<PAGE>
EXHIBIT 99.(b)(1)
Execution Copy
CREDIT SUISSE FIRST BOSTON THE CHASE MANHATTAN BANK
Eleven Madison Avenue CHASE SECURITIES INC.
New York, NY 10010 270 Park Avenue
New York, NY 10017
December 20, 2000
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, CA. 90067-2199
Attention of Albert F. Myers
Project Intrepid
----------------
$6,000,000,000 Senior Credit Facilities
--------------------------------------
Commitment Letter
-----------------
Ladies and Gentlemen:
You have advised Credit Suisse First Boston ("CSFB"), The Chase
Manhattan Bank ("Chase" and, together with CSFB, the "Initial Lenders") and
Chase Securities Inc. ("CSI" and, together with CSFB, the "Agents") that
Northrop Grumman Corporation ("you" or the "Borrower") intends to acquire (the
"Acquisition") a company that you have identified to us as Litton Industries,
Inc. (the "Target") and to consummate the other Transactions. Capitalized terms
used but not defined herein have the meanings assigned in the Summary of
Principal Terms and Conditions attached hereto as Exhibit A (the "Term Sheet").
You have further advised us that, in connection therewith, the Borrower
will obtain the senior credit facilities (the "Facilities") described in the
Term Sheet, in an aggregate principal amount of $6,000,000,000, consisting of a
364-Day Revolving Credit Facility in a principal amount of $3,000,000,000 and a
Five-Year Revolving Credit Facility in a principal amount of $3,000,000,000.
In connection with the foregoing, you have requested that (a) we agree
to structure, arrange and syndicate the Facilities, (b) CSFB and Chase agree to
act as co-administrative agents, (c) CSFB and CSI agree to act as joint book
managers and joint lead arrangers for the Facilities and (d) each Initial Lender
severally commits to provide one-half of the principal amount of the Facilities.
Each Initial Lender is pleased to advise you of its several commitment
to provide up to one-half of the principal amount of the Facilities, upon the
terms and subject to the conditions set forth or referred to in this commitment
letter (the "Commitment Letter") and in the Term Sheet.
It is agreed that CSFB and Chase will act as co-administrative agents
for the Facilities, that CSFB and CSI will act as joint book managers and joint
lead arrangers for the Facilities and that we 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 titles will be awarded and no
compensation (other than that expressly contemplated by the
<PAGE>
Term Sheet and the Fee Letter referred to below) will be paid in connection with
the Facilities unless you and we shall so agree.
We intend to syndicate the Facilities to a group of financial
institutions (together with the Initial Lenders, the "Lenders") identified by us
in consultation with you. We intend to commence syndication efforts promptly
upon the execution of this Commitment Letter, and you agree to actively assist
us in completing a syndication satisfactory to us. Such assistance shall include
(a) your using commercially reasonable efforts to ensure that the syndication
efforts benefit materially from your and the Target's existing lending
relationships, (b) direct contact between senior management, representatives and
advisors of the Borrower, the Target and the proposed Lenders, (c) assistance by
the Borrower and the Target in the preparation of a Confidential Information
Memorandum for the Facilities and other marketing materials to be used in
connection with the syndication and (d) the hosting, with us, of one or more
meetings of prospective Lenders.
We will manage, in consultation with you, all aspects of the syndication
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 allocation of the commitments among the
Lenders and the amount and distribution of fees among the Lenders. To assist us
in our syndication efforts, you agree promptly to prepare and provide, and to
use commercially reasonable efforts to cause the Target to prepare and provide,
to us all information with respect to the Borrower, the Target and their
respective subsidiaries, the Transactions and the other transactions
contemplated hereby, including all financial information and projections (the
"Projections"), as we may reasonably request. You hereby represent and covenant
that (a) all information other than the Projections (the "Information") that has
been or will be made available to us by you or any of your representatives 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 us by you or any of your representatives have been or will be
prepared in good faith based upon assumptions that are reasonable at the time
made and at the time the related Projections are made available to us. You agree
that if at any time prior to the closing of the Facilities any of the
representations in the preceding sentence would be incorrect if the Information
and Projections were being furnished, and such representations were being made,
at such time, then you will promptly supplement the Information and the
Projections so that such representations will be correct under those
circumstances. In arranging and syndicating the Facilities, we will be entitled
to use and rely primarily on the Information and the Projections without
responsibility for independent verification thereof.
As consideration for the Initial Lender's several commitments hereunder
and our agreements to perform the services described herein, you agree to pay to
the Initial Lenders the nonrefundable fees set forth in the Term Sheet and in
the Fee Letter dated the date hereof and delivered herewith with respect to the
Facilities (the "Fee Letter").
The Initial Lenders' several commitments hereunder and our agreements to
perform the services described herein are further subject to (a) our not having
discovered or otherwise become aware of any information not previously disclosed
to us that we believe to be inconsistent in a material and adverse manner with
our understanding, based on the information provided to us prior to the date
hereof, of the business, assets,
<PAGE>
3
operations, condition (financial or otherwise), or prospects of the Borrower,
the Target and their respective subsidiaries, (b) there not having occurred any
material adverse change or material adverse condition in the business, assets,
operations, condition (financial or otherwise) or prospects of the Borrower and
its subsidiaries, taken as a whole, or the Target and its subsidiaries, taken as
a whole, in each case since December 31, 1999, (c) there not having occurred
after the date hereof a material disruption of or material adverse change in
financial, banking or capital market conditions that has adversely affected the
syndication of the Facilities, (d) our satisfaction that, prior to and during
the syndication of the Facilities, there shall be no competing issues of debt
securities or commercial bank or other credit facilities of the Borrower, the
Target or their respective subsidiaries being offered, placed or arranged, (e)
the negotiation, execution and delivery of definitive documentation with respect
to the Facilities satisfactory to us and our counsel, (f) our having been
afforded a reasonable period following the date hereof to syndicate the
Facilities and (g) the other conditions set forth in the Term Sheet.
You agree (a) to indemnify and hold harmless each of CSFB, Chase, CSI and
their respective affiliates and their respective officers, directors, employees,
agents and controlling persons from and against any and all losses, claims,
damages, liabilities and expenses, joint or several, to which any such persons
may become subject arising out of or in connection with this Commitment Letter,
the Fee Letter, the Term Sheet, the Transactions, the Facilities or any related
transaction or any claim, litigation, investigation or proceeding relating to
any of the foregoing, regardless of whether any of such indemnified persons is a
party thereto, and to reimburse each of such indemnified persons upon demand for
any reasonable legal or other expenses incurred in connection with investigating
or defending any of the foregoing, provided that the foregoing indemnity will
--------
not, as to any indemnified person, apply to losses, claims, damages, liabilities
or related expenses to the extent they are found in a final judgment of a court
to have resulted from the willful misconduct or gross negligence of such
indemnified person, and (b) to reimburse us from time to time, upon presentation
of a summary statement, for all reasonable out-of-pocket expenses (including but
not limited to expenses of our due diligence investigation, syndication
expenses, travel expenses and reasonable fees, disbursements and other charges
of counsel), in each case incurred in connection with the Facilities and the
preparation of this Commitment Letter, the Term Sheet, the Fee Letter and the
definitive documentation for the Facilities. Notwithstanding any other provision
of this Commitment Letter, no indemnified person shall be liable for any
indirect or consequential damages in connection with its activities related to
the Facilities.
You acknowledge that each of us and our affiliates may be providing debt
financing, equity capital or other services (including financial advisory
services) to other companies in respect of which you may have conflicting
interests regarding the transactions described herein and otherwise. None of us
will use confidential information obtained from you by virtue of the
transactions contemplated by this Commitment Letter or its other relationships
with you in connection with the performance by us of services for other
companies, and none of us will furnish any such information to other companies.
You also acknowledge that none of us has any obligation to use in connection
with the transactions contemplated by this Commitment Letter, or to furnish to
you, confidential information obtained by us from other companies.
This Commitment Letter and our commitments hereunder shall not be
assignable by you without the prior written consent of the Initial Lenders and
the Agents (and any attempted assignment without such consent shall be null and
void), are intended to be
<PAGE>
4
solely for the benefit of the parties hereto (and indemnified persons), are not
intended to confer any benefits upon, or create any rights in favor of, any
person other than the parties hereto (and indemnified persons) and are not
intended to create a fiduciary relationship among the parties hereto. Each
Initial Lender may assign its commitment hereunder to any of its affiliates or
any Lender. Any such assignment to an affiliate will not relieve the assignor
from any of its obligations hereunder unless and until such affiliate shall have
funded the portion of the commitment so assigned. Any assignment to a Lender
shall be by novation and shall release the assignor from the portion of its
commitment hereunder so assigned. This Commitment Letter may not be amended or
any provision hereof waived or modified except by an instrument in writing
signed by the Initial Lenders, the Agents and you. 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 counterpart of a 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 between us with respect to the 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.
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE 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.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Term Sheet or the Fee Letter nor any of
their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) to your officers, employees, attorneys, accountants and
advisors on a confidential and need-to-know basis or (b) as required by
applicable law or compulsory legal process (in which case you agree to inform us
promptly thereof); provided that following our acceptance hereof and of the Fee
--------
Letter you may disclose this Commitment Letter, the Term Sheet and the contents
hereof and thereof (but not the Fee Letter or the contents thereof) to the
Target and its attorneys, accountants and advisors, in each case in connection
with the Acquisition and on a confidential and need-to-know basis.
The compensation, 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 the Initial Lenders' commitments hereunder.
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 5:00 p.m., New York City time, on December 29, 2000. The Initial Lenders'
commitments hereunder and agreements contained herein will expire at such time
in the event that we have not received such executed counterparts in accordance
with the immediately preceding sentence. In the event that the Closing Date does
not occur on or before March 31, 2001, then this Commitment Letter and the
Initial Lenders' commitments and undertakings hereunder shall automatically
terminate unless we shall, in our discretion, agree to an extension.
<PAGE>
5
Before such date, we may terminate this Commitment Letter if any event occurs or
information becomes available that, in our judgment, results or is likely to
result in the failure to satisfy any condition precedent set forth herein or in
the Term Sheet.
<PAGE>
We are pleased to have been given the opportunity to assist you in
connection with the financing for the Acquisition.
Very truly yours,
CREDIT SUISSE FIRST BOSTON,
by /s/ Richard B. Carey
_________________________________
Name: Richard B. Carey
Title: Managing Director
by /s/ Eugene F. Martin
---------------------------------
Name: Eugene F. Martin
Title: Senior Vice President
THE CHASE MANHATTAN BANK,
by /s/ Thomas H. Kozlink
_________________________________
Name: Thomas H. Kozlink
Title: Vice President
CHASE SECURITIES INC.,
by /s/ Patricia A. Brill
_________________________________
Name: Patricia A. Brill
Title: Managing Director
Accepted and agreed to as of
the date first above written:
NORTHROP GRUMMAN CORPORATION,
by /s/ Albert F. Myers
-------------------------------
Name: Albert F. Myers
Title: Corporate Vice President
and Treasurer
<PAGE>
CONFIDENTIAL
December 20, 2000 EXHIBIT A
Project Intrepid
----------------
$6,000,000,000 Senior Credit Facilities
---------------------------------------
Summary of Principal Terms and Conditions
-----------------------------------------
Borrower: Northrop Grumman Corporation, a Delaware
-------- corporation (the "Borrower").
Acquisition: The Borrower intends to acquire (the
----------- "Acquisition") a Delaware corporation
identified as Litton Industries, Inc.
(the "Target") pursuant to an agreement
and plan of merger (the "Merger Agreement")
to be entered into by the Borrower, a wholly
owned special purpose subsidiary of the
Borrower ("Merger Sub") and the Target.
The Merger Agreement will provide either for
(a) a tender offer to be made by Merger Sub
for all the issued and outstanding capital
stock of the Target at a purchase price of
$80.00 per share, net to the seller in cash
(the "Tender Offer"), followed by a merger
(the "Merger") of Merger Sub and the Target
in which, subject to stockholders' dissent
rights, each share not tendered in the Tender
Offer would be converted into the right to
receive $80.00 in cash, or (b) a one-step
statutory Merger of Merger Sub and the Target
in which, subject to stockholders' dissent
rights, each issued outstanding share of
capital stock of the Target would be
converted into the right to receive $80.00
per share in cash. In either event, the
aggregate cash consideration payable to the
stockholders of the Target in respect of the
Acquisition would be approximately $3.972
billion. In connection with the Acquisition,
(a) the Borrower and the Target will repay
all amounts outstanding under, and terminate,
their existing bank credit agreements (the
"Existing Credit Agreements") and certain
other existing debt (together with the
Existing Credit Agreements, the "Refinanced
Debt"), (b) the Borrower will obtain the
senior credit facilities described below
under the caption "Facilities" and (c) fees
and expenses incurred in connection with the
foregoing will be paid. The transactions
described in this paragraph, together with
the Acquisition, are collectively referred to
herein as the "Transactions".
Sources and Uses: The approximate sources and uses of the
---------------- funds necessary to consummate the
Transactions are set forth in Annex II
hereto.
Joint Book Managers and Joint Chase Securities, Inc. ("CSI") and Credit
----------------------------- Suisse First Boston ("CSFB") will act as
Lead Arrangers: joint book managers and joint lead arrangers
-------------- for the Facilities
<PAGE>
2
(the "Arrangers"), and will perform the duties
customarily associated with such roles.
Co-Administrative Agents: The Chase Manhattan Bank ("Chase") and CSFB
------------------------ will act as co-administrative agents (the
"Agents") for a syndicate of financial
institutions (together will Chase and CSFB,
the "Lenders"), and will perform the duties
customarily associated with such role.
Payment Agent: Chase (the "Payment Agent").
-------------
Syndication Agent(s): One or more financial institutions mutually
-------------------- acceptable to the Arrangers and the Borrower
will be given the title of syndication agent.
Documentation Agent(s): One or more financial institutions mutually
---------------------- acceptable to the Arrangers and the Borrower
will be given the title of documentation
agent.
Senior Credit Facilities: Two unsecured Revolving Credit Facilities
------------------------ (each a "Facility" and together the
"Facilities") in an aggregate principal amount
of up to $6,000,000,000:
(A) A 364-Day Revolving Credit Facility in an
aggregate principal amount of up to
$3,000,000,000 (the "364-Day Facility").
(B) A Five-Year Revolving Credit Facility in
an aggregate principal amount of up to
$3,000,000,000 (the "Five-Year
Facility").
Availability: Amounts borrowed and repaid may be reborrowed
------------ subject to availability under the applicable
Facility.
Purpose: The proceeds of the initial borrowings under
------- the Facilities will be used solely (a) to pay
the cash consideration payable in the
Acquisition, (b) to refinance the Existing
Credit Agreements and Refinanced Debt and (c)
to pay related fees and expenses. The proceeds
of subsequent borrowings under the Facilities
will be used for general corporate purposes.
Final Maturity: The Lenders' commitments under the 364-Day
-------------- Facility will expire and the borrowings
thereunder will mature on the date that is 364
days after the date of execution of definitive
credit documentation for the Facilities (the
"Closing Date"). Commitments under the Five-
Year Facility will
<PAGE>
3
expire and the borrowings thereunder will
mature on the fifth anniversary of the
Closing Date.
Mandatory Reductions in Commitments under the 364-Day Facility
----------------------- will be reduced, and loans thereunder
Commitments: prepaid, from time to time by an amount
----------- equal to (a) 100% of the net cash proceeds
of certain non-ordinary-course asset sales
or other dispositions of assets by the
Borrower and its subsidiaries and (b) 100%
of the net cash proceeds of certain
issuances of debt or equity securities of
the Borrower and its subsidiaries.
Voluntary Reductions in Voluntary reductions of the unutilized
----------------------- portion of the commitments and prepayments
Commitments: of Revolving Credit borrowings will be
----------- permitted at any time, in minimum
principal amounts to be agreed upon,
without premium or penalty, subject to
reimbursement of the Lenders' redeployment
costs in the case of a prepayment of
Adjusted LIBOR borrowings other than on
the last day of the relevant interest
period.
Representations and Warranties: Usual for facilities and transactions of
------------------------------ this type and otherwise substantially in
the form of those contained in the
Borrower's Second Amended and Restated
Credit Agreement dated as of March 1, 1996
(the "Restated Credit Agreement"),
including corporate existence; accuracy of
financial information, absence of material
adverse change; absence of material
litigation; absence of breach or defaults;
corporate action; necessary approvals; use
of proceeds; ERISA matters; payment of
taxes; ownership of properties;
environmental matters; true and complete
disclosure; material subsidiaries and
intercompany debt.
Conditions Precedent to Initial Usual for facilities and transactions of
------------------------------- this type and otherwise substantially in
Borrowing: the form of those contained in the
--------- Restated Credit Agreement, including
delivery of satisfactory legal options,
audited financial statements and other
financial information; accuracy of
representations and warranties; absence of
defaults, prepayment events or creation
of liens under debt instruments or other
agreements; evidence of authority, and
payment of fees and expenses.
Either (a) the Merger shall be consummated
substantially simultaneously with the
closing under the Facilities or (b) the
Tender Offer shall be consummated
substantially simultaneously with the
<PAGE>
4
closing under the Facilities and there shall
have been validly tendered thereunder and
not withdrawn a majority of the capital
stock of the Target, such that Merger Sub
would be able to consummate the Merger
without the vote of any other stockholder of
the Target, in each case in accordance with
applicable law and on the terms described
herein; the Merger Agreement and all other
related documentation shall be satisfactory
to the Lenders; and none of such
documentation shall have been amended,
waived or modified in any material respect
without the consent of the Lenders.
After giving effect to the Transactions and
the other transactions contemplated hereby,
the Borrower and its subsidiaries shall have
outstanding no indebtedness or preferred
stock other than (a) the loans and other
extensions of credit under the Facilities
and (b) other indebtedness to be agreed
upon.
The Lenders shall have received (a) audited
consolidated balance sheets and related
statements of income, stockholders' equity
and cash flows of the Borrower and the
Target for the 1997, 1998 and 1999 fiscal
years and (b) unaudited consolidated balance
sheets and related statements of income,
stockholders' equity and cash flows of the
Borrower and the Target for each subsequent
fiscal quarter ended 30 days before the
Closing Date, which financial statements
shall not be materially inconsistent with
the financial statements or forecasts
previously provided to the Lenders.
The amount and nature of any environmental
or health and safety liabilities, including
any liabilities related to the presence or
release of, or exposure to, hazardous
substances, to which the Borrower and its
subsidiaries may be subject after giving
effect to the Transactions shall be
substantially consistent with the Agent's
understanding thereof based on the
disclosure contained in the Company's Annual
Report on Form 10-K for the year ended
December 31, 1999.
All requisite governmental authorities and
third parties shall have approved or
consented to the Transactions and the other
transactions contemplated hereby to the
extent required, all applicable appeal
periods shall have expired and there shall
be no litigation, governmental,
<PAGE>
5
administrative or judicial action, actual
or threatened, that could reasonably be
expected to restrain, prevent or impose
burdensome conditions on the other
Transactions or the other transactions
contemplated hereby.
Conditions Precedent to all Delivery of notice, accuracy of
--------------------------- representations and warranties and
Borrowings: absence of defaults.
----------
Affirmative Covenants: Usual for facilities and transactions of
--------------------- this type and otherwise substantially in
the form of those contained in the
Restated Credit Agreement, including
delivery of financial statements and
other financial information; maintenance
of corporate existence and rights;
performance of obligations, including
payment of taxes and ERISA; compliance
with law; delivery of notices of default
and litigation; maintenance of
satisfactory insurance and inspection of
books and properties.
Negative Covenants: Usual for facilities and transactions of
------------------ this type and otherwise substantially in
the form of those contained in the
Restated Credit Agreement, including
limitations on restricted payments;
limitations on dispositions of property;
limitations on guarantees; limitations on
mergers, acquisitions and asset sales;
limitations on subsidiary equity
issuances; limitations on liens;
limitations on loans and investments;
limitations on debt and hedging
arrangements; limitations on acquisitions
of Margin Stock and limitations on
changes in business conducted by the
Borrower and its subsidiaries.
Selected Financial Covenants: Usual for facilities and transactions of
---------------------------- this type and otherwise substantially in
the form of those contained in the
Restated Credit Agreement (with financial
definitions and levels to be agreed
upon), including (a) maximum ratios of
Funded Debt to Total Capitalization, (b)
maximum ratios of Funded Debt to Cash
Flow and (c) minimum ratios of Cash Flow
minus Capital Expenditures to Fixed
Charges.
Events of Default: Usual for facilities and transactions of
----------------- this type and otherwise substantially in
the form of those contained in the
Restated Credit Agreement, including:
failure to pay principal, interest or
other amounts; breach of representations
and warranties; breach of covenants;
certain bankruptcy events; cross default
and cross acceleration; certain ERISA
matters; certain judgments; and Change in
Control (to be defined).
<PAGE>
6
Voting: Amendments and waivers of the definitive
------ credit documentation will require the
approval of Lenders holding more than 50%
of the aggregate amount of the loans and
commitments under the Facilities, except
that the consent of each Lender adversely
affected thereby shall be required with
respect to, among other things, (a)
increases in the commitment of such Lender,
(b) reductions of principal, interest or
fees and (c) extensions of final maturity.
Yield Protection and Illegality: Usual and customary, including but not
------------------------------- limited to protection with respect to
breakage costs, changes in capital
requirements or their interpretation,
changes in circumstances, reserves,
illegality and taxes.
Assignments and Participations: The Lenders will be permitted to assign
------------------------------ loans and commitments to other Lenders (or
their affiliates) without restriction, or
to other financial institutions with the
consent of the Borrower and the Agents, in
each case not to be unreasonably withheld.
Each assignment (except to other Lenders or
their affiliates) will be in a minimum
amount of $10,000,000. The Agents 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 without
restriction to other financial
institutions. Voting rights of participants
shall be limited to matters in respect of
(a) increases in commitments, (b)
reductions of principal, interest or fees
and (c) extensions of final maturity.
Expenses and Indemnification: The Borrower will indemnify the Arrangers,
---------------------------- the Agents and other Lenders and hold them
harmless from and against all costs,
expenses (including without limitation
fees, disbursements and other charges of
counsel) and liabilities of the Arrangers,
the Agents and the other Lenders arising
out of or relating to any claim or any
litigation or other proceeding (regardless
of whether the Arrangers, the Agents or any
other Lender is a party thereto) that
relates to the Transactions, including the
financing contemplated hereby, the
Acquisition or any transactions connected
therewith, provided that none of the
--------
Arrangers, the Agents or any other Lender
will be indemnified for any cost, expense
or liability to the extent determined in
the final judgment of a court of competent
jurisdiction to
<PAGE>
have resulted from its gross
negligence or willful misconduct.
In addition, all out-of-pocket
expenses of the Lenders for
enforcement costs and documentary
taxes associated with the
Facilities are to be paid by the
Borrower.
Governing Law and Forum: New York.
-----------------------
Counsel to Agents and Cravath, Swaine & Moore.
---------------------
Arrangers:
---------
<PAGE>
2
ANNEX I
Facility Fee: Facility Fees will accrue and be payable to
------------ the Lenders on the aggregate amount of each
Facility (whether drawn or undrawn),
commencing on the Closing Date. Facility Fees
will be payable in arrears at the end of each
calendar quarter and upon the maturity date or
the termination of the commitments. The rates
at which the Facility Fees accrue will depend
upon the ratings of Moody's Investors Service,
Inc. and Standard and Poor's Ratings Services
(the "Ratings") applicable to the Borrower's
senior, unsecured, non-credit enhanced long-
term debt (the "Index Debt"), as set forth in
the table appearing at the end of this Annex
I.
Interest Rates: The interest rates under the Facilities will
-------------- be, at the option of the Borrower, Adjusted
LIBOR or ABR, in each case plus spreads
depending upon the Ratings, as set forth in
the table appearing at the end of this Annex
I.
The Borrower may elect interest periods of 1,
2, 3 or 6 months for Adjusted LIBOR
borrowings.
Calculation of interest shall be on the basis
of the actual days elapsed in a year in of 360
days (or 365 or 366 days, as the case may be,
in the case of ABR loans based on the Prime
Rate) and interest shall be and interest shall
be payable at the end of each interest period
and, in any event, at least every 3 months.
ABR is the Alternate Base Rate, which is the
higher of Chase's Prime Rate and the Federal
Funds Effective Rate plus 1/2 of 1%.
Adjusted LIBOR will at all times include
statutory reserves.
<PAGE>
ANNEX II
Sources and Uses of Funds
(in millions of dollars)
(all figures are approximate)
<TABLE>
<CAPTION>
Sources of Funds Uses of Funds
---------------- -------------
<S> <C> <C> <C>
Facilities 1/
364-Day Revolver $1,295.7 Purchase of Equity $3,972.0
5-Year Revolver 3,000.0 Retire Misc. Existing 511.5
Debt & Preferred
Excess Cash/Option 262.8 Fees & Expenses 75.0
Proceeds -------- --------
Total Sources $4,558.5 Total Uses $4,558.5
======== ========
</TABLE>
______________________
1/ Represents amount to be drawn under the $6,000,000,000 Facilities
on the Closing Date.
<PAGE>
3
FEE AND SPREAD TABLES
---------------------
<TABLE>
<CAPTION>
==========================================================================================================
LIBOR ABR Drawn
Facility Fee Spread Spread Cost
364-Day Ratings (bps per (bps per (bps per (bps per
Facility (S&P/Moody's) annum) annum) annum) annum)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Catagory 1 BBB+ or Baal or 10.0 65.0 0.0 75.0
higher
----------------------------------------------------------------------------------------------------------
Catagory 2 BBB or Baa2 or 12.5 87.5 0.0 100.0
higher
----------------------------------------------------------------------------------------------------------
Catagery 3 BBB- and Baa3 17.5 107.5 7.5 125.0
----------------------------------------------------------------------------------------------------------
Catagory 4 BBB- and Bal or 25.0 125.0 25.0 150.0
BB+ and Baa3
----------------------------------------------------------------------------------------------------------
Catagory 5 BB+ and Bal 30.0 145.0 45.0 175.0
----------------------------------------------------------------------------------------------------------
Catagory 6 Anything lower 37.5 187.5 87.5 225.0
----------------------------------------------------------------------------------------------------------
<CAPTION>
==========================================================================================================
LIBOR ABR Drawn
Facility Fee Spread Spread Cost
Five-Year Ratings (bps per (bps per (bps per (bps per
Facility (S&P/Moody's) annum) annum) annum) annum)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Catagory 1 BBB+ or Baal or 15.0 60.0 0.0 75.0
higher
----------------------------------------------------------------------------------------------------------
Catagory 2 BBB or Baa2 or 17.5 82.5 0.0 100.0
higher
----------------------------------------------------------------------------------------------------------
Catagery 3 BBB- and Baa3 22.5 102.5 2.5 125.0
----------------------------------------------------------------------------------------------------------
Catagory 4 BBB- and Bal or 37.5 112.5 12.5 150.0
BB+ and Baa3
----------------------------------------------------------------------------------------------------------
Catagory 5 BB+ and Bal 42.5 132.5 32.5 175.0
----------------------------------------------------------------------------------------------------------
Catagory 6 Anything lower 50.0 175.0 75.0 225.0
----------------------------------------------------------------------------------------------------------
</TABLE>
