EXHIBIT 10.11
AMENDMENT NO. 1 TO MANAGEMENT ASSISTANCE AGREEMENT
AMENDMENT NO. 1 dated as of October 18, 1996 between Xxxxxx Products
Company, a Delaware corporation (the "Company") and Morningside Capital Group,
LLC, a Connecticut limited liability company ("Morningside").
The Company and Morningside are parties to a Management Assistance
Agreement dated August 23, 1995 (the "Management Agreement"), providing for the
retention of the services of Morningside and its principal member, Xxxxxxx X.
Xxxxx, in connection with the ongoing business of the Company. The Company and
Morningside wish to amend the Management Agreement in certain respects, and
accordingly, the parties hereto agree as follows:
Section 1. Definitions. Except as otherwise defined in this
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Amendment No. 1, terms defined in the Management Agreement are used herein as
defined therein, and the term "this Agreement" and words such as "herein" and
"hereunder" shall refer to the Management Agreement as amended by this Amendment
No. 1.
Section 2. Amendment. Effective as of the date hereof, (S)19 of the
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Management Agreement shall be amended to read in its entirety as follows:
(S)19. SUBORDINATION. The Company, for itself and its successors,
agrees that all of the obligations in respect of this Agreement and all payments
in respect hereof shall be subordinate and junior in right of payment to the
prior payment in full in cash or cash equivalents of all Senior Indebtedness as
set forth in this Section 19. Each holder of Senior Indebtedness shall have
been deemed to have acquired such Senior Indebtedness in reliance upon the
subordination as set forth in this Section 19.
(a) During the continuance of any default beyond applicable grace
periods in the payment of principal, premium, if any, and interest on any
Senior Indebtedness, whether at maturity, upon redemption or pursuant to
acceleration or otherwise (a "Payment Default"), no direct or indirect
payment of any kind shall be made with respect to this Agreement unless and
until such Payment Default shall have been cured or waived or shall have
ceased to exist or such Senior Indebtedness shall have been discharged or
paid in full in cash or cash equivalents, after which, subject to Section
19(d) (if applicable), the Company shall resume making any and all required
payments in respect of this Agreement, including any missed payments.
(b) During the continuance of any event of default on or in respect of
Senior Indebtedness (other than a Payment Default) that entitles the
holders of such Senior
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Indebtedness to accelerate the maturity of the obligations outstanding
thereunder (a "Non-payment Default"), no direct or indirect payment of any
kind shall be made with respect to this Agreement and Morningside shall not
accept any such payment, for a period (the "Payment Blockage Period")
beginning on the date on which written notice of such default (a "Blockage
Notice") is given to the Company by the holders of Senior Indebtedness and
ending on the earlier of (x) 179 days after delivery of such Blockage
Notice, or (y) the date on which such Non-payment Default is cured or
waived or shall have ceased to exist, after which period, subject to
Section 19(d) (if applicable), the Company shall immediately make all past
due payments and shall resume all other required payments hereunder,
including any payments omitted pursuant to this Section 19. No single Non-
payment Default may serve as the basis for more than one Blockage Notice
(other than a Non-payment Default that has been cured or waived or
otherwise ceased to exist for a period of 90 consecutive days); no Non-
payment Default in existence on the date of delivery of a Blockage Notice
shall serve as the basis for any subsequent Blockage Notice, whether or not
within a period of 360 consecutive days unless such Non-payment Default
shall have been cured or waived or otherwise ceased to exist for a period
of 90 consecutive days; and during any 360-day period there shall not be
more than one Blockage Notice. The Company agrees to deliver copies of all
Blockage Notices to Morningside immediately upon receipt, although the
failure of the Company to do so shall not affect the rights of holders of
Senior Indebtedness under this Section 19. In no event shall a Payment
Blockage Period extend beyond 179 days from the date of the receipt of the
notice to the Company referred above and there must be a 181 consecutive
day period in any 360 consecutive day period during which no Payment
Blockage Period is in effect pursuant to this Section 19(b).
(c) Until all Senior Indebtedness has been paid in full in cash or
cash equivalents, Morningside shall not, without the prior written consent
of the Required Banks (as defined in the Credit Agreement) commence any
action, suit or proceeding to enforce any claims, rights, demands, causes
of action, liabilities, or suits, of any kind whatsoever, whether known or
unknown, that have been, could have been, or in the future might be
asserted by Morningside based upon, arising out of, or in any way relating
to, this Agreement until the earlier of (i) 10 Business Days after
Morningside shall have given prior written notice to the Agent (as defined
in the Credit Agreement) of its intention to exercise any such remedies or
(ii) if an Event of Default has occurred and is continuing, the holders of
Senior Indebtedness have accelerated the Senior Indebtedness. The 10
Business Day period referenced in the preceding sentence shall run
concurrently with any Payment Blockage Period instituted pursuant to
Sections 19(b) and (c) hereof.
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(d) Upon any distribution of assets of the Company or of Holdings of
any kind or character upon any dissolution, winding up, total or partial
liquidation or reorganization of the Company or of Holdings (whether in
bankruptcy, insolvency or receivership proceedings or upon an assignment
for the benefit of creditors or otherwise):
(i) the holders of all Senior Indebtedness shall first be
entitled to receive payment in full in cash or cash equivalents of all
obligations owing in respect thereof before Morningside is entitled to
receive any payment of any amount owing under this Agreement; and
(ii) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to which
Morningside would be entitled except for the provisions of this
Section 19 shall be paid by the liquidating trustee or agent or other
person making such payment or distribution directly to the holders of
Senior Indebtedness or their representative or representatives under
the agreements pursuant to which the Senior Indebtedness may have been
issued, to the extent necessary to make payment in full of all Senior
Indebtedness remaining unpaid after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness.
Upon any payment or distribution of assets of the Company referred to
in this Section 19, Morningside shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding-up or similar case or proceeding is pending, for the
purpose of ascertaining the persons entitled to participate in such payment
or distribution, the holders of Senior Indebtedness and other Indebtedness
of the Company, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto
or to this Section 19; provided, however, that the foregoing shall apply
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only if such court has been fully apprised of the provisions of this
Section 19.
(e) If any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, shall be
received by Morningside on account of amounts due under this Agreement
that, because of the provisions of this Section 19, should not have been
made, then such payment or distribution shall be received and held in trust
for, and shall be paid over to, the holders of the Senior Indebtedness
remaining unpaid or unprovided for or their representative or
representatives under the agreements pursuant to which the Senior
Indebtedness may have been issued for application to the payment of such
Senior Indebtedness until all such Senior Indebtedness shall have been paid
in full, after giving effect to any concurrent
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payment or distribution to the holders of such Senior Indebtedness.
(f) Upon the payment in full in cash or cash equivalents of all Senior
Indebtedness, Morningside shall be subrogated to the rights of the holders
of such Senior Indebtedness to receive payments and distributions of cash,
property and securities made to the holders of the Senior Indebtedness to
which Morningside would be entitled except for the provisions of this
Section 19 until the amounts due under this Agreement shall be paid in full
in cash or cash equivalents. For purposes of such subrogation, no payments
or distributions to the holders of Senior Indebtedness of any cash,
property or securities to which Morningside would be entitled except for
the provisions of this Section 19, and no payments over pursuant to the
provisions of this Section 19 to the holders of Senior Indebtedness by
Morningside shall, as among the Company, its creditors other than holders
of Senior Indebtedness, and Morningside, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
If any payment or distribution to which Morningside would otherwise
have been entitled but for the provisions of this Section 19 shall have
been applied, pursuant to the provisions of this Section 19, to the payment
of all amounts payable under the Senior Indebtedness of the Company, then
and in such case Morningside shall be entitled to receive from the holders
of such Senior Indebtedness at the time outstanding any payments or
distributions received by such holders of such Senior Indebtedness in
excess of the amount sufficient to pay all amounts payable under or in
respect of such Senior Indebtedness in full in cash or cash equivalents.
(g) If, at any time, all or part of any payment with respect to Senior
Indebtedness theretofore made by the Company or any other Person is
rescinded for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of the Company or such other
Person), the subordination provisions set forth herein shall continue to be
effective or be reinstated, as the case may be, all as though such payment
had not been made.
(h) If, while any Senior Indebtedness is outstanding, any Event of
Default occurs, Morningside shall duly and promptly take such action as any
holder of Senior Indebtedness may reasonably request to collect any payment
hereunder to which the holders of Senior Indebtedness may be entitled under
this Agreement, and to file appropriate claims or proofs of claim in
respect of this Agreement. Upon the failure of Morningside to take any
such action, each holder of Senior Indebtedness is hereby irrevocably
authorized and empowered (in its own name or otherwise), but shall have no
obligation, to demand, xxx for, collect and
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receive every payment or distribution referred to under this Agreement and
to file claims and proofs of claim with respect to this Agreement and
Morningside hereby appoints each holder of Senior Indebtedness or its
representative as attorney-in-fact for Morningside to take any and all
actions permitted by this paragraph to be taken by Morningside.
(i) Morningside agrees and consents that without notice to or assent
by Morningside, and without affecting the liabilities and obligations of
the Company and the rights and benefits of the holders of the Senior
Indebtedness set forth in this Section 19:
(i) the obligations and liabilities of the Company and any other
party or parties for or upon the Senior Indebtedness may, from time to
time, be renewed, refinanced, extended, modified, amended, restated,
compromised, supplemented, terminated, waived or released (but only to
the extent permitted by the definition of "Senior Indebtedness");
(ii) the holders of Senior Indebtedness, and any representative or
representatives acting on behalf thereof, may exercise or refrain from
exercising any right, remedy or power granted by or in connection with
any agreements relating to the Senior Indebtedness; and
(iii) any balance or balances of funds with any holder of Senior
Indebtedness at any time outstanding to the credit of the Company may,
from time to time, in whole or in part, be surrendered or released,
all as the holders of any Senior Indebtedness, or any representative or
representatives acting on behalf thereof, may deem advisable, and all
without impairing, abridging, diminishing, releasing or affecting the
subordination of the obligations under this Agreement to Senior
Indebtedness, provided, however, that in no event shall any such actions
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limit the rights of Morningside to take any action to pursue any rights or
remedies under this Agreement or under applicable laws if the taking of
such action does not otherwise violate the terms of this Agreement.
(j) The provisions of this Section 19 are for the benefit of the
holders from time to time of Senior Indebtedness and, so long as any Senior
Indebtedness remains outstanding, may not be modified, rescinded or
canceled in whole or in part, nor shall any grace periods in the definition
of "Event of Default" be reduced, without the prior written consent thereto
of all holders of Senior Indebtedness.
(k) Until all of the Senior Indebtedness has been fully paid,
Morningside hereby undertakes and agrees for the benefit of the holders of
Senior Indebtedness that, upon the
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occurrence and during the continuance of any events set forth in clauses
(b) and (c) of this Section 19, Morningside shall take any actions
reasonably requested by any holder of Senior Indebtedness to effectuate the
full benefit of the subordination contained herein.
(l) To the extent permitted by applicable law, Morningside and the
Company hereby waive notice of acceptance hereof by the holders of the
Senior Indebtedness.
(m) The Company and Morningside hereby expressly agree that the
holders of Senior Indebtedness may enforce any and all rights derived
herein by suit, either in equity or at law, for specific performance of any
agreement contained in this Section 19 or for judgment at law and any other
relief whatsoever appropriate to such action or procedure.
(n) The provisions of this Section 19 are and are intended solely for
the purpose of defining the relative rights of Morningside on the one hand
and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Section 19 or elsewhere in this Agreement is intended to
or shall (a) impair, as among the Company, its creditors other than holders
of Senior Indebtedness and Morningside, the obligation of the Company,
which is absolute and unconditional, to pay to Morningside the fees and
reimbursement of expenses set forth in this Agreement as and when the same
shall become due and payable in accordance with the terms thereof; or (b)
affect the relative rights against the Company of Morningside and creditors
of the Company other than the holders of Senior Indebtedness; or (c)
prevent Morningside from exercising all remedies otherwise permitted by
applicable law upon any default or Event of Default under this Agreement,
subject to the rights, if any, under this Section 19 of the holders of
Senior Indebtedness (1) in any case, proceeding, dissolution, liquidation
or other winding up, assignment for the benefit of creditors or other
marshalling of assets and liabilities of the Company referred to in Section
19(d), to receive, pursuant to and in accordance with such Section, cash,
property and securities otherwise payable or deliverable to Morningside, or
(2) under the conditions specified in Section 19(a), to prevent any payment
prohibited by such Section. The failure to make any payment due hereunder
by reason of any provision in this Section 19 shall not be construed as
preventing the occurrence of a default under this Agreement.
Nothing contained in this Section 19 shall limit the right of
Morningside to take any action to pursue any rights or remedies hereunder
or under applicable law, subject to the rights, if any, under this Section
19 of the holders, from time to time, of Senior Indebtedness.
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For purposes of this Section 19, the following terms shall have the
meanings set forth below:
"Affiliate" shall mean with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all
directors and executive officers of such Person), controlled by, or under
direct or indirect common control with such Person. A Person shall be
deemed to control a corporation for the purposes of this definition if such
Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of
directors of such corporation or (ii) to direct or cause the direction of
the management and policies of such corporation, whether through the
ownership of voting securities, by contract or otherwise.
"Business Day" means any day other than Saturday, Sunday and a day on
which banks are permitted or required to be closed, or which is a legal
holiday, in New York, New York.
"Credit Agreement" means the Credit Agreement dated as of October 18,
1996 among the Company and Banque Indosuez, New York Branch, as lender and
agent, and any other parties who may become lenders thereunder, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Event of Default" means if the Company, any of its Significant
Subsidiaries, or Holdings shall commence a voluntary case concerning itself
under Title 11 of the United States Code Entitled "Bankruptcy," as now or
hereafter in effect, or any successor thereto (the "Bankruptcy Code"); or
an involuntary case is commenced against the Company, any of its
Significant Subsidiaries, or Holdings and the petition is not contested
within 20 days, or is not dismissed for a period of 60 consecutive days
after commencement of the case; or a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or substantially
all of the property of the Company, any of its Significant Subsidiaries, or
Holdings; or the Company, any of its Significant Subsidiaries, or Holdings
commences any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Company, any of its Significant Subsidiaries, or
Holdings; or there is commenced against the Company, any of its Significant
Subsidiaries, or Holdings any such proceeding which remains undismissed for
a period of 60 consecutive days; or the Company, any of its Significant
Subsidiaries, or Holdings is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is
entered and continues
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undischarged or unstayed for a period of 60 consecutive days; or the
Company, any of its Significant Subsidiaries, or Holdings suffers any
appointment of any custodian or the like for it or any substantial part of
its property to continue undischarged or unstayed for a period of 60
consecutive days; or the Company, any of its Significant Subsidiaries, or
Holdings makes a general assignment for the benefit of creditors; or any
corporate action is taken by the Company, any of its Significant
Subsidiaries, or Holdings for the purpose of effecting any of the
foregoing.
"Holdings" shall mean Xxxxxx, Inc., a Delaware corporation.
"Indebtedness" of a Person at a particular date shall mean, without
duplication, (i) all indebtedness of such Person for borrowed money, (ii)
the deferred purchase price of assets or services which in accordance with
generally accepted accounting principles in the United States of America as
in effect from time to time would be shown on the liability side of the
balance sheet of such Person, other than current liabilities in respect of
the foregoing, liabilities for accumulated postretirement benefit
obligations and liabilities for deferred compensation, (iii) the face
amount of all letters of credit issued for the account of such Person and,
without duplication, all drafts drawn and unpaid thereunder, (iv) all
Indebtedness of a second Person secured by any Lien (as defined in the
Credit Agreement) on any property owned by such first Person, whether or
not such Indebtedness has been assumed by such first Person, (v) all
Capitalized Lease Obligations (as defined in the Credit Agreement) of such
Person, (vi) all obligations of such Person to pay a specified purchase
price for goods or services whether or not delivered or accepted, i.e.,
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take-or-pay and similar obligations, (vii) all obligations of such Person
under Interest Rate Agreements (as defined in the Credit Agreement) and
(viii) all Contingent Obligations (as defined in the Credit Agreement) of
such Person; provided that Indebtedness shall not include trade payables,
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accrued expenses, accrued dividends and accrued income taxes, in each case
arising in the ordinary course of business.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any Governmental
Authority.
"Senior Indebtedness" shall mean all obligations of the Company
incurred pursuant to the Credit Agreement, whether for principal, premium
(if any) or interest (including, without limitation, interest which would
accrue but for the filing of a petition initiating any bankruptcy or
similar proceeding and Indebtedness incurred to pay other fees and expenses
arising therefrom or in connection therewith). Notwithstanding the
foregoing, Senior Indebtedness shall not
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include, among others: (i) any Indebtedness of the Company to a Subsidiary
of the Company; (ii) any Indebtedness to any Affiliate, director, officer
or employee of the Company or any Subsidiary (including, without
limitation, amounts owed for compensation); (iii) Indebtedness and other
amounts incurred in connection with obtaining goods, materials or services
owing to trade creditors; (iv) any liability for Federal, state, local or
other taxes owed or owing by the Company; or (v) Indebtedness incurred in
violation of the Credit Agreement.
"Significant Subsidiary" shall mean, at any date of determination, any
Subsidiary of the Company that, together with its Subsidiaries, (i) for the
most recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company or (ii) as of the end of such fiscal
year, was the owner of more than 10% of the consolidated assets of the
Company, all as set forth on the most recently available consolidated
financial statements of the Company for such fiscal year.
"Subsidiary" of any Person shall mean and includes (i) any corporation
more than 50% of whose voting stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of
such corporation (including stock of any class or classes of such
corporation that might have voting power solely by reason of the happening
of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association,
joint venture or other entity in which such Person directly or indirectly
through Subsidiaries has more than a 50% equity interest at the time.
Section 3. Miscellaneous. Except as herein provided, the Management
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Agreement shall remain unchanged and in full force and effect. This Amendment
No. 1 may be executed in any number of counterparts, all of which taken together
shall constitute one and the same amendatory instrument and any of the parties
hereto may execute this Amendment No. 1 by signing any such counterpart. This
Amendment No. 1 shall be governed by, and construed and enforced under, the laws
of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
1 to be duly executed and delivered as of the day and year first written above.
XXXXXX PRODUCTS COMPANY MORNINGSIDE CAPITAL GROUP, LLC
By_______________________ By_________________________
Title: Title:
