EXECUTION COPY
CHASE LINCOLN FIRST
COMMERCIAL CORPORATION J.P. MORGAN SECURITIES
270 Park Avenue INC.
New York, NY 10017 270 Park Avenue
New York, NY 10017
CONFIDENTIAL
April 2, 2006
Service Corporation International
1929 Allen Parkway
Houston, Texas 77019
Attention: Jeffrey E. Curtiss
Eric D. Tanzberger
PROJECT CORONADO
$850,000,000 SENIOR BRIDGE FACILITY
COMMITMENT LETTER
Ladies and Gentlemen:
You have advised Chase Lincoln First Commercial Corporation ("CHASE
LINCOLN") and J.P. Morgan Securities Inc. ("JPMORGAN" and, together with Chase
Lincoln and you, the "Parties") that you intend to consummate the Transactions
(such term and each other capitalized term used but not defined herein having
the meanings assigned to them in Exhibit A hereto and the Term Sheet referred to
below).
In connection with the Transactions, Chase Lincoln is pleased to
advise you of its commitment to provide the entire principal amount of the
Facility, upon the terms and subject to the conditions set forth or referred to
in this Commitment Letter and in the Summary of Principal Terms and Conditions
attached hereto as Exhibit B (the "TERM SHEET").
You hereby appoint JPMorgan to act, and JPMorgan hereby agrees to
act, as sole lead arranger and sole bookrunner for the Facility on the terms and
subject to the conditions set forth or referred to in this Commitment Letter and
in the Term Sheet. You also hereby appoint Chase Lincoln to act, and Chase
Lincoln hereby agrees to act, as sole and exclusive administrative agent for the
Facility on the terms and subject to the conditions set forth or referred to in
this Commitment Letter and in the Term Sheet. It is understood and agreed that
(a) no additional agents, co-agents, arrangers, co-arrangers, managers or
co-managers will be appointed and no other titles will be awarded in connection
with the Facility without the approval of Chase Lincoln and JPMorgan and (b) no
compensation (other than as expressly contemplated below, by the Term Sheet or
the Fee Letter referred to below) will be paid in connection with the Facility
unless you and we so agree, PROVIDED that you may appoint one additional
bookrunner for the
Facility, up to three additional lead arrangers for the Facility and any number
of co-agents or co-managers for the Facility (any such appointees, the
"ADDITIONAL BANKS"), in each case reasonably acceptable to JPMorgan and with
compensation on the same terms (and on a pro rata basis) provided for JPMorgan
and Chase Lincoln herein and in the Fee Letter (PROVIDED that, without the
consent of Chase Lincoln and JPMorgan, such Additional Banks shall not
collectively commit to provide more than 50% of the Facility). It is further
understood and agreed that JPMorgan will have "lead left" placement in all
marketing materials and other documentation used in connection with the
Facility.
Chase Lincoln reserves the right, prior to or after the execution of
definitive documentation for the Facility (the "FACILITY DOCUMENTATION"), in
consultation with you, to syndicate all or a portion of its commitment hereunder
to one or more financial institutions that will become parties to such
definitive documentation pursuant to a syndication to be managed by JPMorgan in
consultation with you (the financial institutions becoming parties to such
definitive documentation being collectively referred to as the "LENDERS");
PROVIDED that, notwithstanding Chase Lincoln's right to syndicate the Facility
and receive commitments with respect thereto, Chase Lincoln will not be released
from its commitment hereunder with respect to any such syndication prior to the
Closing Date (other than to any Additional Bank). JPMorgan may decide to
commence syndication efforts promptly, and you agree to assist JPMorgan in
completing a timely and orderly syndication. Such assistance shall include, but
not be limited to, (a) your using commercially reasonable efforts to ensure that
the syndication efforts benefit materially from your existing lending and
investment banking relationships and the existing lending and, to the extent
practicable, investment banking relationships of the Company, (b) arranging for
direct contact during the syndication between your senior management,
representatives and advisors (and the use of commercially reasonable efforts to
cause the Company to provide direct contact during the syndication between its
senior management, representatives and advisors), on the one hand, and the
proposed Lenders, on the other hand, (c) your assistance (including the use of
commercially reasonable efforts to cause the Company and your and the Company's
respective affiliates and advisors to assist) in the preparation of a
Confidential Information Memorandum for the Facility and other marketing
materials to be used in connection with the syndication and (d) your hosting,
with JPMorgan, of one or more meetings of prospective Lenders.
It is understood and agreed that JPMorgan will, after consultation
with you, manage all aspects of the syndication, including selection of Lenders,
allocation of fees, determination of when JPMorgan will approach potential
Lenders and the time of acceptance of the Lenders' commitments, any naming
rights and the final allocations of the commitments among the Lenders. In acting
as arranger for the Facility, JPMorgan will have no responsibility other than to
arrange the syndication as set forth herein and shall in no event be subject to
any fiduciary or other implied duties. To assist JPMorgan in its syndication
efforts, you agree promptly to prepare and provide to JPMorgan and Chase Lincoln
(and to use commercially reasonable efforts to cause the Company to provide) all
information with respect to you and the Company and your and the Company's
respective subsidiaries, the Transactions and the other transactions
2
contemplated hereby, as it may reasonably request, including a reasonably
detailed business plan and all other financial information and projections (the
"PROJECTIONS"), as JPMorgan or Chase Lincoln may reasonably request in
connection with the structuring, arrangement and syndication of the Facility. At
the request of JPMorgan, you agree to assist (and to use commercially reasonable
efforts to cause the Company to assist) in the preparation of a version of the
information package and presentation consisting exclusively of information and
documentation that is either publicly available or not material with respect to
you, the Company, your or the Company's respective affiliates and any of your or
the Company's respective securities for purposes of United States Federal and
state securities laws (such version, the "PUBLIC-SIDE VERSION"). Prior to
distribution of the offering materials to be used in the syndication, including
the Public-Side Version, to prospective Lenders, you will execute and deliver to
us one letter authorizing the distribution of such offering materials other than
the Public-Side Version and a separate letter authorizing the distribution of
the Public-Side Version for inclusion in the respective information packages.
You hereby represent and warrant that (a) to the best of your
knowledge, all information other than the Projections (the "INFORMATION") that
has been or will be made available to JPMorgan or Chase Lincoln by you or your
subsidiaries, or any of your representatives, is or will be, when furnished,
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, when taken as a
whole, not materially misleading in light of the circumstances under which such
statements are made and (b) the Projections prepared by you and, to the best of
your knowledge, any Projections prepared by the Company, and in each case that
have been or will be made available to JPMorgan or Chase Lincoln by you, the
Company or your or the Company's respective subsidiaries, or any of your
respective representatives, have been and will be prepared in good faith based
upon assumptions that are believed by you or the Company, as the case may be, to
be reasonable at the time made available to JPMorgan. You agree that if at any
time from and including the date hereof until the closing of the Facility, the
representations and warranties in this paragraph would be, to the best of your
knowledge, incorrect if the Information and Projections were being furnished at
such time, then you will promptly supplement the Information and the Projections
so that such representations and warranties would be correct under those
circumstances, PROVIDED that no such supplement shall cure or otherwise affect,
or shall be deemed to cure or otherwise affect, any failure of such
representations and warranties to be correct on the date hereof. In arranging
the Facility, including the syndication of the Facility, JPMorgan and Chase
Lincoln will be entitled to use and rely primarily on the Information and the
Projections without responsibility for independent verification thereof.
As consideration for Chase Lincoln's commitment hereunder and
JPMorgan's agreement to structure, arrange and syndicate the Facility, you agree
to pay to Chase Lincoln the fees as set forth in the Term Sheet and in the Fee
Letter dated the date hereof and delivered herewith with respect to the Facility
(the "FEE LETTER"), as and when payable in accordance with the terms thereof.
Except as specifically described in the Fee Letter, once paid, such fees shall
not be refundable under any circumstances.
3
The commitment hereunder and JPMorgan's agreement to perform the
services described herein are subject to (a) there not having occurred any
event, change, circumstance or effect that would be a Company Material Adverse
Effect (as defined in the Merger Agreement), since December 31, 2005, (b) there
not having been any, prior to and during the syndication of the Facility (and
you agree that, until the earlier of the termination of syndication of the
Facility and the first anniversary of the Closing Date there shall not be any)
competing issues of debt securities or commercial bank or other credit
facilities of you and, after the Closing Date, the Company or any of your or,
after the Closing Date, the Company's respective subsidiaries being offered,
placed or arranged (other than the Debt Securities and the New Revolving
Facility or the Amendment and Restatement), (c) the negotiation, execution and
delivery of Facility Documentation consistent with the Term Sheet, (d) Chase
Lincoln's having been afforded at least 30 days to syndicate the Facility
following the completion of the Confidential Information Memorandum and (e) the
other conditions set forth in the Term Sheet and the annexes thereto.
Notwithstanding anything in this Commitment Letter, the Term Sheet,
the Fee Letter, the Facility Documentation or any other letter agreement or
other undertaking concerning the financing of the Transactions to the contrary,
(i) the only representations relating to the Company, its subsidiaries and their
businesses the making of which shall be a condition to availability of the
Facility on the Closing Date shall be (A) the representations made by the
Company in the Merger Agreement that are material to the interests of the
Lenders (the accuracy of which will be certified by the Company on the Closing
Date) (the "COMPANY AVAILABILITY REPRESENTATIONS"), but only to the extent that
you have the right to terminate your obligations under the Merger Agreement as a
result of a breach of such representations in the Merger Agreement, and (B) the
Specified Representations (as defined below), (ii) the only representations
relating to you, your subsidiaries and your and their businesses the making of
which shall be a condition to availability of the Facility on the Closing Date
shall be (A) the representations described on Annex II to Exhibit B to this
Commitment Letter, (B) the representations set forth in the sixth paragraph of
this Commitment Letter (the representations referred to in the immediately
preceding clauses (A) and (B), together with the Company Availability
Representations, the "AVAILABILITY REPRESENTATIONS") and (C) the Specified
Representations, and (iii) the terms of the Facilities Documentation shall be in
a form such that they do not impair availability of the Facility on the Closing
Date if the conditions set forth or referred to herein and in the Term Sheet are
satisfied. For purposes hereof, "SPECIFIED REPRESENTATIONS" means
representations and warranties relating to corporate power and authority, due
authorization, execution, delivery, legality, validity, binding effect and
enforceability of the Facility Documentation (if applicable), Federal Reserve
margin regulations, the Investment Company Act and, if applicable, status as
senior debt.
By executing this Commitment Letter, you agree (a) to indemnify and
hold harmless Chase Lincoln, JPMorgan, their affiliates and their respective
officers, directors, employees, affiliates, 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,
4
the Fee Letter, the Term Sheet, the Transactions and the other transactions
contemplated hereby, the Facility or any related transaction or any claim,
litigation, investigation or proceeding relating to any of the foregoing
(including, without limitation, any such claim, litigation, investigation or
proceeding brought by or on behalf of you, any of your affiliates or any of your
respective officers, directors, employees, advisors, agents and controlling
persons), regardless of whether any of such indemnified parties is a party
thereto, and to reimburse each of such indemnified parties upon demand for any
reasonable out-of-pocket and documented 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 party, apply to losses,
claims, damages, liabilities or related expenses to the extent they are found in
a final nonappealable judgment of a court to have resulted from the willful
misconduct or gross negligence of such indemnified party, and (b) to reimburse
Chase Lincoln and JPMorgan from time to time, for all reasonable, documented,
out-of-pocket expenses (including but not limited to expenses of Chase Lincoln's
or JPMorgan's due diligence investigation, consultants' fees, syndication
expenses, travel expenses and reasonable fees, disbursements and other charges
of counsel) incurred in connection with the Facility and the preparation of this
Commitment Letter, the Term Sheet, the Fee Letter and the definitive
documentation for the Facility. Notwithstanding any other provision of this
Commitment Letter, no indemnified person shall be liable for any damages arising
from the use by others of information or other materials obtained through
electronic, telecommunications or other information transmission systems or for
any special, indirect, consequential or punitive damages in connection with its
activities related to the Facility.
You acknowledge that Chase Lincoln, JPMorgan and their respective
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 Chase Lincoln, JPMorgan or any of their respective
affiliates 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 Chase Lincoln, JPMorgan or any of
their respective affiliates of services for other companies, and none of Chase
Lincoln, JPMorgan or any of their respective affiliates will furnish any such
information to other companies. You also acknowledge that none of Chase Lincoln,
JPMorgan or any of their respective affiliates has any obligation to use in
connection with the transactions contemplated by this Commitment Letter, or to
furnish to you, the Company or your or the Company's respective subsidiaries,
confidential information obtained by Chase Lincoln, JPMorgan or any of their
respective affiliates from other companies.
This Commitment Letter and the commitment hereunder shall not be
assignable by you without the prior written consent of Chase Lincoln and
JPMorgan, and any attempted assignment without such consent shall be void. This
Commitment Letter may not be amended or any provision hereof waived or modified
except by an instrument in writing signed by Chase Lincoln, JPMorgan and you.
This Commitment Letter may be executed in any number of counterparts, each of
which shall be deemed an original and all of which, when taken together, shall
constitute one agreement. Delivery of an
5
executed counterpart of a signature page of this Commitment Letter by facsimile
transmission shall be effective as delivery of a manually executed counterpart
of this Commitment Letter. This Commitment Letter (including the exhibits
hereto) and the Fee Letter are the only agreements that have been entered into
among us with respect to the Facility and set forth the entire understanding of
the parties with respect thereto. This Commitment Letter 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 other than the
parties hereto. This Commitment Letter shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to the
conflicts of law principles thereof. Chase Lincoln and JPMorgan may perform the
duties and activities described hereunder through any of their respective
affiliates and the provisions of the second preceding paragraph shall apply with
equal force and effect to any of such affiliates so performing any such duties
or activities.
The Parties irrevocably and unconditionally submit to the exclusive
jurisdiction of any state or Federal court sitting in the City of New York over
any suit, action or proceeding arising out of or relating to the Transactions or
the other transactions contemplated hereby, this Commitment Letter, the Term
Sheet or the Fee Letter or the performance of services hereunder or thereunder.
The Parties hereby agree that service of any process, summons, notice or
document by registered mail addressed to such Party shall be effective service
of process for any suit, action or proceeding brought in any such court. The
Parties irrevocably and unconditionally waive any objection to the laying of
venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding has been brought in any
inconvenient forum. The Parties agree that a final judgment in any such suit,
action or proceeding brought in any such court shall be conclusive and binding
upon such Party and may be enforced in any other courts to whose jurisdiction
such Party is or may be subject, by suit upon judgment. The Parties irrevocably
agree to waive trial by jury in any suit, action, proceeding, claim or
counterclaim brought by or on behalf of any party related to or arising out of
the Transactions, this Commitment Letter, the Term Sheet or the Fee Letter or
the performance of services hereunder or thereunder.
Chase Lincoln and JPMorgan each hereby notifies you that pursuant to
the requirements of the USA PATRIOT ACT (Title III of Pub. L. 107-56 (signed
into law October 26, 2001) (the "PATRIOT ACT"), it and each of the Lenders may
be required to obtain, verify and record information that identifies you, which
information may include your name and address and other information that will
allow each of the Arrangers and Lenders to identify you in accordance with the
Patriot Act. This notice is given in accordance with the requirements of the
Patriot Act and is effective for Chase Lincoln, JPMorgan and each of the
Lenders.
You agree that you will not disclose, directly or indirectly, this
Commitment Letter, the Term Sheet, the Fee Letter, the contents of any of the
foregoing or the activities of Chase Lincoln or JPMorgan pursuant hereto or
thereto to any person without the prior approval of Chase Lincoln and JPMorgan,
except that you may disclose (a) this Commitment Letter, the Term Sheet, the Fee
Letter and the contents hereof and thereof (i) to your officers, employees,
attorneys, accountants and advisors directly
6
involved in the consideration of this matter on a confidential and need-to-know
basis, (ii) as required by applicable law, regulation or compulsory legal
process (in which case you agree to inform us promptly thereof) and (iii) with
the consent of Chase Lincoln and JPMorgan (which consent shall not be
unreasonably withheld or delayed) at the request of any regulatory authority and
(b) this Commitment Letter, the Term Sheet and the contents hereof and thereof
(but not the Fee Letter or the contents thereof) (i) to the Company and its
officers, directors, employees, attorneys, accountants and advisors, in each
case in connection with the Transactions and on a confidential and need-to-know
basis, (ii) to the rating agencies, (iii) in any filing in any public record in
which it is required by law to be filed and (iv) with the consent of Chase
Lincoln and JPMorgan (which consent shall not be unreasonably withheld or
delayed) in any filing in any public record in which it is deemed advisable to
be filed.
Please indicate your acceptance of the terms hereof and of the Fee
Letter by signing in the appropriate space below and in the Fee Letter and
returning to Chase Lincoln the enclosed duplicate originals (or facsimiles) of
this Commitment Letter and the Fee Letter not later than 5:00 p.m., New York
City time, on April 7, 2006. The commitment hereunder will expire at such time
in the event that Chase Lincoln has not received such executed duplicate
originals (or facsimiles) in accordance with the immediately preceding sentence.
In the event that the initial borrowing under the Facility does not occur on or
before the first anniversary of the date of this Commitment Letter, then this
Commitment Letter and the commitment hereunder shall automatically terminate
unless Chase Lincoln and JPMorgan shall, in their discretion, agree to an
extension. The syndication, compensation, reimbursement, indemnification,
jurisdiction 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 commitment hereunder.
[This space left intentionally blank]
7
We are pleased to have been given the opportunity to assist you in
connection with the financing for the Transactions.
Very truly yours,
CHASE LINCOLN FIRST
COMMERCIAL CORPORATION,
by /s/ John C. Riordan
____________________________
Name: John C. Riordan
Title: Vice President
J.P. MORGAN SECURITIES INC.,
by /s/ Geoffrey S. Benson
____________________________
Name: Geoffrey S. Benson
Title: Vice President
Accepted and agreed to as of the date first above written:
SERVICE CORPORATION INTERNATIONAL,
by /s/ Eric D. Tanzberger
____________________________
Name: Eric D. Tanzberger
Title: Senior Vice President and
Corporate Controller
CONFIDENTIAL EXHIBIT A
April 2, 2006
PROJECT CORONADO
$850,000,000 SENIOR BRIDGE FACILITY
TRANSACTIONS DESCRIPTION
Capitalized terms used but not defined in this Exhibit A shall have
the meanings set forth in the other Exhibits to the Commitment Letter to which
this Exhibit A is attached (the "COMMITMENT LETTER").
Service Corporation International, a Texas corporation (the
"BORROWER"), intends to acquire all the equity interests of Alderwoods Group,
Inc., a Delaware corporation (the "COMPANY").
In connection with the foregoing, it is intended that:
(a) Pursuant to an agreement and plan of merger dated as of April
2, 2006 (together with the schedules and exhibits thereto, the "MERGER
AGREEMENT") to be entered into among the Borrower, Coronado Acquisition
Corporation, a Delaware corporation and a wholly owned direct subsidiary of the
Borrower ("MERGER SUB"), and the Company, Merger Sub will merge (the "MERGER")
with and into the Company, with the Company surviving the Merger as a direct,
wholly owned subsidiary of the Borrower. In connection with the Merger, the
outstanding equity interests in the Company will be converted into the right to
receive aggregate cash consideration (the "MERGER CONSIDERATION") in an amount
equal to $20.00 per share of common stock of the Company.
(b) The Borrower will either (i) issue and sell senior notes, senior
subordinated notes and/or other debt securities (including convertible debt
securities) (the "DEBT SECURITIES") in a public offering or in a Rule 144A or
other private placement, and/or borrow term loans under one or more unsecured
term loan facilities (the "TERM LOANS"), together providing aggregate proceeds
in an amount equal to $850,000,000, or (ii) if and to the extent the Borrower
does not issue the Debt Securities and/or borrow Term Loans in such aggregate
amount on or prior to the date on which the Merger is consummated (the "CLOSING
DATE"), borrow an amount up to $850,000,000, less the sum of (x) the aggregate
principal amount of Debt Securities issued, and Term Loans borrowed, pursuant to
the immediately preceding clause (i), (y) the aggregate principal amount of the
7.75% Notes not tendered on or prior to the Closing Date pursuant to the Tender
Offer referred to below and (z) the aggregate amount of all premiums and other
amounts that would have been payable in connection with the repurchase of such
7.75% Notes in the Tender Offer (the amounts in clauses (y) and (z)
collectively, the "UNTENDERED AMOUNT"), PLUS any amounts to be used to defease
the 7.75% Notes (but in no event greater than $850,000,000) in loans (the
"BRIDGE LOANS") from one or more lenders under a new senior unsecured bridge
facility (the "FACILITY").
(c) On the Closing Date the Company shall either (i) complete a tender
offer and consent solicitation (the "TENDER OFFER") pursuant to which the
Company shall (A) repurchase all 7.75% Senior Notes due 2012 of the Company (the
"7.75%
NOTES") validly tendered and not withdrawn in the Tender Offer (such repurchased
7.75% Notes to constitute not less than a majority of the outstanding aggregate
principal amount of 7.75% Notes on the Closing Date) and (B) in connection
therewith, obtain valid consents from the respective holders thereof to amend
the indenture governing the 7.75% Notes to eliminate substantially all
restrictive covenants (including the covenant requiring the Company to make a
change of control offer for the 7.75% Notes) and certain default provisions
contained therein or (ii) irrevocably defease all issued and outstanding 7.75%
Notes in accordance with the terms of the indenture governing the 7.75% Notes.
(d) On the Closing Date the Borrower will repay or prepay any
indebtedness outstanding under the Company's Credit Agreement dated as of
September 17, 2003, and pay any required fees in connection therewith, and will
terminate such agreement.
(e) On or prior to the Closing Date the Borrower will either (i) enter
into a new senior unsecured revolving credit facility providing for available
undrawn commitments on the Closing Date of not less than $200,000,000 on terms
and conditions reasonably satisfactory to JPMorgan (the "NEW REVOLVING
FACILITY") and will repay or prepay any indebtedness outstanding under its
Amended and Restated Revolving Credit Agreement dated as of August 11, 2004 (the
"EXISTING REVOLVING FACILITY") and terminate such agreement or (ii) amend and
restate, or obtain requisite waivers under, the Existing Revolving Facility to
provide for undrawn commitments on the Closing Date of not less than
$200,000,000 and otherwise on terms and conditions reasonably satisfactory to
JPMorgan in order to permit the Merger and the other transactions contemplated
by this Exhibit A to occur (the "AMENDMENT AND RESTATEMENT") and, in each case,
pay any required fees in connection therewith.
(f) Costs and expenses incurred in connection with the foregoing
transactions will be paid (the "TRANSACTION COSTS").
The transactions described above are collectively referred to herein
as the "TRANSACTIONS".
CONFIDENTIAL EXHIBIT B
April 2, 2006
PROJECT CORONADO
$850,000,000 SENIOR BRIDGE FACILITY
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS
Capitalized terms used but not defined in this Exhibit B shall have the
meanings set forth in the other Exhibits to the Commitment Letter to which this
Exhibit B is attached (the "COMMITMENT LETTER").
INITIAL LOANS: The Lenders (as defined below) will make loans (the
"INITIAL LOANS") to the Borrower (as defined below) on
the Closing Date (as defined below) in an aggregate
principal amount of up to $850,000,000. Chase Lincoln
First Commercial Corporation ("CHASE LINCOLN") and each
assignee of any portion of the Initial Loans or of
Chase Lincoln's commitment to make the Initial Loans
are collectively referred to as the "LENDERS".
BORROWER: Service Corporation International (the "BORROWER").
GUARANTEES: The obligations of the Borrower in respect of the
Initial Loans will be unconditionally and irrevocably
guaranteed (the "GUARANTEES") on a senior basis by each
of the Borrower's existing and subsequently acquired or
organized owned domestic subsidiaries.
AGENT: Chase Lincoln (in such capacity, the "ADMINISTRATIVE
AGENT").
ARRANGER: J.P. Morgan Securities Inc. ("JPMORGAN").
LENDERS: A syndicate of banking and financial institutions
arranged by JPMorgan, in consultation with you.
TRANSACTIONS: As set forth in Exhibit A to the Commitment Letter to
which this Exhibit B is attached. Terms used but not
defined herein shall have the meanings assigned to such
terms in Exhibit A.
USE OF PROCEEDS: The proceeds of the Initial Loans on the Closing Date
will be used solely to (a) pay the Merger Consideration
in connection with the Merger, (b) repurchase, repay or
defease existing indebtedness of the Company or the
Borrower and (c) pay costs and expenses in connection
with the Transactions.
FUNDING/AVAILABILITY: The Lenders will make the Initial Loans
2
simultaneously with the consummation of the
Transactions. The date on which such Initial Loans are
made is herein called the "CLOSING DATE".
The Initial Loans will be made in a single drawing on
the Closing Date in an aggregate principal amount of up
to $850,000,000, less the sum of the aggregate
principal amount of Debt Securities and Term Loans
issued prior to the Closing Date PLUS the Untendered
Amount.
MATURITY/EXCHANGE: All the Initial Loans will mature on the date that is
one year following the Closing Date (the "MATURITY
DATE"). If any Initial Loan has not been previously
repaid in full on or prior to the Maturity Date, the
Lender in respect of such Initial Loan thereafter will
have the option at any time or from time to time to
receive Exchange Notes (the "EXCHANGE NOTES") in
exchange for such Initial Loan having the terms set
forth in the term sheet attached hereto as Annex I;
PROVIDED, HOWEVER, that a Lender may not elect to
exchange outstanding Initial Loans for Exchange Notes
in an aggregate principal amount of less than $5
million unless (i) such Lender intends at the time of
such exchange of Initial Loans promptly to sell the
Exchange Notes received in such exchange or (ii)
following such exchange such Lender will not hold any
Initial Loans; PROVIDED, FURTHER, that the Borrower may
defer the first issuance of Exchange Notes until such
time as the Borrower has received requests to issue an
aggregate of at least $25,000,000 in principal amount
of Exchange Notes. If any Lender does not exchange its
Initial Loans for Exchange Notes on the Maturity Date,
such Lender shall be required to extend the maturity of
such Initial Loans to another date selected by such
Lender. If, at such extended maturity, such Lender does
not exchange its Initial Loans, such Lender shall be
required again to extend the maturity of such Initial
Loans to another date selected by such Lender (PROVIDED
that such Lender shall not be required to extend the
maturity of such Initial Loans beyond the tenth
anniversary of the Closing Date (the "FINAL MATURITY
DATE")), and this sentence shall apply to each extended
maturity of such Initial Loans prior to the Final
3
Maturity Date.
The Initial Loans and the Exchange Notes shall be PARI
PASSU for all purposes.
INTEREST: Prior to the Maturity Date, the Initial Loans will
accrue interest at a rate per annum equal to
three-month Adjusted LIBOR ("ADJUSTED LIBOR") plus a
spread (the "SPREAD"). If the Initial Loans are not
repaid in whole within six months following the Closing
Date, the Spread will increase by 100 basis points at
the end of such six-month period and shall increase by
an additional 50 basis points at the end of each
three-month period thereafter until the Maturity Date.
The "Spread" shall initially be determined on the
Closing Date and shall equal the greater of (a) 350
basis points and (b) the Treasury Rate (as defined
below) on the Closing Date plus 375 basis points, less
Adjusted LIBOR on the Closing Date. "TREASURY RATE"
means (a) the rate borne by direct obligations of the
United States maturing on the tenth anniversary of the
Closing Date or (b) if there are no such obligations,
the rate determined by linear interpolation between the
rates borne by the two direct obligations of the United
States maturing closest to, but straddling, the tenth
anniversary of the Closing Date, in each case as
published by the Board of Governors of the Federal
Reserve System.
Notwithstanding the foregoing, (a) the interest rate in
effect at any time on or prior to November 30, 2006,
shall not exceed 10.00% per annum (the "INITIAL TOTAL
CAP"), (b) the interest rate in effect at any time
after November 30, 2006, and prior to the Maturity Date
shall not exceed 10.50% per annum (the "ADJUSTED TOTAL
CAP" and, together with the Initial Total Cap, the
"TOTAL CAPS") and (c) the interest rate in effect at
any time prior to the Maturity Date shall not be less
than 8.50% per annum. In no event shall the interest
rate on the Initial Loans exceed the highest lawful
rate permitted under applicable law.
In the period during which an event of default occurs
and is continuing, the Spread and the Total Caps will
each increase by 200 basis points.
4
Following the Maturity Date, all outstanding Initial
Loans will accrue interest at the rate provided for the
Exchange Notes in Annex I hereto.
Calculation of interest shall be on the basis of actual
days elapsed in a year of 360 days (or 365 or 366 days,
as the case may be, in the case of Initial Loans based
on JPMorgan Chase Bank, N.A.'s Prime Rate).
Adjusted LIBOR will at all times include statutory
reserves.
In the event that Adjusted LIBOR cannot be determined,
or any Lender is unable to maintain a loan accruing
interest at Adjusted LIBOR, the affected Initial Loans
will accrue interest until the Maturity Date at the
"ALTERNATE BASE RATE", which will be the higher of (a)
JPMorgan Chase Bank, N.A.'s Prime Rate and (b) the
Federal Funds Effective Rate plus 1/2 of 1%, in each
case plus the Spread less 100 basis points.
Interest will be payable in arrears (a) for Initial
Loans accruing interest at a rate based on Adjusted
LIBOR, at the end of each Adjusted LIBOR period
following the Closing Date and on the Maturity Date,
(b) for Initial Loans accruing interest at the
Alternate Base Rate, at the end of each fiscal quarter
of the Borrower following the Closing Date and on the
Maturity Date and (c) for Initial Loans outstanding
after the Maturity Date, at the end of each fiscal
quarter of the Borrower following the Maturity Date.
MANDATORY REDEMPTION: The Borrower will be required to prepay Initial Loans
(and, if issued, to redeem Exchange Notes or offer to
purchase Fixed Rate Exchange Notes (as defined), to the
extent required by the terms of such Exchange Notes or
Fixed Rate Exchange Notes) on a PRO RATA basis, at par
plus accrued and unpaid interest, from the net cash
proceeds from (i) any direct or indirect public
offering or private placement of debt securities of the
Borrower or any of the Borrower's subsidiaries or any
equity securities of the Borrower, (ii) the incurrence
of any other indebtedness by the Borrower or any
subsidiary of the Borrower (other than borrowings under
the New Revolving Facility or the Existing Revolving
Facility and certain
5
permitted indebtedness) and (iii) any future issuance
or sale of stock of subsidiaries of the Borrower or
sales of assets (subject to customary ordinary course
exceptions) by the Borrower or any subsidiary of the
Borrower.
The Borrower will be required to offer to prepay
Initial Loans and purchase Exchange Notes at 101% of
par plus accrued and unpaid interest upon the
occurrence of a change of control or ownership.
OPTIONAL PREPAYMENT: The Initial Loans may be prepaid, in whole or in part,
at the option of the Borrower, at any time upon three
days' prior notice, at par plus accrued and unpaid
interest, subject to reimbursement of the Lenders'
actual redeployment costs in the case of a prepayment
of Adjusted LIBOR borrowings other than on the last day
of the relevant interest period. If the Borrower elects
to optionally prepay all or any portion of the Initial
Loans, then the Borrower shall be required to
optionally redeem on a PRO RATA basis outstanding
Exchange Notes, if any, subject, in certain
circumstances, to the non-call provisions of any Fixed
Rate Exchange Notes, at par plus accrued and unpaid
interest.
REPRESENTATIONS AND Representations and warranties as set forth or
WARRANTIES: described in the Commitment Letter and in Annex II to
this Exhibit B.
CONDITIONS PRECEDENT: Conditions precedent to the borrowing of the Initial
Loans will be limited to those set forth in the
Commitment Letter and in Exhibit C to the Commitment
Letter and the following: the absence of any default or
event of default; accuracy of the Availability
Representations and Specified Representations; delivery
of customary legal opinions; execution of the
Guarantees, which shall be in full force and effect;
payment of fees and expenses; delivery of borrowing
certificates; delivery of evidence of reasonably
satisfactory and customary insurance; receipt of
Patriot Act information; and delivery of corporate
organization, existence and good standing certificates,
officer certificates and secretary certificates.
The Facility Documentation shall not contain (a)
6
any conditions precedent other than the conditions
precedent set forth herein, in the Commitment Letter or
in Exhibit C to the Commitment Letter, or (b) any
representation and warranty, affirmative or negative
covenant or event of default that is not set forth in
the Commitment Letter or the Exhibits or Annexes
thereto, the accuracy, compliance or absence,
respectively, of or with which is a condition to the
initial borrowing of the Initial Loans.
REFINANCING: The Borrower will use commercially reasonable efforts
to refinance the Initial Loans as promptly as
practicable after the Closing Date with Debt Securities
and/or Term Loans providing aggregate proceeds in an
amount equal to the amount of Bridge Loans then
outstanding.
COVENANTS: Customary for facilities and transactions of this type,
including certain financial covenants to be mutually
agreed upon by the Borrower and the Lenders and using
best efforts to obtain ratings of the Facility by each
of Standard & Poor's Ratings Group ("S&P") and Moody's
Investor Services, Inc. ("MOODY'S").
Following the Maturity Date, all outstanding Initial
Loans will include covenants substantially identical to
the covenants of the Exchange Notes.
EVENTS OF DEFAULT: Customary for facilities and transactions of this type.
Following the Maturity Date, the events of default
relevant to the Initial Loans will be automatically
modified to be consistent with the Exchange Notes.
COST AND YIELD
PROTECTION: Customary for facilities and transactions of this type.
ASSIGNMENT AND Subject to the consent of the Agent, the Lenders will
PARTICIPATION: have the absolute and unconditional right to assign
Initial Loans and commitments without the consent of
the Borrower. The Agent will receive a processing and
recordation fee of $3,500, payable by the assignor
and/or the assignee, with each assignment. Assignments
will be by novation which will release the obligation
of the assigning Lender. Chase Lincoln will act as
Administrative Agent for all assignees (if any) holding
the Initial Loans from time to time.
7
Notwithstanding the above, prior to 180 days after the
Closing Date, (i) any such assignment shall be
consummated in consultation with the Borrower and (ii)
the consent of the Borrower shall be required with
respect to any such assignment if, subsequent thereto,
Chase Lincoln and the Additional Banks would
collectively hold less than 50.1% of the outstanding
Initial Loans. Any such assignments by Chase Lincoln
and the Additional Banks shall be made pro rata by
Chase Lincoln and the Additional Banks.
Subject to the consent of the Agent, Lenders will be
permitted to participate their Initial Loans to other
financial institutions without restriction, other than
customary voting limitations. Participants will have
the same benefits as the selling Lenders would have
(and will be limited to the amount of such benefits)
with regard to yield protection and increased costs.
VOTING: Amendments and waivers of the documentation for the
Initial Loans and the other definitive credit
documentation related thereto will require the approval
of Lenders holding more than 50% of the outstanding
Initial Loans, except that the consent of each affected
Lender will be required for (a) reductions of
principal, interest rates, fees or Spread, (b) except
as provided under "Maturity/Exchange" above, extensions
of the Maturity Date, (c) additional restrictions on
the right to exchange Initial Loans for Exchange Notes
or any amendment of the rate of such exchange, (d) any
amendment to the Exchange Notes that requires (or
would, if any Exchange Notes were outstanding, require)
the approval of all holders of Exchange Notes, (e)
releases of material subsidiary guarantees or (f)
modifications of any voting percentages.
EXPENSES AND All reasonable, documented, out-of-pocket expenses
INDEMNIFICATION: (including but not limited to expenses incurred in
connection with due diligence) of the Lenders, Chase
Lincoln and JPMorgan associated with the preparation,
execution and delivery, administration, waiver or
modification and enforcement of the Facility and the
other documentation contemplated hereby and thereby
(including the reasonable fees, disbursements and other
charges of counsel) are to be paid by the
8
Borrower. In addition, all reasonable, documented,
out-of-pocket expenses of the Lenders for enforcement
costs and documentary taxes associated with the
facility are to be paid by the Borrower.
The Borrower will indemnify the Lenders, Chase Lincoln
and JPMorgan, and their respective officers, directors,
employees, affiliates, agents and controlling persons,
and hold them harmless from and against all costs,
expenses (including but not limited to reasonable fees
and out-of-pocket charges and disbursements of counsel)
and liabilities of any such Lender, Chase Lincoln or
JPMorgan arising out of or relating to any claim or any
litigation or other proceeding (regardless of whether
any such Lender, Chase Lincoln or JPMorgan is a party
thereto or whether such claim, litigation or other
proceeding is brought by the Borrower and its
affiliates or a third party) that relate to the
proposed transactions, including but not limited to the
Transactions or any transactions connected therewith;
PROVIDED, HOWEVER, that no such person will be
indemnified for costs, expenses or liabilities arising
from such person's gross negligence or willful
misconduct.
GOVERNING LAW AND FORUM: New York.
COUNSEL FOR CHASE
LINCOLN AND JPMORGAN: Cravath, Swaine & Moore LLP.
ANNEX I
to Exhibit B
PROJECT CORONADO
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS
OF EXCHANGE NOTES
Capitalized terms used but not defined herein have the meanings given
in the Summary of Principal Terms and Conditions of the $850,000,000 Senior
Bridge Facility to which this Annex I is attached.
ISSUER: The Borrower will issue Exchange Notes under an
indenture that complies with the Trust Indenture Act
(the "INDENTURE"). The Borrower in its capacity as
issuer of the Exchange Notes is referred to as the
"ISSUER".
GUARANTEES: Same as Initial Loans.
PRINCIPAL AMOUNT: The Exchange Notes will be available only in exchange
for the Initial Loans. The principal amount of any
Exchange Note will equal 100% of the aggregate
principal amount of the Initial Loan for which it is
exchanged.
MATURITY: The Exchange Notes will mature on the tenth anniversary
of the Closing Date.
INTEREST RATE: The Exchange Notes will bear interest at a rate equal
to the Initial Rate (as defined below) plus the
Exchange Spread (as defined below). Notwithstanding the
foregoing, the interest rate in effect at any time
shall not exceed a rate equal to the Adjusted Total Cap
nor be less than 8.50% per annum. In no event shall the
interest rate on the Exchange Notes exceed the highest
lawful rate permitted under applicable law.
"EXCHANGE SPREAD" shall mean 0 basis points during the
three-month period commencing on the Maturity Date and
shall increase by 50 basis points at the beginning of
each subsequent three-month period.
"INITIAL RATE" shall be determined on the Maturity Date
and shall equal the greatest of (a) the interest rate
borne by the Initial Loans on the day immediately
preceding the Maturity Date plus 50 basis points, (b)
Adjusted LIBOR plus 550 basis points and (c) the
Treasury Rate (as defined
2
below) on the Maturity Date plus 575 basis points.
"TREASURY RATE" means (a) the rate borne by direct
obligations of the United States maturing on the tenth
anniversary of the Closing Date and (b) if there are no
such obligations, the rate determined by linear
interpolation between the rates borne by the two direct
obligations of the United States maturing closest to,
but straddling, the tenth anniversary of the Closing
Date, in each case as published by the Board of
Governors of the Federal Reserve System.
In the period during which an event of default occurs
and is continuing, the Exchange Spread and the Adjusted
Total Cap will each increase by 200 basis points.
Interest will be payable in arrears at the end of each
fiscal quarter of the Issuer.
MANDATORY REDEMPTION: The Issuer will be required to redeem the Exchange
Notes or, in the case of Fixed Rate Exchange Notes, to
offer to purchase such notes (and, if outstanding,
repay the Initial Loans) on a PRO RATA basis, at par
plus accrued and unpaid interest, from the net cash
proceeds from (i) any direct or indirect public
offering or private placement of debt securities of the
Borrower or any of the Borrower's subsidiaries or any
equity securities of the Borrower, (ii) the incurrence
of any other indebtedness by the Borrower or any
subsidiary of the Borrower (other than borrowings under
the New Revolving Facility or the Existing Revolving
Facility and certain permitted indebtedness) and (iii)
any future issuance or sale of stock of subsidiaries of
the Borrower or sales of assets (subject to customary
ordinary course exceptions) by the Borrower or any
subsidiary of the Borrower.
The Borrower will be required to offer to prepay
Initial Loans and purchase Exchange Notes at 101% of
par plus accrued and unpaid interest upon the
occurrence of a change of control or ownership.
3
OPTIONAL REDEMPTION: Subject to the following sentence, the Exchange Notes
will be redeemable at the option of the Issuer, in
whole or in part, at any time at par plus accrued and
unpaid interest to the redemption date. If any Exchange
Note is sold by a Lender to a third party purchaser,
such Lender shall have the right to fix the interest
rate on such Exchange Note (each such Note, a "FIXED
RATE EXCHANGE Note") at (a) a rate not higher than the
then applicable rate of interest on such Exchange Note,
or (b) upon the representation of such transferring
Lender that a higher rate (such higher rate, the
"TRANSFER RATE") is necessary in order to permit such
Lender to transfer such Exchange Note to a third party
and receive consideration equal to the principal amount
thereof plus all accrued and unpaid interest to the
date of such transfer, the Transfer Rate; PROVIDED,
HOWEVER, that such Transfer Rate shall not exceed the
Adjusted Total Cap. If such Lender exercises such
right, such Fixed Rate Exchange Note will be
non-callable until the date that is five years from the
Closing Date (subject to customary equity clawback
provisions) and will be callable thereafter at par plus
accrued interest plus a premium equal to (a) one-half
of the coupon in effect on the date of sale of the
Exchange Notes or (b) if the Transfer Rate was used,
one-half of the Transfer Rate, which premium in either
case shall decline ratably on each yearly anniversary
of the date that is five years from the Closing Date to
zero one year prior to the maturity of the Exchange
Notes, PROVIDED, that such call protection shall not
apply to any call for redemption issued prior to the
sale to such third party purchaser.
If the Issuer elects to optionally redeem all or any
portion of the Exchange Notes, then the Issuer shall be
required to optionally prepay on a PRO RATA basis
outstanding Initial Loans, if any, at par plus accrued
and unpaid interest.
REGISTRATION RIGHTS: The Issuer will file within 30 days after the Maturity
Date, and will use its best efforts to
4
cause to become effective as soon thereafter as
practicable, a shelf registration statement with
respect to the Exchange Notes (a "SHELF REGISTRATION
STATEMENT") and/or a registration statement relating to
a Registered Exchange Offer (as described below). If a
Shelf Registration Statement is filed, the Issuer will
keep such registration statement effective and
available (subject to customary exceptions) until it is
no longer needed to permit unrestricted resales of
Exchange Notes but in no event longer than two years
from the Maturity Date. If within 120 days from the
Maturity Date, a Shelf Registration Statement for the
Exchange Notes has not been declared effective or the
Issuer has not effected an exchange offer (a
"REGISTERED EXCHANGE OFFER") whereby the Issuer has
offered registered notes having terms identical to the
Exchange Notes (the "SUBSTITUTE NOTES") in exchange for
all outstanding Exchange Notes and Initial Loans (it
being understood that a Shelf Registration Statement is
required to be made available in respect of Exchange
Notes the holders of which could not receive Substitute
Notes through the Registered Exchange Offer which, in
the opinion of counsel, would be freely saleable by
such holders without registration or requirement for
delivery of a current prospectus under the Securities
Act (other than a prospectus delivery requirement
imposed on a broker-dealer who is exchanging Exchange
Notes acquired for its own account as a result of a
market making or other trading activities)), then the
Issuer will pay liquidated damages of $0.192 per week
per $1,000 principal amount of Exchange Notes and
Initial Loans outstanding to holders of such Exchange
Notes and Initial Loans who are unable freely to
transfer Exchange Notes from and including the 121st
day after the date of the first issuance of Exchange
Notes to but excluding the earlier of the effective
date of such Shelf Registration Statement or the date
of consummation of such Registered Exchange Offer. The
Issuer will also pay such liquidated
5
damages for any period of time (subject to customary
exceptions) following the effectiveness of a Shelf
Registration Statement that such Shelf Registration
Statement is not available for resales thereunder. In
addition, unless and until the Issuer has consummated
the Registered Exchange Offer and, if required, caused
the Shelf Registration Statement to become effective,
the holders of the Exchange Notes will have the right
to "piggy-back" the Exchange Notes in the registration
of any debt securities (subject to customary scale-back
provisions) that are registered by the Issuer (other
than on a Form S-4) unless all the Exchange Notes and
Initial Loans will be redeemed or repaid from the
proceeds of such securities.
EXCHANGE NOTES ESCROWED: The Exchange Notes will be delivered on the Closing
Date and held, undated, in escrow by a mutually
agreeable fiduciary.
RIGHT TO TRANSFER The holders of the Exchange Notes shall have the
EXCHANGE NOTES: absolute and unconditional right to transfer such
Exchange Notes in compliance with applicable law to any
third parties.
COVENANTS: Customary for an interim financing of this nature.
EVENTS OF DEFAULT: Customary for an interim financing of this nature.
GOVERNING LAW AND FORUM: New York.
ANNEX II
to Exhibit B
REPRESENTATIONS AND WARRANTIES
Except as disclosed in the Borrower's SEC filings filed on or prior to the date
of the Commitment Letter, or otherwise disclosed to JPMorgan on or prior to the
date of the Commitment Letter,
o Organization, good standing and authority of the Borrower and its
subsidiaries, subject to Material Adverse Effect qualifier with respect to
subsidiaries.
o Power and authority to own properties and assets, qualification to do
business, both subject to Material Adverse Effect qualifier.
o No conflicts with, and no liens under, organizational documents, laws,
governmental orders or contracts subject to Material Adverse Effect qualifier
with respect to laws and contracts.
o Subsidiaries and equity investments -- complete list provided, shares are
owned free and clear of liens except for certain permitted encumbrances.
o Financial statements have been provided and present fairly in all material
respects the financial condition of the Borrower and its subsidiaries, and their
results of operations and were prepared in accordance with GAAP.
o No material undisclosed liabilities, except as previously disclosed or
incurred the in ordinary course of business.
o Valid ownership of assets material to the business.
o Payment of taxes, subject to Material Adverse Effect qualifier.
o No undisclosed material litigation and no undisclosed and known environmental
issues or labor matters.
o IP necessary to conduct business is validly owned or licensed, subject to
Material Adverse Effect qualifier.
o 10b-5 representation on information provided and SEC
filings.
o No government consents required in connection with the financing Transactions.
o ERISA compliance, subject to Material Adverse Effect qualifier.
o Compliance with laws generally, subject to Material Adverse Effect qualifier.
"MATERIAL ADVERSE EFFECT" definition -- no material adverse effect on (i) the
business, assets, results of operations or financial condition of Borrower and
its subsidiaries, taken as a whole, or (ii) the ability of the Borrower and its
subsidiaries to perform their respective obligations under the Facility.
CONFIDENTIAL EXHIBIT C
April 2, 2006
PROJECT CORONADO
$850,000,000 SENIOR BRIDGE FACILITY
SUMMARY OF ADDITIONAL CONDITIONS PRECEDENT
The initial borrowings under the Facility shall be subject to the
following conditions precedent. Capitalized terms used in this Exhibit C shall
have the meanings set forth in the other Exhibits attached to the Commitment
Letter to which this Exhibit C is attached (the "COMMITMENT LETTER").
(a) The Transactions shall have been consummated, or simultaneously with
the closing of the Facility shall be consummated, in accordance with the Merger
Agreement and all other related documentation (without giving effect to any
amendments to or waivers of such documents that are materially adverse to the
Lenders and not approved by the Lenders).
(b) The Borrower shall have either (i) entered into the New Revolving
Facility and terminated the Existing Revolving Facility or (ii) completed the
Amendment and Restatement, and in either case shall have undrawn commitments of
at least $200,000,000 thereunder.
(c) Either (i) all issued and outstanding 7.75% Notes shall have been
irrevocably defeased in accordance with the terms of the indenture governing the
7.75% Notes with the proceeds of the Initial Loans or (ii) the Tender Offer
shall result in the purchase of at least a majority of the outstanding aggregate
principal amount of the 7.75% Notes and, after giving effect to the Transactions
and the other transactions contemplated hereby, neither the Borrower nor any of
its subsidiaries shall have any outstanding indebtedness (the defeased 7.75%
Notes shall be deemed to no longer be outstanding indebtedness) or preferred
stock other than (a) the loans under the Facility, (b) the 7.2% notes due 2006,
the 6.875% notes due 2007, the 6.5% notes due 2008, the 7.7% notes due 2009, the
7.875% debentures due 2013, the 6.75% notes due 2016 and the 7.0% notes due
2017, in each case of the Borrower and outstanding on the date of the Commitment
Letter, (c) the convertible debentures, maturities through 2013, of the Borrower
and outstanding on the date of the Commitment Letter, (d) the 7.75% Notes of the
Company not repurchased in the Tender Offer and (e) other indebtedness to be
mutually agreed upon.
(d) The Lenders shall have received (a) audited consolidated balance
sheets and related statements of operations, shareholders' equity and cash flows
of each of the Borrower and the Company for the three most recently completed
fiscal years ended at least 75 days before the Closing Date and (b) unaudited
consolidated balance sheets and related statements of operations, shareholders'
equity and cash flows of each of the Borrower and the Company for (i) each
subsequent fiscal quarter ended at least 40 days before the Closing Date (and
comparable periods for the prior fiscal year) and (ii) to the extent reasonably
available to the Borrower and, in any event, excluding footnotes, each fiscal
month after the most recent fiscal period for which financial statements were
2
received by the Lenders as described above and ended at least 30 days before the
Closing Date.
(e) The Borrower shall have used commercially reasonable efforts to
deliver to JPMorgan and the Lenders a pro forma consolidated balance sheet of
the Borrower as of the date of the most recent consolidated balance sheet
delivered pursuant to the preceding paragraph and a pro forma statement of
operations for the most recent fiscal year, interim period (if available) and
12-month period ending on the last day of such interim period, in each case
adjusted to give effect to the Transactions, the other transactions related
thereto and any other transactions that would be required to be given pro forma
effect by Regulation S-X promulgated under the Securities Act of 1933, as
amended, and such other adjustments as shall be agreed between the Borrower and
JPMorgan, together with a certificate of the Borrower to the effect that such
pro forma balance sheet fairly presents in all material respects the pro forma
financial condition of the Borrower and its subsidiaries in accordance with
GAAP.
(f) JPMorgan and the Lenders shall have received a customary certificate
from a financial officer of the Borrower confirming the solvency of the Borrower
and its subsidiaries on a consolidated basis after giving effect to the
Transactions and the other transactions contemplated hereby.
(g) The consummation of the Transactions and the other transactions
contemplated hereby shall not (a) violate any applicable law, statute, rule or
regulation or (b) conflict with, or result in a default or event of default or
right of termination or acceleration under, any material agreement of the
Borrower or any of its subsidiaries after giving effect to the Transactions,
other than any such violations, conflicts or defaults that, individually or in
the aggregate, would not reasonably be expected to result in a Company Material
Adverse Effect (as defined in the Merger Agreement).
(h) The Borrower shall have used commercially reasonable efforts to
deliver to the Investment Bank (as defined in the Fee Letter) not later than 45
days prior to the Closing Date, a complete printed preliminary prospectus or
preliminary offering memorandum or preliminary private placement memorandum that
is suitable for use in a customary high-yield road show relating to the Debt
Securities that contains all financial statements (including all audited
financial statements, all unaudited financial statements (which shall have been
reviewed by the independent accountants for the Borrower or the Company, as
applicable, as provided in Statement on Auditing Standards No. 100) and all
appropriate pro forma financial statements prepared in accordance with, or
reconciled to, generally accepted accounting principles in the United States and
prepared in accordance with Regulation S-X under the Securities Act of 1933, as
amended) and all other data (including selected financial data) that the
Securities and Exchange Commission would require in a registered offering of the
Debt Securities or that would be necessary for the Investment Bank to receive
customary "comfort" (including "negative assurance" comfort) from independent
accountants in connection with the offering of the Debt Securities. Upon
delivery of such preliminary prospectus, offering memorandum or private
placement memorandum, the Borrower shall have caused senior management personnel
of the Borrower (and shall have used commercially reasonable efforts to cause
senior management personnel of the Company) reasonably satisfactory to the
Investment Bank to have participated in a customary road show for the sale of
the Debt Securities.
3
(i) The Borrower shall have used commercially reasonable efforts to obtain
ratings of the Debt Securities by S&P and Moody's not less than 30 days prior to
the Closing Date.
(j) The conditions set forth in Section 6.1(b), 6.1(c) and 6.2(d) of the
Merger Agreement shall have been satisfied in all material respects.