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EXHIBIT 10.5
(Xxxxxxx letterhead)
May 5, 1999
VIA FEDERAL EXPRESS AND FACSIMILE
BankBoston, N.A., as Administrative Agent
000 Xxxxxxxxx Xxxxxx Xxxxx, X.X.
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxx
Facsimile: 000-000-0000
Re: Stock Purchase Agreement between stockholders of The X. X.
Xxxxxxx Company, Inc. and Charlesbank Equity Fund IV, Limited
Partnership
Ladies and Gentlemen:
Reference is made to the Amended and Restated Loan and Security Agreement (the
"Loan Agreement"), dated as of May 20, 1998, as amended by the letter dated
November 30, 1998 from the Lenders to Xxxxxxx, by and between The X.X. Xxxxxxx
Company, Inc. ("Xxxxxxx"), Xxxxxx & Xxxxxxx, Inc., The Speed Merchant, Inc. and
ITCO Holding Company, Inc., as Borrowers, the financial institutions from time
to time party thereto, as Lenders, Fleet Capital Corporation and First Union
National Bank, as Co-Agents, and BankBoston, N.A., as Administrative Agent for
the Lenders. Capitalized terms used and not defined in this letter are defined
in the Loan Agreement.
On April 21, 1999, the controlling stockholders of Xxxxxxx entered into a
definitive agreement (the "Stock Purchase Agreement") for the sale of all of
their shares of capital stock of Xxxxxxx to Charlesbank Equity Fund IV, Limited
Partnership (the "Purchaser"). A copy of the Stock Purchase Agreement is
attached as Exhibit A to this letter. The closing of the sale and purchase under
the Stock Purchase Agreement would, if consummated, constitute a Change of
Control for purposes of Section 12.1(o) of the Loan Agreement and be an Event of
Default.
Further, Section 3.14 of the Stock Purchase Agreement provides that, if
requested by the Purchaser, the parties to the Stock Purchase Agreement will
negotiate appropriate modifications so that the transactions contemplated
thereby may be effected by means of a merger transaction involving Xxxxxxx.
Certain management employees will also be offered the opportunity to purchase
shares of the capital stock of Xxxxxxx on or after completion of the stock
purchase
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transaction contemplated by the Stock Purchase Agreement, and to borrow from
Xxxxxxx the funds necessary to purchase such shares.
Xxxxxxx is soliciting the consent of holders of its outstanding 10% Senior Notes
Due 2008 to amendments to both of the Indentures under which such Notes were
issued that would, in effect, avoid the applicability of Section 4.09 of each
such Indenture to the transactions contemplated by the Stock Purchase Agreement.
The consent solicitation is more fully described in the consent solicitation
statement attached as Exhibit B to this letter.
Certain persons have stock appreciation rights pursuant to agreements described
in Schedule 6.1(b) to the Loan Agreement. The Loan Agreement provides that
payments not greater than $1,500,000 in respect of such stock appreciation
rights made by Xxxxxxx on or prior to the first anniversary of the Effective
Date are to be excluded for purposes of determining the amount of Restricted
Distributions and Restricted Payments permitted under Section 11.6 (Restricted
Distributions and Payments, Etc.). Xxxxxxx currently anticipates that a portion
of such $1,500,000 will be paid after the first anniversary of the Effective
Date, but on or prior to June 30, 1999.
Xxxxxxx hereby requests that the Administrative Agent and the Lenders or
Required Lenders, as applicable, waive compliance and effects of non-compliance
by the Borrowers with the following provisions of the Loan Agreement:
1. Section 11.4 (Acquisitions) arising out of up to $2.5 million principal
amount of loans outstanding to management employees the proceeds of
which have been applied exclusively to pay the purchase price of shares
of capital stock of Xxxxxxx.
2. Section 11.7 (Merger, Consolidation and Sale of Assets) and Section 9.1
(Preservation of Corporate Existence and Similar Matters) arising out
of completion of the acquisition of common stock of Xxxxxxx by
Purchaser by merger, rather than purchase of stock, provided that the
effect of the financial terms of any such merger on Xxxxxxx and the
other Borrowers shall be equivalent to the effect of the stock purchase
contemplated by the Stock Purchase Agreement and Xxxxxxx shall be the
surviving corporation of any such merger or the survivor shall be
satisfactory to the Lenders and shall assume the obligations of Xxxxxxx
under the Loan Agreement and the other Loan Documents in a manner
satisfactory to the Administrative Agent in its reasonable judgment.
3. Section 11.11 (Amendments of Other Agreements) arising out of the
effectiveness of the supplemental indentures (as discussed in Exhibit B
hereto and as modified to reflect any additional amendments necessary
in connection with a transaction described in paragraph 2 above) to be
executed and delivered in connection with the consent of the holders of
Xxxxxxx'x Senior Notes to the transactions contemplated by the Stock
Purchase Agreement (the "Noteholders' Consents").
Xxxxxxx hereby further requests that:
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A. the Lenders waive the Event of Default that would otherwise occur under
Section 12.1(o) (Change of Control) upon consummation of the
transactions contemplated by the Stock Purchase Agreement;
B. Section 11.6 (Restricted Distributions and Payments, Etc.) of the Loan
Agreement be amended by replacing the words "the first anniversary of
the Effective Date" with "June 30, 1999"; and
C. the definition of "Senior Notes Indenture" in Section 1.1 of the Loan
Agreement be amended by replacing such definition in its entirety with
the following:
"Senior Notes Indenture" means (i) the Indenture dated as of
May 15, 1998 between the Company, the subsidiary guarantors party
thereto and First Union National Bank, as Trustee, as supplemented by a
Supplemental Indenture dated as of February 22, 1999, (ii) the
Indenture dated as of December 1, 1998 between the Company, the
subsidiary guarantors party thereto and First Union National Bank, as
Trustee, as supplemented by a Supplemental Indenture dated as of
February 22, 1999, and (iii) any supplemental indenture entered into
with the consent of the Lenders and the requisite holders of Senior
Notes in connection with the Consent Solicitation Statement of the
Company dated April 30, 1999.
Xxxxxxx acknowledges and agrees (1) that the consent of the Administrative Agent
and the Required Lenders or Lenders, as the case may be, except as such consent
specifically relates to paragraphs B. and C. above, is conditioned upon receipt
by the Administrative Agent of evidence satisfactory to it that the Noteholders'
Consents have been obtained and are in full force and effect, prior to
consummation of the transactions contemplated by the Stock Purchase Agreement,
and (2) that, except as expressly waived or modified above, the terms and
conditions of the Loan Agreement and the other Loan Documents remain in full
force and effect and are hereby ratified and confirmed.
If the foregoing is acceptable to you, please sign this letter in the space
provided below (and ask the Lenders to do the same) to evidence the consent,
acceptance and agreement of the Administrative Agent and the Lenders.
Very truly yours,
THE X. X. XXXXXXX COMPANY, INC.
By: /s/ Xxxxxx X. Roof
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Xxxxxx X. Roof
Senior Vice President and
Chief Financial Officer
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Accepted and agreed:
BANKBOSTON, N.A.,
as Administrative Agent and as a Lender
By: /s/ Xxxxx Xxxxxx
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Name: XXXXX XXXXXX
Title: Vice President
Date:
FIRST UNION NATIONAL BANK,
as Co-Agent and as a Lender
By: /s/ Xxxx X. Xxxxxxx
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Name: XXXX X. XXXXXXX
Title: Vice President
Date:
FLEET CAPITAL CORPORATION,
as Co-Agent and as a Lender
By: /s/ Rooney X. XxXxxxx
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Name: ROONEY X. XXXXXXX
Title: Sr. Vice President
Date: May 14, 1999
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