July 9, 2007 COMMITMENT LETTER
Exhibit (b)
Xxxxxx Brothers Holdings Inc. Xxxxxx Brothers Commercial Bank Xxxxxx Commercial Paper Inc. Xxxxxx Brothers Inc. 000 Xxxxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000 |
Xxxxxxx Xxxxx Capital Corporation Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated 4 World Financial Center North Tower 000 Xxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000 |
July 9, 2007
PERSONAL AND CONFIDENTIAL
The Home Depot, Inc.
0000 Xxxxx Xxxxx Xxxx X.X.
Xxxxxxx, Xxxxxxx 00000
0000 Xxxxx Xxxxx Xxxx X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: | Xxxxx X. Tomé Chief Financial Officer and Executive Vice President-Corporate Services |
Ladies and Gentlemen:
This commitment letter agreement (together with all exhibits and schedules hereto, the “Commitment
Letter”) will confirm the understanding and agreement among Xxxxxx Brothers Commercial Bank
(together with its designated affiliates, “LBCB”), Xxxxxx Brothers Holdings Inc. (together with its
designated affiliates, “LBHI”), Xxxxxx Commercial Paper Inc. (“LCPI” and together with LBCB and
LBHI, the “Xxxxxx Lenders”), Xxxxxx Brothers Inc. (“Xxxxxx Brothers” and together with the Xxxxxx
Lenders, “Xxxxxx”), Xxxxxxx Xxxxx Capital Corporation (“MLCC”) and Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated (“MLPF&S” and together with MLCC, “Xxxxxxx Xxxxx”), The Home Depot, Inc., a
Delaware corporation (the “Company”), in connection with the proposed financing for the acquisition
of up to 250 million shares of its common stock pursuant to the offer to purchase (the “Offer to
Purchase”) (as such amount may be increased as provided therein) dated on or about the date hereof
(the “Share Repurchase”) and to provide support for the issuance by the Company of commercial paper
in connection with such Share Repurchase. For purposes of this Commitment Letter, the Xxxxxx
Lenders, Xxxxxx Brothers, MLCC and MLPF&S are collectively referred to as “we”, “us” or the
“Agents”. The entering into and borrowings under the Credit Facility (as defined below) by the
parties herein described, the Share Repurchase and the payment of any related fees and expenses are
herein collectively referred to as the “Transactions”. The date on which the parties enter into
definitive documentation governing the Credit Facility (as defined below) is referred to as the
“Closing Date.”
You have advised us that the total funds needed to finance the Transactions (including fees
and expenses) will be provided from up to $10.0 billion from (i) the issuance of commercial paper
by the Company and/or (ii) direct borrowings by the Company under a Revolving Facility (the “Credit
Facility”) among the Company, the Xxxxxx Lenders, MLCC and the financial institutions party
thereto.
1. The Commitments.
(a) You have requested that each of (i) the Xxxxxx Lenders and (ii) MLCC, severally and not
jointly, (collectively with each other entity that becomes a lender under the Credit Facility, the
“Lenders”) commit to provide 50% each of the entire amount of the Credit Facility upon the terms
and subject to the conditions set forth or referred to in this Commitment Letter and in the
Summary of Terms of Credit Facility attached hereto as Exhibit A (the “Term Sheet”).
(b) Based on the foregoing, each of (i) the Xxxxxx Lenders and (ii) MLCC is pleased to confirm
by this Commitment Letter its several commitment to you (the “Commitment”), to provide or cause one
or more of its affiliates to each provide 50% of the entire amount of the Credit Facility.
(c) It is agreed that Xxxxxx Brothers and MLPF&S (each an “Arranger” and together the
“Arrangers”) will act as the sole book-runners and sole arrangers for the Credit Facility, that
LCPI (or its designated affiliate) will act as the sole and exclusive Administrative Agent (acting
in such role, the “Administrative Agent”) for the Credit Facility, and MLCC will act as the sole
and exclusive Syndication Agent (acting in such role, the “Syndication Agent”) for the Credit
Facility. Each of the Arrangers, the Administrative Agent, and the Syndication Agent will have the
rights and authority customarily given to financial institutions in such roles, but will have no
duties other than those expressly set forth herein. You agree that no other agents, co-agents,
arrangers or book-runners will be appointed, no other titles will be awarded, and no compensation
(other than that expressly contemplated by the Term Sheet or the Fee Letter referred to below) will
be paid, in connection with the Credit Facility unless you and we so agree.
(d) The commitments and agreements of each of the Xxxxxx Lenders, MLCC and the Arrangers
described herein are subject to (i) there not having occurred any event, development or
circumstance since January 28, 2007 that has caused or would reasonably be expected to cause a
material adverse condition or material adverse change in or affecting (A) the financial condition,
operations, business or properties of the Company and its subsidiaries, taken as a whole, except as
previously disclosed in the Company’s public filings with the Securities and Exchange Commission or
(B) the validity or enforceability of any of the Credit Documentation (as defined in the Term
Sheet) or the rights and remedies of the Administrative Agent and the Lenders thereunder, (ii) any
information or other matter disclosed to the Arrangers prior to the date hereof in connection with
the Transactions not proving to have been false or misleading in any material respect at the time
such information or other matter was disclosed to the Arrangers, (iii) there not having occurred a
material disruption or material adverse change in the financial, banking (including the bank loan
syndication market) or capital markets that is reasonably expected to materially impair the
syndication of the Credit Facility or the sale or placement of investment grade, senior unsecured
corporate debt securities and (iv) the other conditions set forth below or referred to in the
Funding Conditions attached hereto as Exhibit B.
2. Fees and Expenses. In consideration of the execution and delivery of this
Commitment Letter by each of the Xxxxxx Lenders and MLCC as a Lender, you agree to pay the fees and
expenses set forth in Annex A-I to the Term Sheet and in the Fee Letter dated the date hereof (the
“Fee Letter”) as and when payable in accordance with the terms thereof.
3. Indemnification.
(a) The Company hereby agrees to indemnify and hold harmless each of the Xxxxxx Lenders,
Xxxxxx Brothers, MLCC, MLPF&S, the other Lenders and each of their respective affiliates and all
their respective officers, directors, partners, trustees, employees, controlling persons and agents
(each, an “Indemnified Person”) from and against any and all losses, claims, damages and
liabilities to which any Indemnified Person may become subject arising out of or in connection with
this Commitment Letter, the Credit Facility, the use of the proceeds therefrom, any of the other
transactions contemplated by this Commitment Letter or any other transaction related thereto or any
claim, litigation, investigation or proceeding relating to any of the foregoing (each a “Claim” and
collectively the “Claims”), regardless
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of whether any Indemnified Person is a party thereto, and to reimburse each Indemnified Person
promptly upon demand for all reasonable legal and other expenses reasonably incurred by it in
connection with investigating, preparing to defend or defending, or providing evidence in or
preparing to serve or serving as a witness with respect to, any lawsuit, investigation, claim or
other proceeding relating to any of the foregoing (including, without limitation, in connection
with the enforcement of the indemnification obligations set forth herein); provided, however, that
no Indemnified Person will be entitled to indemnity hereunder in respect of any loss, claim,
damage, liability or expense to the extent such loss, claim, damage, liability or expense results
from (i) the willful misconduct or gross negligence of such Indemnified Person, (ii) any material
breach by such Indemnified Person of its representations or obligations under this Commitment
Letter or (iii) the violation by such Indemnified Person of any law, rule or regulation binding
upon such Indemnified Person (the matters set forth in the foregoing clauses (i) through (iii)
being collectively referred to as the “Indemnity Exclusions”). In no event will any Indemnified
Person be liable on any theory of liability for indirect, special or consequential damages, lost
profits or punitive damages as a result of any failure to fund the Credit Facility or otherwise in
connection with the Credit Facility. No Indemnified Person will be liable for any damages arising
from the use by unauthorized persons of information, projections or other materials sent through
electronic, telecommunications or other information transmission systems that are intercepted by
unauthorized persons, except to the extent such use resulted from the gross negligence or willful
misconduct of such Indemnified Person.
(b) The Company further agrees that, without the prior written consent of each of Xxxxxx and
Xxxxxxx Xxxxx, which consent will not be unreasonably withheld, it will not enter into any
settlement of a lawsuit, claim or other proceeding against any Indemnified Person arising out of
this Commitment Letter or the Transactions unless such settlement includes an explicit and
unconditional release from the party bringing such lawsuit, claim or other proceeding of such
Indemnified Person.
(c) In case any action or proceeding is instituted involving any Indemnified Person for which
indemnification is to be sought hereunder by such Indemnified Person, then such Indemnified Person
will promptly notify the Company of the commencement of any action or proceeding; provided,
however, that the failure so to notify the Company will not relieve the Company from any liability
that they may have to such Indemnified Person pursuant to this Section 3 or from any liability that
they may have to such Indemnified Person other than pursuant to this Section 3. Notwithstanding
the above, following such notification, the Company may elect in writing to assume the defense of
such action or proceeding, and, upon such election, they will not be liable for any legal costs
subsequently incurred by such Indemnified Person (other than reasonable costs of investigation and
providing evidence) in connection therewith, unless (i) they have failed to provide counsel
reasonably satisfactory to such Indemnified Person in a timely manner, (ii) counsel provided by the
Company reasonably determines that its representation of such Indemnified Person would present it
with a conflict of interest or (iii) the Indemnified Person reasonably determines that there may be
legal defenses available to it which are different from or in addition to those available to the
Company. In connection with any one action or proceeding, the Company will not be responsible for
the fees and expenses of more than one separate law firm (in addition to local counsel) for all
Indemnified Persons.
(d) The Company, the Xxxxxx Lenders, Xxxxxx Brothers, MLCC and MLPF&S agree that if any
indemnification or reimbursement sought pursuant to this Section 3 is judicially determined to be
unavailable for a reason other than those as provided in the Indemnity Exclusions, then the Company
will contribute to the amount paid or payable by the Xxxxxx Lenders, Xxxxxx Brothers, MLCC or
MLPF&S as the case may be, as a result of such losses, claims, damages, liabilities and expenses
for which such indemnification or reimbursement is held unavailable (i) in such proportion as is
appropriate to reflect the relative benefits to the Company, on the one hand, and the Xxxxxx
Lenders, Xxxxxx Brothers, MLCC or MLPF&S, as the case may be, on the other hand, in connection with
the transactions to which such indemnification or reimbursement relates, or (ii) if the allocation
provided by
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clause (i) above is judicially determined not to be permitted, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) but also the
relative faults of the Company, on the one hand, and the Xxxxxx Lenders, Xxxxxx Brothers, MLCC or
MLPF&S, on the other hand, as well as any other equitable considerations.
4. Expiration of Commitment. The Commitments will expire at 5:00 p.m., New York City
time, on July 9, 2007 unless on or prior to such time you have executed and returned to Xxxxxx
Brothers a copy of this Commitment Letter, the Fee Letter and the Engagement Letter. If you do so
execute and deliver to Xxxxxx Brothers this Commitment Letter, the Fee Letter and the Engagement
Letter, the Xxxxxx Lenders and MLCC agree to hold their respective Commitments available for you
until 5:00 p.m., New York City time, on September 30, 2007. The Commitments will terminate on the
Closing Date, and you agree to rely exclusively on your rights and the commitments set forth in the
Credit Documentation in respect of all loans and extensions of credit to be made after the Closing
Date.
5. Confidentiality.
(a) This Commitment Letter, the Fee Letter, and the Engagement Letter dated as of the date
hereof among you and the Arrangers (the “Engagement Letter”) and the terms and conditions contained
herein and therein may not be disclosed by the Company to any person or entity (other than (i) such
of your agents and advisors as need to know and agree to be bound by the provisions of this
paragraph, (ii) other than with respect to the Fee Letter, disclosures made as part of the Offer to
Purchase and related Schedule TO or (iii) as otherwise may be required by law or in response to
comments from the Securities and Exchange Commission or other regulatory authority in connection
with the Offer to Purchase (including with respect to the Fee Letter)) without the prior written
consent of the Xxxxxx Lenders, MLCC and the Arrangers.
(b) You acknowledge that each of Xxxxxx Brothers and its affiliates (the term “Xxxxxx
Brothers,” when used in this paragraph, includes all such affiliates, including the Xxxxxx Lenders)
and Xxxxxxx Xxxxx and its 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. Neither
Xxxxxx Brothers nor Xxxxxxx Xxxxx will use confidential information obtained from you by virtue of
the transactions contemplated by this Commitment Letter or their other relationships with you in
connection with the performance by Xxxxxx Brothers or Xxxxxxx Xxxxx of services for other
companies, and neither Xxxxxx Brothers nor Xxxxxxx Xxxxx will furnish any such information to other
companies. You also acknowledge that neither of Xxxxxx Brothers or Xxxxxxx Xxxxx has any
obligation to use in connection with the transactions contemplated by this Commitment Letter, or to
furnish to you, confidential information obtained from other companies.
6. Assignment and Syndication.
(a) The parties hereto agree that Xxxxxx and Xxxxxxx Xxxxx will have the right to syndicate
the Credit Facility and the Commitment to one or more groups of financial institutions or other
investors, identified by us after consultation with you, provided that any such financial
institutions and other investors that are not currently participating as lenders under the
Company’s existing revolving credit facility shall be subject to approval by the Company (such
approval not to be unreasonably withheld or delayed). Xxxxxx and Xxxxxxx Xxxxx will have the right
to manage all aspects of any such syndication in consultation with you, including decisions as to
the selection of institutions to be approached and when they will be approached, the acceptance of
commitments, the amounts offered, the amounts allocated and the compensation provided. The
Commitments are subject to the Company using all commercially reasonable efforts to assist Xxxxxx
Brothers and Xxxxxxx Xxxxx in such syndication process for the Credit Facility and any issuance of
commercial paper made to finance the Share Repurchase, includ-
4
ing, without limitation: (i) ensuring that the syndication efforts benefit from the existing
lending relationships of the Company; (ii) arranging for direct contact between senior management
and other representatives and advisors of the Company and the proposed Lenders or purchasers; (iii)
assisting in the preparation of marketing materials to be used in connection with any syndication;
and (iv) hosting, with us, one or more meetings of prospective Lenders or purchasers, and, in
connection with any such Lender meeting, consulting with us with respect to the presentations to be
made at such meeting, and making available appropriate officers and representatives to rehearse
such presentations prior to such meetings, as reasonably requested by us. You also agree that, at
your expense, you will work with Xxxxxx Brothers and MLPF&S to procure a rating for the Credit
Facility by Xxxxx’x Investors Service, Inc. and Standard & Poor’s Ratings Group prior to the
commencement of the general syndication of the Credit Facility.
(b) To assist the Arrangers in its syndication efforts, you agree promptly to prepare and
provide to Xxxxxx Brothers such information with respect to the Company and the other transactions
contemplated hereby as it may reasonably request, including all financial information as it may
reasonably request. You hereby represent and covenant that all information (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 misleading in light of the
circumstances under which such statements are made. You understand that in arranging and
syndicating the Credit Facility and the Commitment we may use and rely on the Information without
independent verification thereof.
(c) To ensure an orderly and effective syndication of the Credit Facility and the Commitment,
you agree that, from the date hereof until the earlier of the termination of the syndication as
determined by the Arrangers and 45 days following the Closing Date, you will not, and will not
permit any of your affiliates to, syndicate or issue, attempt to syndicate or issue, announce or
authorize the announcement of the syndication or issuance of, or engage in discussions concerning
the syndication or issuance of, any debt facility, or debt or preferred equity security of the
Company or any of its subsidiaries (other than (i) debt issued pursuant to your commercial paper
program to fund the Share Repurchase or for working capital purposes and other operations in the
ordinary course of business and in consultation with the Arrangers, (ii) the syndication of the
Credit Facility as contemplated hereby and (iii) any offering of Securities as contemplated by the
Engagement Letter), including any renewals or refinancings of any existing debt facility, in each
case, if such actions could, in the reasonable judgment of the Arrangers, be expected to interfere
in any material respect with the syndication of the Credit Facility, unless the Arrangers have
given their prior written consent thereto.
7. Survival. The provisions of this Commitment Letter relating to the payment of fees
and expenses, indemnification and contribution and confidentiality and the provisions of Sections 6
and 8 hereof will survive the expiration or termination of the Commitment or this Commitment Letter
(including any extensions) and the execution and delivery of definitive financing documentation.
8. Choice of Law; Jurisdiction; Waivers.
(a) This Commitment Letter will be governed by and construed in accordance with the laws of
the State of New York. The Company hereby irrevocably submits to the non-exclusive jurisdiction of
any New York State court or Federal court sitting in the County of New York in respect of any suit,
action or proceeding arising out of or relating to the provisions of this Commitment Letter or the
Fee Letter and irrevocably agrees that all claims in respect of any such suit, action or proceeding
may be heard and determined in any such court. The parties hereto hereby waive any objection that
they may now or hereafter have 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 brought in any
such court has been brought
5
in an inconvenient forum. The parties hereto hereby waive, to the fullest extent permitted by
applicable law, any right to trial by jury with respect to any action or proceeding arising out of
or relating to this Commitment Letter or the Fee Letter.
(b) No Lender will be liable in any respect for any of the obligations or liabilities of any
other Lender under this letter or arising from or relating to the transactions contemplated hereby.
9. Miscellaneous.
(a) This Commitment Letter may be executed in one or more counterparts, each of which will be
deemed an original, but all of which taken together will constitute one and the same instrument.
Delivery of an executed signature page of this Commitment Letter by facsimile transmission will be
effective as delivery of a manually executed counterpart hereof. This Commitment Letter may not be
amended or waived except by an instrument in writing signed by Xxxxxx Brothers, the Xxxxxx Lenders,
MLCC, MLPF&S and you.
(b) The Company may not assign any of its rights, or be relieved of any of its obligations,
under this Commitment Letter, without the prior written consent of each of the Xxxxxx Lenders and
MLCC (and any purported assignment without such consent will be null and void). In connection with
any syndication of all or a portion of the Commitment, the rights and obligations of each of the
Xxxxxx Lenders and MLCC hereunder may be assigned, in whole or in part, and upon such assignment
and assumption by the assignee of all such obligations in respect of the portion of the Commitment
so assigned on the terms set forth in this Commitment Letter or on the terms set forth in the
definitive financing documents, the Xxxxxx Lenders or MLCC, as the case may be, will be relieved
and novated hereunder from its obligations with respect to such portion of the Commitment.
(c) This Commitment Letter and the attached Exhibits set forth the entire understanding of the
parties hereto as to the scope of the Commitment and the obligations of the Lenders and the
Arrangers hereunder. This Commitment Letter supersedes all prior understandings and proposals,
whether written or oral, between any of the Lenders and you relating to any financing or the
transactions contemplated hereby. This Commitment Letter is in addition to the agreements of the
parties contained in the Engagement Letter and the Fee Letter.
(d) This Commitment Letter has been and is made solely for the benefit of the parties
signatory hereto, the Indemnified Persons, and their respective heirs, successors and assigns, and
nothing in this Commitment Letter, expressed or implied, is intended to confer or does confer on
any other person or entity any rights or remedies under or by reason of this Commitment Letter or
the agreements of the parties contained herein.
(e) You acknowledge that the Lenders and the Arrangers may be (or may be affiliated with) full
service financial firms and as such from time to time may effect transactions for their own account
or the account of customers, and hold long or short positions in debt or equity securities or loans
of companies that may be the subject of the transactions contemplated by this Commitment Letter.
You hereby waive and release, to the fullest extent permitted by law, any claims you have with
respect to such conflicts of interest arising from such transactions, activities, investments or
holdings, or arising from the failure of the Xxxxxx Lenders, Xxxxxx Brothers, MLCC, MLPF&S or one
or more Lenders or any of their respective affiliates to bring such transactions, activities,
investments or holdings to your attention.
(f) You agree to provide us, prior to the Closing Date, with all documentation and other
information required by bank regulatory authorities under applicable “know your customer” and
6
anti-money laundering rules and regulations, including, without limitation, the U.S.A. Patriot
Act., as we may have requested.
7
If you are in agreement with the foregoing, kindly sign and return to us the enclosed copy of
this Commitment Letter.
Very truly yours, XXXXXX BROTHERS HOLDINGS INC. |
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By: | /s/ X. Xxxxxx Xxxxxxx | |||
Name: | X. Xxxxxx Xxxxxxx | |||
Title: | Authorized Signatory | |||
XXXXXX BROTHERS COMMERCIAL BANK |
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By: | /s/ Xxxxxx Xxxxx | |||
Name: | Xxxxxx Xxxxx | |||
Title: | Chief Credit Officer | |||
XXXXXX COMMERCIAL PAPER INC. |
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By: | /s/ Xxxxx X’Xxxxxx | |||
Name: | Xxxxx X’Xxxxxx | |||
Title: | Managing Director | |||
XXXXXX BROTHERS INC. |
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By: | /s/ Xxxxx X’Xxxxxx | |||
Name: | Xxxxx X’Xxxxxx | |||
Title: | Managing Director | |||
XXXXXXX XXXXX CAPITAL CORPORATION. |
||||
By: | /s/ Xxxxxxxxx Xxxxxxxx | |||
Name: | Xxxxxxxxx Xxxxxxxx | |||
Title: | Vice President | |||
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED |
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By: | /s/ Xxxxxxxxx Xxxxxxxx | |||
Name: | Xxxxxxxxx Xxxxxxxx | |||
Title: | Vice President | |||
[Signature Page to Commitment Letter]
Accepted and agreed to as of the
date first above written:
date first above written:
THE HOME DEPOT, INC. | ||||||
By: | /s/ Xxxxx X. Tomé | |||||
Name: | Xxxxx X. Tomé |
|||||
Title: | Chief Financial Officer and
Executive Vice President-Corporate Services |
[Signature Page to Commitment Letter]
EXHIBIT A TO COMMITMENT LETTER
SUMMARY OF TERMS OF CREDIT FACILITY
Set forth below is a summary of certain of the terms of the Credit Facility and the
documentation related thereto. Capitalized terms used and not otherwise defined herein have the
meanings set forth in the Commitment Letter to which this Summary of Terms is attached and of which
it forms a part.
I. | Parties | |||
Borrower | The Home Depot, Inc. (the “Company”). |
|||
Guarantors and Security | None. |
|||
Sole Arrangers and Sole Book-Runners |
Xxxxxx Brothers Inc. and Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated (in such capacity,
the “Arrangers”). |
|||
Administrative Agent | Xxxxxx Commercial Paper Inc. (or its
designated affiliate and in such
capacity, the “Administrative
Agent”). |
|||
Syndication Agent | Xxxxxxx Xxxxx Capital Corporation (in
such capacity, the “Syndication
Agent”). |
|||
Lenders | Banks, financial institutions and
other entities that become lenders
pursuant to the Credit Documentation
(as defined below) (collectively, the
“Lenders”). |
|||
II. | Type and Amount of Credit Facility | |||
Revolving Credit Facility | A revolving credit facility (the
“Revolving Facility” or the “Credit
Facility”; the commitments
thereunder, the “Revolving Credit
Commitments”) in the amount of up to
$10.0 billion (the loans thereunder,
the “Loans”). |
|||
Availability | The Revolving Credit Facility shall
be available on a revolving basis
during the period commencing on the
Closing Date and ending on November
21, 2007 (the “Revolving Credit
Termination Date”). |
|||
Maturity | The Revolving Credit Termination Date. |
|||
Purpose | The proceeds of the Loans will be
used to finance the Share Repurchase,
to provide support for the issuance
by the Borrower of commercial paper
in connection with such Share
Repurchase and to pay related fees
and expenses. |
A-1
III. | Certain Payment Provisions | |||
Fees and Interest Rates | Interest rates to be consistent with
those provided in the Company’s
Credit Agreement dated as of December
16, 2005, as amended (the “Existing
Credit Agreement”) and fees as set
forth on Annex I. |
|||
Optional Prepayments and Commitment Reductions | Loans may be prepaid and Revolving
Credit Commitments may be reduced
without premium or penalty (other
than LIBOR breakage costs) in minimum
amounts to be agreed upon and
substantially consistent with the
Existing Credit Agreement. |
|||
Mandatory Prepayments and Commitment Reductions | 100% of the net cash proceeds of any
sale or issuance or incurrence of any
debt or equity (including preferred
equity) securities (other than
issuances pursuant to employee stock
plans, issuances of commercial paper,
and other exceptions and thresholds
to be agreed) after the Closing Date
by the Company or any of its
subsidiaries will be applied to
prepay the Loans and permanently
reduce the Revolving Credit
Commitments. |
|||
100% of the net cash proceeds of any
asset sales (subject to exceptions
for store sales in the ordinary
course of business and other
exceptions and thresholds to be
agreed) after the Closing Date by the
Company or any of its subsidiaries
will be applied to prepay the Loans
and permanently reduce the Revolving
Credit Commitments. |
||||
To the extent the Share Repurchase is
consummated and the sum of (x) the
amounts borrowed under the Credit
Facility on the Closing Date and (y)
the amounts of the Revolving Credit
Commitments needed after the Closing
Date to support commercial paper
issued to finance the Share
Repurchase (such amounts under this
clause (y) the “Support Commitments”)
are less than $10.0 billion in the
aggregate, any Revolving Credit
Commitments in excess of all such
amounts shall be permanently
terminated. The Support Commitments
shall terminate on the earlier of (x)
the Revolving Credit Termination Date
and (y) the date on which such
commercial paper issued to finance
the Share Repurchase is refinanced
with securities issued in the capital
markets. |
A-2
IV. | Conditions | The availability of the Credit
Facility is subject to the conditions
set forth on Exhibit B to the
Commitment Letter. |
||
The making of each extension of
credit will be conditioned upon (i)
the accuracy of all representations
and warranties in all material
respects in the definitive financing
documentation with respect to the
Credit Facility (the “Credit
Documentation”) (other than (A) the
material adverse change, (B)
litigation representations and (C)
representations that relate solely to
an earlier date), and (ii) there
being no default or event of default
in existence at the time of, or after
giving effect to the making of, the
Loans. |
||||
V. | Certain Documentation Matters | The Credit Documentation will contain
representations, warranties,
affirmative covenants, negative
covenants and events of default
consistent with those contained in
the Existing Credit Agreement. |
||
Representations and Warranties | Substantially consistent with the
Existing Credit Agreement. |
|||
Affirmative Covenants | Substantially consistent with the
Existing Credit Agreement. |
|||
Financial Covenants | None. |
|||
Negative Covenants | Substantially consistent with the
Existing Credit Agreement. |
|||
Events of Default | Substantially consistent with the
Existing Credit Agreement. |
|||
Voting | Amendments and waivers with respect
to the Credit Documentation will
require the approval of Lenders
holding not less than a majority of
the aggregate amount of the Loans,
except that (i) the consent of each
Lender directly and adversely
affected thereby will be required
with respect to (a) reductions in the
amount or extensions of the scheduled
date of final maturity of any Loan,
(b) reductions in the rate of
interest or extensions of any due
date thereof, (c) increases in the
amount or extensions of the expiry
date of any Lender’s commitment or
(d) modifications to the pro rata
provisions of the Credit
Documentation and (ii) the consent of
100% of the Lenders will be required
with respect to modifications to any
of the voting percentages. |
A-3
Assignments and Participations | Each Lender may assign any or all of
its loans and commitments to its
affiliates or to one or more banks,
financial institutions or other
entities. Except for assignments to
another Lender or to an affiliate of
a Lender or assignments of funded
Loans, assignments will require the
consent of the Administrative Agent
and, so long as no event of default
has occurred and is continuing, the
Company (which consent in each case
will not be unreasonably withheld or
delayed). No consent shall be
required in connection with an
assignment to a Federal Reserve Bank.
Partial assignments (other than to
another Lender or to an affiliate of
a Lender), must be at least $15.0
million unless otherwise agreed by
the Company and the Administrative
Agent. Upon assignment, the assignee
will become a Lender for all purposes
under the Credit Documentation under
documentation reasonably acceptable
to the Administrative Agent.
Promissory notes will be issued under
the Credit Facility only upon
request. |
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Yield Protection | The Credit Documentation will contain
customary provisions relating to
increased costs, loss of yield and
“breakage costs” and substantially as
set forth in the Existing Credit
Agreement. |
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Expenses and Indemnification | The Company will pay (i) all
reasonable out-of-pocket expenses of
the Administrative Agent and the
Arrangers associated with the
syndication of the Credit Facility
and the preparation, negotiation,
execution, delivery and, if the
Credit Facility is syndicated to
Lenders other than affiliates of the
Arrangers, administration (limited to
an amount to be agreed upon following
the Closing Date) of the Credit
Documentation and any amendment or
waiver with respect thereto
(including the reasonable fees,
disbursements and other charges of
counsel (as separately agreed by the
Company, the Administrative Agent and
the Lenders) and the charges of
IntraLinks) and (ii) all reasonable
out-of-pocket expenses of the
Administrative Agent and the Lenders
(including the reasonable fees,
disbursements and other charges of
counsel) in connection with the
enforcement of the Credit
Documentation or in any bankruptcy
case or insolvency proceeding. |
|||
The Administrative Agent, the
Arrangers and the Lenders (and their
affiliates and each of their
respective officers, directors,
partners, trustees, employees, |
A-4
controlling persons and agents) will
be indemnified against any loss,
liability, cost or expense incurred
in respect of the financing
contemplated hereby or the use or the
proposed use of proceeds thereof on
terms consistent with those set forth
in the Existing Credit Agreement. |
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Governing Law and Forum | State of New York. |
|||
Counsel to the Administrative Agent and the Arrangers | Xxxxxx Xxxxxx & Xxxxxxx llp. |
A-5
Annex I
Interest and Certain Fees
Interest Rate Options | Consistent with Existing Credit Agreement. |
|
The Company may elect that the loans comprising
each borrowing bear interest at a rate per annum
equal to: |
||
(i) the Base Rate plus the Applicable Margin (“Base
Rate Loans”); or |
||
(ii) the LIBOR Rate plus the Applicable Margin
(“LIBOR Loans”). |
||
As used herein: |
||
“Base Rate” means the higher of (i) the prime
lending rate as established by JPMorgan Chase Bank,
N.A. and in effect from time to time (the “Prime
Rate”), and (ii) the federal funds effective rate
from time to time plus 0.5%. |
||
“Applicable Margin” means the applicable margin per
annum based upon the applicable ratios of
Consolidated Funded Debt to Consolidated Total
Tangible Capital (each as defined in the Existing
Credit Agreement) on the pricing grid attached
hereto as Annex I-A (the “Pricing Grid”). |
||
“LIBOR Rate” means the rate (adjusted for statutory
reserve requirements for eurocurrency liabilities)
at which eurodollar deposits for one, two or three
months (as selected by the Company) are offered in
the interbank eurodollar market. |
||
No new LIBOR interest period may be selected when
any event of default is continuing. |
||
Interest Payment Dates | For Base Rate Loans, quarterly in arrears. |
|
For LIBOR Loans, on the last day of each relevant
interest period. |
||
Facility Fee | The Borrower shall pay a facility fee calculated at
a rate per annum determined in accordance with the
Pricing Grid on the aggregate amount of the
Revolving Facility (whether drawn or undrawn),
payable on the Closing Date and thereafter
quarterly in arrears and at maturity. |
I-1
Default Rate | Overdue amounts (including overdue interest) will
bear interest at a rate equal to 2% per annum above
the applicable rate. |
|
Rate and Fee Basis | All per annum rates will be calculated on the basis
of a year of 360 days (or 365 days, in the case of
Base Rate Loans the interest rate payable on which
is then based on the Prime Rate) and the actual
number of days elapsed. |
I-2
Annex I-A
Applicable Margin (in basis points per annum)
LIBOR | ||||||||
Pricing | Total Funded Debt/Total | Loan | LIBOR First | |||||
Level | Tangible Capital | Facility Fee (bps) | Margin (bps) | Drawn (bps) | ||||
1
|
<25.00% | 4.0 | 11 | 15.0 | ||||
2 | >25.00% and <35.00% | 4.5 | 10.5 | 15.0 | ||||
3 | >35.00% and <45.00% | 5.5 | 17.0 | 22.5 | ||||
4 | >45.00% | 7.0 | 28.0 | 35.0 |
I-1
EXHIBIT B TO COMMITMENT LETTER
FUNDING CONDITIONS
Capitalized terms used but not defined herein have the meanings assigned to them in the Commitment
Letter to which this Exhibit B is attached and of which it forms a part. The availability of the
Credit Facility is conditioned upon satisfaction of, among other things, the conditions precedent
summarized below.
(a) | The Company shall have executed and delivered definitive financing documentation with respect to the Credit Facility consistent with the Term Sheet and otherwise reasonably satisfactory to the Administrative Agent, the Arrangers and the Company. | |
(b) | There shall not exist any default or event of default under the Credit Facility. |
(c) | The Share Repurchase shall have been consummated pursuant to the Offer to Purchase on terms and conditions acceptable to the Arrangers (it being understood that the terms and conditions set forth in the draft Offer to Purchase delivered to the Arrangers on July 6, 2007 are acceptable), and no provision thereof shall have been waived, amended, supplemented or otherwise modified in a manner materially adverse to the interests of the Company or the Lenders without the written consent of the Arrangers. |
(d) | The Company shall have complied with all of its obligations under and agreements in the Commitment Letter, the Engagement Letter and the Fee Letter. |
(e) | All governmental, regulatory and third party approvals necessary in connection with the Transactions and the financing contemplated hereby shall have been obtained and be in full force and effect, without any action being taken or threatened by any competent authority that could reasonably be expected to restrain, prevent or otherwise impose material adverse conditions on the Share Repurchase or the financing thereof. |
(f) | The Company’s corporate credit ratings shall on the Closing Date be BBB+ (with a stable outlook) or better by S&P and Baa1 (with a stable outlook) or better by Xxxxx’x, and in each case neither ratings organization shall have announced that it has such rating under surveillance or review, with possible negative implications, for a reduction to a rating below BBB+ or Baa1, as the case may be. |
(g) | If the closing date occurs after September 12, 2007, the Company shall have delivered to the Arrangers its unaudited interim consolidated financial statements for the quarterly period ended July 29, 2007. |
(h) | The Administrative Agent shall have received such legal opinions, documents and other instruments as are customary for transactions of this type and substantially consistent with those delivered pursuant to the Existing Credit Agreement. |
(i) | The Company will use commercially reasonable efforts to place commercial paper as available to the Company in the market up to the amount of the Revolving Commitments. |
B-1