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EXHIBIT 99.7
CREDIT SUISSE FIRST BOSTON
ELEVEN MADISON AVENUE
NEW YORK, NY 10010
May 22, 2000
International Paper Company
Two Manhattanville Road
Purchase, New York 10577
INTERNATIONAL PAPER COMPANY
SENIOR CREDIT FACILITIES
COMMITMENT LETTER
Ladies and Gentlemen:
You have advised Credit Suisse First Boston ("CSFB") that International
Paper Company ("IP" or "you") intends to acquire (the "Acquisition") Champion
International Corporation (the "Company"). You have further advised us that the
Acquisition will be accomplished by an exchange offer (the "Exchange Offer") by
a wholly owned subsidiary of IP ("Acquico") for the outstanding shares (the
"Shares") of capital stock of the Company followed by a merger of Acquico and
the Company, with the surviving entity of such merger being a wholly owned
subsidiary of IP (the "Merger"), pursuant to an agreement and plan of merger
previously entered into among IP, Acquico, and the Company and related documents
(collectively, the "Acquisition Agreement"). We understand that (i) the Exchange
Offer will be conditioned, among other things, on the tender and purchase (or
exchange) of at least that number of Shares that will permit Acquico, acting
alone, to effectuate the Merger and (ii) the total consideration for tendered
Shares and the Merger will be $75.00 per Share of which $50.00 will be paid in
cash and the remainder will be paid in the form of common stock of IP (the
"Equity Issuance").
You have advised us that you wish to obtain senior unsecured financing in
the form of (1) a 364-day revolving credit facility in the principal amount of
up to $1,750,000,000 (the "364-day Credit Facility") and (2) a two year term
loan facility in the principal amount of up to $1,300,000,000 (the "Term Loan
Facility" and, together with the 364-day Credit Facility, the "Credit
Facilities"). The Credit Facilities (i) would be used to finance a portion of
(a) the cash consideration paid in the Exchange Offer and (b) on the date of the
Merger, the remaining cash consideration of the Acquisition, the refinancing of
existing indebtedness of the Company to the extent required by the Acquisition
(the "Refinancing") and the payment of related fees and expenses and (ii) the
remainder of which would be used, after the date of the Merger, for other
general corporate purposes of IP and its subsidiaries. You have also advised us
that funds for the remaining portion of the Acquisition, the Refinancing and the
payment of related fees and expenses may come from (i) cash on hand of IP and
the Company and (ii) proceeds from the issuance of unsecured debt securities
(collectively, the "Debt Issuance"). You have further advised us that the
364-day Credit Facility may be used to support one or more commercial paper
programs (collectively, the "CP Program"). A summary of preliminary terms and
conditions of the Credit Facilities is set forth in Exhibit A hereto (the "Term
Sheet"). The (i) Acquisition, (ii) Exchange Offer, (iii) Merger, (iv)
Refinancing, (v) Equity Issuance, (vi) Debt Issuance and (vii) borrowings under
the Credit Facilities (or issuances of commercial paper under the CP Program)
are collectively referred to herein as the "Transactions".
You have requested that CSFB (i) agree to structure, arrange and syndicate
the Credit Facilities and (ii) commit to provide the Credit Facilities and to
serve as administrative agent therefor.
In connection with the foregoing, CSFB is pleased to advise you (i) that it
is willing to act as exclusive book manager and lead arranger for the Credit
Facilities and (ii) of its commitment to provide the entire amount of the Credit
Facilities upon the terms and subject to the conditions set forth or referred to
in this commitment letter (as the same may be amended from time to time in
accordance with its terms, the "Commitment Letter") and in the Term Sheet and in
Exhibit B hereto (the "Conditions").
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CSFB intends to syndicate the Credit Facilities to a group of financial
institutions (together with CSFB, the "Lenders") identified by us in
consultation with you. CSFB intends to commence syndication efforts promptly
upon the execution of this Commitment Letter or such later date as CSFB
determines to be appropriate in its sole discretion (the commencement date of
such syndication efforts being the "Syndication Commencement Date"). Our
commitments hereunder are conditioned upon, among other things, our having
sufficient time in our judgement prior to the Closing Date (as defined in the
Term Sheet) to complete syndication. CSFB will manage all aspects of the
syndication, including decisions, after consultation with you, 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,
what titles (if any) they will be awarded, the allocation of the commitments
among the Lenders and the amount and distribution of fees among the Lenders. It
is agreed that CSFB will act as the sole and exclusive administrative agent,
book manager and lead arranger for the Credit Facilities, and will, in such
capacities, perform the duties and exercise the authority customarily performed
and exercised by it in such roles. You agree that no other agents, book
managers, co-agents or arrangers will be appointed, no other titles will be
awarded and no compensation (other than that expressly contemplated by the Term
Sheet and the Fee Letter referred to below) will be paid in connection with the
Credit Facilities unless you and we shall so agree.
You agree to assist CSFB, and to use your commercially reasonable efforts
to cause the Company to assist CSFB, in completing a syndication satisfactory to
it. Such assistance shall include (a) your using your commercially reasonable
efforts to ensure, and to use your commercially reasonable efforts to cause the
Company to use its commercially reasonable efforts to ensure, that the
syndication efforts benefit materially from your and the Company's existing
lending relationships, (b) direct contact between senior management and advisors
of you and the proposed Lenders (and your using your commercially reasonable
efforts to cause direct contact between senior management and advisors of the
Company and the proposed Lenders), (c) assistance by you and your using your
commercially reasonable efforts to cause assistance by the Company in the
preparation of a Confidential Information Memorandum and other marketing
materials to be used in connection with the syndication (such Confidential
Information Memorandum and other marketing materials to be completed and
delivered by you to us on or before the Syndication Commencement Date) and (d)
the hosting, with CSFB, of one or more meetings with prospective Lenders.
Additionally, you agree that prior to the Arranger's determination that the
syndication of the Credit Facilities has been completed, or the earlier
termination of this Commitment Letter unless otherwise agreed to by CSFB, there
shall be no competing issues of debt securities or commercial bank facilities of
IP or any of its subsidiaries (it being understood that competing issues would
not include debt securities or commercial bank facilities currently outstanding
but would include, without limitation, issues of new (or refinancing of
existing) debt securities or commercial bank facilities) other than (i) debt
incurred to refinance outstanding debt which, in the ordinary course, becomes
due and owing at its scheduled maturity, (ii) debt guaranteed by you and issued
by a governmental authority in connection with any of your facilities, (iii)
debt issued by Carter Holt Harvey, Ltd. or Bush Boake & Allen Company and (iv)
any Debt Issuance (provided that you shall ensure that such issuance (and
related efforts) are coordinated with and reasonably acceptable to CSFB).
You agree to prepare and provide, and will use your commercially reasonable
efforts to cause the Company to provide, promptly to CSFB all information with
respect to you, the Company and the Transactions and the other transactions
contemplated hereby, including all financial information and projections (the
"Projections"), as we may reasonably request in connection with the arrangement
and syndication of the Credit Facilities. You hereby represent and covenant that
(a) all information other than the Projections (the "Information") that has been
or will be made available to CSFB, any Lender or any potential Lender by or on
behalf of you or any of your representatives in connection with the
Transactions, taken as a whole, is or will be complete and correct in all
material respects and does not or will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained therein not misleading in light of the circumstances under
which such statements are made and (b) all Projections that have been or will be
made available to CSFB, any Lender or any potential Lender by or on behalf of
you or any of your representatives in connection with the Transactions, taken as
a whole, have been or will be prepared in good faith based upon what you believe
to be reasonable assumptions. You agree to supplement the Information and the
Projections from time to time until the completion of the syndication so
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that the representation and covenant in the preceding sentence remain correct
without regard to when such Information and Projections were made available. You
understand that in arranging and syndicating the Credit Facilities, CSFB may use
and rely on the Information and the Projections without responsibility for
independent verification thereof.
As consideration for CSFB's commitment hereunder and agreement to perform
the services described herein, you agree to pay to CSFB the nonrefundable fees
set forth in the Term Sheet and in the Senior Credit Facilities Fee Letter dated
the date hereof (as the same may be amended from time to time in accordance with
its terms, the "Fee Letter").
CSFB reserves the right, after consultation with you, to change any or all
of the terms, structure, amount, tenor or pricing of the Credit Facilities as
set forth herein and in the Term Sheet and the Fee Letter if such changes are
advisable, in CSFB's judgment, to ensure that the Credit Facilities are
successfully syndicated (as determined by CSFB), provided that the aggregate
principal amount of the Credit Facilities remains the same.
You agree to reimburse CSFB and its affiliates, upon request made from time
to time, for their reasonable fees and expenses incurred in connection with the
Credit Facilities and the preparation, execution and delivery of any related
documentation and the activities thereunder or contemplated thereby, including
without limitation due diligence expenses, syndication expenses, consultants'
fees and expenses and the reasonable fees and expenses of counsel to CSFB and
its affiliates, whether incurred before or after the execution of this
Commitment Letter. You will also pay all costs and expenses of CSFB (including,
without limitation, reasonable fees and disbursements of counsel) incurred in
connection with the enforcement of any of its rights and remedies hereunder.
You hereby agree to indemnify and hold harmless CSFB, its affiliates and
their respective officers, directors, employees, agents, advisors and
controlling persons (each, an "Indemnified Person") from and against any and all
losses, claims, damages, liabilities and expenses, joint or several, to which
any such Indemnified Person may become subject arising out of or in connection
with this Commitment Letter, the Credit Facilities, the use of the proceeds
thereof, the Transactions or any related transaction or any claim, litigation,
investigation or proceeding relating to any of the foregoing, regardless of
whether any Indemnified Person is a party thereto, and to reimburse each such
Indemnified Person for any reasonable legal or other expenses as they are
incurred in connection with investigating or defending any of the foregoing;
provided, however, that the foregoing indemnification will not, as to any
Indemnified Person, apply to losses, claims, damages, liabilities or expenses to
the extent that they are finally judicially determined by a court of competent
jurisdiction not subject to further appeal to have resulted from the gross
negligence or willful misconduct of such Indemnified Person. No Indemnified
Person shall be liable for any indirect or consequential damages in connection
with its obligations hereunder or its activities related to the Credit
Facilities.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter nor any other agreement between us related to
this Commitment Letter or the Transactions, including the Term Sheet, the
Conditions and the Fee Letter, nor any of their terms or substance shall be
disclosed, directly or indirectly, to any other person except (a) to your
officers, employees, agents and legal advisors who are directly involved in the
consideration of this matter (and then only on a confidential and need-to-know
basis) or (b) as may be required by law or compulsory legal process (in which
case you agree to inform us promptly thereof prior to any such disclosure);
provided, however, that, after your acceptance of this Commitment Letter and the
Fee Letter, you may disclose this Commitment Letter, the Term Sheet and the
Conditions and their terms and substance (but not the Fee Letter or its terms
and substance), on a confidential and need-to-know basis, to the Company and its
directors, officers, employees, agents and legal advisors.
The reimbursement, indemnification and confidentiality provisions contained
herein and in the Fee Letter shall remain in full force and effect regardless of
whether definitive financing documentation shall be executed and delivered and
notwithstanding the termination of this Commitment Letter or CSFB's commitment
hereunder.
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Reference is made to the commitment letter among the parties hereto dated
as of May 11, 2000 (the "Existing Commitment Letter") and the fee letter among
the parties hereto dated April 24, 2000. It is the intention of the parties
hereto that this Commitment Letter and the Fee Letter replace such letters in
their entirety. Upon your acceptance of this Commitment Letter in accordance
with the immediately succeeding paragraph, this Commitment Letter shall amend,
restate and supersede in its entirety the Existing Commitment Letter.
If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms hereof and of the Term Sheet, the Conditions and the Fee
Letter by returning to us executed counterparts hereof and of the Fee Letter,
prior to 12:00 Noon (New York time) on May 23, 2000. CSFB's commitment and
agreements contained herein will expire at such time in the event CSFB has not
received such executed counterparts in accordance with the immediately preceding
sentence. If the initial borrowing in respect of the Credit Facilities does not
occur on or before November 30, 2000, then this Commitment Letter and CSFB's
commitment and undertakings hereunder shall automatically terminate unless CSFB
shall, in its discretion, agree to an extension. Before such date, CSFB may
terminate this Commitment Letter if any event occurs or information has become
available that, in its judgment, results or is reasonably likely to result in
the failure to satisfy any condition set forth in Exhibit B. In any event, your
obligations with respect to indemnification and confidentiality shall remain in
full force and effect, regardless of any termination of the commitment of CSFB
made hereunder.
This Commitment Letter is intended to be solely for the benefit of the
parties hereto and the Indemnified Persons and is not intended to confer any
benefits upon, or create any rights in favor of, any person other than the
parties hereto and the Indemnified Persons. This letter is not intended to
create a fiduciary relationship among the parties hereto. This Commitment Letter
and CSFB's commitment hereunder shall not be assignable by you without the prior
written consent of CSFB (and any purported assignment without such consent shall
be null and void). CSFB's commitment hereunder may be assigned by CSFB to any of
its affiliates or any Lender. Any such assignment to an affiliate shall not
relieve CSFB from any of its obligations hereunder unless and until the portion
of the commitment so assigned shall have been funded by such affiliate. Any
assignment to a Lender shall be by novation and shall release CSFB from its
commitment hereunder pro tanto. This Commitment Letter, together with the Term
Sheet (and the annex thereto), the Conditions and the Fee Letter, contain the
entire agreement between the parties relating to the subject matter hereof and
supersede all oral statements and prior writings with respect thereto. This
Commitment Letter may not be amended or waived except by an instrument in
writing signed by you and CSFB. This Commitment Letter may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original and all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page of this
Commitment Letter by facsimile transmission shall be as effective as delivery of
a manually executed counterpart hereof. This Commitment Letter shall be governed
by, and construed in accordance with, the internal laws of the State of New
York, without reference to its choice of law rules.
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ITS RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY
PARTY RELATED TO OR ARISING OUT OF THIS COMMITMENT LETTER OR THE PERFORMANCE OF
SERVICES HEREUNDER.
You irrevocably and unconditionally submit to the exclusive jurisdiction of
any state or federal court sitting in the County of New York over any suit,
action or proceeding arising out of or relating to this Commitment Letter.
Service of any process, summons, notice or document in any such suit, action or
proceeding may be made by registered mail addressed to you or CSFB, as
appropriate, and you waive to the fullest extent permitted under applicable law
any claim that any such suit, action or proceeding has been brought in an
inconvenient forum. A final judgment in any such suit, action or proceeding
brought in any such court may be enforced in any other courts to whose
jurisdiction you are or may be subject, by suit upon such judgment.
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You acknowledge that CSFB may provide debt financing, equity capital or
other services (including financial advisory services) to parties whose
interests may conflict with yours. Consistent with CSFB's policy to hold in
confidence the affairs of its customers, CSFB will not furnish confidential
information obtained from you to any of its other customers. Furthermore, CSFB
has no obligation to use in connection with the Transactions contemplated
hereby, or to furnish to you, confidential information obtained by CSFB from any
other person.
CSFB is pleased to have been given the opportunity to assist you in
connection with this important financing.
Very truly yours,
CREDIT SUISSE FIRST BOSTON
By: /s/ RICHARD B. CAREY
------------------------------------
Name: Richard B. Carey
Title: Managing Director
By: /s/ PETER S. MILHAUPT
------------------------------------
Name: Peter S. Milhaupt
Title: Managing Director
Accepted and agreed to as of the date first written above,
INTERNATIONAL PAPER COMPANY
By: /s/ JULIUS A. WEISS
--------------------------------------------------------
Name: Julius A. Weiss
Title: Assistant Treasurer -- International
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CONFIDENTIAL EXHIBIT A
May 22, 2000
INTERNATIONAL PAPER COMPANY
SENIOR CREDIT FACILITIES
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS
(All capitalized terms not defined herein have the meanings given to them in the
Commitment Letter to which this Summary relates (as the same may be amended
from time to time in accordance with its terms))
Borrower: International Paper Company ("IP" or the
"Borrower").
Credit Facilities: Senior unsecured 364-day revolving credit facility
in an aggregate principal amount of up to $1.75
Billion (the "364-day Credit Facility").
Senior unsecured two year term loan facility in an
aggregate principal amount of up to $1.3 Billion
(the "Term Loan Facility").
Administrative Agent: CSFB will act as administrative agent (the
"Administrative Agent") for a syndicate of
financial institutions (the "Lenders"), and will
perform the duties customarily associated with such
role.
Sole Book Manager and Sole
Lead Arranger: CSFB will act as sole book manager and sole lead
arranger for the Credit Facilities (the "Arranger")
and will perform the duties customarily associated
with such roles.
Syndication Agent(s): One or more financial institutions mutually
acceptable to the Arranger and IP will be given the
title of syndication agent.
Documentation Agent(s): One or more financial institutions mutually
acceptable to the Arranger and IP will be given the
title of documentation agent.
364-day Credit Facility:
Purpose: (A) The 364-day Credit Facility will be used,
together with proceeds from the other Credit
Facility, the Equity Issuance, the Debt
Issuance (if any) and cash on hand with IP and,
on the date of the Merger, the Company, (i) on
and after the Closing Date, to finance the
Exchange Offer (if any) and (ii) on the date of
the Merger, to finance the Acquisition, the
Refinancing and to pay related fees and
expenses; and
(B) Thereafter, the proceeds of loans under the
364-day Credit Facility other than proceeds
used as described in the immediately preceding
paragraph, will be used for general corporate
purposes of the Borrower and its subsidiaries.
The 364-day Credit Facility may be used to provide
liquidity support for the CP Program, provided the
net proceeds of the commercial paper are used for
the purposes set forth in the preceding clauses (A)
and (B) or to refinance commercial paper).
Availability and
Maturity: The 364-day Credit Facility will be available on a
revolving basis during the period from the date
(the "Closing Date") of execution and delivery by
all parties of definitive documentation relating to
the 364-day Credit
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Facility and the Term Loan Facility (the "Credit
Agreement") to the date 364 days after the Closing
Date. The commitments under the 364-day Credit
Facility (the "Commitments") will be reduced from
time to time pursuant to provisions described under
"Voluntary Permanent Reductions in Commitments."
Interest Rate and Fees: Alternate base rate or reserve-adjusted eurodollar
rate loans, with the Applicable Margins determined
according to a ratings grid based on the Borrower's
senior unsecured debt rating, as set forth on Annex
I. Reserve-adjusted eurodollar rate loans will have
interest periods of 1, 2, 3 or 6 months. All
interest will be payable at the end of the
applicable interest period or quarterly, whichever
is earlier.
In addition, a competitive bid option will be
provided on terms and conditions usual for bid
options of this type for competitive bid loans
bearing interest at an absolute rate or a margin
over the reserve-adjusted eurodollar rate, with
maturities from 7 to 360 days.
Facility fees on the full amount of the Commitments
will be determined according to a ratings grid
based on the Borrower's senior unsecured debt
rating, as set forth on Annex I. Facility Fees will
accrue from the Closing Date and will be payable
quarterly in arrears and upon the termination of
any Commitment, in each case for the actual number
of days elapsed in a 360-day year.
Other fees will be payable in accordance with the
separate Fee Letter.
Interest will accrue on overdue amounts (i) in the
case of overdue principal of any loan, at the
applicable pre-default interest rate plus 2.0% per
annum, and (ii) in the case of any other overdue
amount, at the alternate base rate plus 2.0% per
annum.
Tax Gross Up: Payments of principal and interest under the
364-day Credit Facility will be made without any
withholding tax except as required by applicable
law. If any withholding tax is imposed, additional
amounts will be required to be paid by the Borrower
so that the Lenders are made whole.
Mandatory Prepayments: Loans outstanding under the 364-day Credit Facility
will be subject to mandatory prepayment to the
extent required to cause such outstanding loans
never to exceed the amount of the Commitments at
any time.
Voluntary Permanent
Reductions in
Commitments (and
Prepayments): Voluntary reductions in the unused portion of the
364-day Credit Facility will be permitted in whole
or in part, at the option of the Borrower, in
minimum principal amounts (and multiples thereof)
to be agreed upon. Voluntary prepayments of loans
under the 364-day Credit Facility (other than
competitive bid loans) will be permitted in whole
or in part, at the option of the Borrower, in
minimum principal amounts to be agreed upon,
without premium or penalty, subject to
reimbursement of the Lenders' redeployment costs in
the case of prepayment of reserve-adjusted
eurodollar borrowings other than on the last day of
the relevant interest period.
Term Loan Facility:
Purpose: (A) The Term Loan Facility will be used, together
with proceeds from the other Credit Facilities,
the Equity Issuance, the Debt Issuance
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(if any) and cash on hand with IP and, on the
date of the Merger, the Company, (i) on and
after the Closing Date, to finance the Exchange
Offer (if any) and (ii) on the date of the
Merger, to finance the Acquisition, the
Refinancing and to pay related fees and
expenses (including the Break-up Fee); and
(B) Thereafter, the proceeds of loans under the
Credit Facility other than proceeds used as
described in the immediately preceding
paragraph, will be used for general corporate
purposes of the Borrower and its subsidiaries.
Final Maturity Date: Term loans outstanding under the Term Loan Facility
will be due and payable on the second anniversary
of the Closing Date.
Interest Rate and Fees: Alternate base rate or reserve-adjusted eurodollar
rate loans, with the Applicable Margins determined
according to a ratings grid based on the Borrower's
senior unsecured debt rating, as set forth on Annex
I. Reserve-adjusted eurodollar rate loans will have
interest periods of 1, 2, 3 and 6 months. All
interest will be payable at the end of the
applicable interest period or quarterly, whichever
is earlier.
Interest will accrue on overdue amounts (i) in the
case of overdue principal of any loan, at the
applicable pre-default interest rate plus 2.0% per
annum, and (ii) in the case of any other overdue
amount, at the alternate base rate plus 2.0% per
annum.
Tax Gross Up: Payments of principal and interest under the Term
Loan Facility will be made without any withholding
tax except as required by applicable law. If any
withholding tax is imposed, additional amounts will
be required to be paid by the Borrower so that the
Lenders are made whole.
Voluntary Prepayments: Voluntary prepayments of term loans under the Term
Loan Facility will be permitted in whole or in
part, at the option of the Borrower, in minimum
principal amounts to be agreed upon, without
premium or penalty, subject to reimbursement of the
Lenders' redeployment costs in the case of
prepayment of reserve-adjusted eurodollar
borrowings other than on the last day of the
relevant interest period.
Representations and
Warranties: Usual for facilities and transactions of these
types and otherwise substantially in the form of
those contained in the Borrower's Amended and
Restated 364-Day Credit Agreement dated as of March
29, 2000 (the "Existing Credit Agreement"),
including, but not limited to: accuracy of
financial statements; absence of undisclosed
liabilities; no material adverse change (on the
Closing Date only); absence of material litigation;
no violation of agreements or instruments;
compliance with laws (including ERISA, margin
regulations and environmental laws); payment of
taxes; solvency; effectiveness of regulatory
approvals; environmental matters; and accuracy of
information.
Conditions Precedent to
Initial Borrowing: Usual for facilities and transactions of these
types, including but not limited to the conditions
set forth in Exhibit B hereto and otherwise
substantially in the form of those contained in the
Existing Credit Agreement.
Affirmative Covenants: Usual for facilities and transactions of these
types and otherwise substantially in the form of
those contained in the Existing Credit Agreement,
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including but not limited to: use of proceeds;
maintenance of corporate existence and rights;
compliance with laws; maintenance of properties in
good repair; maintenance of appropriate and
adequate insurance; inspection of books and
properties; payment of taxes and other liabilities;
notice of defaults, litigation and other adverse
action; delivery of financial statements, financial
projections and compliance certificates;
consummation of the Merger (on terms reasonably
satisfactory to the Arranger and the Lenders)
within 180 days after the Closing Date and the
requirement to obtain all requisite approvals and
consents for consummation of the Merger; and
further assurances.
Negative Covenants: Usual for facilities and transactions of these
types and otherwise substantially in the form of
those contained in the Existing Credit Agreement,
including, but not limited to: limitations on
mergers, acquisitions, liquidations, dissolutions
and asset sales; limitations on liens and sale-
leaseback transactions; and limitations on
transactions with affiliates.
Selected Financial
Covenants: Usual for facilities and transactions of these
types, including but not limited to: (a) a maximum
ratio of total debt to total capital (including
shareholders equity) covenant and (b) a minimum
consolidated net worth covenant.
Events of Default: Usual for facilities and transactions of these
types and otherwise substantially in the form of
those contained in the Existing Credit Agreement,
including but not limited to: nonpayment of
principal when due; nonpayment of interest, fees or
other amounts after a grace period of three
business days; violation of covenants (subject to,
in the case of certain affirmative covenants, a
grace period of thirty days); failure of any
representation or warranty to be true in all
material respects when made or deemed made; cross
default (nonpayment of principal or interest when
due in respect of any of its indebtedness in an
aggregate amount of $200 million or more); failure
to consummate the Merger within 180 days after the
Closing Date; Change in Control (to be defined);
bankruptcy events; material judgments; and ERISA.
Voting: Amendments and waivers of the Credit Agreement and
the other definitive credit documentation will
require the approval of Lenders holding more than
50% of the aggregate amount of the loans and
commitments under the Credit Facilities, except
that the consent of each Lender adversely affected
thereby shall be required with respect to (a)
increases in such Lender's commitments, (b)
reductions of principal, interest or fees, and (c)
extensions of the termination date of the
Commitments or the final maturity of the loans (as
applicable) and except that the consent of all
Lenders shall be required with respect to any
assignment by the Borrower or modifications of the
voting percentages of the Lenders.
Cost and Yield Protection: Usual for facilities and transactions of these
types and substantially in the form of those
contained in the Existing Credit Agreement,
including standard protective provisions for such
matters as increased costs, funding losses, capital
adequacy, illegality and taxes.
Assignment and
Participations: The Lenders will be permitted to assign loans and
commitments to their affiliates, other Lenders or
their affiliates or to secure extensions of credit
to such lenders without restriction, or to other
financial institutions with the consent of the
Administrative Agent and the Borrower, in each case
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not to be unreasonably withheld. The Administrative
Agent will receive a customary processing and
recordation fee, payable by the assignor and/or the
assignee, with each assignment. Assignments will be
by novation.
The Lenders will be permitted to participate loans
and commitments to other financial institutions
without restriction. Voting rights of participants
shall be limited to matters in respect of (a)
reductions of principal, interest or fees, and (b)
extensions of the termination date of the
Commitments or the final maturity of the loans.
Expenses and
Indemnification: All reasonable out-of-pocket expenses (including,
without limitation, expenses incurred in connection
with due diligence) of the Arranger and the
Administrative Agent associated with the
syndication of the Credit Facilities and with the
preparation, execution and delivery,
administration, waiver or modification and
enforcement of the Credit Agreement and the other
documentation contemplated hereby and thereby
(including the reasonable fees, disbursements and
other charges of counsel) are to be paid by the
Borrower. In addition, all reasonable out-of-pocket
expenses of the Lenders for enforcement costs and
documentary taxes associated with the Credit
Facilities are to be paid by the Borrower.
The Borrower will indemnify the Arranger, the
Administrative Agent, the Lenders and their
respective officers, directors, employees,
affiliates, agents and controlling persons and hold
them harmless from and against all liabilities,
costs and expenses (including reasonable fees,
disbursements and other charges of counsel) arising
out of or relating to any claim or any litigation
or other proceedings (regardless of whether any
such indemnified person is a party thereto) that
relate to the Transactions, the Credit Facilities
or any transactions connected therewith; provided,
however, that no indemnified person will be
indemnified for any cost, expense or liability to
the extent determined by a court of competent
jurisdiction in a final and nonappealable judgment
to have resulted from its gross negligence or
willful misconduct.
Governing Law and Forum: New York.
Waiver of Jury Trial: The parties to the definitive credit documentation
will waive trial by jury in any action, proceeding,
claim or counterclaim brought on behalf of any
party related to or arising out of the Credit
Facilities.
Counsel to Administrative
Agent and Arranger: Dewey Ballantine LLP.
5
<PAGE> 11
ANNEX I
TO EXHIBIT A
PRICING GRID
The "Applicable Margin" and, if applicable, the "Facility Fee Rate" under
the Credit Facilities for any day are the respective percentages set forth below
in the applicable row under the column corresponding to the Status that exists
on such day,
With respect to the 364-day Credit Facility:
<TABLE>
<CAPTION>
STATUS LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V LEVEL VI
------ ------- -------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Applicable Margin -- Eurodollar Rate
Loans (basis points)............... 31.5 42 52.5 62.5 85 125
Applicable Margin -- Base Rate Loans
(basis points)..................... 0 0 0 0 0 25
Facility Fee Rate (basis points)..... 6 8 10 12.5 15 25
</TABLE>
With respect to the Term Loan Facility:
<TABLE>
<CAPTION>
STATUS LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V LEVEL VI
------ ------- -------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Applicable Margin -- Eurodollar Rate
Loans (basis points)............... 50 62.5 75 100 125 175
Applicable Margin -- Base Rate Loans
(basis points)..................... 0 0 0 0 25 75
</TABLE>
For purposes of this Schedule, the following terms have the following
meanings (as modified by the provisos below):
"Level I Status" exists at any date if, at such date, the Borrower's senior
unsecured long-term debt is rated either A or higher by S&P or A2 or higher by
Moody's.
"Level II Status" exists at any date if, at such date, the Borrower's
senior unsecured long-term debt is rated either A- or higher by S&P or A3 or
higher by Moody's.
"Level III Status" exists at any date if, at such date, the Borrower's
senior unsecured long-term debt is rated either BBB+ or higher by S&P or Baa1 or
higher by Moody's.
"Level IV Status" exists at any date if, at such date, the Borrower's
senior unsecured long-term debt is rated either BBB or higher by S&P or Baa2 or
higher by Moody's.
"Level V Status" exists at any date if, at such date, the Borrower's senior
unsecured long-term debt is rated either BBB- or higher by S&P or Baa3 or higher
by Moody's.
"Level VI Status" exists at any date if, at such date, no other Status
exists.
"Status" refers to the determination which of Level I Status, Level II
Status, Level III Status, Level IV Status, Level V Status or Level VI Status
exists at any date.
The credit ratings to be utilized for purposes of this Schedule are those
assigned to the senior unsecured long-term debt securities of the Borrower
without third-party credit enhancement and any rating assigned to any other debt
security of the Borrower shall be disregarded. The rating in effect at any date
is that in effect at the close of business on such date.
Provided, if the Borrower is split-rated and the ratings differential is
one level, the higher rating will apply. If the Borrower is split-rated and the
differential is two levels or more, the rating at the midpoint will apply. If
there is no midpoint rating, the higher of the two intermediate ratings will
apply.
Provided, further, Level I Status will apply in the event that the Borrower
is rated at or above either of the Moody's or Standard & Poor's ratings set out
in Level I Status above. Level VI Status will apply in the event
<PAGE> 12
that the Borrower is rated below both the Moody's and Standard & Poor's ratings
set out in Level V Status above.
With respect to the 364-day Credit Facility only, a Utilization Fee will
become payable while either (i) any term loans remain outstanding under the Term
Loan Facility or (ii) 25% or more of the Commitments have been borrowed under
the 364-day Credit Facility. The Utilization Fee will be calculated on the
outstanding principal amount under the 364-day Credit Facility (including
competitive bid loans) and determined in accordance with the pricing grid as
follows (in basis points): Level I Status -- 12.5, Level II Status -- 12.5,
Level III Status -- 12.5, Level IV Status -- 25, Level V Status -- 25, Level VI
Status -- 25.
2
<PAGE> 13
EXHIBIT B
CONDITIONS
The commitment of Credit Suisse First Boston ("CSFB" or the "Arranger")
pursuant to the Senior Credit Facilities Commitment Letter dated May 22, 2000
(as the same may be amended from time to time in accordance with its terms, the
"Commitment Letter"), between CSFB and International Paper Company ("IP" or the
"Borrower"), shall be subject to the following conditions (capitalized terms
used but not defined herein shall, unless otherwise specified, have the meanings
assigned to such terms in the Commitment Letter):
(i) after the date of the Commitment Letter, no information or other
matter relevant to the Transactions becomes known to the Arranger that it
in good faith believes is inconsistent in a material and adverse manner
with any information or other matter relevant to the Transactions disclosed
to the Arranger prior to the date of the Commitment Letter;
(ii) there shall not have occurred, exist or become known to the
Arranger any event, condition or change in or affecting IP or Acquico that,
singly or in the aggregate, could reasonably be expected to have a Material
Adverse Effect;
(iii) the preparation, execution and delivery of definitive
documentation satisfactory to the Arranger in connection with the Credit
Facilities, and compliance with, and satisfaction of, all terms and
conditions to be performed at or prior to the first loan under the Credit
Facilities;
(iv) the sources (including the amounts of the Debt Issuance and cash
on hand) and uses of funds necessary to consummate the Transactions are as
set forth in the Commitment Letter and otherwise satisfactory to the
Arranger, in its reasonable judgment;
(v) after giving effect to the Transactions (and the sources and uses
necessary to consummate the Transactions), IP and its subsidiaries shall
have on a pro forma basis reasonably sufficient liquidity to conduct their
businesses in the normal course;
(vi) the terms, conditions and structure of the Acquisition (including
the Exchange Offer and the Merger), the Equity Issuance and the Debt
Issuance, including any documentation therefor, shall be in form and
substance reasonably satisfactory to the Arranger and the Lenders. The
Transactions shall be in compliance, in all material respects, with all
laws and regulations, including any state anti-takeover law regulating the
Acquisition, or the Arranger shall have determined such to be inapplicable
to the Acquisition. The Arranger shall have received copies, certified by
IP, of all material filings made with any governmental authority in
connection with the Transactions;
(vii) with respect to the Exchange Offer,
(a) not less than 66 2/3% of the Shares outstanding on a fully
diluted basis (with all options or other securities convertible into or
exercisable or exchangeable for Shares being deemed to have been so
converted, exercised or exchanged)) shall have been validly tendered
pursuant to the Exchange Offer and not withdrawn prior to the expiration
of the Exchange Offer and accepted for payment (or exchange) in
accordance with the terms of the Exchange Offer,
(b) the Arranger shall be satisfied, in its sole discretion, that
the provisions of Section 912 of the New York Business Corporation Law
have been complied with or are invalid or otherwise inapplicable to the
Exchange Offer, and
(c) the Arranger shall be satisfied, in its sole discretion, that
no provision of law or regulation, or of the certificate of
incorporation or by-laws of the Company or of any shareholder agreement
or shareholder rights program of the Company or of any other agreement,
shall prevent or impede the consummation of the Exchange Offer or the
Merger (or the ability of Acquico to vote the Shares in favor of the
Merger) in a manner reasonably satisfactory to the Arranger and the
Lenders;
<PAGE> 14
(viii) as of the Closing Date, the Transactions shall have been
consummated in accordance with documents in form and substance reasonably
satisfactory to the Arranger, which documents shall contain no material
terms and conditions which have not been satisfied and no material term
thereof shall have been amended, supplemented, otherwise modified in any
material respect or waived except with the consent of the Lenders and the
Administrative Agent;
(ix) the Arranger shall be reasonably satisfied as to compliance, in
all material respects, by IP and Acquico, any applicable acquisition entity
and the Company with all applicable regulations;
(x) all material approvals and consents of any governmental
authorities and third parties required in connection with the Transactions
and the other transactions contemplated by the Commitment Letter shall have
been obtained (without the imposition of any materially burdensome or
adverse conditions), and all such approvals and consents shall be in full
force and effect. All applicable waiting periods shall have expired without
any action being taken by any competent authority which restrains, prevents
or imposes materially adverse conditions upon the Transactions;
(xi) customary closing conditions for transactions similar to the
Credit Facilities, as applicable, including, without limitation, (a) the
accuracy in all material respects of all representations and warranties,
(b) the absence of any defaults, prepayment events or creation of liens
under debt instruments or other agreements (other than under any debt
instrument or agreement which is being repaid and terminated on the Closing
Date) as a result of the Transactions and the other transactions
contemplated by the Commitment Letter, (c) the absence of any change in the
capital, corporate and organizational structure of IP, Acquico or the
Company which would be materially adverse to the Lenders in their
reasonable determination, (d) compliance with applicable laws and
regulations (including employee health and safety, margin regulations, and
environmental laws), (e) evidence of reasonably satisfactory insurance, (f)
evidence of authority, (g) delivery of historical and pro forma financial
statements, and (h) the receipt by the Arranger of satisfactory legal
opinions (including, without limitation, as to no violation of any margin
regulations);
(xii) there shall not exist any threatened or pending action,
proceeding or counterclaim by or before any court or governmental,
administrative or regulatory agency or authority, domestic or foreign, (a)
challenging the consummation of the Transactions or which would restrain,
prevent or impose burdensome conditions on the Transactions, individually
or in the aggregate, or any other transaction contemplated hereunder, which
could reasonably be expected to have a Material Adverse Effect, (b) seeking
to prohibit the ownership or operation by IP or any of its subsidiaries of
all or a material portion of any of their business or assets which could
reasonably be expected to have a Material Adverse Effect, or (c) seeking to
obtain, or having resulted in the entry of, any judgment, order or
injunction that (i) would restrain, prohibit or impose adverse conditions
on the ability of the Lenders to make the loans under the Credit
Facilities, (ii) could reasonably be expected to affect the legality,
validity or enforceability of any Credit Document or the ability of any
party thereto to perform its obligations thereunder, (iii) would be
materially inconsistent with the stated assumptions underlying the
projections provided to the Arranger and the Lenders and could reasonably
be expected to have a Material Adverse Effect, or (iv) is seeking any
material damages as a result thereof;
(xiii) there shall not have occurred after the date of the Commitment
Letter (a) any general suspension (other than temporary "circuit breakers")
of trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market in any Applicable
Jurisdiction, (b) the declaration of a banking moratorium or any suspension
of payments in respect of banks in any Applicable Jurisdiction, (c) the
commencement of a war, armed hostilities or other international or national
calamity or emergency, directly or indirectly involving any Applicable
Jurisdiction, which makes it, in the Arranger's reasonable discretion,
impracticable or inadvisable to provide the Credit Facilities, (d) any
limitations (whether or not mandatory) imposed by any governmental
authority on the nature or extension of credit or further extension of
credit by banks or other lending institutions, which makes it, in the
Arranger's reasonable discretion, impracticable or inadvisable to provide
the Credit Facilities, or (e) in the case of the foregoing clauses (c) and
(d), a material escalation or worsening thereof, which
2
<PAGE> 15
makes it, in the Arranger's reasonable discretion, impracticable or
inadvisable to provide the Credit Facilities; and
(xiv) payment of fees and expenses, including reasonable fees and
expenses of the Arranger's counsel.
"Material Adverse Effect" shall mean a material adverse change, or any
condition or event that, in the reasonable and good faith judgment of the
Arranger, could reasonably be expected to result in a material adverse change,
in (i) the business, assets, results of operations or financial condition of IP,
the Company and their respective subsidiaries taken as a whole, or (ii) the
validity or enforceability of any of the documents entered into in connection
with the Transactions or the other transactions contemplated by the Commitment
Letter or the rights, remedies and benefits available to the parties thereunder
or the ability of IP, Acquico or the Company to consummate the Transactions.
"Applicable Jurisdiction" means the United States and any State thereof.
3
