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EXHIBIT (b)(1)
BEAR, STEARNS & CO. INC.
245 PARK AVENUE
NEW YORK, NEW YORK 10167
BEAR STEARNS CORPORATE LENDING INC.
245 PARK AVENUE
NEW YORK, NEW YORK 10167
June 22, 2000
SENIOR CREDIT FACILITIES
COMMITMENT LETTER
HB Finance LLC
c/o Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Mr. Jack Furst
and
c/o Bear Stearns Merchant Fund Corp.
245 Park Avenue
New York, New York 10167
Attention: Mr. John Howard
Ladies and Gentlemen:
You have advised Bear, Stearns & Co. Inc. ("Bear Stearns") and Bear Stearns
Corporate Lending Inc. ("BSCL") that Hicks, Muse, Tate & Furst Incorporated and
Bear Stearns Merchant Fund Corp. (collectively, the "Sponsors") intend, together
with certain of their respective affiliates and certain other investors
(collectively with the Sponsors, the "Sponsor Group") and certain existing
stockholders and members of management of the Target referred to below (the
"Rollover Shareholders" and, together with the Sponsor Group, the "Investor
Group"), to cause your affiliate, HB Merger LLC ("Mergerco"), a newly-formed
limited liability company owned by the Sponsor Group, to enter into a merger
agreement (the "Merger Agreement") with Johns Manville Corporation, a Delaware
corporation (the "Target"), pursuant to which Mergerco will be merged (the
"Merger") with and into the Target (with the Target as the surviving
corporation) and the Investor Group will acquire all of the outstanding capital
stock and options of the Target (the "Transaction"). You have further advised us
that the Transaction will be effected pursuant to a recapitalization (the
"Recapitalization") in which the Investor Group will subscribe for and purchase
newly issued equity of the Target or, in the case of the Rollover Shareholders,
roll over certain of their existing common equity of the Target into a
combination of pay-in-kind preferred, junior preferred and common equity of the
Target, and that certain existing indebtedness of the Target will be refinanced
(the "Refinancing") concurrently with the consummation of the Recapitalization
(currently estimated to be $471,800,000 at the closing of the Transaction), all
as more specifically described in the Sources and Uses Table attached hereto as
Schedule I. In connection with the Recapitalization, the Target will transfer
all of its assets to a wholly-owned subsidiary of the Target reasonably
acceptable to Bear Stearns and BSCL (the "Borrower"). References herein to the
"Transaction" shall include the financings described herein (including the
Merger and the Refinancing) and all other transactions related to the
Transaction.
You have also advised us that you propose to finance the Transaction and
the related premiums, fees, expenses and tax settlement costs from the following
sources: (a) $853,100,000 in common and preferred equity of the Target on the
terms described in the Transaction Documentation (as defined in the Term Sheet
described below) or as otherwise reasonably satisfactory to us (the "Equity"),
consisting of no less than $500,000,000 contributed in cash by the Sponsor Group
and approximately $353,100,000 (based on
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liquidation preference in the case of preferred stock and based on the
consideration per share paid in the Transaction in the case of common stock) in
pay-in-kind preferred stock of the Target (the "Rollover PIK Preferred Stock"),
junior preferred stock of the Target (the "Junior Preferred Stock") and common
stock of the Target (the "Rollover Common Equity"), (b) approximately
$1,750,000,000 from senior secured credit facilities (such credit facilities,
the "Senior Credit Facilities") of the Borrower comprised of term loan
facilities aggregating $1,450,000,000 (the "Term Loan Facilities") and a
$300,000,000 revolving credit facility (the "Revolving Credit Facility") (of
which approximately $108,400,000 is expected, subject to changes in (i) the
Target's and its subsidiaries' existing bank debt in the ordinary course of
business, (ii) the amount of excess cash on the Target's balance sheet at the
closing of the Transaction and (iii) the amount of the management equity
rollover, to be drawn initially to finance the Transaction), (c) excess cash on
the Target's balance sheet expected to be available at the closing of the
Transaction (currently estimated to be $54,300,000) and (d) at least
$600,000,000 in gross cash proceeds from either (i) the issuance by the Borrower
of senior subordinated unsecured notes (the "Senior Subordinated Notes") in a
public offering or Rule 144A private placement or (ii) in the event the Borrower
is unable to issue the full amount of the Senior Subordinated Notes at or prior
to the time the Transaction is consummated, borrowings under a senior
subordinated bridge facility (the "Senior Subordinated Bridge Facility";
together with the Senior Credit Facilities, the "Facilities") as interim bridge
financing to the Senior Subordinated Notes. The Revolving Credit Facility will
be used to finance (x) a portion of the cost of the Transaction and (y) the
continuing operations of the Borrower and its subsidiaries after the
Transaction.
Bear Stearns is pleased to advise you that it is willing to act as
exclusive advisor, sole lead arranger and sole book manager for the Senior
Credit Facilities.
Furthermore, BSCL is pleased to advise you of its commitment to provide (or
to cause one of its subsidiaries or affiliates to provide) the entire amount of
the Senior Credit Facilities, upon the terms and subject to the conditions set
forth or referred to in this commitment letter (this "Commitment Letter") and in
the Summary of Terms and Conditions attached hereto as Exhibit A (the "Term
Sheet").
It is agreed that Bear Stearns will act as the sole and exclusive advisor,
lead arranger and book manager for the Senior Credit Facilities, and that Bear
Stearns will, in such capacity, perform the duties and exercise the authority
customarily performed and exercised by it in such role. You agree that no other
agents, co-agents, lead arrangers or book managers will be appointed, no other
titles will be awarded and no compensation (other than that expressly
contemplated by the Term Sheet and the Fee Letter referred to below) will be
paid in connection with the Senior Credit Facilities, unless you and we shall so
agree.
We intend to syndicate the Senior Credit Facilities to a group of financial
institutions identified by us in consultation with you and acceptable to you
(such acceptance not to be unreasonably withheld) (together with BSCL, the
"Senior Lenders"). Bear Stearns intends to commence syndication efforts promptly
following the execution of the Merger Agreement, and you agree actively to
assist, and to cause the Sponsors and the Target actively to assist, Bear
Stearns in completing a syndication satisfactory to it and you. Such assistance
shall include (a) your using commercially reasonable efforts to ensure that the
syndication efforts benefit materially from the Sponsors' existing lending
relationships and the existing lending relationships of the Target, (b) direct
contact between senior management and advisors of the Target and the Sponsors
and the proposed Senior Lenders, (c) assistance in the preparation of a
Confidential Information Memorandum and other marketing materials to be used in
connection with the syndication and (d) the hosting, with Bear Stearns, of one
or more meetings of prospective Senior Lenders. You also agree that, at your
expense, you will work with Bear Stearns to procure a rating for the Senior
Credit Facilities by Moody's Investors Service, Inc. and Standard & Poor's
Ratings Group prior to the commencement of the syndication of the Senior Credit
Facilities. Without limiting or otherwise affecting the foregoing and the other
conditions to BSCL's commitment set forth herein, it is understood and agreed
that BSCL's commitment hereunder is not subject to the successful syndication of
the Senior Credit Facilities or a credit rating being obtained.
Bear Stearns will manage all aspects of the syndication in consultation
with you, including decisions as to the selection of institutions to be
approached and when they will be approached, when their commitments will be
accepted, which institutions will participate, the allocations of the
commitments among the Senior Lenders
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and the amount and distribution of fees among the Senior Lenders. To assist Bear
Stearns in its syndication efforts, you agree promptly to prepare and provide,
and to cause the Target promptly to prepare and provide, to Bear Stearns all
information with respect to the Target and the Transaction, including all
projections, pro forma financial statements, financial models and business plans
(collectively, the "Projections"), as we may reasonably request in connection
with the arrangement and syndication of the Senior Credit Facilities. You hereby
represent and covenant that (a) all information, other than the Projections (the
"Information"), that has been or will be made available to Bear Stearns by you,
the Target or any of your respective representatives in connection with the
transactions contemplated hereby, taken as a whole, is or will be, when
furnished, complete and correct in all material respects and does not or will
not, when furnished, 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 materially misleading in light of the circumstances under which such
statements are made and (b) the Projections that have been or will be made
available to Bear Stearns by you, the Target or any of your respective
representatives have been or will be prepared in good faith based upon
reasonable assumptions at the time of the preparation thereof; provided that
such representation and warranty with respect to Information and Projections
provided by the Target shall be limited to your actual knowledge. You understand
that in arranging and syndicating the Senior Credit Facilities we may use and
rely on the Information and the Projections without independent verification
thereof.
As consideration for BSCL's commitment hereunder and Bear Stearns'
agreement to perform the services described herein, you agree to pay, or to
cause the Borrower to pay, to BSCL the nonrefundable fees set forth in Annex I
to the Term Sheet and in the Fee Letter dated the date hereof and delivered
herewith (the "Fee Letter").
BSCL's commitment hereunder and Bear Stearns' agreement to perform the
services described herein are subject to (a) 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 Transaction 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,
(b) 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) affecting the Target or the
Transaction 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, (c)
there not having occurred and being continuing after the date hereof a material
disruption of or material adverse change in financial, banking or capital market
conditions that, in our sole discretion, could materially impair the syndication
of the Senior Credit Facilities, (d) our satisfaction that prior to and during
the syndication of the Senior Credit Facilities there shall be no competing
offering, placement or arrangement of any debt securities or bank financing by
or on behalf of the Sponsors, any affiliate thereof or, from and after the
execution of the Merger Agreement, the Target or any of its subsidiaries (which,
in the case of the Sponsors or any of their affiliates, would materially impair
the syndication of the Senior Credit Facilities) (other than the offering and
placement of the Senior Subordinated Notes and the Senior Subordinated Bridge
Facility and other facilities disclosed to Bear Stearns and BSCL the syndication
of which is coordinated with the syndication of the Senior Credit Facilities to
the reasonable satisfaction of Bear Stearns and BSCL), (e) the negotiation,
execution and delivery of definitive documentation with respect to the Senior
Credit Facilities satisfactory to Bear Stearns 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, (f) your compliance with
your covenants and agreements with us under this Commitment Letter and the Fee
Letter in respect of the Transaction, and (g) the other conditions set forth or
referred to herein or in the Fee Letter or the Term Sheet. Those matters that
are not covered by the provisions hereof (including the immediately preceding
paragraph hereof) and of the Term Sheet are subject to the approval and
agreement of Bear Stearns, BSCL and the Sponsors.
You agree (a) to indemnify and hold harmless Bear Stearns, BSCL, their
affiliates and their respective officers, directors, employees, advisors, and
agents (each, an "Indemnified Person") as set forth in Annex A hereto and (b) to
reimburse Bear Stearns, BSCL and their affiliates from time to time upon
presentation of
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reasonable supporting documentation for all reasonable out-of-pocket expenses
(including due diligence expenses, syndication expenses, consultant's fees and
expenses, travel expenses, and fees, charges and disbursements of counsel)
incurred in connection with the Senior Credit Facilities and any related
documentation (including this Commitment Letter, the Term Sheet, the Fee Letter
and the definitive financing documentation) or the amendment, modification or
waiver of this Commitment Letter, the Term Sheet or the Fee Letter; provided
that if the Transaction is not consummated you shall not be required to
reimburse any expenses pursuant to this clause (b) except as otherwise agreed in
writing between you and Bear Stearns. No Indemnified Person shall be liable for
any damages arising from the use by unauthorized persons of Information or other
materials sent through electronic, telecommunications or other information
transmission systems that are intercepted by such persons or for any special,
indirect, consequential or punitive damages in connection with the Senior Credit
Facilities.
You acknowledge that Bear Stearns and its affiliates (the term "Bear
Stearns" as used below in this paragraph being understood to include such
affiliates) may be providing debt financing, equity capital or other services
(including financial advisory services) to other persons in respect of which you
or the Sponsors may have conflicting interests. Bear Stearns will not use
confidential information obtained from you or the Sponsors by virtue of the
Transaction or its other relationships with you or the Sponsors in connection
with the performance by Bear Stearns of services for other persons, and Bear
Stearns will not furnish any such information to other persons. You also
acknowledge that Bear Stearns has no obligation to use in connection with the
Transaction, or to furnish to you, confidential information obtained from other
persons.
This 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 your rights and obligations hereunder and under the Fee
Letter to the Target or the Borrower 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 Borrower) other than the parties hereto and the Indemnified Persons.
This Commitment Letter may not be amended or waived except by an instrument in
writing signed by each of you, Bear Stearns and BSCL. This Commitment Letter may
be executed in any number of counterparts, each of which shall be an original,
and all of which, when taken together, shall constitute one agreement. Delivery
of an executed signature page of this Commitment Letter by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof. This Commitment Letter and the Fee Letter are the only agreements that
have been entered into among us with respect to the Senior Credit Facilities and
set forth the entire understanding of the parties with respect thereto. This
Commitment Letter shall be governed by, and construed in accordance with, the
laws of the State of New York.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Term Sheet or the Fee Letter nor any of
their terms or substance shall be disclosed, directly or indirectly, by you to
any other person except (a) to your directors, officers, committees, agents,
employees and advisors and, on a confidential basis, to the directors, officers,
committees, agents, employees and advisors of the Sponsors and to the directors,
officers, agents, employees and advisors of the Target, in each case who are
directly involved in the consideration of this matter or (b) as may be compelled
in a judicial or administrative proceeding or as otherwise required by law (in
which case you agree to inform us promptly thereof), provided, that the
foregoing restrictions shall cease to apply (except in respect of the Fee Letter
and its terms and substance) after this Commitment Letter has been accepted by
you.
The compensation, reimbursement, indemnification and confidentiality
provisions contained herein and in the Fee Letter shall remain in full force and
effect notwithstanding the termination of this Commitment Letter or BSCL's
commitment hereunder; provided, that your obligations under this Commitment
Letter, other than those arising under the thirteenth paragraph hereof, shall
automatically terminate and be superseded by the provisions of the definitive
documentation relating to the Senior Credit Facilities upon the execution
thereof, and you shall automatically be released from all liability in
connection therewith at such time; provided, further, that in the event that the
syndication of the Senior Credit Facilities has not been successfully
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completed prior to the execution of such definitive documentation, you shall
enter into, and shall cause the Borrower to enter into, a satisfactory agreement
with Bear Stearns and BSCL with respect to the completion of such syndication,
pursuant to which you and the Borrower shall agree to satisfy your obligations
under the fifth, sixth and seventh paragraphs hereof until such time as such
syndication shall have been successfully completed.
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 Commitment Letter or the
transactions contemplated hereby and the parties hereto hereby waive and release
all claims related to any such liability or obligation.
You hereby irrevocably submit 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 purpose of
any suit, action or other proceeding arising out of this Commitment Letter, the
Fee Letter or any of the agreements or transactions contemplated hereby, which
is brought by or against you and you (i) hereby irrevocably agree that all
claims in respect of any such suit, action or proceeding may be heard and
determined in any such court and (ii) hereby agree not to commence any action,
suit or proceeding relating to this Commitment Letter, the Fee Letter or any
such other agreements or transactions other than in such court except to the
extent mandated by applicable law. You hereby waive any objection that you may
now or hereafter have to the venue of any such suit, action or proceeding in any
such court or that such suit, action or proceeding was brought in an
inconvenient court and agree not to plead or claim the same. You hereby
acknowledge that you have been advised by counsel in the negotiation, execution
and delivery of this Commitment Letter, the Fee Letter and the other agreements
and transactions contemplated hereby, that neither Bear Stearns nor BSCL has any
fiduciary relationship with or fiduciary duty to you or any other person arising
out of or in connection with this Commitment Letter, the Fee Letter or any of
the other agreements or transactions contemplated hereby and that neither BSCL
nor Bear Stearns has been retained to advise or has advised you or any other
person pursuant to this Commitment Letter regarding the wisdom, prudence or
advisability of entering into or consummating the Transaction. EACH OF BEAR
STEARNS, BSCL AND YOU HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS COMMITMENT LETTER, THE
FEE LETTER OR ANY OF THE OTHER AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY
AND FOR ANY COUNTERCLAIM RELATING THERETO.
If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms hereof and of the Term Sheet and the Fee Letter by
returning to us executed counterparts hereof and of the Fee Letter not later
than the earlier of (i) 5:00 p.m., New York City time, on June 23, 2000 and (ii)
24 hours after the execution of the Merger Agreement. BSCL's commitment and Bear
Stearns' agreements herein will automatically expire at such time in the event
Bear Stearns has not received such executed counterparts in accordance with the
immediately preceding sentence; provided that BSCL's commitment and Bear
Stearns' agreements herein will immediately expire upon (i) 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
of the Target or (ii) the termination or expiration of the Merger Agreement.
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Bear Stearns and BSCL are pleased to have been given the opportunity to
assist you in connection with this important financing.
Very truly yours,
BEAR, STEARNS & CO. INC.
By: /s/ KEITH C. BARNISH
-------------------------------------
Name: Keith C. Barnish
Title: Senior Managing Director
BEAR STEARNS CORPORATE LENDING INC.
By: /s/ KEITH C. BARNISH
-------------------------------------
Name: Keith C. Barnish
Title: Senior Managing Director
Accepted and agreed to as of the
date first written above by:
HB FINANCE LLC
By: /s/ ANDREW S. ROSEN
--------------------------------
Name: Andrew S. Rosen
Title: Vice President and
Assistant Secretary
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ANNEX A
Capitalized terms used and not otherwise defined herein are used with the
meanings attributed thereto in the Commitment Letter dated June 22, 2000 (the
"Commitment Letter") from Bear, Stearns & Co. Inc. and Bear Stearns Corporate
Lending Inc. 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 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 Transaction, (ii) the Commitment Letter, the Fee Letter
or the Senior Credit Facilities, or (iii) any untrue statement or alleged untrue
statement of a material fact contained in, or material omissions or alleged
omissions in, information furnished by the Indemnifying Party or any of its
subsidiaries or affiliates to any of the Indemnified Persons or any other person
in connection with the Transaction or the 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 (a) the gross negligence or willful misconduct of
any of the Indemnified Persons or (b) the breach of the Commitment Letter by any
Indemnified Person.
These Indemnification Provisions shall be in addition to any liability
which any Indemnifying Party may have to the Indemnified Persons.
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. Bear
Stearns, 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 Bear Stearns (which consent shall not be
unreasonably withheld), the Indemnifying Party shall not settle or compromise
any claim, 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 irrevocable release from all
liability in respect of such claim, (ii) the terms of such release do not, in
Bear Stearns' judgment, materially and adversely affect the business of the
Indemnified Persons and (iii) the Indemnifying Party gives to Bear Stearns
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 an Indemnified Person or contain any adverse
finding of fact with respect thereto.
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In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these Indemnification Provisions is made but it is
found by a judgment of 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 provided 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 Commitment Letter and the Fee Letter.
Except as provided in the fourteenth paragraph of the Commitment Letter,
the expiration or termination of BSCL's commitment under the Commitment Letter
shall not affect these Indemnification Provisions, which provisions shall remain
operative and in full force and effect.
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EXHIBIT A
$1,750,000,000 SENIOR CREDIT FACILITIES
SUMMARY OF TERMS AND CONDITIONS
June 22, 2000
Hicks, Muse, Tate & Furst Incorporated and Bear Stearns Merchant Fund Corp.
(collectively, the "Sponsors") intend, together with certain of their respective
affiliates and certain other investors (collectively with the Sponsors, the
"Sponsor Group") and certain existing stockholders and members of management of
the Target referred to below (the "Rollover Shareholders" and, together with the
Sponsor Group, the "Investor Group"), to cause HB Merger LLC ("Mergerco"), a
newly-formed limited liability company owned by the Sponsor Group, to enter into
a merger agreement (the "Merger Agreement") with Johns Manville Corporation, a
Delaware corporation (the "Target"), pursuant to which Mergerco will be merged
(the "Merger") with and into the Target (with the Target as the surviving
corporation) and the Investor Group will acquire all of the outstanding capital
stock and options of the Target (the "Transaction"). The Transaction will be
effected pursuant to a recapitalization (the "Recapitalization") in which the
Investor Group will subscribe for and purchase newly issued equity of the Target
or, in the case of the Rollover Shareholders, roll over certain of their
existing common equity of the Target into a combination of pay-in-kind
preferred, junior preferred and common equity of the Target. The Sponsors intend
to refinance (the "Refinancing") certain existing indebtedness of the Target
concurrently with the consummation of the Recapitalization (currently estimated
to be $471,800,000 at the closing of the Transaction), all as more specifically
described in the Sources and Uses Table attached as Schedule I to the Commitment
Letter of which this Exhibit A is a part. In connection with the
Recapitalization, the Target will transfer all of its assets to a wholly-owned
subsidiary of the Target reasonably acceptable to Bear Stearns and BSCL (the
"Borrower"). References herein to the "Transaction" shall include the financings
described herein (including the Merger and the Refinancing) and all other
transactions related to the Transaction.
The Transaction and the related premiums, fees, expenses and tax settlement
costs will be financed from the following sources: (a) $853,100,000 in common
and preferred equity of the Target on the terms described in the Transaction
Documentation (as defined in Annex II) or as otherwise reasonably satisfactory
to Bear Stearns and BSCL (the "Equity"), consisting of no less than $500,000,000
contributed in cash by the Sponsor Group and approximately $353,100,000 (based
on liquidation preference in the case of preferred stock and based on the
consideration per share paid in the Transaction in the case of common stock) in
pay-in-kind preferred stock of the Target (the "Rollover PIK Preferred Stock"),
junior preferred stock of the Target (the "Junior Preferred Stock") and common
stock of the Target (the "Rollover Common Equity"), (b) approximately
$1,750,000,000 from senior secured credit facilities (such credit facilities,
the "Senior Credit Facilities") of the Borrower comprised of term loan
facilities aggregating $1,450,000,000 (the "Term Loan Facilities") and a
$300,000,000 revolving credit facility (the "Revolving Credit Facility") (of
which approximately $108,400,000 is expected, subject to changes in (i) the
Target's and its subsidiaries' existing bank debt in the ordinary course of
business, (ii) the amount of excess cash on the Target's balance sheet at the
closing of the Transaction and (iii) the amount of the management equity
rollover, to be drawn initially to finance the Transaction), (c) excess cash on
the Target's balance sheet expected to be available at the closing of the
Transaction (currently estimated to be $54,300,000) and (d) at least
$600,000,000 in gross cash proceeds from either (i) the issuance by the Borrower
of senior subordinated unsecured notes (the "Senior Subordinated Notes") in a
public offering or Rule 144A private placement or (ii) in the event the Borrower
is unable to issue the full amount of the Senior Subordinated Notes at or prior
to the time the Transaction is consummated, borrowings under a senior
subordinated bridge facility (the "Senior Subordinated Bridge Facility";
together with the Senior Credit Facilities, the "Facilities") as interim bridge
financing to the Senior Subordinated Notes. The Revolving Credit Facility will
also be used to finance the continuing operations of the Borrower and its
subsidiaries after the Transaction.
(B)(1)-9
<PAGE> 10
I PARTIES
Borrower: The Borrower. Certain foreign subsidiaries of the
Borrower may be designated as additional borrowers
under the Revolving Credit Facility on terms and
conditions to be agreed upon.
Guarantors: The Target and each of its direct and indirect
present and future domestic subsidiaries (other
than the Borrower) (the "Guarantors"; the Borrower
and the Guarantors, collectively, the "Credit
Parties"). To the extent subsidiaries of the
Borrower are designated as additional borrowers as
described above, the Borrower will guarantee any
borrowings made by such subsidiaries under the
Revolving Credit Facility.
Advisor, Sole Lead Arranger
and Sole Book Manager: Bear, Stearns & Co. Inc. (in such capacity, the
"Lead Arranger").
Syndication Agent: Bear Stearns Corporate Lending Inc. (in such
capacity, the "Syndication Agent").
Administrative Agent: A Senior Lender acceptable to the Borrower and the
Lead Arranger (in such capacity, the
"Administrative Agent" and, together with the Lead
Arranger and the Syndication Agent, the "Agents").
Senior Lenders: A syndicate of banks, financial institutions and
other entities arranged by the Lead Arranger and
acceptable to the Borrower (such acceptance not to
be unreasonably withheld) (collectively, the
"Senior Lenders").
II TYPES AND AMOUNTS OF SENIOR CREDIT FACILITIES
1 Term Loan Facilities
Types and Amounts of Senior
Credit Facilities: Term Loan Facilities in an aggregate amount of
$1,450,000,000 (the loans thereunder, the "Term
Loans") as follows:
Tranche A Term Loan Facility: A six and one
half-year term loan facility (the "Tranche A Term
Loan Facility") in an aggregate principal amount
equal to $500,000,000 (the loans thereunder, the
"Tranche A Term Loans"). The Tranche A Term Loans
shall be repayable in semi-annual installments in
amounts to be agreed upon until the date that is
six and one-half years after the Closing Date (as
defined in Annex II).
Tranche B Term Loan Facility: A seven and one
half-year term loan facility (the "Tranche B Term
Loan Facility") in an aggregate principal amount
equal to $650,000,000 (the loans thereunder, the
"Tranche B Term Loans"). The Tranche B Term Loans
shall be repayable in semi-annual installments in
amounts to be agreed upon until the date that is
seven and one-half years after the Closing Date.
Tranche C Term Loan Facility: An eight and one
half-year term loan facility (the "Tranche C Term
Loan Facility") in an aggregate principal amount
equal to $300,000,000 (the loans thereunder, the
"Tranche C Term Loans"). The Tranche C Term Loans
shall be repayable in semi-annual installments in
amounts to be agreed upon until the date that is
eight and one-half years after the Closing Date.
Availability: The Term Loans shall be made in a single drawing on
the Closing Date.
(B)(1)-10
<PAGE> 11
Purpose: The proceeds of the Term Loans shall be used to
finance the Transaction and to pay related fees and
expenses.
2 Revolving Credit Facility
Type and Amount of
Facility: Six and one half-year Revolving Credit Facility in
the amount of $300,000,000 (or the equivalent
thereof in foreign currencies under the
multi-currency option described below) (the loans
thereunder, the "Revolving Credit Loans").
Availability: The Revolving Credit Facility shall be available on
a revolving basis during the period commencing on
the Closing Date and ending on the six and one
half-year anniversary thereof (the "Revolving
Credit Termination Date"). Not more than
$108,400,000 in Revolving Credit Loans shall be
made on the Closing Date (subject to changes in (i)
the Target's and its subsidiaries' existing bank
debt in the ordinary course of business, (ii) the
amount of excess cash on the Target's balance sheet
at the closing of the Transaction and (iii) the
amount of the management equity rollover).
Letters of Credit: A portion of the Revolving Credit Facility not in
excess of an amount to be agreed shall be available
for the issuance of letters of credit (the "Letters
of Credit") by a Senior Lender to be selected in
the syndication process and agreed to by the
Borrower (in such capacity, the "Issuing Lender").
No Letter of Credit shall have an expiration date
after the earlier of (a) one year after the date of
issuance and (b) five business days prior to the
Revolving Credit Termination Date, provided that
any Letter of Credit with a one-year tenor may
provide for the renewal thereof for additional
one-year periods (which shall in no event extend
beyond the date referred to in clause (b) above).
Drawings under any Letter of Credit shall be
reimbursed by the Borrower (whether with its own
funds or with the proceeds of Revolving Credit
Loans) on the same business day. To the extent that
the Borrower does not so reimburse the Issuing
Lender, the Senior Lenders under the Revolving
Credit Facility shall be irrevocably and
unconditionally obligated to reimburse the Issuing
Lender on a pro rata basis.
Swing Line Loans: A portion of the Revolving Credit Facility not in
excess of an amount to be agreed shall be available
for swing line loans (the "Swing Line Loans") from
a Senior Lender to be selected in the syndication
process and agreed to by the Borrower (in such
capacity, the "Swing Line Lender") on same-day
notice. Any such Swing Line Loans will reduce
availability under the Revolving Credit Facility on
a dollar-for-dollar basis. Each other Senior Lender
under the Revolving Credit Facility shall acquire,
under certain circumstances, an irrevocable and
unconditional pro rata participation in each Swing
Line Loan.
Multi-Currency
Option: Loans under the Revolving Credit Facility shall be
available in foreign currencies to be agreed
("Foreign Currency Loans"), subject to limits for
each such currency to be agreed. The structure of
the manner and mechanics for the funding of Foreign
Currency Loans (i.e. whether Foreign Currency Loans
in one or more countries shall be made available by
all the Senior Lenders or a sub-group of Senior
Lenders consisting of one or more Senior Lenders
fronting on behalf of the other Senior
(B)(1)-11
<PAGE> 12
Lenders) shall be determined by the Syndication
Agent after consultation with the Borrower, but it
is the intention of the Syndication Agent that all
the Senior Lenders under the Revolving Credit
Facility shall share the risk on a pro rata basis.
Maturity: The Revolving Credit Termination Date.
Purpose: The proceeds of the Revolving Credit Loans shall be
used to finance the Transaction and to pay related
fees and expenses and for general corporate
purposes of the Borrower and its subsidiaries in
the ordinary course of business.
III CERTAIN PAYMENT PROVISIONS
Fees and Interest Rates As set forth on Annex I.
Optional Prepayments and
Commitment Reductions: Loans may be prepaid and commitments may be reduced
by the Borrower in minimum amounts to be agreed
upon. Optional prepayments of the Term Loans shall
be applied to the Tranche A Term Loans, the Tranche
B Term Loans and the Tranche C Term Loans ratably
in accordance with the then-outstanding amounts
thereof and may not be reborrowed. Optional
prepayments of the Tranche A Term Loans, the
Tranche B Term Loans or the Tranche C Term Loans,
as applicable, shall be applied, first, to the next
two installments thereof, and second, ratably to
the remaining installments thereof in accordance
with the then-remaining number of installments.
Notwithstanding the foregoing, so long as any
Tranche A Term Loans are outstanding, each holder
of Tranche B Term Loans or Tranche C Term Loans
shall have the right to refuse all or any portion
of such prepayment allocable to its Tranche B Term
Loans or Tranche C Term Loans, as the case may be,
on or prior to the second anniversary of the
Closing Date and the amount so refused will be
applied to prepay the Tranche A Term Loans.
Mandatory Prepayments and
Commitment Reductions: The following amounts shall be applied to prepay
the Term Loans:
(a) 100% of the net proceeds of any incurrence of
certain indebtedness and 50% of the net proceeds of
any sale or issuance of equity (other than
indebtedness in respect of the Senior Subordinated
Notes (or any other subordinated debt securities
issued in lieu of the Senior Subordinated Notes to
refinance or replace the Senior Subordinated Bridge
Facility (the "Take-Out Securities")) and certain
other customary exceptions to be agreed) after the
Closing Date by the Target or any of its
subsidiaries;
(b) 100% of the net proceeds of any sale or other
disposition (including as a result of casualty or
condemnation) by the Target or any of its
subsidiaries of any assets in excess of an amount
to be agreed (except for (i) the sale of inventory
in the ordinary course of business and certain
other dispositions to be agreed on and (ii) a
capacity for reinvestment in like assets within 12
months of such sale or other disposition to be
agreed); and
(c) 50% of excess cash flow (to be defined) for
each fiscal year of the Borrower and its
subsidiaries based on audited annual financial
statements (commencing with the 2001 fiscal year),
provided that no such prepayment shall be required
with respect to any fiscal year for which the
(B)(1)-12
<PAGE> 13
ratio of consolidated total debt to consolidated
EBITDA is less than 3.0 to 1.0.
Each such prepayment of the Term Loans shall be
applied to the Tranche A Term Loans, the Tranche B
Term Loans and the Tranche C Term Loans ratably in
accordance with the then-outstanding amounts
thereof and may not be reborrowed. Mandatory
prepayments of the Tranche A Term Loans, the
Tranche B Term Loans or the Tranche C Term Loans,
as applicable, shall be applied, first, to the next
two installments thereof, and second, ratably to
the remaining installments thereof in accordance
with the then-remaining number of installments.
Notwithstanding the foregoing, so long as any
Tranche A Term Loans are outstanding, each holder
of Tranche B Term Loans or Tranche C Term Loans
shall have the right to refuse all or any portion
of such prepayment allocable to its Tranche B Term
Loans or Tranche C Term Loans, as the case may be,
and the amount so refused will be applied to prepay
the Tranche A Term Loans.
To the extent that the aggregate extensions of
credit under the Revolving Credit Facility exceed
the amount of the Revolving Credit Facility by an
amount to be agreed as a result of fluctuations in
currency exchange rates, the extensions of credit
thereunder shall be reduced by the amount of such
excess. To the extent that there are limits on
borrowings in any particular foreign currency under
the Revolving Credit Facility, borrowings in such
currencies shall be repaid to the extent such
limits are exceeded.
IV COLLATERAL
The obligations of each Credit Party in respect of
the Senior Credit Facilities shall be secured by a
perfected first priority security interest in
substantially all of its present and future
tangible and intangible assets (including, without
limitation, intellectual property, owned real
property with a value in excess of an amount to be
agreed and all of the capital stock of the Borrower
and each of its direct and indirect domestic
subsidiaries and 65% of the capital stock of each
of its first-tier foreign subsidiaries), except for
(a) leasehold interests in real property and (b)
those assets as to which the Syndication Agent
shall determine in its discretion that the costs of
obtaining such a security interest are excessive in
relation to the value of the security to be
afforded thereby.
V CERTAIN CONDITIONS
Initial Conditions: As set forth on Annex II.
On-Going Conditions: The making of each extension of credit shall be
conditioned upon (a) the accuracy in all material
respects of all representations and warranties in
the Credit Documentation (as defined in Annex II)
(including, without limitation, the material
adverse change and litigation representations) and
(b) there being no default or event of default in
existence at the time of, or after giving effect to
the making of, such extension of credit. As used
herein and in the Credit Documentation, a "material
adverse change" shall mean any event, development
or circumstance that has had or could reasonably be
expected to have a material adverse effect on (a)
as of the Closing Date, the Transaction, (b) the
business, assets,
(B)(1)-13
<PAGE> 14
property, condition (financial or otherwise),
results of operations or prospects of the Borrower
and its subsidiaries taken as a whole, or (c) the
validity or enforceability of any of the Credit
Documentation or the rights and remedies of the
Agents and the Senior Lenders thereunder.
VI CERTAIN DOCUMENTATION MATTERS
The Credit Documentation shall contain
representations, warranties, covenants and events
of default customary for financings of this type
and other terms deemed appropriate by the Senior
Lenders, including, without limitation (in each
case, with appropriate qualifications and
exceptions to be agreed):
Representations and
Warranties: Financial statements (including pro forma financial
statements); absence of undisclosed liabilities; no
material adverse change; corporate existence;
compliance with law; corporate power and authority;
enforceability of Credit Documentation; no conflict
with law or contractual obligations; no material
litigation; no default; ownership of property;
liens; intellectual property; no burdensome
restrictions; taxes; Federal Reserve regulations;
ERISA; Investment Company Act; subsidiaries;
environmental matters; solvency; labor matters;
accuracy of disclosure; creation and perfection of
security interests; status as senior debt; and no
other designated senior debt.
Affirmative Covenants: Delivery of financial statements, reports, final
accountants' letters, projections, officers'
certificates and other information requested by any
Senior Lender; payment of other obligations;
continuation of business and maintenance of
existence and material rights and privileges;
compliance with laws and material contractual
obligations; maintenance of property and insurance;
maintenance of books and records; right of each of
the Senior Lenders to inspect property and books
and records; notices of defaults, litigation and
other material events; compliance with
environmental laws; further assurances (including,
without limitation, with respect to security
interests in after-acquired property); and
agreement to obtain interest rate protection on
terms and conditions reasonably satisfactory to the
Syndication Agent such that at least 50% of the
long-term debt of the Borrower and its subsidiaries
bears interest at a fixed rate.
Financial Covenants: Minimum fixed charge coverage and maximum total
leverage having terms to be determined.
Negative Covenants: Limitations on: indebtedness; liens; guarantee
obligations; mergers, consolidations, liquidations
and dissolutions; sales of assets; dividends and
other payments in respect of capital stock
(including the Rollover PIK Preferred Stock and the
Junior Preferred Stock); capital expenditures;
investments, loans and advances; optional payments
and modifications of subordinated and other
material debt instruments; transactions with
affiliates; sale and leasebacks; changes in fiscal
year; negative pledge clauses; changes in lines of
business; designated senior debt; and changes in
passive holding company status of the Target.
Events of Default: Nonpayment of principal when due; nonpayment of
interest, fees or other amounts after a grace
period of 5 business days; material inaccuracy of
representations and warranties; violation of
covenants (subject, in the
(B)(1)-14
<PAGE> 15
case of certain affirmative covenants, to a grace
period to be agreed upon); cross-default;
bankruptcy events; certain ERISA events; material
judgments; actual or asserted invalidity of any
guarantee or security document, subordination
provisions or security interest; and a change of
control (the definition of which is to be agreed
but in any event including any change of control in
respect of the Senior Subordinated Notes, any
Take-Out Securities or the Senior Subordinated
Bridge Facility).
Voting: Amendments and waivers with respect to the Credit
Documentation shall require the approval of Senior
Lenders holding not less than a majority of the
aggregate amount of the Term Loans, Revolving
Credit Loans, participations in Letters of Credit
and Swing Line Loans and unused commitments under
the Senior Credit Facilities, except that (a) the
consent of each Senior Lender directly affected
thereby shall be required with respect to (i)
reductions in the amount or extensions of the final
maturity of any Loan, (ii) reductions in the rate
of interest or any fee or extensions of any due
date thereof, (iii) increases in the amount or
extensions of the expiry date of any Senior
Lender's commitment and (iv) modifications to the
pro rata provisions of the Credit Documentation,
(b) the consent of Senior Lenders holding not less
than a percentage to be agreed of the aggregate
amount of the Tranche A Term Loans, the Tranche B
Term Loans or the Tranche C Term Loans, as the case
may be, shall be required with respect to
extensions of the scheduled amortization of any
Tranche A Term Loan, Tranche B Term Loan or Tranche
C Term Loan, respectively, and (c) the consent of
100% of the Senior Lenders shall be required with
respect to (i) decreases in any of the voting
percentages and (ii) releases of all or
substantially all of the Guarantors or all or
substantially all of the collateral. In addition,
the consent of Senior Lenders holding a majority of
the aggregate amount of the Tranche A Term Loans,
the Tranche B Term Loans or the Tranche C Term
Loans, as the case may be, shall be required with
respect to certain modifications affecting the Term
Loan Facilities.
Assignments and
Participations: The Senior Lenders shall be permitted to assign and
sell participations in their Loans and commitments,
subject, in the case of assignments (other than
assignments to another Senior Lender or to an
affiliate of a Senior Lender), to the consent of
the Administrative Agent and the Borrower (and, in
the case of any assignment relating to the
Revolving Credit Facility, the Issuing Lender and
the Swing Line Lender) (which consent in each case
shall not be unreasonably withheld) and the giving
of notice to the Syndication Agent. Non-pro rata
assignments shall be permitted. In the case of
partial assignments (other than to another Senior
Lender or to an affiliate of a Senior Lender), the
minimum assignment amount shall be $5,000,000, and,
after giving effect thereto, the assigning Senior
Lender shall have commitments and Loans aggregating
at least $5,000,000, in each case unless otherwise
agreed by the Borrower and the Administrative
Agent. Participants shall have the same benefits as
the Senior Lenders with respect to yield protection
and increased cost provisions. Voting rights of
participants shall be limited to those matters with
respect to which the affirmative vote of the Senior
Lender from which it purchased its participation
would be required as described under "Voting"
above. Pledges of Loans in accordance with
applicable law shall be permitted without
restriction. Promissory notes shall be issued under
the Senior Credit Facilities only upon request.
(B)(1)-15
<PAGE> 16
Yield Protection: The Credit Documentation shall contain customary
provisions (a) protecting the Senior Lenders
against increased costs or loss of yield resulting
from changes in reserve, tax, capital adequacy and
other requirements of law and from the imposition
of or changes in withholding or other taxes and (b)
indemnifying the Senior Lenders for "breakage
costs" incurred in connection with, among other
things, any prepayment of a Eurodollar Loan (as
defined in Annex I) on a day other than the last
day of an interest period with respect thereto.
Expenses and
Indemnification: The Borrower shall pay (a) all reasonable
out-of-pocket expenses of the Agents associated
with the syndication of the Senior Credit
Facilities and the preparation, execution, delivery
and administration of the Credit Documentation and
any amendment or waiver with respect thereto
(including the reasonable fees, disbursements and
other charges of counsel) and (b) all out-of-pocket
expenses of the Agents and the Senior Lenders
(including the reasonable fees, disbursements and
other charges of one counsel to the Agents and one
additional counsel to the Senior Lenders) in
connection with the enforcement of the Credit
Documentation.
The Agents and the Senior Lenders (and their
affiliates and their respective officers,
directors, employees, advisors and agents) will
have no liability for, and will be indemnified and
held harmless against, any loss, liability, cost or
expense incurred in respect of the financing
contemplated hereby or the use or the proposed use
of proceeds thereof (except to the extent resulting
from the gross negligence or willful misconduct of
the indemnified party or a breach by the
indemnified person of its obligations under the
Credit Documentation).
Governing Law and Forum: State of New York.
Counsel to Lead Arranger: Simpson Thacher & Bartlett.
(B)(1)-16
<PAGE> 17
ANNEX I
INTEREST AND CERTAIN FEES
INTEREST RATE OPTIONS: The Borrower may elect that the Loans comprising
each borrowing bear interest at a rate per annum
equal to:
the Base Rate plus the Applicable Margin; or
the Eurodollar Rate plus the Applicable Margin.
provided, that (i) all Swing Line Loans shall bear
interest based upon the Base Rate, and (ii) all
Foreign Currency Loans shall bear interest as
described below under "Foreign Currency Loan
Interest and Fees".
As used herein:
"Base Rate" means the higher of (i) the rate of
interest publicly announced by the Administrative
Agent as its prime rate in effect at its principal
office in New York City (the "Prime Rate"), and
(ii) the federal funds effective rate from time to
time plus 0.5%.
"Applicable Margin" means (a) in the case of
Tranche A Term Loans and Revolving Credit Loans (i)
1.50%, if such Loans are Base Rate Loans (as
defined below) and (ii) 2.50%, if such Loans are
Eurodollar Loans (as defined below), (b) in the
case of Tranche B Term Loans (i) 2.00%, if such
Loans are Base Rate Loans and (ii) 3.00%, if such
Loans are Eurodollar Loans and (c) in the case of
Tranche C Term Loans (i) 2.25%, if such Loans are
Base Rate Loans and (ii) 3.25%, if such Loans are
Eurodollar Loans. The foregoing margins shall be
subject to adjustment after six months following
the Closing Date by amounts to be agreed upon based
on the ratio of consolidated total funded debt to
consolidated EBITDA and provided that no default or
event of default has occurred and is continuing.
"Eurodollar Rate" means the rate (adjusted for
statutory reserve requirements for eurocurrency
liabilities) at which eurodollar deposits for one,
two, three or six (or, to the extent available to
all the Senior Lenders, nine or twelve) months (as
selected by the Borrower) are offered in the
interbank eurodollar market.
Interest Payment Dates: In the case of Loans bearing interest based upon
the Base Rate("Base Rate Loans"), quarterly in
arrears.
In the case of Loans bearing interest based upon
the Eurodollar Rate("Eurodollar Loans"), on the
last day of each relevant interest period and, in
the case of any interest period longer than three
months, on each successive date three months after
the first day of such interest period.
Commitment Fees: The Borrower shall pay a commitment fee calculated
at the rate of 0.50% per annum, on the average
daily unused portion of the Revolving Credit
Facility, payable quarterly in arrears. The
foregoing rate shall be subject to adjustment after
six months following the Closing Date by amounts to
be agreed upon based on the ratio of consolidated
total funded debt to consolidated EBITDA and
provided that no default or event of default has
occurred and is continuing. Swing Line Loans shall,
for purposes of the commitment fee calculations
only, not be deemed to
(B)(1)-17
<PAGE> 18
be a utilization of the Revolving Credit Facility.
Issuances of Letters of Credit shall be deemed to
be a utilization of the Revolving Credit Facility.
Letter of Credit Fees: The Borrower shall pay a commission on all
outstanding Letters of Credit at a per annum rate
to be agreed on the face amount of each such Letter
of Credit. Such commission shall be shared ratably
among the Senior Lenders participating in the
Revolving Credit Facility and shall be payable
quarterly in arrears.
A fronting fee calculated at a rate per annum to be
agreed on the face amount of each Letter of Credit
shall be payable quarterly in arrears to the
Issuing Lender for its own account. In addition,
customary administrative, issuance, amendment,
payment and negotiation charges shall be payable to
the Issuing Lender for its own account.
Foreign Currency Loan
Interest and Fees: In the event that Foreign Currency Loans in a
foreign currency are made available by all the
Senior Lenders, such Foreign Currency Loans shall
bear interest at a base rate to be agreed upon plus
the Applicable Margin then in effect for Eurodollar
Loans. In the event that Foreign Currency Loans are
fronted by one or more Senior Lenders, (a) such
Foreign Currency Loans shall bear interest at base
rate to be agreed upon, (b) the Borrower shall pay
a commission on such Foreign Currency Loans at a
per annum rate equal to the Applicable Margin then
in effect with respect to Eurodollar Loans on the
face amount of each such Loan and (c) a fronting
fee equal to an amount to be determined per annum
on the face amount of each such Multi-Currency Loan
shall be payable quarterly in arrears to the
relevant fronting Senior Lender or Senior Lenders
for its or their own account. The commission
payable pursuant to clause (b) of the immediately
preceding sentence shall be shared ratably among
the Senior Lenders participating in the Revolving
Credit Facility and shall be payable quarterly in
arrears.
Default Rate: At any time when the Borrower is in default in the
payment of any amount of principal due under the
Senior Credit Facilities, such amount shall bear
interest at 2% above the rate otherwise applicable
thereto. Overdue interest, fees and other amount
shall bear interest at 2% above the rate applicable
to Base Rate Loans.
Rate and Fee Basis: All per annum rates shall be calculated on the
basis of a year of 360 days (or 365/366 days, in
the case of Base Rate Loans the interest rate
payable on which is then based on the Prime Rate)
for actual days elapsed.
(B)(1)-18
<PAGE> 19
ANNEX II
CERTAIN CONDITIONS
Initial Conditions: The availability of the Senior Credit Facilities
shall be conditioned upon the continuing
satisfaction of the following conditions precedent
(the date upon which all such conditions precedent
shall be satisfied, the "Closing Date") 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:
(a) Each Credit Party shall have executed and
delivered satisfactory definitive financing
documentation with respect to the Senior
Credit Facilities (the "Credit
Documentation").
(b) The following transactions shall have occurred
prior to, or shall occur concurrently with,
the initial extension of credit under the
Senior Credit Facilities:
(i) The Target shall have received no less than
$500,000,000 in cash from the issuance of its
equity to the Sponsor Group (as a result of the
Merger) on the terms and conditions set forth in
the Transaction Documentation or as otherwise
reasonably satisfactory to the Syndication Agent.
Pursuant to the Transaction, 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 Transaction in the case of
common stock), after giving effect to the
Transaction and on the terms and conditions set
forth in the Transaction Documentation or as
otherwise reasonably satisfactory to the
Syndication Agent.
(ii) The Borrower shall have received the net
cash proceeds from (a) the issuance of at least
$600,000,000 of the Senior Subordinated Notes (or
any Take-Out Securities) or (b) borrowings of at
least $600,000,000 under the Senior Subordinated
Bridge Facility on terms and conditions reasonably
satisfactory to the Syndication Agent and each of
the Senior Lenders; provided that it is hereby
acknowledged that to the extent such terms and
conditions are substantially the same as those
described herein, they shall be deemed reasonably
satisfactory.
(iii) The Transaction 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,
HB Finance LLC and Mergerco 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 thereunder, in a manner materially
adverse to the interests of the Senior Lenders
without the prior written consent of the
Syndication Agent.
(B)(1)-19
<PAGE> 20
(iv) The Transaction (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 Transaction shall have been
consummated in all material respects in accordance
with the terms of the Transaction Documentation and
all applicable requirements of law.
(v) 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 the
Syndication Agent.
(vi) 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 the Syndication Agent. The
consummation of the Transaction shall not trigger
any change of control put rights under any such
indebtedness to remain outstanding after the
Closing Date.
(vii) The capital structure of the Target and its
subsidiaries shall be reasonably satisfactory to
the Syndication Agent, after giving effect to the
Transaction; 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.
(viii) The Target shall have transferred all of
its assets to the Borrower.
(c) The Senior Lenders, the Administrative Agent,
the Syndication Agent and the Lead Arranger
shall have received all fees required to be
paid, and all expenses for which invoices have
been presented, on or before the Closing Date.
(d) All material governmental and third party
approvals (including any bankruptcy court
approval) necessary or, in the reasonable
discretion of the Syndication Agent, advisable
in connection with the Transaction, the
financing contemplated hereby and the
continuing operations of the Borrower and its
subsidiaries shall have been obtained and be
in full force and effect, and all applicable
waiting periods shall have expired without any
action being taken or known to be threatened
by any competent authority which would
restrain, prevent or otherwise impose adverse
conditions on the Transaction or the financing
thereof.
(e) Each of the Senior Lenders shall have received
unaudited interim financial statements of the
Target, prepared in the same manner as the
historical audited statements previously
delivered to the Senior Lenders, 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).
(f) Each of the Senior Lenders shall have received
and shall be reasonably satisfied with
consolidated pro forma balance sheets and
income statements of the Borrower as of the
last day of the most recently ended fiscal
quarter prior to the Closing Date, giving
effect
(B)(1)-20
<PAGE> 21
to the Transaction and the transactions
contemplated by the Merger Agreement and the
Commitment Letter (meeting the requirements of
Regulation S-X for a registration statement on
Form S-1).
(g) The Syndication Agent and the Administrative
Agent shall have received the results of a
recent lien search in each relevant
jurisdiction with respect to the Target and
its domestic subsidiaries, and such search
shall reveal no liens on any of the material
assets of the Target or its domestic
subsidiaries except for liens permitted by the
Credit Documentation, Permitted Exceptions (as
defined in the Merger Agreement, other than
clause (v) of such definition) or liens to be
discharged on or prior to the Closing Date
pursuant to documentation reasonably
satisfactory to the Syndication Agent.
(h) The fees and expenses to be incurred in
connection with the Transaction and the
financing thereof shall not exceed
$160,000,000 in the aggregate.
(i) All actions and filings required, in the
judgment of the Syndication Agent, to perfect
the security interests in the collateral for
the Senior Credit Facilities shall have been
taken or made (or arrangements reasonably
satisfactory to the Syndication Agent shall
have been made with respect thereto).
(j) The Syndication Agent shall have received and
shall be reasonably satisfied with a solvency
opinion from an independent valuation firm
reasonably satisfactory to the Syndication
Agent which shall document the solvency of the
Target and its subsidiaries after giving
effect to the Transaction and the other
transactions contemplated hereby.
(k) Each of the Senior Lenders shall have received
such legal opinions (including opinions from
(i) counsel to the Credit Parties and (ii)
such special and local counsel as may
reasonably be required by the Syndication
Agent), documents and other instruments as are
customary for transactions of this type or as
they may reasonably request.
(l) The Syndication Agent shall be satisfied that
the pro forma ratio (adjusted to give effect
to the Transaction 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 of the Target (excluding
certain non-recurring charges acceptable to
the Syndication Agent) 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
Syndication Agent (and, except as may be
acceptable to the Syndication Agent, in
conformity with Regulation S-X).
(m) The Syndication Agent 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
(B)(1)-21
<PAGE> 22
the Transactions or the Facilities 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 Facilities or any of the other transactions
contemplated hereby.
(n) All representations and warranties in the
Credit Documentation (including, without
limitation, the material adverse change and
litigation representations) shall be true and
correct in all material respects.
(o) No default or event of default under the
Credit Documentation shall exist at the time
of, or after giving effect to the making of,
the loans to be made on the Closing Date.
(B)(1)-22
