital markets generally that,
in the sole discretion of BSCL, could materially impair the syndication or
funding of the Bridge Loans and (v) the negotiation, execution and delivery of
definitive documentation with respect to the Bridge Loans SATISFACTORY TO BSCL
AND ITS COUNSEL ON OR BEFORE THE EARLIER OF (A) THE DATE WHICH IS 30 DAYS AFTER
THE THEN-OPERATIVE TERMINATION DATE OF THE MERGER AGREEMENT AND (B) FEBRUARY 28,
2001, including, without limitation, a definitive bridge loan agreement (the
"Bridge Loan Agreement") covering the matters referred to in this Bridge
Commitment Letter and such other customary matters as the Required Bridge
Lenders (as defined in Annex 1 hereto) may reasonably request (collectively, the
"Bridge Financing Documents").
3. Syndication. Prior to or after execution of the Bridge Loan Agreement,
BSCL may assign all or any portion of the Aggregate Commitment to one or more
financial institutions or other investors; provided that, with the consent of
Financeco (which consent shall not be unreasonably withheld), BSCL shall be
relieved of its obligation to make Bridge Loans in the amount so assigned in
connection with any such assignment to a commercial bank or investment bank of
national standing. BSCL will, after consultation with the Sponsors, manage all
aspects of the syndication and Financeco and the Company will, and will cause
each of their respective subsidiaries and affiliates to, cooperate with BSCL in
connection with any syndication of all or any portion of the Aggregate
Commitment.
4. Limitation on Other Acquisitions and Securities Issuances. Until the
earlier to occur of (i) the date on which the Aggregate Commitment expires or is
terminated without funding or (ii) the date Bridge Loans are funded, Financeco
will not, and will not permit its subsidiaries or affiliates whose principal
asset is or is expected to be any securities of the Target or the Company
(excluding any of the Sponsors) or any person acting for any of them, to: (A)
syndicate, offer or issue, or attempt to syndicate, offer or issue, any debt
(other than the Senior Credit Facility and, in accordance with the terms of the
Bridge Engagement Letter, the Permanent Debt Financing), any equity (other than
the Equity Financing) or any other security intended to replace the Bridge Loans
except, in each case, in accordance with the terms of the Bridge Engagement
Letter or the Bridge Fee Letter (as defined below) or as otherwise provided in
the Bridge Engagement Letter or the Bridge Fee Letter or (B) make any
acquisition of the capital stock or a material portion of the assets of any
person or entity other than (1) the Merger, (2) short-term investments in
marketable investment grade securities made for cash management purposes or (3)
acquisitions of inventory and equipment in the ordinary course of business.
5. Expenses; Indemnification. Financeco hereby agrees to (a) reimburse BSCL
for all reasonable fees and disbursements of Latham & Watkins and all of BSCL's
reasonable travel and other out-of-pocket expenses, in each case incurred in
connection with this Bridge Commitment Letter, the fee letter of even date
herewith by and between BSCL and Financeco (the "Bridge Fee Letter"), the
Transactions or otherwise arising out of BSCL's commitment hereunder; provided
that if the Transactions are not consummated, Financeco shall not be required to
reimburse any expenses except as may be otherwise agreed to in writing between
Bear Stearns and Financeco or Mergerco and (b) to defend, indemnify and hold
harmless BSCL, the Bridge Lenders and each of the other Indemnified Persons
identified and as set forth in the indemnification provisions attached as
Exhibit A hereto (the "Indemnification Provisions") and hereby made a part
hereof as though fully set forth herein. The obligations of Financeco under this
Section 5 and the Bridge Fee Letter shall survive expiration or termination of
this Bridge Commitment Letter and the Bridge Fee Letter; provided
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that if any Bridge Financing is consummated, the terms of the definitive
documentation relating thereto shall supercede the indemnification terms of this
Section 5.
6. Expiration; Termination. The Aggregate Commitment will expire and this
Commitment will terminate upon the occurrence of any of the following, without
further act or condition: (i) at 5:00 p.m. (New York time) on THE EARLIER OF (A)
THE DATE WHICH IS 30 DAYS AFTER THE THEN-OPERATIVE TERMINATION DATE OF THE
MERGER AGREEMENT AND (B) FEBRUARY 28, 2001, unless prior to that time the Bridge
Financing Documents have been executed, all conditions required to be met
hereunder or thereunder for the funding of the Bridge Loans have been satisfied
or waived in writing by BSCL in its sole discretion, and the Bridge Loans have
been funded; (ii) funding of the Permanent Financings, in escrow or otherwise;
(iii) termination or expiration of the Merger Agreement; (iv) termination of the
Bridge Engagement Letter by Financeco or the Company; (v) the occurrence of any
material breach or material default in the performance of any of the material
obligations of Financeco or the Company or any of its subsidiaries or affiliates
set forth in, or relating to the transactions contemplated by, the Bridge
Engagement Letter or any other agreement or legal obligation enforceable by
BSCL, Bear Stearns or any of their respective affiliates; (vi) written notice to
the Bridge Lenders by the Sponsors or Financeco of their desire to terminate the
Aggregate Commitment; or (vii) the execution by the Target of any agreement with
any parties other than the Sponsors which contemplates the acquisition of all or
substantially all of the stock or assets or the Target.
7. Disclosure.
(a) This Bridge Commitment Letter, the Bridge Fee Letter, the Bridge
Engagement Letter and each subsequent communication relating to the
Transactions, are being delivered to you on the understanding that neither they,
nor their substance, shall be disclosed by Financeco or any of its affiliates to
any third person except to its committees, officers, directors, employees,
attorneys, agents and advisors and, on a confidential basis, this Bridge
Commitment Letter may be disclosed to the committees, officers, directors,
employees, attorneys, agents and advisors of the Sponsors and the Target, in
each case, who are directly involved in the consideration of this matter. In
addition, Financeco and Mergerco and their respective advisors may make such
public disclosure of this Bridge Commitment Letter, the Bridge Fee Letter and
the Bridge Engagement Letter as may be compelled in a judicial or administrative
proceeding or as is required by law or regulation of the Securities and Exchange
Commission (in which case you agree to inform us promptly thereof).
(b) BSCL and each other Bridge Lender, if any, may freely discuss the
Transactions contemplated hereby on a confidential basis with their respective
affiliates (including, without limitation, Bear Stearns), any prospective Bridge
Lender or participant, in each case, who has signed a confidentiality agreement
reasonably acceptable to Financeco, and may freely disclose to any such
affiliate, prospective Bridge Lender or participant and permit any such
affiliate, prospective Bridge Lender or participant, from time to time, to use
for any purpose contemplated by this Bridge Commitment Letter, any and all
information at any time provided to Bear Stearns, BSCL or any other Bridge
Lender by or on behalf of Financeco or the Company or any of their subsidiaries
or affiliates.
8. Miscellaneous. The following provisions shall be applicable both to this
Bridge Commitment Letter and to the Bridge Fee Letter:
(a) Governing Law; Consent to Jurisdiction; No Third Party
Beneficiaries; Waiver of Trial by Jury. The validity and interpretation of
this Bridge Commitment Letter and the Bridge Fee Letter shall be governed
by, and construed and enforced in accordance with, the laws of the State of
New York applicable to agreements made and to be fully performed therein
(excluding the conflicts of laws rules). Financeco hereby irrevocably
submits to the non-exclusive jurisdiction of any court of the State of New
York located in the Borough of Manhattan in the City of New York or the
United States District Court for the Southern District of the State of New
York, or any appellate courts from any thereof, for the purposes of any
suit, action or other proceeding arising out of this Bridge Commitment
Letter, the Bridge Fee Letter or any of the agreements or transactions
contemplated hereby, which is brought by or against Financeco and Financeco
(i) hereby irrevocably agrees that all claims in respect of any such suit,
action or proceeding may be heard and determined in any such court and (ii)
hereby agrees not to commence any action, suit or proceeding relating to
this Bridge Commitment Letter, the Bridge Fee
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Letter or any such other agreements or transactions other than in such
court except to the extent mandated by applicable law. Financeco hereby
waives any objection that it may now or hereafter have to the venue of any
such suit, action or proceeding in any court or that such suit, action or
proceeding was brought in an inconvenient court and agrees not to plead or
claim the same. Financeco hereby acknowledges that it has been advised by
counsel in the negotiation, execution and delivery of this Bridge
Commitment Letter, the Bridge Fee Letter and the other agreements and
transactions contemplated hereby, that BSCL does not have any fiduciary
relationship with or fiduciary duty to Financeco or any other person
arising out of or in connection with this Bridge Commitment Letter, the
Bridge Fee Letter or any of the other agreements or transactions
contemplated hereby and that BSCL has not been retained to advise or has
advised you or any other person regarding the wisdom, prudence or
advisability of entering into or consummating the Transactions. EACH OF
BSCL AND YOU HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS BRIDGE COMMITMENT LETTER,
THE BRIDGE FEE LETTER OR ANY OTHER AGREEMENTS OR TRANSACTIONS CONTEMPLATED
HEREBY AND FOR ANY COUNTERCLAIM RELATING THERETO.
(b) Severability. If it is found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) that any term or
provision hereof is invalid or unenforceable: (i) the remaining terms and
provisions hereof shall be unimpaired and shall remain in full force and
effect and (ii) the invalid or unenforceable provision or term shall be
replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of such invalid or unenforceable
term or provision.
(c) Complete Agreement; Waivers and Other Changes to be in
Writing. This Bridge Commitment Letter and the Bridge Fee Letter embody the
entire agreement and understanding of the parties hereto with respect to
the subject matter hereof and thereof and supersede any and all prior
agreements and understandings relating to the matters provided for herein
and therein. No alteration, waiver, amendment or supplement of or to this
Bridge Commitment Letter or the Bridge Fee Letter shall be binding or
effective unless the same is set forth in a writing signed by a duly
authorized representative of each party hereto or thereto.
(d) Power, Authority and Binding Effect. Each of the parties hereto
represents and warrants to each of the other parties hereto and their
respective successors and permitted assigns that (i) it has all requisite
power and authority to enter into this Bridge Commitment Letter and the
Bridge Fee Letter and (ii) each of this Bridge Commitment Letter and the
Bridge Fee Letter has been duly and validly authorized by all necessary
action on the part of such party, has been duly executed and delivered by
such party and constitutes a legally valid and binding agreement of such
party, enforceable against it in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
the rights of creditors generally or by general principles of equity.
(e) No Liability for Special, Indirect, Consequential or Punitive
Damages; Limitation on Liability. No party hereto shall be liable for any
special, indirect or consequential damages or, to the fullest extent that a
claim for punitive damages may lawfully be waived, for any punitive damages
on any claim (whether founded in contact, tort, legal duty or any other
theory of liability) arising from or related in any manner to this Bridge
Commitment Letter or the negotiation, execution, administration,
performance, breach or enforcement of this Bridge Commitment Letter or the
instruments and agreements evidencing, governing or relating to the other
Transactions contemplated hereby or any amendment thereto or the funding of
the Bridge Loans or the consummation of, or any failure to consummate, any
of the Transactions or any act, omission, breach or wrongful conduct in any
manner related thereto. No direct or indirect holder of any equity
interests or securities of either party hereto (whether such holder is a
limited or general partner, member, stockholder or otherwise), nor any
affiliate of any party hereto, nor any director, officer, employee,
representative, agent or other controlling person of each of the parties
hereto and their respective affiliates shall have any liability or
obligation arising under this Bridge Commitment Letter or the transactions
contemplated hereby and the parties hereto hereby waive and release all
claims related to any such liability or obligation.
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(f) Reliance on Information. In undertaking and performing its
obligations under this Bridge Commitment Letter, BSCL and each of the other
Bridge Lenders, if any, is relying and will continue to rely: (i) without
independent verification thereof, on the accuracy and completeness of all
financial and other information furnished by or on behalf of Financeco, the
Company or any of their respective subsidiaries and (ii) on each of the
representations, warranties, covenants and legal waivers by or on behalf of
Financeco set forth in this Bridge Commitment Letter. Financeco represents
and warrants to each of the Bridge Lenders that all financial and other
information which it has provided to BSCL and the other Bridge Lenders, if
any, in connection with this Bridge Commitment Letter and the Transactions
contemplated hereby does not and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not materially
misleading; provided that such representation and warranty with respect to
information provided by the Target shall be limited to your actual
knowledge.
(g) Assignment. This Bridge Commitment Letter shall not be assignable
by you (other than (i) an assignment of your rights hereunder to an
affiliate of yours which becomes a party to, and succeeds to all of your
rights under, the Merger Agreement, or (ii) an assignment of all your
rights and obligations hereunder and under the Bridge Fee Letter to the
Target or the Company concurrently with the closing of the Recapitalization
and only if the Recapitalization occurs) without the prior written consent
of Bear Stearns and BSCL (and any purported assignment without such consent
shall be null and void), is intended to be solely for the benefit of the
parties hereto and is not intended to confer any benefits upon, or create
any rights in favor of, any person (including, without limitation, the
Target and the Company) other than the parties hereto and the Indemnified
Persons.
(h) Counterparts. This Bridge Commitment Letter and the Bridge Fee
Letter may each be executed in one or more counterparts, all of which,
taken together, shall constitute one and the same agreement.
(i) Time of Essence. Time shall be of the essence whenever and
wherever a date or period of time is prescribed or referred to in this
Bridge Commitment Letter or the Bridge Fee Letter.
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This Bridge Commitment Letter may only be accepted by (i) signing this
Bridge Commitment Letter in the space provided below and returning it to the
undersigned, along with a signed copy of the Bridge Fee Letter, and (ii) signing
the Bridge Engagement Letter and returning it to Bear Stearns, in each case,
within 24 hours after execution of the Merger Agreement and in any event by not
later than 5:00 p.m. (New York time) on June 23, 2000.
Very truly yours,
BEAR STEARNS CORPORATE LENDING INC.
By: /s/ KEITH C. BARNISH
------------------------------------
Name: Keith C. Barnish
Title: Senior Managing Director
Agreed to and Accepted as of
June 22, 2000:
HB FINANCE LLC
By: /s/ ANDREW S. ROSEN
-----------------------------------
Name: Andrew S. Rosen
Title: Vice President and Assistant
Secretary
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EXHIBIT A
INDEMNIFICATION PROVISIONS
Capitalized terms used and not otherwise defined herein are used with the
meanings attributed thereto in the Bridge Commitment Letter dated June 22, 2000
(the "Bridge Commitment Letter") from Bear Stearns Corporate Lending Inc.
("BSCL") to HB Finance LLC (the "Indemnifying Party") of which these
Indemnification Provisions form an integral part.
To the fullest extent permitted by applicable law, the Indemnifying Party
agrees that it will indemnify and hold harmless each of BSCL, the Bridge Lenders
and the affiliated entities, directors, officers, employees, legal counsel,
agents and controlling persons (within the meaning of the federal securities
laws) of each of BSCL and the other Bridge Lenders (all of the foregoing,
collectively, the "Indemnified Persons"), from and against any and all losses,
claims, damages, obligations, penalties, judgments, awards, liabilities, costs,
expenses and disbursements and any and all actions, suits, proceedings and
investigations in respect thereof and any and all reasonable third party fees,
costs, expenses and disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise (including, without limitation, the costs,
expenses and disbursements, as and when incurred, of investigating, preparing or
defending any such action, proceeding or investigation (whether or not in
connection with litigation in which any of the Indemnified Persons is a party)
and including, without limitation, any and all losses, claims, damages,
obligations, penalties, judgments, awards, liabilities, costs, expenses and
disbursements, resulting from any negligent act or omission of any of the
Indemnified Persons), directly or indirectly, caused by, relating to, based
upon, arising out of or in connection with (i) the Transactions, (ii) the Bridge
Commitment Letter, the Bridge Fee Letter or the Bridge Financing Documents, or
(iii) any untrue statement or alleged untrue statement of a material fact
contained in, or material omissions or alleged material omissions from any
filing with any governmental agency or similar statements or omissions in or
from any information furnished by the Sponsors, the Indemnifying Party, the
Company or any of their respective subsidiaries or affiliates to any of the
Indemnified Persons or any other person in connection with the Transactions or
the Bridge Commitment Letter; provided, however, such indemnity agreement shall
not apply to any portion of any such loss, claim, damage, obligation, penalty,
judgment, award, liability, cost, expense or disbursement to the extent it is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) to have resulted primarily and directly from the gross
negligence or willful misconduct of any of the Indemnified Persons or primarily
and directly from the breach of the Bridge Commitment Letter by an Indemnified
Person.
These Indemnification Provisions shall be in addition to any liability
which the Indemnifying Party may have to the Indemnified Persons or the persons
indemnified below in this sentence and shall extend to the following: BSCL, Bear
Stearns, their respective affiliated entities, directors, officers, employees,
legal counsel, agents and controlling persons (within the meaning of the federal
securities laws). All references to "BSCL" in these Indemnification Provisions
shall be understood to include any and all of the foregoing.
If any action, suit, proceeding or investigation is commenced, as to which
any of the Indemnified Persons proposes to demand indemnification, it shall
notify the Indemnifying Party with reasonable promptness; provided, however,
that any failure by any of the Indemnified Persons to so notify the Indemnifying
Party shall not relieve the Indemnifying Party from its obligations hereunder
except to the extent it has been materially prejudiced by such failure. BSCL, on
behalf of the Indemnified Persons, shall have the right to retain one counsel of
its choice to represent the Indemnified Persons, and the Indemnifying Party
shall pay the reasonable fees, expenses and disbursement of such counsel; and
such counsel shall, to the extent consistent with its professional
responsibilities, cooperate with the Indemnifying Party and any counsel
designated by the Indemnifying Party. The Indemnifying Party shall be liable for
any settlement of any claim against any of the Indemnified Persons made with its
written consent (which consent shall not be unreasonably withheld). Without the
prior written consent of BSCL (which consent shall not be unreasonably
withheld), the Indemnifying Party shall not settle or compromise any claim, or
permit a default or consent to the entry of any judgment in respect thereof
unless (i) such settlement, compromise or consent includes, as an unconditional
term thereof, the giving by the claimant to each of the Indemnified Persons of
an unconditional and
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irrevocable release from all liability in respect of such claim, (ii) the terms
of such release do not, in BSCL's judgment, materially and adversely affect the
business of the Indemnified Persons and (iii) the Indemnifying Party gives to
BSCL reasonable advance notice of such settlement, compromise or claim.
Notwithstanding the foregoing, the consent of Bear Stearns shall not be required
for the settlement or compromise of a claim if: (a) such settlement or
compromise involves only the payment of money by the Indemnifying Party; (b) any
such payment is made in full by the Indemnifying Party at the time of such
settlement or compromise and (c) such settlement or compromise includes, as an
unconditional term thereof, the giving by the claimant to each of the
Indemnified Persons of an unconditional and irrevocable release from all
liability in respect of such claim and does not involve or constitute an
admission of guilt or liability by any Indemnified Person or contain any adverse
finding of fact with respect thereto.
In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these Indemnification Provisions is made but is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) that such indemnification may not be enforced in such case, even
though the express provisions hereof provide for indemnification in such case,
then the Indemnifying Party, on the one hand, and the Indemnified Persons, on
the other hand, shall contribute to the losses, claims, damages, obligations,
penalties, judgments, awards, liabilities, costs, expenses and disbursements to
which the Indemnified Persons may be subject in accordance with the relative
benefits received by the Indemnifying Party, on the one hand, and the
Indemnified Persons, on the other hand, and also the relative fault of the
Indemnifying Party, on the one hand, and the Indemnified Persons, on the other
hand, in connection with the statements, acts or omissions which resulted in
such losses, claims, damages, obligations, penalties, judgments, awards,
liabilities, costs, expenses and disbursements and the relevant equitable
considerations shall also be considered. No person found liable for a fraudulent
misrepresentation shall be entitled to contribution from any other person who is
not also found liable for such fraudulent misrepresentation. Notwithstanding the
foregoing, none of the Indemnified Persons shall be obligated to contribute any
amount hereunder that exceeds the amount of fees previously received by such
Indemnified Person pursuant to the Bridge Commitment Letter and the Bridge Fee
Letter.
Except as set forth in Section 5 of the Bridge Commitment Letter, neither
expiration or termination of the Aggregate Commitment nor funding or repayment
of any Bridge Financing, the Exchange Notes or the Permanent Financings shall
affect these Indemnification Provisions which shall then remain operative and in
full force and effect.
(B)(2)-9
<PAGE> 10
ANNEX 1
SUMMARY OF TERMS AND CONDITIONS OF BRIDGE LOANS
Capitalized terms used and not otherwise defined herein have the meanings
set forth in the Bridge Commitment Letter to which this Summary of Terms and
Conditions is attached and of which it forms an integral part.
Borrower: The Company and/or such other affiliate or
affiliates of the Company as may be the borrowers
under the Senior Credit Facility (the"Borrower").
Guarantor(s): Each affiliate of the Company that guarantees all
or a portion of the indebtedness under the Senior
Credit Facility (the "Guarantors" and, together
with the Borrower, the "Obligors").
Bridge Lender(s): BSCL and/or its assigns.
Administrative Agent: BSCL or a commercial bank selected by BSCL.
Loans: $600.0 million in aggregate principal amount of
unsecured exchangeable senior subordinated
increasing rate loans due 2001 (the"Bridge Loans").
The funding date of the Bridge Loans is hereinafter
referred to as the"Closing Date."
Guarantees: The Guarantors will jointly and severally guarantee
the payment when due of all the Bridge Loans and
the costs of collection and enforcement thereof
pursuant to senior subordinated unconditional
guarantees (the "Guarantees"). The Guarantees will
be subordinated to the Guarantors' guarantees of
the Senior Credit Facility to the same extent as
the Bridge Loans are subordinated to the
indebtedness under the Senior Credit Facility. A
subsidiary's guarantee will be released upon the
sale of such subsidiary to the extent released
under the Senior Credit Facility or as otherwise
provided in the Bridge Financing Documents.
Use of Proceeds: To consummate the Merger and the Refinancing and to
pay fees and expenses associated with the
Transactions.
Availability: The Bridge Loans must be drawn in a single drawing.
Amounts borrowed under the Bridge Facility that are
subsequently repaid may not be reborrowed.
Maturity/Exchange: The Bridge Loans will mature on the date that is
one year following the Closing Date (the "Bridge
Maturity Date"). If any Bridge Loan has not been
previously repaid in full on or prior to the Bridge
Maturity Date, such Bridge Loan shall be
automatically converted into a term loan (the "Term
Loans") with a final maturity on the nine-year
anniversary of the Bridge Maturity Date. The Term
Loans will be governed by the Bridge Loan Agreement
and, except as expressly set forth in Annex 2 to
the Bridge Commitment Letter, shall have the same
terms as the Bridge Loans. The Bridge Lender in
respect of such Term Loan will have the option, at
any time or from time to time, to request Exchange
Notes (the "Exchange Notes") in exchange for such
Term Loan having the terms set forth in the term
sheet attached as Annex 2 to the Bridge Commitment
Letter; provided, however, that a Bridge Lender may
not elect to exchange only a portion of its
outstanding Term Loans for Exchange Notes unless
such Bridge Lender intends at the time of such
partial
(B)(2)-10
<PAGE> 11
exchange of Term Loans promptly to sell the
Exchange Notes received in such exchange.
The Term Loans and the Exchange Notes shall be pari
passu for all purposes.
Interest: The Bridge Loans will bear interest at a rate per
annum equal at all times during each interest
period (as set forth below) to the greatest of
(each as determined at the beginning of the
applicable interest period): (a) the three-month
London interbank offered rate, adjusted for
reserves ("LIBOR") calculated on the basis of the
actual number of days elapsed in a year of 360
days, plus the applicable Spread; (b) the Bear
Stearns Single B High Yield Index plus the
applicable Spread and (c) the Treasury Rate (as
defined below) plus the applicable Spread. The
"Spread" will initially be (a) with respect to
LIBOR Loans, 675 basis points, (b) with respect to
any Bear Stearns Single B High Yield Index Loans,
100 basis points and (c) with respect to any
Treasury Rate Loans, 675 basis points. If the
Bridge Loans are not repaid in whole within 180
days following the Closing Date, the applicable
Spread will increase by 100 basis points at the end
of such 180 days period and shall increase by an
additional 50 basis points at the end of each
90-day period thereafter; provided, however, that
the interest rate applicable to the Bridge Loans
shall not (i) (except as provided in the next
paragraph) exceed 17% per annum, and (ii) exceed
the maximum rate permitted by applicable law; and,
provided, further, that the Borrower shall have the
option to pay any interest in excess of 15% on the
Bridge Loans by capitalizing such excess interest
on the applicable interest payment date.
Notwithstanding the foregoing, the interest in
effect at any time prior to the Bridge Maturity
Date shall not be less than 13.25% per annum.
"Treasury Rate" means (a) the rate borne by direct
obligations of the United States maturing on the
date which is ten years after the Closing Date and
(b) if there are no such obligations, the rate
determined by linear interpolation between the
rates borne by the two direct obligations of the
United States maturing closest to, but straddling,
the date which is ten years after the Closing Date,
in each case, as published by the Board of
Governors of the Federal Reserve System.
Notwithstanding the foregoing, after the occurrence
and during the continuance of an event of default,
interest will accrue on the Bridge Loans at the
then-applicable rate plus 200 basis points per
annum.
Interest with respect to LIBOR Loans will be
payable in arrears at the end of each three-month
LIBOR period and on the date of any prepayment or
repayment of the Bridge Loans. Interest on all
other Bridge Loans will be payable quarterly in
arrears and on the date of any prepayment or
repayment of the Bridge Loans.
Security: None.
Ranking; Subordination: The Bridge Loans will be unsecured, senior
subordinated obligations of the Obligors. The
Bridge Loans and all obligations with respect
thereto will be subordinated in right of payment,
on terms reasonably satisfactory to the Bridge
Lenders, to the payment in full of all obligations
of the Borrower under the Senior Credit Facility
and certain refinancings thereof. The Obligors will
not be permitted to incur any indebtedness
(B)(2)-11
<PAGE> 12
that is subordinated to the borrowings under the
Senior Credit Facility and senior to any other
indebtedness of the Obligors. Nothing in the
subordination provisions will prevent any holder of
Bridge Loans from receiving and retaining any
proceeds originally received by any Obligor that
were used to repay Bridge Loans to the extent
required under the "Mandatory Repayments" provision
below, and the same may be retained by such holder
free and clear of any claims by holders of any
debt, pursuant to these subordination provisions or
otherwise.
Mandatory Repayments: The net cash proceeds from any of the following
(collectively, "Net Proceeds") will be used to
repay the Bridge Loans (subject to prior mandatory
prepayments on the Senior Credit Facility, if any,
and certain exceptions to be agreed to in the
Bridge Loan Agreement), in each case at 100% of the
principal amount of the Bridge Loans repaid plus
accrued and unpaid interest to the date of the
repayment and any LIBOR breakage costs: (i) any
direct or indirect public offering or private
placement of any senior or subordinated debt or
equity securities, including, without limitation,
any Permanent Financings, after the Closing Date by
any Obligor or any affiliate of any Obligor, (ii)
any future bank borrowings by any Obligor other
than under the Senior Credit Facility as in effect
on the Closing Date and (iii) any future asset
sales by any Obligor or any affiliate or direct or
indirect subsidiary of an Obligor.
Change of Control: The Borrower shall prepay the Bridge Loans at a
price of 100% of principal amount, plus accrued and
unpaid interest, upon the occurrence of a change of
control.
Optional Repayment: The Bridge Loans may be prepaid, in whole or in
part, at the option of the Borrower at any time
upon three business days' written notice at a price
equal to 100% of the principal amount thereof plus
accrued interest to the date of redemption and any
LIBOR breakage costs.
Payments: Payments by the Obligors will be made by wire
transfer of immediately available funds.
Indemnification: The Obligors will, jointly and severally, indemnify
and hold harmless the Bridge Lenders in connection
with the Bridge Financing Documents and the
Transactions on terms substantially similar to the
Indemnification Provisions set forth in Exhibit A
to the Bridge Commitment Letter.
Modification of the Bridge
Loans: Modification of the Bridge Loan Agreement may be
made with consent of the Required Bridge Lenders,
except that, without the consent of the Bridge
Lenders holding 100% of the Bridge Loans affected
thereby, no modification or change may extend the
final maturity of any Bridge Loans or time of
payment of any interest on the Bridge Loans, reduce
the rate of interest or the principal amount of any
Bridge Loans or reduce the percentage of Bridge
Lenders necessary to modify or change the Bridge
Loan Agreement.
As used herein, "Required Bridge Lenders" means the
Bridge Lenders holding (i) prior to the Closing
Date, greater than 50% of the Aggregate Commitment
or (ii) after the Closing Date, more than 50% of
the aggregate principal amount of the Bridge Loans
then outstanding.
Cost and Yield Protection: The Bridge Lenders shall receive cost and yield
protection customary for facilities and
transactions of this type, including, but not
limited to,
(B)(2)-12
<PAGE> 13
compensation in respect of "break funding," taxes
(including but not limited to gross-up provisions
for withholding taxes imposed by any governmental
authority), changes in capital requirements,
guidelines or policies or their interpretation or
application, illegality, change in circumstances,
reserves and other provisions deemed necessary by
the Bridge Lenders to provide customary protection
for U.S. and non-U.S. financial institutions.
Conditions Precedent: The several obligations of the Bridge Lenders to
make the Bridge Loans will be subject to the
closing conditions set forth in the Bridge
Commitment Letter and on Annex 3 to the Bridge
Commitment Letter.
Covenants: The Bridge Loan Agreement will contain such
covenants with respect to the Company and its
subsidiaries as are usual and customary for
financings of this kind (in each case with
customary carve-outs, exceptions and/or
qualifications), including, without limitation, as
to (i) use of proceeds; (ii) refinancing of the
Bridge Loans; (iii) furnishing of financial
information in accordance with generally accepted
accounting principles, access to other information
and access to management; (iv) compliance with
laws; (v) maintenance of existence, (vi)
restrictions on liens; (vii) restrictions on
indebtedness; (viii) restrictions on investments;
(ix) restrictions on dividends, distributions,
redemptions and other restricted payments (to be
defined); (x) restrictions on sales and other
dispositions of assets; (xi) restrictions on
mergers and consolidations (other than with
existing subsidiaries) and restrictions on
additional acquisitions and consolidations; (xii)
restrictions on transactions with affiliates;
(xiii) restrictions on business activities; and
(xiv) restrictions on material adverse amendments
to charter documents.
Events of Default: The Bridge Loan Agreement will include such events
of default as are usual and customary for
financings of this kind, in each case, with
customary qualifications, including, without
limitation: (i) the failure of the Obligors to pay
principal on the Bridge Financing when due; (ii)
the failure of the Obligors to pay interest or fees
on the Bridge Financing and the continuance of such
failure for five business days; (iii) the failure
of the Obligors to comply with any other provision,
condition, covenant, promise, warranty or
representation in the Bridge Financing Documents,
provided that in certain cases such failure
continues for 30 days after notice; (iv) a default
under any instrument or instruments governing
indebtedness of any of the Obligors or their
subsidiaries when such default causes such
indebtedness to become accelerated and due prior to
its stated maturity or failure to pay any such
indebtedness at its stated maturity in an aggregate
principal amount exceeding a threshold amount to be
agreed; (v) final uninsured (or not covered by a
solvent indemnitor) judgments aggregating in excess
of a threshold amount to be agreed rendered against
the Obligors or any of their subsidiaries and not
discharged or stated within 60 days; (vi) certain
events of bankruptcy, insolvency or reorganization
with respect to any of the Obligors or any of their
subsidiaries; (vii) material misrepresentations in
the Bridge Financing Documents; (viii) certain
ERISA defaults; (ix) the exercise of any change of
control put right by any lender under any
instrument or instruments governing indebtedness,
with a minimum aggregate principal
(B)(2)-13
<PAGE> 14
amount to be agreed, of any of the Obligors; or (x)
any Guarantee shall become invalid.
"Conversion Default" shall mean each of the events
set forth in clauses (ii), (iii), (iv), (vi) and
(x) of the immediately preceding paragraph.
In case an event of default shall occur and be
continuing, the holders of more than 50% in
aggregate principal amount of the Bridge Loans then
outstanding, by notice in writing to the Borrower,
may declare the principal of and all accrued
interest on the Bridge Loans to be immediately due
and payable; provided, however, that no such notice
shall be necessary in the case of an event of
default described in clause (vi) of the immediately
preceding paragraph. An acceleration notice may be
annulled and past defaults (except for payment
defaults not yet cured) may be waived by the
holders of a majority in aggregate principal amount
of Bridge Loans then outstanding.
Representations and
Warranties: The Bridge Loan Agreement will contain such
representations and warranties with respect to the
Obligors, the Target and their respective
subsidiaries as are usual and customary for
financings of this kind (in each case with
customary carve-outs, exceptions and
qualifications), including, without limitation: (i)
organization and good standing, (ii)
capitalization, (iii) authorization and
enforceability, (iv) no conflicts, (v) governmental
regulations (including margin regulations), (vi) no
defaults, (vii) no violation of law, (viii) absence
of litigations, proceedings, labor disputes, etc.,
(ix) financial condition (including solvency
matters), (x) Investment Company Act and
Hart-Scott-Rodino matters, (xi) absence of material
adverse change, (xii) absence of undisclosed
liabilities, (xiii) financial statements and (xiv)
full disclosure.
Assignments and
Participations: Each of the Bridge Lenders will have the absolute
and unconditional right, upon notice to the
Borrower and the Administrative Agent, to: (i)
assign all (or any portion in excess of $5.0
million) of its Bridge Loans to any one or more
Permitted Assignees and (ii) pledge all or any
portion of its Bridge Loans to any Federal Reserve
Bank or to any funding source of such Bridge
Lender. In addition, subject to customary
limitations on participants' voting rights, each of
the Bridge Lenders may sell participations (a) in
its share of the Aggregate Commitment to any
Permitted Assignee, provided that no such
participation shall relieve the selling Bridge
Lender of its obligations to make Bridge Loans on
the Closing Date, and (b) in its Bridge Loans to
any Permitted Assignee. As used herein, "Permitted
Assignee" means (i) any "qualified institutional
buyer" (as defined in Rule 144A under the
Securities Act of 1933, as amended) or (ii) any
"accredited investor" (as defined in Section 2(15)
of the Securities Act of 1933, as amended).
Governing Law and Forum: New York.
Counsel for the Bridge
Lenders: Latham & Watkins.
(B)(2)-14
<PAGE> 15
ANNEX 2
SUMMARY OF TERMS AND CONDITIONS OF EXCHANGE NOTES
AND TERM LOANS
Capitalized terms used but not defined herein have the meanings given in
the Bridge Commitment Letter to which this Annex 2 is attached or, if not
defined therein, in Annex 1 thereto.
Exchange Notes/Term Loans: If the Bridge Loans are not repaid in their
entirety on or before the Bridge Maturity Date,
such Bridge Loans shall be automatically converted
to term loans ("Term Loans"), provided that no
Conversion Default has occurred and is continuing.
The Bridge Lender in respect of such Term Loan will
have the option, at any time or from time to time,
to request Exchange Notes in exchange for such Term
Loan in an aggregate principal amount equal to the
then outstanding principal amount of the Term Loan
being exchanged, plus any capitalized interest
added thereto; provided, however, that a Bridge
Lender may not elect to exchange only a portion of
its outstanding Term Loans for Exchange Notes
unless such Bridge Lender intends at the time of
such partial exchange of Term Loans promptly to
sell the Exchange Notes received in such exchange.
The Term Loans will be governed by the Bridge Loan
Agreement and, except as expressly set forth below,
shall have the same terms as the Bridge Loans.
The Borrower will issue Exchange Notes, and the
Guarantors will issue joint and several guarantees
thereof, under an indenture which complies with the
Trust Indenture Act of 1939, as amended (the
"Indenture"). The Obligors will appoint a trustee
reasonably acceptable to the holders of the
Exchange Notes.
Maturity: The Term Loans and the Exchange Notes will mature
on the tenth anniversary of the Closing Date (i.e.,
the ninth anniversary of the Bridge Maturity Date).
Denomination: The Exchange Notes will be issued in denominations
of $1,000 and integral multiples thereof.
Interest Rate: The rate per annum (expressed as a fixed
percentage) applicable to the Bridge Loans on the
Bridge Maturity Date plus 50 basis points, which
rate shall increase by 50 basis points on the last
day of each 90-day period after the Bridge Maturity
Date; provided, however, that the interest rate
applicable to the Term Loans and the Exchange Notes
(i) shall not (except as provided in the next
paragraph) exceed 17% per annum, and (ii) shall not
exceed the maximum rate permitted by applicable
law; and, provided, further, that the Borrower
shall have the option to pay interest on the Term
Loans or the Exchange Notes, as applicable, through
the issuance of additional Term Loans or Exchange
Notes, as applicable, for such amount in excess of
15% per annum.
Notwithstanding the foregoing, after the occurrence
and during the continuance of a default or an event
of default, interest will accrue on the Term Loans
and the Exchange Notes at the then-applicable rate
plus 200 basis points per annum.
(B)(2)-15
<PAGE> 16
Interest will be payable in arrears at the end of
each 90-day period after the Bridge Maturity Date,
and on the maturity date of the Term Loans and the
Exchange Notes, as applicable.
Ranking; Subordination: Same as Bridge Loans.
Guarantees: Same as Bridge Loans.
Security: None.
Mandatory Redemption: None.
Change of Control: Upon the occurrence of a change of control, the
Borrower shall offer to repay the Term Loans and
redeem the Exchange Notes at a price of 101% of
principal amount, plus accrued interest.
Optional Redemption: Except as provided in the next sentence, the Term
Loans may be repayed and the Exchange Notes may be
redeemed, in whole or in part, at the option of the
Borrower at any time upon three business days'
written notice at par plus accrued and unpaid
interest to the date of redemption.
Prior to the first transfer of any Exchange Notes
to a person who was not a Bridge Lender or any
affiliate thereof, the Bridge Lender or affiliate
thereof that is the transferor shall give the
Borrower notice of such proposed transfer and an
opportunity to redeem such Exchange Notes at par
plus accrued interest. Once an Exchange Note has
been transferred to a person who was not a Bridge
Lender or any affiliate thereof, such Exchange Note
will be subject to call protection customary for
fixed rate high-yield debt securities for a period
of five years from the Closing Date.
If the Borrower elects to optionally redeem all or
any portion of the Exchange Notes, then the
Borrower shall be required to optionally prepay, on
a pro rata basis, outstanding Term Loans, if any,
at par plus accrued and unpaid interest.
Payments: Same as Bridge Loans.
Transferability: Unlimited except as otherwise provided by law.
Defeasance: The Indenture will contain customary defeasance
provisions.
Modification: Modification of the Indenture may be made with
consent of the Required Bridge Lenders, except
that, without the consent of the Bridge Lenders
holding 100% of the Exchange Notes affected
thereby, no modification or change may extend the
final maturity of any Exchange Notes or time of
payment of any interest on the Exchange Notes,
reduce the rate of interest or the principal amount
of any Exchange Notes or reduce the percentage of
Bridge Lenders necessary to modify or change the
Indenture.
Registration Rights: The Obligors will file within 30 days after the
Bridge Maturity Date (the "Trigger Date"), and will
use commercially reasonable efforts to cause to
become effective as soon thereafter as practicable,
a shelf registration statement with respect to the
Exchange Notes (a "Shelf Registration Statement").
If a Shelf Registration Statement is declared
effective, the Obligors will keep such registration
statement effective and available (subject to
customary exceptions) until it is no longer needed
to permit unrestricted resales of the Exchange
Notes but in no event longer than
(B)(2)-16
<PAGE> 17
two years. If within 120 days from the Trigger Date
(the "Effectiveness Date") a Shelf Registration
Statement for the Exchange Notes has not been
declared effective, then the Obligors will pay
liquidated damages in the form of increased
interest of 50 basis points per annum on the
principal amount of Exchange Notes outstanding to
holders of such Exchange Notes who are unable to
freely transfer Exchange Notes from and including
the 120th day after the Trigger Date to but
excluding the effective date of such Shelf
Registration Statement. On the 121st day after the
Effectiveness Date, the interest shall increase by
50 basis points per annum, and on each 90-day
anniversary of the Effectiveness Date thereafter,
shall increase by 50 basis points per annum, to a
maximum increase in interest of 150 basis points.
The Obligors will also pay such increased interest
for any period of time (subject to customary
exceptions) following the effectiveness of a Shelf
Registration Statement that such Shelf Registration
Statement is not available for sales thereunder.
All accrued increased interest will be paid on each
quarterly interest payment date. In addition,
unless and until the Obligors have caused the Shelf
Registration Statement to become effective, the
holders of the Exchange Notes will have the right
to "piggy-back" in the registration of any debt
securities (subject to customary scale-back
provisions) that are registered by any of the
Obligors (other than on a Form S-4) unless all the
Exchange Notes will be redeemed or repaid from the
proceeds of such securities.
Covenants: The Indenture will contain covenants which are
usual and customary for financings of this kind.
Events of Default: The Indenture will contain events of default which
are usual and customary for financings of this
kind.
Governing Law and Forum: New York.
Counsel for the Bridge
Lenders: Latham & Watkins.
(B)(2)-17
<PAGE> 18
ANNEX 3
CERTAIN CONDITIONS
Capitalized terms used but not defined herein have the meanings given in
the Bridge Commitment Letter to which this Annex 3 is attached or, if not
defined therein, in Annex 1 or Annex 2 thereto.
The availability of the Bridge Loans shall be conditioned upon the
satisfaction of the following conditions precedent:
1. The Borrower shall have executed and delivered satisfactory
definitive financing documentation with respect to the Bridge Loans,
including, without limitation, the Bridge Loan Agreement (the "Bridge Loan
Documentation").
2. The following transactions shall have occurred prior to, or shall
occur concurrently with, the funding of the Bridge Loans:
a. The Target shall have received no less than $500,000,000 in cash
from the issuance of its common stock to the Sponsors (or as a result of
the Merger) on the terms and conditions described in the Transaction
Documentation or as otherwise reasonably satisfactory to BSCL. Pursuant
to the Transactions, approximately $353,100,000 in common stock or
options of the Target held by the Rollover Shareholders shall have been
rolled over into pay-in-kind preferred stock, junior preferred stock and
common stock of the Target (based on liquidation preference in the case
of preferred stock and based on the consideration per share paid in the
Transactions in the case of common stock), after giving effect to the
Transactions and on the terms and conditions described in the
Transaction Documentation or as otherwise reasonably satisfactory to
BSCL.
b. The Borrower and the financial institutions party thereto shall
have entered into the $1,750,000,000 Senior Credit Facility consisting
of a $300,000,000 six and one-half year revolving credit facility, a
$500,000,000 six and one-half year amortizing term loan A, a
$650,000,000 seven and one-half year amortizing term loan B and a
$300,000,000 eight and one-half year amortizing term loan C. All
conditions precedent to borrowings under the Senior Credit Facility
shall have been satisfied or, with the prior approval of the Required
Lenders, waived.
c. The Transactions shall have been consummated for aggregate
consideration (including fees and expenses) of approximately
$3,081,800,000 (subject to changes in the Target's and its subsidiaries'
existing bank debt in the ordinary course of business) pursuant to (i)
the Merger Agreement, dated as of June 22, 2000, executed by the Target,
Mergerco and Financeco and (ii) the stock voting agreement, dated as of
June 22, 2000, executed by Mergerco and The Manville Personal Injury
Settlement Trust (together, the "Transaction Documentation"), and no
material provision thereof shall have been amended, waived or otherwise
modified, and no consent or agreement shall be made by Mergerco or
Financeco thereunder, in a manner materially adverse to the interests of
the Bridge Lenders without the prior written consent of BSCL.
d. The Transactions (including the Merger) shall have been approved
by the holders of at least a majority of the outstanding common stock of
the Target and the Transactions shall have been consummated in all
material respects in accordance with the terms of the Transaction
Documentation and all applicable requirements of law.
e. All amounts outstanding under the Target's existing revolving
credit facility shall have been repaid, all commitments thereunder shall
have been terminated and all liens securing such facilities shall have
been terminated, in each case, on terms and conditions reasonably
satisfactory to BSCL.
f. The Target's other outstanding indebtedness for borrowed money
(other than certain indebtedness to be agreed) shall have been redeemed
or repurchased on terms and conditions reasonably satisfactory to BSCL.
The consummation of the Transactions shall not trigger any
(B)(2)-18
<PAGE> 19
change of control put rights under any such indebtedness to remain
outstanding after the Closing Date.
g. The capital structure of the Target and its subsidiaries shall
be reasonably satisfactory to BSCL, after giving effect to the
Transactions; provided that it is hereby acknowledged that to the extent
such capital structure is the same as that described herein, it shall be
deemed to be reasonably satisfactory.
h. The Target shall have transferred all of its assets to the
Company.
3. BSCL, Bear Stearns, the Bridge Lenders, and Latham & Watkins shall
have received all reasonable fees required to be paid, and all expenses for
which invoices have been presented, on or before the Closing Date.
4. All material governmental and third-party approvals (including any
bankruptcy court approval) necessary or, in the reasonable discretion of
BSCL, advisable in connection with the Transactions, the financing
contemplated hereby and the continuing operations of the Borrower and its
respective 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 known to be threatened by any competent authority
which would restrain, prevent or otherwise impose adverse conditions on the
Transactions or the financing thereof.
5. Each of the Bridge Lenders shall have received unaudited interim
financial statements of the Target, prepared in the same manner as the
historical audited statements previously delivered to BSCL, for each
quarterly period commencing with the fiscal quarter ended June 30, 2000 and
for the same quarterly period during the most recently ended fiscal year
(such interim financial statements to be delivered within 45 days of the
end of the applicable fiscal quarter).
6. Each of the Bridge Lenders shall have received and shall be
reasonably satisfied with consolidated pro forma balance sheets and income
statements of the Company as of the last day of the most recently ended
fiscal quarter prior to the Closing Date, giving effect to the Transactions
and the transactions contemplated by the Merger Agreement and the Bridge
Commitment Letter (meeting the requirements of Regulation S-X for a
registration statement on Form S-1).
7. The Bridge Lenders and Bear Stearns shall have received the written
permission of each of the Company and the Target to include each of the
financial statements referred to in paragraphs (5) and (6) in any manner in
connection with the Bridge Loans and/or the Permanent Financing.
8. The fees and expenses to be incurred in connection with the
Transactions and the financing thereof shall not exceed $160,000,000 in the
aggregate.
9. BSCL shall have received and shall be reasonably satisfied with a
solvency opinion from an independent valuation firm reasonably satisfactory
to BSCL which shall document the solvency of the Target and its
subsidiaries after giving effect to the Transactions and the other
transactions contemplated hereby.
10. Each of the Bridge Lenders shall have received such legal opinions
(including opinions (i) from counsel to the Obligors and (ii) from such
special and local counsel as may reasonably be required by BSCL), documents
and other instruments as are customary for transactions of this type or as
they may reasonably request.
11. BSCL shall be satisfied that the pro forma ratio (giving effect to
the Transactions and the transactions contemplated by the Merger Agreement
and consummated on or prior to the Closing Date) of consolidated total
funded debt to consolidated EBITDA (excluding certain non-recurring charges
as accepted by BSCL) of the Target for the twelve month period ending on
the date of the most recently ended fiscal quarter for which internal
financial statements are available is no greater than 4.65 to 1.0, and the
Target shall provide support for such calculation of a nature that is
reasonably satisfactory to the BSCL (and, except as may be accepted by
BSCL, in conformity with Regulation S-X).
(B)(2)-19
<PAGE> 20
12. The Required Lenders shall be reasonably satisfied as to the
absence of any action, suit, investigation, litigation or proceeding
pending or known to be threatened in any court or before any arbitrator or
governmental instrumentality that purports to affect the Transactions, the
Senior Credit Facility, the Bridge Financing or any of the other
transactions contemplated hereby, or that could reasonably be expected to
have a material adverse effect on the Transactions or the Senior Credit
Facility, the Bridge Financing or any of the other transactions
contemplated hereby.
13. All representations and warranties in the Bridge Loan
Documentation (including, without limitation, the material adverse change
and litigation representations) shall be true and correct in all material
respects.
14. No default or event of default under the Bridge Loan Documentation
or the Senior Credit Facility shall exist at the time of, or after giving
effect to the making of, the Bridge Loans or the loans under the Senior
Credit Facility to be made on the Closing Date.
15. The Bridge Lenders shall have received not less than three
business days prior notice of the expected Closing Date.
(B)(2)-20
