EXHIBIT 99(b)(1)
XXXXXXX XXXXX CREDIT THE CHASE MANHATTAN BANK
PARTNERS X.X. XXXXX SECURITIES INC.
00 XXXXX XXXXXX 000 XXXX XXXXXX
XXX XXXX, XXX XXXX 00000 XXX XXXX, XXX XXXX 00000
PERSONAL AND CONFIDENTIAL
December 22, 1997
Outsourcing Solutions Inc.
Suite 000
000 Xxxxx Xxxxx Xxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxx
Re: OUTSOURCING SOLUTIONS INC.
AMENDED AND RESTATED CREDIT AGREEMENT
Gentlemen:
Reference is made to that certain Xxxxxxx and Restated Credit Agreement dated as
of October 8, 1997, as amended to the date hereof (as so amended, the "EXISTING
CREDIT AGREEMENT"), among Outsourcing Solutions Inc. ("COMPANY"), the lenders
party thereto (the "EXISTING LENDERS"), The Chase Manhattan Bank ("CHASE") and
Xxxxxxx Xxxxx Credit Partners L.P. ("GSCP"), as Co-Administrative Agents, GSCP
and Chase Securities Inc. ("CSI"), as Arranging Agents, and SunTrust Bank,
Atlanta, as Collateral Agent.
You have advised us that Company intends to acquire (the "ACQUISITION") the
outstanding capital stock of The Union Corporation, a Delaware corporation
("UNION"), through a tender offer (the "TENDER OFFER") by a newly formed, wholly
owned Subsidiary ("MERGER SUB") of Company for up to 100% of the shares of Union
(the "SHARES"), followed by a merger of Merger Sub with and into Union (the
"MERGER") in which Union will be the surviving corporation and in which any
Shares not tendered in the Tender Offer will be cancelled in exchange for cash
consideration. We understand that the Tender Offer will be conditioned on, among
other things, the tender and purchase of at least 66-2/3% of the Shares (the
"MINIMUM SHARES"). Upon the consummation of the Acquisition and the
Outsourcing Solutions Inc.
December 22, 1997
Page 2
Merger, Union will be a wholly owned subsidiary of Company. You have delivered
to us on the date hereof a fully executed copy of a merger agreement between
Company and Union providing for the Merger and have advised us that the merger
agreement and the Merger on the terms set forth in such merger agreement have
been approved by the Board of Directors of Union.
You have also advised us that it is anticipated that, in order to finance the
Acquisition (including transaction costs), to refinance certain existing debt of
Company and to pay costs and expenses related to the Acquisition, the Company
desires to obtain up to $225,000,000 in additional senior bank financing (the
"ADDITIONAL BANK FINANCING") pursuant to an amendment and restatement of the
Existing Credit Agreement (the Existing Credit Agreement, as so amended and
restated, being the "AMENDED AND RESTATED CREDIT AGREEMENT") which would
restructure the credit facilities available under the Existing Credit Agreement
(the "EXISTING BANK FACILITIES") so as to consist of the existing two term loan
facilities of $62,500,000 and $124,921,708, respectively, a third term loan
facility of up to $225,000,000 (collectively, the "TERM LOAN FACILITIES"), and
the existing revolving credit facility of up to $58,000,000 with a sublimit for
letters of credit of $15,000,000 (the "REVOLVING CREDIT FACILITY"; together with
the Term Loan Facilities, the "AMENDED AND RESTATED BANK FACILITIES"). The
proceeds from the up to $225,000,000 of additional Term Loan Facilities are
expected to be used, to pay the consideration for the Shares pursuant to the
Tender Offer and the Merger and to pay related transaction costs and to repay
amounts outstanding under the Revolving Credit Facility, in each case in the
amounts set forth on SCHEDULE I to Annex B hereto.
Each of GSCP and Chase is pleased to confirm its commitment to provide up to
one-half of the $470,421,708 of Amended and Restated Bank Facilities, consisting
of (a) GSCP's $19,283,967.81 and Xxxxx'x $19,004,510.47 of commitments and
outstanding loans under the Existing Credit Agreement, (b) an additional
$225,000,000 of commitments in respect of the Additional Bank Financing, and (c)
in the event Existing Lenders constituting Requisite Lenders (as defined in the
Existing Credit Agreement) fail to consent to the Amended and Restated Bank
Facilities, the amount (the "BACKSTOPPED EXISTING BANK FACILITIES AMOUNT") of
the Existing Bank Facilities (as defined in the attached Annex B) which would,
when added to the amount of the Existing Bank Facilities held by Existing
Lenders which have consented to the Amended and Restated Bank Facilities, be
sufficient, if voted to approve the Amended and Restated Bank Facilities, to
provide the approval of Requisite Lenders to the Amended and Restated Bank
Facilities, in each case under the terms and subject to the conditions contained
in this letter, the attached Annex A and the attached Annex B (together, the
"COMMITMENT LETTER"). In addition, on the terms and subject to the conditions of
the Commitment Letter, GSCP and Chase will act as Co-Administrative
Outsourcing Solutions Inc.
December 22, 1997
Page 3
Agents, and GSCP and CSI will act as Arranging Agents, in connection with the
Amended and Restated Bank Facilities.
Our commitments are subject, in our respective reasonable discretion, to the
condition that there shall not have been, since the date of the most recent
audited financial statements of Company and its subsidiaries and of Union and
its subsidiaries provided to GSCP, Chase and CSI, any material adverse change in
the business, condition (financial or otherwise) results of operations, assets,
liabilities, financial performance or prospects of Company and its subsidiaries
or Union and its subsidiaries which in any such case GSCP, Chase or CSI, in
their respective judgment, reasonably deems material. Our commitments are also
subject, in our respective reasonable discretion, to the satisfactory
negotiation, execution and delivery of appropriate loan documents relating to
the Amended and Restated Bank Facilities, including, without limitation, an
amended and restated credit agreement, guaranties, security agreements, pledge
agreements, real property security agreements, opinions of counsel and other
related definitive documents (collectively, the "LOAN DOCUMENTS") to be based
upon and substantially consistent with the terms set forth in this Commitment
Letter.
The terms of this Commitment Letter are intended as an outline of certain of the
material terms of the Amended and Restated Bank Facilities, but do not include
all of the terms, conditions, covenants, representations, warranties, default
clauses and other provisions that will be contained in the Loan Documents. The
Loan Documents shall include, in addition, provisions that are customary or
typical for financings of this type and other provisions that GSCP and/or Chase
may reasonably determine to be appropriate in the context of the proposed
transactions.
Each of GSCP and Chase intends and reserves the right to syndicate the Amended
and Restated Bank Facilities to the Existing Lenders and the New Lenders (as
defined in the attached Annex B). GSCP, Chase and CSI will coordinate all
aspects of the syndication of the Amended and Restated Bank Facilities,
including determining the selection of potential New Lenders, the timing of all
offers to Existing Lenders and potential New Lenders, any designation of agent
or other title awarded to a Lender, the acceptance of commitments, the amounts
offered and the compensation provided to each Lender and the final commitment
allocations (with Company's consent not to be unreasonably withheld).
You agree to cooperate with GSCP, Chase and CSI in connection with (i) the
preparation of an information package regarding the business, operations and
prospects of Company and Union, including, without limitation, the delivery of
all information relating to the transactions contemplated hereunder prepared by
or on behalf of Company or Union deemed reasonably necessary by GSCP, Chase or
CSI to complete the syndication of the
Outsourcing Solutions Inc.
December 22, 1997
Page 4
Amended and Restated Bank Facilities and (ii) the presentation of such
information package in bank meetings and other communications with Lenders in
connection with the syndication of the Amended and Restated Bank Facilities. You
shall be solely responsible for the contents of any such information package and
presentation and you acknowledge that GSCP, Chase and CSI will be using and
relying upon the information contained in such information package and
presentation without independent verification thereof. In addition, you
represent and covenant that all information provided directly or indirectly by
you to GSCP, Chase, CSI or the Lenders in connection with the transactions
contemplated hereunder is and will be complete and correct in all material
respects and does not and will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
In connection with arrangements such as this, it is our policy to receive
indemnification. You agree to the provisions with respect to our indemnity and
other matters set forth in Annex A which is incorporated by reference into this
Commitment Letter.
You also agree to reimburse us for our reasonable out-of-pocket expenses,
including the reasonable fees and disbursements of our attorneys and any other
consultants or advisors that we have retained with your consent (not to be
unreasonably withheld), plus any sales, use or similar taxes (including
additions to such taxes, if any) arising in connection with any matter referred
to in this Commitment Letter (whether incurred before or after the date hereof).
Please note that this Commitment Letter and any written or oral advice provided
by GSCP, Chase or CSI in connection with this arrangement is exclusively for the
information of Company and may not be disclosed to any third party (other than
Union and its advisors) or circulated or referred to publicly without our prior
written consent, except as required by law. With respect to any disclosures
required by law, you agree to provide GSCP and Chase with prior notice of your
intention to make any such disclosure and an opportunity to consult with you
with respect thereto. The foregoing agreements regarding confidentiality shall
survive the termination of this Commitment Letter.
As you know, each of GSCP, Chase and CSI may from time to time effect
transactions, for its own account or the account of customers, and hold
positions in loans or options on loans of Company, Union and other companies
that may be the subject of this arrangement. In addition, Xxxxxxx, Xxxxx & Co.,
an affiliate of GSCP, and CSI are full service securities firms and as such may
from time to time effect transactions, for their own accounts or the accounts of
customers, and hold positions in securities or options on securities of Company
and other companies that may be the subject of this arrangement. In addition,
GSCP,
Outsourcing Solutions Inc.
December 22, 1997
Page 5
Chase and CSI may employ the services of its affiliates in providing
services hereunder and may exchange with such affiliates information concerning
Company, Union and other companies that may be the subject of this arrangement,
and such affiliates shall be entitled to the benefits afforded to GSCP, Chase
and CSI hereunder.
Our commitments hereunder shall terminate on the earlier of (x) 60 days from the
date of this Commitment Letter and (y) the date of termination of your agreement
with Union with respect to the Acquisition, unless the closing of the Amended
and Restated Bank Facilities, on the terms and subject to the conditions
contained herein, shall have been consummated by such date.
The obligations of GSCP, Chase and CSI hereunder are several obligations and the
failure of GSCP, Chase or CSI, as the case may be, to perform its obligations
hereunder shall not give rise to any liability on the part of any or all of the
other Lenders party to this letter with respect to such failure. The respective
rights of GSCP, Chase and CSI hereunder may be enforced independently.
[Remainder of page intentionally left blank]
Outsourcing Solutions Inc.
December 22, 1997
Page 6
Please confirm that the foregoing is in accordance with your understanding by
signing and returning to GSCP, Chase and CSI the enclosed copy of this
Commitment Letter, on or before the close of business on December 22, 1997,
whereupon this Commitment Letter shall become a binding agreement between us. If
not signed and returned as described in the preceding sentence by such date,
this offer will terminate on such date. We look forward to working with you on
this assignment.
Very truly yours,
XXXXXXX XXXXX CREDIT PARTNERS L.P.
By: /s/ XXXXXXX XXXX
-----------------------------
Authorized Signatory
THE CHASE MANHATTAN BANK
By: /s/ XXXXXX X. XXXXXXX
-----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
CHASE SECURITIES INC.
By: /s/ X. XXXXXXX XXXXXX
-----------------------------
Name: X. Xxxxxxx Xxxxxx
Title: Vice President
Outsourcing Solutions Inc.
December 22, 1997
Page 7
ACCEPTED AS OF THE DATE ABOVE:
OUTSOURCING SOLUTIONS INC.
By: /s/ XXXXX X. XXXXXX
---------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
ANNEX A
In the event that GSCP, Chase or CSI becomes involved in any capacity in any
action, proceeding or investigation brought by or against any person, including,
without limitation, stockholders of Company or of Union, in connection with or
as a result of either this arrangement or any matter referred to in this
Commitment Letter or any related agreement (collectively, the "LETTER"), Company
periodically will reimburse GSCP and/or Chase and/or CSI, as the case may be,
for its reasonable legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith; PROVIDED,
HOWEVER, that if GSCP, Chase or CSI is found in any such action, proceeding or
investigation to have acted with gross negligence or bad faith in performing the
services which are the subject of the Letter, GSCP, Chase or CSI, as the case
may be, shall repay such portion of such reimbursed amounts that is attributable
to expenses incurred in relation to the act or omission of GSCP, Chase or CSI,
as the case may be, which is the subject of such finding. Company also will
indemnify and hold GSCP, Chase and CSI harmless against any and all losses,
claims, damages or liabilities to any such person in connection with or as a
result of either this arrangement or any matter referred to in the Letter,
except to the extent that any such loss, claim, damage or liability results from
the gross negligence or bad faith of GSCP and/or Chase and/or CSI, as the case
may be,in performing the services that are the subject of the Letter. If for any
reason the foregoing indemnification is unavailable to GSCP and/or Chase and/or
CSI, as the case may be, or insufficient to hold it harmless, then Company shall
contribute to the amount paid or payable by GSCP and/or Chase and/or CSI, as the
case may be, as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect the relative economic interests of
Company and its stockholders on the one hand and GSCP and/or Chase and/or CSI,
as the case may be, on the other hand in the matters contemplated by the Letter
as well as the relative fault of Company and GSCP and/or Chase and/or CSI, as
the case may be, with respect to such loss, claim, damage or liability and any
other relevant equitable considerations. The reimbursement, indemnity and
contribution obligations of Company under this paragraph shall be in addition to
any liability which Company may otherwise have, shall extend upon the same terms
and conditions to any affiliate of GSCP or Chase and/or CSI (including without
limitation Xxxxxxx, Xxxxx & Co.) and the partners, directors, agents, employees
and controlling persons (if any), of GSCP and/or Chase and/or CSI, as the case
may be, and any such affiliate, and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of
Company, GSCP, Chase, CSI any such affiliate and any such person. Company also
agrees that none of GSCP, Chase, CSI or any of their respective affiliates,
partners, directors, agents, employees or controlling persons shall have any
liability to Company, any person asserting claims on behalf of or in right of
Company or any other person in connection with or as a result of either this
arrangement or any matter referred to in the Letter except to the extent that
any losses, claims, damages, liabilities or expenses incurred by Company result
from the gross negligence or bad faith of GSCP and/or Chase and/or CSI, as the
case may be, in performing the services that are the subject of the Letter.
Annex A-1
Any right to trial by jury with respect to any action or proceeding arising in
connection with or as a result of either this arrangement or any matter referred
to in the Letter is hereby waived by the parties hereto. The provisions of this
Annex A shall survive any termination or completion of the arrangement provided
by the Letter, and the Letter shall be governed by and construed in accordance
with the laws of the State of New York without regard to principles of conflicts
of laws.
Annex A-2
ANNEX B
SUMMARY OF TERMS AND CONDITIONS OF THE AMENDED AND RESTATED BANK FACILITIES
Outsourcing Solutions Inc. (the "BORROWER") proposes to acquire (the
"ACQUISITION") all of the outstanding capital stock of The Union Corporation
("UNION") through a tender offer (the "TENDER OFFER") by a newly formed, wholly
owned Subsidiary ("MERGER Sub") of the Borrower for up to 100% of the shares of
Union (the "SHARES"), followed by a merger of Merger Sub with and into Union
(the "MERGER") in which Union will be the surviving corporation and in which any
Shares not tendered in the Tender Offer will be cancelled in exchange for cash
consideration. In order to complete the Acquisition, to refinance certain
indebtedness of Company, to pay fees and expenses related to such transactions
and to finance the continuing operations of the Borrower and its subsidiaries
after the Acquisition, the Borrower proposes (i) to maintain the Existing Bank
Facilities (as defined below), and (ii) to borrow additional term loans in an
aggregate principal amount of up to $225,000,000.
Set forth below is a Summary of Terms and Conditions outlining certain terms of
the Amended and Restated Bank Facilities referred to in the Commitment Letter,
of which this Annex B is a part. Certain capitalized terms used herein are
defined in the Commitment Letter.
I. THE AMENDED AND RESTATED BANK FACILITIES
BORROWER: Outsourcing Solutions Inc.
GUARANTORS: Each of the Borrower's subsidiaries shall guaranty (the
"GUARANTEES") all obligations under the Amended and
Restated Bank Facilities.
CO-ADMINISTRATIVE Xxxxxxx Xxxxx Credit Partners L.P. ("GSCP") and The
AGENTS: Chase Manhattan Bank ("CHASE").
ARRANGING GSCP and Chase Securities Inc. ("CSI"). Collectively,
AGENTS: the Co-Administrative Agents and the Arranging Agents are
referred to herein as the "AGENTS".
LENDERS: GSCP, Chase, the other Existing Lenders and other financial
institutions (the "NEW LENDERS")(collectively, the "LENDERS").
Annex B-1
AMOUNT OF AMENDED The Amended and Restated Bank Facilities shall consist
AND RESTATED BANK of up to $470,421,708 of senior secured bank financing
FACILITIES: (the "AMENDED AND RESTATED BANK FACILITIES") to include:
(i) $62,500,000 of existing senior term loans (the
"TRANCHE A TERM LOANS");
(ii) $124,921,708 of existing senior term loans and
(the "TRANCHE B TERM LOANS");
(iii) up to $225,000,000 of additional senior term loans
(the "TRANCHE C TERM LOANS"; collectively, the Tranche A
Term Loans, the Tranche B Term Loans and the Tranche C
Term Loans are referred to herein as the "TERM LOAN
FACILITIES"); and
(iv) the existing $58,000,000 senior revolving credit
facility (the "REVOLVING CREDIT FACILITY"; collectively,
the Tranche A Term Loans, the Tranche B Term Loans and
the Revolving Credit Facility are referred to herein as
the "EXISTING BANK FACILITIES" ).
AVAILABILITY: TERM LOAN FACILITIES - The Tranche A Term Loans and Tranche B
Term Loans shall be maintained as Tranche A Term Loans and
Tranche B Term Loans, respectively, under the Amended and
Restated Credit Agreement. One drawing may be made of the
Tranche C Term Loans on the Effective Date; a portion of the
Tranche C Term Loans not to exceed an amount equal to
one-third (1/3) of the aggregate consideration for the Shares
(such portion being the "DELAYED-DRAW TERM LOAN ") will be
available on a delayed-draw basis, for a period not to exceed
120 days after the Effective Date, to pay that portion of the
consideration for the Shares and related fees and expenses
that become due and payable upon consummation of the Merger.
REVOLVING CREDIT FACILITY - Loans made under the
Revolving Credit Facility under the Existing Credit
Agreement shall be maintained as loans under the
Revolving Credit Facility under the Amended and Restated
Credit Agreement. After the Effective Date, amounts
under the Revolving Credit Facility
Annex B-2
may be borrowed until the maturity date of the Revolving
Credit Facility.
PURPOSE/USE OF To finance the consideration for the Shares acquired in
PROCEEDS OF the Acquisition, to refinance certain borrowings under
ADDITIONAL BANK the Revolving Credit Facility and to pay fees and
FINANCING: expenses associated therewith, in each case in the amounts set
forth on SCHEDULE I annexed to this Annex B.
MATURITIES: Tranche A Term Loans: October 15, 2001
Tranche B Term Loans: October 15, 2003
Tranche C Term Loans: October 15, 2004
Revolving Credit Facility: October 15, 2001
EFFECTIVE DATE: The date (the "EFFECTIVE DATE") on or before
February 15, 1998 on which the initial borrowings of the
Tranche C Term Loans under the Amended and Restated Bank
Facilities are made.
AMORTIZATION: As contained in the Existing Credit Agreement for the
Tranche A Term Loans and Tranche B Term Loans. The
Tranche C Term Loans shall be amortized in installments
in the amounts and on the dates indicated below:
SCHEDULED
DATE REPAYMENT OF
TRANCHE C TERM
LOANS
April 15, 1998 $ 250,000
July 15, 1998 $ 250,000
October 15, 1998 $ 250,000
January 15, 1999 $ 250,000
April 15, 1999 $ 250,000
July 15, 1999 $ 250,000
October 15, 1999 $ 250,000
Annex B-3
January 15, 2000 $ 250,000
April 15, 2000 $ 250,000
July 15, 2000 $ 250,000
October 15, 2000 $ 250,000
January 15, 2001 $ 250,000
April 15, 2001 $ 250,000
July 15, 2001 $ 250,000
October 15, 2001 $ 250,000
January 15, 2002 $ 250,000
April 15, 2002 $ 250,000
July 15, 2002 $ 250,000
October 15, 2002 $ 250,000
January 15, 2003 $ 250,000
April 15, 2003 $ 250,000
July 15, 2003 $ 250,000
October 15, 2003 $ 250,000
January 15, 2004 $ 54,750,000
April 15, 2004 $ 54,750,000
July 15, 2004 $ 54,750,000
October 15, 2004 $ 55,000,000
LETTERS OF
CREDIT: At the Borrower's option, a portion of the Revolving Credit
Facility not to exceed $15,000,000 will be made available for
the issuance of letters of credit on the terms and subject to
the conditions contained in the Existing Credit Agreement.
INTEREST RATE: All amounts outstanding under the Amended and Restated Bank
Facilities shall bear interest, at the Borrower's option
(provided that the Borrower may not select the reserve
adjusted Eurodollar Rate with respect to the Tranche C Term
Loans until after the Effective Date), as follows:
A. With respect to the Tranche A Term Loans:
(i) at the Base Rate plus 1.50% per annum; or
Annex B-4
(ii) at the reserve adjusted Eurodollar Rate plus
2.50% per annum.
B. With respect to the Tranche B Term Loans:
(i) at the Base plus 2.00% per annum; or
(ii) at the reserve adjusted Eurodollar Rate plus
3.00% per annum.
C. With respect to the Tranche C Term Loans:
(i) at the Base plus 2.00% per annum; or
(ii) at the reserve adjusted Eurodollar Rate plus
3.00% per annum.
D. With respect to loans made under the Revolving Credit
Facility:
(i) at the Base plus 1.50% per annum; or
(ii) at the reserve adjusted Eurodollar Rate plus
2.50% per annum.
As used herein, (x) the term "reserve adjusted Eurodollar
Rate" shall have meaning customary and appropriate for
financings of this type, and the basis for calculating accrued
interest and the interest periods for loans bearing interest
at the reserve adjusted Eurodollar Rate shall be customary and
appropriate for financings of this type and (y) the term Base
Rate shall mean, at any time, the higher of (x) the rate
announced by Chase from time to time as its prime rate for
commercial lending and (y) the federal funds rate plus 1/2 of
1%. Upon the occurrence and continuance of an Event of
Default, interest shall accrue at a rate equal to the rate on
loans bearing interest at the rate determined by reference to
the Base Rate plus an additional two percentage points (2.00%)
per annum and shall be payable on demand.
The interest rates set forth above with respect to the Tranche
A Term Loans and loans made under the Revolving Credit
Facility shall be reduced upon attainment by the Borrower of
Annex B-5
certain performance tests as contained in the Existing Credit
Agreement.
INTEREST
PAYMENTS: Quarterly for loans bearing interest with reference to the
Base Rate; on the last day of selected interest periods (which
shall be one, two, three and six months) for loans bearing
interest with reference to the reserve adjusted Eurodollar
Rate ( "EURODOLLAR RATE LOANS ") (and at the end of every
three months, in the case of interest periods of longer than
three months); and upon prepayment, in each case payable in
arrears and computed on the basis of a 360-day year (or a 365
or 366-day year, as the case may be, for Loans bearing
interest with reference to the Base Rate).
INTEREST RATE Within 180 days following the Effective Date, the
PROTECTION: Borrower will obtain interest rate protection through interest
rate swaps, caps or other agreements reasonably satisfactory
to the Co-Administrative Agents.
FUNDING
PROTECTION: Customary for transactions of this type, including breakage
costs, gross-up for withholding, compensation for increased
costs and compliance with capital adequacy and other
regulatory restrictions.
COMMITMENT FEES: Commitment fees equal to .50% per annum times the daily
average unused portion of the Revolving Credit Facility
(reduced by the amount of letters of credit issued and
outstanding) and any unfunded portion of the Term Loan
Facilities shall accrue from the Effective Date and shall be
payable quarterly in arrears on the unused portion of the
Revolving Credit Facility and such unfunded portion of the
Term Loan Facilities.
LETTER OF CREDIT As contained in the Existing Credit Agreement.
FEES:
VOLUNTARY The Amended and Restated Bank Facilities may be prepaid
PREPAYMENTS: in whole or in part without premium or penalty (except for
breakage costs, if any, with respect to Eurodollar Rate Loans
Annex B-6
which are prepaid prior to the last day of the related
interest period). Voluntary prepayments of the Term Loan
Facilities shall be applied ratably among the Term Loan
Facilities and to scheduled amortization payments pro rata.
MANDATORY As contained in the Existing Credit Agreement (with such
PREPAYMENTS: modifications thereto as may be agreed upon).
SECURITY: The Amended and Restated Bank Facilities and each Guarantee
shall continue to be secured by first priority security
interests in all assets, including without limitation, all
property, plant and equipment, intangible assets and other
personal, real and mixed property of the Borrower and its
subsidiaries; PROVIDED that security interests in
real property assets shall be excepted if the Agents shall
determine in their reasonable discretion that the costs of
obtaining such a security interest are excessive in relation
to the value of the security to be afforded thereby. In
addition, the Amended and Restated Bank Facilities shall be
secured by a first priority security interest in 100% of the
stock of each domestic subsidiary of the Borrower (65% of each
foreign subsidiary) and all intercompany debt (it being
understood that after consummation of the Tender Offer but
prior to the Merger, the Amended and Restated Bank Facilities
(i) shall be secured by a first priority security interest in
the Shares acquired in the Tender Offer only to the extent
such Shares can be pledged in compliance with applicable
margin regulations, and (ii) shall not be secured by any
assets of Union). All security arrangements shall be in form
and substance reasonably satisfactory to the Agents.
REPRESENTATIONS
AND As contained in the Existing Credit Agreement (with such
WARRANTIES: modifications thereto as may be agreed upon to account for the
Acquisition).
COVENANTS: As contained in the Existing Credit Agreement (with such
modifications thereto as may be agreed upon to account for the
Acquisition).
Annex B-7
EVENTS OF
DEFAULT: As contained in the Existing Credit Agreement (with such
modifications thereto as may be agreed upon to account for the
Acquisition, including without limitation an Event of Default
for failure to consummate the Merger within 120 days of the
Effective Date).
II. CONDITIONS TO CLOSING OF THE AMENDED AND RESTATED BANK FACILITIES
CONDITIONS
PRECEDENT 1. SATISFACTORY DOCUMENTATION. The definitive
TO INITIAL documentation evidencing the Amended and Restated Bank
BORROWINGS: Facilities shall be prepared by counsel to the Agents
and shall be in form and substance reasonably
satisfactory to the Agents and Requisite Lenders.
2. NO EVENT OF DEFAULT UNDER EXISTING CREDIT
Agreement. No Event of Default or Potential Event of
Default under (and as defined in) the Existing Credit
Agreement shall have occurred and be continuing.
3. APPROVALS. All required approvals shall have been
obtained with respect to the amendments to the Existing
Credit Agreement being effected pursuant to the Amended
and Restated Credit Agreement. The Borrower and its
subsidiaries shall have obtained all third party
consents, waivers, amendments, approvals and the like
that may be necessary under the Borrower's existing
contracts and agreements (including any subordinated
Indebtedness) in connection with the borrowings under
the Amended and Restated Bank Facilities and all related
transactions, and the Borrower and its subsidiaries
shall otherwise be in material compliance with such
agreements.
4. ACQUISITION. The documentation (other than the merger
agreement) relating to the Acquisition (including the
Tender Offer and the Merger) (the "ACQUISITION
DOCUMENTS") shall be in form and substance reasonably
satisfactory to the Agents and shall be in full force
and effect. Without limiting the generality of the
foregoing, the Agents shall be reasonably satisfied with
(i) the amount and terms of any debt of Union not repaid
or not proposed to be repaid concurrently with the
consummation
Annex B-8
of the Acquisition and/or the Merger, and (ii) the
aggregate consideration paid in connection with the
Acquisition by the Borrower and its subsidiaries.
5. CONSUMMATION OF TENDER OFFER. Merger Sub shall have
acquired not less than the Minimum Shares pursuant to
the Tender Offer, and all other aspects of the Tender
Offer shall have been consummated pursuant to the
Acquisition Documents, no provision of which shall have
been amended, supplemented, waived or otherwise modified
in any material respect without the prior written
consent of the Agents.
6. TRANSACTION EXPENSES. The Agents shall have
received satisfactory evidence that the fees and
expenses to be incurred in connection with the
Acquisition and the related financings will not exceed
an amount acceptable to Agents.
7. SECURITY. The Collateral Agent (as defined in the
Existing Credit Agreement), for the benefit of the
Lenders, shall have been granted perfected first
priority security interests in all assets to the extent
described above under the heading "Security" in form and
substance reasonably satisfactory to the Agents.
8. NO MATERIAL ADVERSE CHANGE. (i) Since December 31,
1996, there shall not have been any adverse change, or
any development involving a prospective adverse change,
in or affecting the general affairs, management,
financial position, shareholders' equity or results of
operations of the Borrower and its subsidiaries, and
(ii) since June 30, 1997, there shall not have been any
adverse change, or any development involving a
prospective adverse change, in or affecting the general
affairs, management, financial position, shareholders'
equity or results of operations of Union and its
subsidiaries, which, in the case of clauses (i) and
(ii), the Agents, in their reasonable judgment, deem
material.
9. FINANCIAL STATEMENTS. The Lenders shall have
received, and Requisite Lenders shall be satisfied with,
the audited financial statements for (i) the Borrower
and its subsidiaries for the period ended December 31,
1996,
Annex B-9
and (ii) Union and its subsidiaries for the period
ended June 30, 1997, and, in the case of clauses (i) and
(ii), unaudited financial statements for the most
recently concluded monthly period starting from the
respective dates of the most recent audits.
10. CONSENTS AND APPROVALS. All necessary governmental,
third party and shareholder approvals in connection with
the Amended and Restated Bank Facilities, the
transactions contemplated by the Amended and Restated
Bank Facilities, the Acquisition, the Tender Offer, the
Merger and otherwise referred to herein shall have been
obtained and remain in effect, and all applicable
waiting periods shall have expired without any action
being taken by any applicable authority.
11. PAYMENTS OF AMOUNTS DUE. All costs, fees, expenses
(including, without limitation, legal fees and expenses,
title premiums, survey charges and recording taxes and
fees) and other compensation contemplated hereby payable
to the Arranging Agents, the Co-Administrative Agents or
the Lenders shall have been paid to the extent due.
12. SOLVENCY OPINION AND OTHER REPORTS. Lenders shall
have received (i) an opinion from an independent
valuation consultant or appraiser satisfactory to the
Agents and (ii) a certificate from the chief financial
officer of the Borrower, in each case in form and
substance satisfactory to the Agents, to the effect
that, after giving effect to the Acquisition, the Merger
and contemplated borrowings of the full amounts
applicable thereto which will be available under the
Amended and Restated Bank Facilities, the Borrower and
its subsidiaries on a consolidated basis will not be
insolvent or rendered insolvent by the indebtedness
incurred in connection therewith, or be left with
unreasonably small capital with which to engage in
business, or have incurred debts beyond its ability to
pay such debts as they mature.
13. CUSTOMARY CLOSING DOCUMENTS. All documents required
to be delivered under the definitive financing
documents, including customary legal opinions, corporate
records
Annex B-10
and documents from public officials and
officers' certificates, shall have been delivered.
CERTAIN
CONDITIONS Conditions precedent to the funding of the Delayed-Draw
PRECEDENT TO Term Loan will include, without limitation, the
FUNDING OF following:
DELAYED-DRAW
TERM LOAN: 1. CONSUMMATION OF MERGER. The Merger shall have
been consummated pursuant to the Acquisition Documents,
no provision of which shall have been amended,
supplemented, waived or otherwise modified in any
material respect without the prior written consent of
the Agents. Upon consummation of the Merger, all of the
shares of Union shall be owned by the Borrower.
2. SECURITY. The Collateral Agent (as defined in the
Existing Credit Agreement), for the benefit of the
Lenders, shall have been granted perfected first
priority security interests in (i) 100% of the stock of
Union and (ii) all assets of Union (subject to the
limitations set forth in the first sentence under the
heading "Security"), in each case to the extent such
security interests shall not previously have been
granted.
3. AGGREGATE ACQUISITION CONSIDERATION. After giving
effect to the consummation of the Merger and the payment
of any portion of the aggregate consideration for the
Shares (and any related transaction fees and expenses)
that become due and payable thereupon, the aggregate
amount of the consideration paid for the Shares (and all
such transaction fees and expenses) shall not exceed
$205,000,000.
CONDITIONS TO
ALL BORROWINGS: The conditions to all borrowings will include requirements
relating to prior written notice of borrowing, the accuracy of
representations and warranties, and the absence of any default
or potential event of default, and will otherwise be customary
and appropriate for financings of this type.
Annex B-11
III. MISCELLANEOUS
SYNDICATION, Any loans made pursuant to the Amended and Restated
ASSIGNMENTS AND Credit Agreement on the Effective Date (including loans
PARTICIPATIONS: made under the Existing Credit Agreement and maintained as
loans under the Revolving Credit Facility) shall be made by
Existing Lenders and New Lenders in such respective amounts as
shall result in the outstanding loans of all Lenders
reflecting their respective pro rata shares of the commitments
thereunder.
The Lenders may assign all or, in an amount of not less than
$5 million, any part of their share of the Amended and
Restated Bank Facilities to one or more banks, financial
institutions or other entities that are eligible assignees (to
be described in the Loan Documents) which are acceptable to
the Co-Administrative Agents, such consent not to be
unreasonably withheld, and upon such assignment, such
affiliate, bank, financial institution or entity shall become
a Lender for all purposes of the loan documentation; provided
that assignments made to affiliates and other Lenders shall
not be subject to the $5 million minimum assignment
requirement. The Lenders will have the right to sell
participations, subject to customary limitations on voting
rights, in their share of the Amended and Restated Bank
Facilities.
REQUISITE
LENDERS: As contained in the Existing Credit Agreement, being Lenders
holding 51% of total commitments or exposure under the Amended
and Restated Bank Facilities, except that (x) any amendment
which would disproportionately affect the holders of the
Tranche A Term Loans, Tranche B Term Loans, the Tranche C Term
Loans or the loans under the Revolving Credit Facility shall
not be effective without the approval of holders of 51% of
such class of holders and (y) with respect to matters relating
to the interest rates, maturity, amortization, collateral
issues, changes to the percentage specified in the definition
of Requisite Lenders and certain other matters set forth in
the Existing Credit Agreement, Requisite Lenders will be
defined as Lenders holding 100% of total commitments or
exposure under the Amended and Restated Bank Facilities.
Annex B-12
TAXES, RESERVE All payments are to be made free and clear of any taxes
REQUIREMENTS AND (other than franchise taxes and taxes on overall net
INDEMNITIES: income), imposts, assessments, withholdings or other
deductions whatsoever. Foreign Lenders shall furnish to Chase
appropriate certificates or other evidence of exemption from
U.S. federal tax withholding.
The Borrower will indemnify the Lenders against all increased
costs of capital resulting from reserve requirements or
otherwise imposed, in each case subject to customary increased
costs, capital adequacy and similar provisions to the extent
not taken into account in the calculation of the Base Rate or
the Eurodollar Rate.
INDEMNITY: The Borrower will provide standard indemnification for the
Agents and Lenders.
GOVERNING LAW AND The Borrower will submit to the non-exclusive
JURISDICTION: jurisdiction and venue of the federal and state courts of the
State of New York and shall waive any right to trial by jury.
New York law shall govern the Loan Documents.
The foregoing is intended to summarize certain basic terms of the Amended and
Restated Bank Facilities. It is not intended to be a definitive list of all of
the requirements of the Lenders in connection with the Amended and Restated Bank
Facilities.
Annex B-13
SCHEDULE I
SOURCES AND USES OF FUNDS FOR ACQUISITION
PROJECT YANKEE
--------------------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
SOURCES AND USES
-----------------------------------------------------------------------------------------------------------------
SOURCES OF FUNDS AMOUNT USES OF FUNDS AMOUNT
---------------- ------ ------------- ------
Additional Financing $225,000 Cash to Shareholders of Yankee $192,971
-------- Trans. Fees and Expenses (includ. Financing Fees) 13,031
Refinance OSI Revolver 18,998
------
TOTAL SOURCES OF FUNDS $225,000 TOTAL USES OF FUNDS $225,000
-------- --------
-------- --------
Schedule I-1
