February 20, 2004
Mafco Holdings Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Executive Vice President and
General Counsel
Facsimile: (000) 000-0000
email: xxxxxxxxx@xxxxxx.xxx
Ladies and Gentlemen:
Reference is made to that certain exchange support agreement dated as
of February 11, 2004 ("Support Agreement") by and between Revlon, Inc. and Mafco
Holdings Inc. Capitalized terms used herein and not defined shall have the
meaning ascribed to such terms in the Support Agreement.
Exhibit A of the Support Agreement is hereby amended by deleting it in
its entirety and substituting the attached Exhibit A in lieu thereof. As
modified hereby, the Support Agreement and its terms and conditions are hereby
ratified and confirmed for all purposes and in all respects.
Very truly yours,
REVLON, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Executive Vice President, General
Counsel and Chief Legal Officer
ACKNOWLEDGED AND AGREED:
Mafco Holdings Inc.
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Authorized Signature
Xxxxx X. Xxxxxxxx, Executive Vice President
and General Counsel
-----------------------------------
(Type or Print Name and Title of
Authorized Signatory)
ACKNOWLEDGED AND AGREED:
Fidelity Management & Research Co.
/s/ Xxxxxx Xxxxxxx
-----------------------------------
Authorized Signature
Xxxxxx Xxxxxxx, Portfolio Manager
-----------------------------------
(Type or Print Name and Title of
Authorized Signatory)
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EXHIBIT A
TERMS OF
EXCHANGE OFFER FOR ANY AND ALL
I. EXCHANGE OFFER Revlon, Inc. ("Revlon") agrees, in reliance on the
exemption from the registration requirements of the
Securities Act of 1933, as amended (the "Securities
Act"), provided by Section 3(a)(9) thereof, to
conduct an exchange offer (the "Exchange Offer"),
pursuant to which Revlon will offer holders of
certain series of notes issued by its wholly owned
subsidiary, Revlon Consumer Products Corporation
("Products Corporation"), and guaranteed by Revlon,
the option to receive (i) shares of Class A common
stock of Revlon, par value $0.01 per share ("Revlon
Class A common stock"), or (ii) cash, subject to
proration as described below, in exchange for their
notes and guaranties.
As described below, Fidelity and M&F (as such terms
are defined below) agree to exchange notes and
guaranties thereof and, in the case of M&F, certain
other debt obligations of Products Corporation and
preferred stock of Revlon for shares of Revlon
Class A common stock.
EXCHANGE OFFER
CONSIDERATION For each $1,000 principal amount of notes tendered
in the Exchange Offer, holders of Products
Corporation's 8 1/8% Senior Notes due 2006 (the "8
1/8% Senior Notes") and 9% Senior Notes due 2006
(the "9% Senior Notes") (together, the "Senior
Notes") may elect to receive:
o 400 shares of Revlon Class A common stock;
or
o $830, in the case of the 8 1/8% Senior
Notes, in cash; or
o $800, in the case of the 9% Senior Notes,
in cash;
o plus, in each case, accrued and unpaid
interest, which will be paid in Revlon
Class A common stock or cash at the option
of the holder
(without regard to whether such holder has
elected to receive Revlon Class A common
stock or cash in exchange for its Notes).
For each $1,000 principal amount of notes tendered
in the Exchange Offer, holders of Products
Corporation's 8 5/8% Senior Subordinated Notes due
2008 (the "Subordinated Notes" and, together with
the Senior Notes, the "Notes") may elect to
receive:
o 300 shares of Revlon Class A common stock;
or
o $620 in cash;
o plus, in each case, accrued and unpaid
interest, which will be paid in Revlon
Class A common stock or cash at the option
of the holder (without regard to whether
such holder has elected to receive Revlon
Class A common stock or cash in exchange
for its Notes).
Notwithstanding the foregoing, Fidelity, with
respect to the Initial Fidelity Notes (as such term
is defined below), and M&F agree to receive Revlon
Class A common stock in exchange for the principal
amount of Notes tendered and M&F agrees to receive
Revlon Class A common stock with respect to accrued
and unpaid interest, in each case as described
below in the section entitled "Support Agreements."
PRORATION The maximum aggregate principal amount of Notes
that may be tendered for cash (the "Cash Exchange
Amount") in the Exchange Offer will be limited to
$150 million, which amount will be reduced by the
aggregate principal amount of Additional Tendered
Notes (as such term is defined below) tendered and
exchanged for Revlon Class A common stock. In the
event that holders of Notes with an aggregate
principal amount in excess of the Cash Exchange
Amount elect to receive cash, the cash
consideration will be apportioned pro rata first,
among the tendering holders of Subordinated Notes
that elected to receive cash consideration and
then, to the extent that any portion of the Cash
Exchange Amount has not been allocated, pro rata
among the tendering holders of Senior Notes
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that elected to receive cash consideration.
Holders that have elected to receive cash
consideration may further elect, in the event that
they are subject to proration, to have the portion
of their tendered Notes for which they will not
receive cash returned to them. If they do not make
such election, holders will receive Revlon Class A
common stock for the portion of their tendered
Notes for which they will not receive cash.
WITHDRAWAL RIGHTS None.
SUPPORT AGREEMENTS Fidelity Management & Research Co. and its
affiliates and consolidated funds, (collectively,
"Fidelity") hold $155.06 million aggregate
principal amount of Notes (the "Initial Fidelity
Notes"). Fidelity will enter into a Support
Agreement with Revlon, whereby it will agree to
exchange the Initial Fidelity Notes in the Exchange
Offer, for shares of Revlon Class A common stock.
Fidelity may elect to receive either cash or Revlon
Class A common stock in exchange for accrued and
unpaid interest (at the applicable rate) on such
tendered Notes.
As a condition to its exchange of the Initial
Fidelity Notes in the Exchange Offer, two directors
nominated by Fidelity (each, a "Fidelity Appointee"
and, together, the "Fidelity Appointees") shall
have been appointed to, and shall be serving as
members of, Revlon's Board of Directors, one of
whom shall have been appointed as a member to each
standing committee of Revlon's Board of Directors,
subject to satisfaction of applicable listing
standards and other applicable laws, rules and
regulations.
From the date hereof, Revlon shall not enter into
any material transaction pending the appointment of
the Fidelity Appointees as set forth above.
Mafco Holdings Inc. and its affiliates other than
Revlon or any of its subsidiaries (collectively,
"M&F") hold $285.77 million aggregate principal
amount of Notes (the "Initial M&F Notes" and,
together with the Initial Fidelity Notes, the
"Initial Notes"). M&F will enter into a Support
Agreement with Revlon, whereby it will agree to
exchange in the Exchange Offer the Initial M&F
Notes, together with any additional Notes acquired
by it from the date of the Support Agreement
through the closing of the Exchange Offer, in
exchange for shares of Revlon Class A common stock,
including with respect to accrued and unpaid
interest (at the applicable rate) on such tendered
Notes.
In addition, pursuant to the Support Agreement, M&F
will agree to exchange (x) any and all amounts
outstanding (including accrued and unpaid interest
thereon at the applicable rate), as of the date of
the closing of the Exchange Offer, under each of
(i) the $100 Million Senior Unsecured Multiple-Draw
Term Loan Agreement, dated as of February 5, 2003,
between Products Corporation and M&F, as amended,
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(ii) the $65 Million Senior Unsecured Supplemental
Line of Credit Agreement, dated as of February 5,
2003, between Products Corporation and M&F, as
amended (the "M&F $65 Million Line of Credit"), and
(iii) the $125 Million 2004 Senior Unsecured
Multiple-Draw Term Loan Agreement, dated as of
January 28, 2004, between Products Corporation and
M&F (the "M&F $125 Million Loan"), each at an
exchange ratio of 400 shares of Revlon Class A
common stock for each $1,000 of indebtedness
outstanding thereunder, and (y) an aggregate of
$24.1 million outstanding under certain
non-interest bearing subordinated promissory notes
payable by Products Corporation, at an exchange
ratio of 300 shares of Revlon Class A common stock
for each $1,000 of indebtedness outstanding
thereunder. This exchange will be consummated
simultaneously with the Exchange Offer.
In addition, pursuant to the Support Agreement, M&F
will agree to (i) exchange all 546 outstanding
shares of Series A preferred stock of Revlon, par
value $0.01 per share, having an aggregate
liquidation preference of $54.6 million, for shares
of Revlon Class A common stock at an exchange ratio
of 160 shares of Revlon Class A common stock for
each $1,000 of liquidation preference outstanding,
and (ii) convert all 4,333 outstanding shares of
Series B convertible preferred stock of Revlon, par
value $0.01 per share, into 433,333 shares of
Revlon Class A common stock in accordance with the
terms of the certificate of designations for such
Series B convertible preferred stock. This exchange
and conversion will be consummated simultaneously
with the Exchange Offer.
In addition, pursuant to the Support Agreement, M&F
will vote in favor of, or consent to, the issuance
of shares of Revlon Class A common stock in the
Exchange Offer and pursuant to the Support
Agreements with Fidelity and M&F and the other
transactions contemplated by this term sheet and
will agree to take all actions reasonably necessary
to facilitate or otherwise support the Exchange
Offer and the transactions contemplated by this
term sheet.
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MACANDREWS &
FORBES EQUITY
CONTRIBUTION Promptly following the expiration of the Exchange
Offer, M&F agrees to subscribe for additional
shares of Revlon Class A common stock at a purchase
price of $2.50 per share in an aggregate
subscription amount equal to the sum of (x) $150
million less the aggregate principal amount of the
Additional Tendered Notes (the "M&F Equity
Contribution", which amount shall not be less than
zero) plus (y) the amount, if any, of cash to be
paid by Revlon in exchange for Notes tendered in
the Exchange Offer, excluding cash to be paid with
respect to accrued interest at the applicable rate
(the "M&F Stock Subscription").
The "Additional Tendered Notes" are those Notes
validly tendered by any party and accepted by
Revlon in the Exchange Offer in excess of the
aggregate principal amount of the Initial Notes.
USE OF PROCEEDS The net cash proceeds received by Revlon as the M&F
Equity Contribution, if any, will be contributed to
Products Corporation. Revlon will cause Products
Corporation to use any such amounts to reduce
outstanding indebtedness, other than revolving
indebtedness unless there is a corresponding
commitment reduction.
Any cash received by Revlon as the M&F Stock
Subscription will be used for the cash
consideration in the Exchange Offer.
II. PUBLIC RIGHTS
OFFERING As soon as reasonably practicable after the
consummation of the Exchange Offer, Revlon agrees
to consummate a rights offering (the "Public Rights
Offering") pursuant to which Revlon will
distribute, on a pro rata basis and at no charge,
non-transferable rights (the "Public Rights") to
each holder of record, as of a date prior to the
expiration of the Exchange Offer, of Revlon Class A
common stock and the Class B common stock of
Revlon, par value $0.01 per share ("Revlon Class B
common stock" and, together with the Revlon Class A
common stock, the "Common Stock"), to purchase its
pro rata number of shares ("Public Rights Shares")
of Revlon Class A common stock (the "Public Basic
Subscription Privilege") at a price per Public
Rights Share equal to $2.50 (the "Public
Subscription Price"), such that the aggregate
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number of Public Rights Shares to be offered in the
Public Rights Offering multiplied by the Public
Subscription Price will equal the Public Offering
Amount. The "Public Offering Amount" shall be equal
to (A) the sum of (i) the M&F Equity Contribution,
if any, and (ii) the M&F Stock Subscription,
divided by (B) the M&F Ownership Percentage.
The "M&F Ownership Percentage" means the percentage
of Common Stock owned by M&F on the record date of
the Public Rights Offering.
Although M&F will receive Public Rights, it will
agree in its Support Agreement not to exercise such
Public Rights.
Each holder of Public Rights who exercises in full
its Public Basic Subscription Privilege will be
entitled, on a pro rata basis, to subscribe for
additional Public Rights Shares at the Public
Subscription Price, to the extent that other
holders of Public Rights do not exercise all of
their Public Rights in the Public Basic
Subscription Privilege; provided that such
oversubscription privilege will be limited, in the
aggregate, to those Public Rights Shares underlying
the Public Rights of holders other than M&F.
USE OF PROCEEDS The net cash proceeds received by Revlon as payment
for the Public Subscription Price in the Public
Rights Offering will be contributed to Products
Corporation. Revlon will cause Products Corporation
to use any such amounts to reduce outstanding
indebtedness, other than revolving indebtedness
unless there is a corresponding commitment
reduction.
III. SECOND RIGHTS
OFFERING On or prior to December 31, 2004, Revlon agrees to
have closed an additional rights offering (the
"Rights Offering") pursuant to which Revlon will
distribute, on a pro rata basis and at no charge,
rights (the "Rights") to each holder of record of
the Common Stock, to purchase its pro rata number
of shares ("Rights Shares") of Revlon Class A
common stock (the "Basic Subscription Privilege")
at a price per Rights Share to be determined by the
Board of Directors of Revlon at the time of the
Rights Offering (the "Subscription Price"), such
that the aggregate
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number of Rights Shares to be offered in the Rights
Offering multiplied by the Subscription Price will
equal the Aggregate Offering Amount. The "Aggregate
Offering Amount" shall be equal to the positive
excess, if any, of $200 million over the sum of (i)
the aggregate principal amount of the Additional
Tendered Notes, (ii) the M&F Equity Contribution,
if any, and (iii) the aggregate proceeds of the
Public Rights Offering (such excess, if any, being
the "Aggregate Back-Stop Amount").
Each of M&F and Fidelity may exercise their Basic
Subscription Privilege and their Over-Subscription
Privilege.
Each holder of Rights who exercises in full its
Basic Subscription Privilege will be entitled, on a
pro rata basis, to subscribe for additional Rights
Shares at the Subscription Price (the
"Over-Subscription Privilege"), to the extent that
other holders of Rights do not exercise all of
their Rights in the Basic Subscription Privilege.
XXXXXXXXXX & FORBES
BACK-STOP In the event the Rights Offering is not fully
subscribed, M&F shall, on or prior to December 31,
2004, on the same terms as the Rights Offering,
purchase all of the Back-Stop Shares (as such term
is defined below).
"Back-Stop Shares" shall mean such number of shares
of Revlon Class A common stock as equals all of the
Rights Shares that are not otherwise subscribed and
paid for by the holders of Rights under either
their Basic Subscription Privilege or their
Over-Subscription Privilege, provided, however,
that the maximum number of Back-Stop Shares shall
not exceed:
o (x) the Aggregate Back-Stop Amount
o divided by (y) the Subscription Price.
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USE OF PROCEEDS The net cash proceeds received by Revlon as payment
for the Subscription Price in the Rights Offering
will be contributed to Products Corporation. Revlon
will cause Products Corporation to use any such
amounts to reduce outstanding indebtedness, other
than revolving indebtedness unless there is a
corresponding commitment reduction.
IV. ADDITIONAL EQUITY
OFFERINGS To the extent that the sum of (i) the aggregate
principal amount of the Additional Tendered Notes,
(ii) the M&F Equity Contribution, if any, (iii) the
aggregate proceeds of the Public Rights Offering,
(iv) the aggregate proceeds of the Rights Offering
(including the Aggregate Back-Stop Amount) and (v)
the aggregate proceeds of any other equity
offering(s) consummated after the Exchange Offer
and used by Products Corporation to reduce
outstanding indebtedness, other than revolving
indebtedness unless there is a corresponding
commitment reduction, is less than $300 million
(such shortfall, if any, the "Aggregate Additional
Offering Amount"), Revlon will agree to consummate,
on or prior to March 31, 2006, one or more
offerings (which may be rights offerings and/or
issuances of Revlon Class A common stock in a
public offering or private placement or other
exempt transactions either for cash or in exchange
for outstanding indebtedness of Products
Corporation) in order to reduce the outstanding
indebtedness of Products Corporation, other than
revolving indebtedness unless there is a
corresponding commitment reduction, by the
Aggregate Additional Offering Amount (the
"Additional Offerings").
The offering price and terms of any Additional
Offerings shall be determined by the Board of
Directors of Revlon at the time of the Additional
Offerings.
In the event that by March 31, 2006 the proceeds
(or aggregate principal amount of notes tendered in
any exchange) of the Additional Offerings are less
than the Aggregate Additional Offering Amount, M&F
will agree to purchase shares (the "Aggregate
Additional Back-Stop Amount") of Revlon Class A
common stock for an amount of cash such that
Products Corporation reduces indebtedness, other
than
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revolving indebtedness unless there is a
corresponding commitment reduction, in an aggregate
principal amount equal to the Aggregate Additional
Offering Amount.
M&F may satisfy its obligations by making an
investment in Revlon Class A common stock in an
amount equal to the Aggregate Additional Back-Stop
Amount pursuant to any transaction approved by
Revlon's Board of Directors, which may include a
rights offering.
USE OF PROCEEDS The net cash proceeds received by Revlon in the
Additional Offerings (including the Aggregate
Additional Back-Stop Amount) will be contributed to
Products Corporation. Revlon will cause Products
Corporation to use any such amounts to reduce
outstanding indebtedness, other than revolving
indebtedness unless there is a corresponding
commitment reduction.
AMENDMENTS, WAIVERS The terms will not be amended or waived without the
written consent of each of Fidelity, M&F and
Revlon.
V. CORPORATE GOVERNANCE Revlon and Fidelity shall enter into a
shareholders agreement pursuant to which the
parties will agree that:
o Revlon will maintain a majority of
Independent Directors on its Board of
Directors. "Independent Directors" shall
be those directors who satisfy the
"independence" criteria set forth in the
New York Stock Exchange ("NYSE") listing
rules; provided, however, that any
Fidelity Appointees shall be deemed to be
Independent Directors for purposes of the
shareholders agreement;
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o Revlon shall establish within 30 days
after the consummation of the Exchange
Offer and maintain a Nominating and
Corporate Governance Committee of the
Board of Directors;
o Revlon shall not conduct any business or
enter into any transaction or series of
similar transactions with any affiliate of
Revlon (other than Revlon's subsidiaries)
or a legal or beneficial owner of 10% or
more of the voting power of the voting
stock of Revlon or an affiliate of such
owner (other than any transaction (i)
contemplated herein or pursuant to
agreements or arrangements entered into
prior to the date hereof and disclosed to
Fidelity or (ii) specifically permitted by
the indentures pursuant to which the Notes
were issued) unless: (a) with respect to a
transaction or series of related
transactions, other than the purchase or
sale of inventory in the ordinary course
of business, involving aggregate payments
or other consideration in excess of $5.0
million, such transaction or series of
related transactions has been approved by
all the Independent Directors of the Board
of Directors of Revlon, and (b) with
respect to a transaction or series of
related transactions, other than the
purchase or sale of inventory in the
ordinary course of business, involving
aggregate payments or other consideration
in
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excess of $20.0 million, such transaction
or series of related transactions has been
determined, in the written opinion of a
nationally recognized, investment banking
firm, to be fair, from a financial point
of view, to Revlon.
The shareholders agreement shall terminate at such
time as Fidelity ceases to hold at least 5% of the
outstanding voting stock of Revlon.
Without the consent of Fidelity, Revlon, Inc. will
not permit Products Corporation to have outstanding
aggregate borrowings under the M&F $125 Million
Loan and the M&F $65 Million Line of Credit at any
time in excess of (i) $190 million minus (ii) the
principal amount of borrowings under the M&F $125
Million Loan and the M&F $65 Million Line of Credit
exchanged for Revlon Class A common stock in the
Exchange Offer minus (iii) the original commitment
amount of the Additional Credit Facility.
VI. ADDITIONAL CREDIT
FACILITY UBS or a lender under Products Corporation's bank
credit agreement shall provide $65 million of
additional liquidity to Products Corporation by
becoming part of Products Corporation's bank credit
agreement or increasing such lender's commitment
thereunder, as the case may be.
VII. PRESS RELEASE The text of any press release describing the
Exchange Offers or other transactions contemplated
by this Term Sheet shall be reasonably satisfactory
to Fidelity, except as required by applicable law.
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