Exhibit 10.16
EXECUTION COPY
XXXXXX ASSOCIATES LLC
FIRST AMENDMENT AND WAIVER TO
NOTE PURCHASE AGREEMENT
$50,000,000
7.45% Senior Notes
due May 30, 2008
Dated as of May 31, 2002
To the Holders of the Senior Notes,
of Xxxxxx Associates LLC Named in
the Attached Schedule I
Ladies and Gentlemen:
Reference is made to the Note Purchase Agreement dated as of May 1, 1996
among Xxxxxx Associates LLC, a limited liability company organized under the
laws of Illinois (the "Company"), and each of the Purchasers named in Schedule A
thereto (the "Note Agreement"), pursuant to which the Company issued
$50,000,000 aggregate principal amount of its 7.45% Senior Notes due May 30,
2008 (the "Notes"). You are referred to herein individually as a "Holder" and
collectively as the "Holders." Capitalized terms used and not otherwise defined
in this Amendment and Waiver shall have the meanings ascribed to them in the
Note Agreement.
All of the ownership interests of the Company are owned by Xxxxxx Holdings
LLC (the "Parent"). The Parent has formed Xxxxxx Associates, Inc., a Delaware
corporation ("Associates") and owns all of the issued and outstanding common
stock of Associates. The Parent has caused Associates to file a registration
statement for the underwritten public offering of common stock of Associates
(the "IPO"). In preparation for the IPO, the Parent proposes among other things
to (i) cause the Company to distribute (the "Distribution") cash in the amount
of $55,000,000 and accounts receivables in the face amount of $152,500,000 to
the Parent which the Parent will use to fund a partial distribution of
undistributed accumulated earnings to the owners of the Parent and (ii) transfer
to Associates all of the ownership interests of the Company to Associates so
that the Company will become a wholly owned subsidiary of Associates. The
Distribution will cause the Company to be in violation of Section 10.3 of the
Note Purchase Agreement.
The Company has requested the waiver of compliance with Section 10.3 and
the modification of certain financial covenants and other provisions of the Note
Agreement. The
Holders are willing to grant an amendment and waiver on the terms and conditions
hereinafter set forth.
In consideration of the premises and for good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
Company and the Holders agree as follows:
1. AMENDMENTS TO NOTE AGREEMENT
1.1. Amendment of Section 10.4. Section 10.4(c) of the Note Agreement
is amended to read in its entirety as follows:
"(c) Funded Indebtedness provided that the Company will not
permit at any time the ratio of Consolidated Funded Indebtedness to
Consolidated Cash Flow for the most recently completed four fiscal
quarters to exceed 2.25 to 1.0."
1.2. Amendment of Section 10.5. The text of Section 10.5 of the Note
Agreement is deleted in its entirety and replaced by the word "Reserved."
1.3. Amendment of Section 11. Section 11 of the Note Agreement is
amended to include the following clause (k):
"(k) Xxxxxx Holdings LLC defaults in the performance of or
compliance with any term contained in the Parent Guaranty dated as of
May 31, 2002 in favor of the holders of the Notes or such Parent
Guaranty ceases to be in full force and effect (except as set forth
therein with respect to the release thereof), or is declared to be
null and void in whole or in part by a court or other governmental or
regulatory authority having jurisdiction or the validity or
enforceability thereof shall be contested by any of the Company or
Xxxxxx Holdings LLC or any of them renounces any of the same or
denies that it has any or further liability thereunder."
1.4. Amendment of Schedule B.
1.4.1. The definitions of "Current Indebtedness" and "Total
Capitalization" are deleted from Schedule B.
1.4.2. The following terms are added to Schedule B:
"Consolidated Cash Flow" means, for any period, the sum
of Consolidated Net Income for such period, plus, to the extent
deducted in determining such Consolidated Net Income, (i) Consolidated
Interest Expense, (ii) federal, state, local and foreign income,
value added and similar taxes, (iii) depreciation and amortization
expense, (iv) impairment charges relating to goodwill, (v) non-cash
charges and (vi) foreign currency translation adjustments.
"Consolidated Interest Expense" means, for any period,
the consolidated interest expense of the Company and its Restricted
Subsidiaries for
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such period determined in accordance with GAAP (including imputed interest
on Capital Lease obligations and all debt discount and expense amortized in
such period).
1.4.3. The definition of "Consolidated Net Capital" is amended to read
in its entirety as follows:
"Consolidated Net Capital" shall mean the consolidated members'
capital of the Company, as determined in accordance with GAAP, less
Restricted Investments in excess of 20% of consolidated members, capital of
the Company; provided, however, that "Consolidated Net Capital" shall not
include any capital stock of Xxxxxx Associates, Inc. or Xxxxxx Holdings
LLC.
2. WAIVER
The Holders waive compliance by the Company with the provisions of Section
10.3 of the Note Agreement solely as a result of the Distribution until the
earlier to occur of (i) the occurrence of a Default or Event of Default under
the Note Agreement and (ii) delivery by the Company of financial statements
pursuant to Section 7.1(a) or (b) of the Note Agreement, accompanied by
certificate required by Section 7.2 of the Note Agreement, demonstrating that
the Company is then in compliance with Section 10.3, without regard to such
waiver and that there exists no Default or Event of Default. During the period
the foregoing waiver is in effect, the Company will not at any time permit
Consolidated Net Capital to be less than the sum of (a) $25,000,000 plus (b)
the cumulative sum of 10% (without deduction for any loss) of its Consolidated
Net Income for the three-month period ending September 30, 2002 and for each
fiscal year thereafter. This waiver is limited to its terms and shall not
constitute a waiver of any other term, condition, representation or covenant
under the Note Agreement or any of the other agreements, documents or
instruments executed and delivered in connection therewith.
3. REAFFIRMATION; REPRESENTATIONS AND WARRANTIES
3.1. Reaffirmation of Note Agreement. The Company reaffirms its agreement
to comply with each of the covenants, agreements and other provisions of the
Note Agreement and the Notes, including the additions and amendments of such
provisions effected by this Amendment and Waiver.
3.2. Note Agreement. The Company represents and warrants that the
representations and warranties contained in the Note Agreement are true and
correct as of the date hereof, except (a) to the extent that any of such
representations and warranties specifically relate to an earlier date, (b) for
such changes, facts, transactions and occurrences that are contemplated hereby
or have arisen since May 30, 1996 in the ordinary course of business, (c) for
such other matters as have been previously disclosed in writing by the Company
(including in its financial statements and notes thereto) to the Holders and (d)
for other changes that could not reasonably be expected to have a Material
Adverse Effect.
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3.3. No Default or Event of Default. The Company represents and warrants
that no Default or Event of Default has occurred and is continuing or will occur
as a result of the execution of this Amendment and Waiver.
3.4. Authorization. The execution, delivery and performance by the Company
of this Amendment and Waiver have been duly authorized by all necessary action
on the part of the Company as required by the Operating Agreement and the
Company's Articles of Organization and, except as provided herein, do not
require any registration with, consent or approval of, notice to or action by,
any Person (including any Governmental Authority) in order to be effective and
enforceable. The Note Agreement and this Amendment and Waiver each constitute
the legal, valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4 . EFFECTIVE DATE
This Amendment and Waiver shall become effective as of the date set forth
above upon the satisfaction of the following conditions:
4.1. Consent of Holders to Amendment and Waiver. Execution by the holders
of at least 51% of the aggregate principal amount of the Notes outstanding and
receipt by the Holders of a counterpart of this Amendment and Waiver duly
executed by the Company.
4.2. Parent Guaranty. Parent shall have executed and delivered a Parent
Guaranty substantially in the form of the attached Exhibit A in favor of the
Holders.
4.3. Amendment Fee. Each Holder, whether or not such Holder executes this
Amendment and Waiver, shall have received payment of an amendment fee equal to
0.20% of the principal amount of the outstanding Notes held by such Holder.
4.4. Expenses. The Company shall have paid all fees and expenses of special
counsel to the Holders in connection with this Amendment and Waiver.
5. MISCELLANEOUS
5.1. Ratification. Except as expressly amended, modified, deleted or added
to hereby, all of the terms and conditions of the Note Agreement, the Notes and
all other documents relating to the Note Agreement remain in full force and
effect, and the parties hereto expressly reaffirm and ratify their respective
obligations thereunder.
5.2. Reference to and Effect on the Note Agreement. Upon the final
effectiveness of this Amendment and Waiver, each reference in the Note Agreement
and in other documents describing or referencing the Note Agreement to the
"Agreement," "Note Agreement,"
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"hereunder," "hereof," "herein," or words of like import referring to the Note
Agreement, shall mean and be a reference to the Note Agreement, as amended
hereby.
5.3. Binding Effect. This Amendment and Waiver shall be binding upon and
inure to the benefit of the respective successors and assigns of the parties
hereto.
5.4. Governing Law. This Amendment and Waiver shall be governed by and
construed in accordance with Illinois law.
5.5. Counterparts. This Amendment and Waiver may be executed in any number
of counterparts, each executed counterpart constituting an original, but
altogether only one instrument.
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IN WITNESS WHEREOF, the Company and the Holders have caused this First
Amendment and Waiver to the Note Purchase Agreement to be executed and delivered
by their respective officer or officers thereunto duly authorized.
XXXXXX ASSOCIATES LLC
By: C. Xxxxxxxx Xxxxxxxx, III
----------------------------
Name: C. Xxxxxxxx Xxxxxxxx, III
Title: Authorized Representative
S-1
Xxxxxx Associates LLC
1996 Note Purchase Agreement
The foregoing is hereby agreed
to as of the date thereof.
ALLSTATE LIFE INSURANCE COMPANY [LOGO]
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Name: XXXXXX X. XXXXX
-------------------------------
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Name: XXXXX X. XXXXXXX
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Authorized Signatories
S-2
Xxxxxx Associates LLC
1996 Note Purchase Agreement
MINNESOTA LIFE INSURANCE COMPANY
By: Advantus Capital Management, Inc.
By: ___________________________________
Name: _________________________________
Title: ________________________________
MTL INSURANCE COMPANY
By: Advantus Capital Management, Inc.
By: ___________________________________
Name: _________________________________
Title: ________________________________
PROTECTED HOME MUTUAL LIFE INSURANCE COMPANY
By: Advantus Capital Management, Inc.
By: ___________________________________
Name: _________________________________
Title: ________________________________
GUARANTEE RESERVE LIFE INSURANCE COMPANY
By: Advantus Capital Management, Inc.
By: ___________________________________
Name: _________________________________
Title: ________________________________
S-3
Xxxxxx Associates LLC
1996 Note Purchase Agreement
SECURITY CONNECTICUT LIFE INSURANCE COMPANY
By:ING Investment Management LLC, as Agent
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------
Title: Senior Vice President
-----------------------------
RELIASTAR LIFE INSURANCE COMPANY OF
NEW YORK
By:ING Investment Management LLC, as Agent
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------
Title: Senior Vice President
-----------------------------
S-4
Xxxxxx Associates LLC
1996 Note Purchase Agreement
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By: Delaware Lincoln Investment Advisers, a
Series of Delaware Management Business
Trust, Attorney-In-Fact
By: Xxxx X. Xxxxx
------------------------------------
Name: Xxxx X. Xxxxx
----------------------------------
Title: Vice President
----------------------------------
S-5A
Xxxxxx Associates LLC
1996 Note Purchase Agreement
FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
By: Delaware Lincoln Investment Advisers, a
Series of Delaware Management Business
Trust, Attorney-In-Fact
By: Xxxx X. Xxxxx
------------------------------------
Name: Xxxx X. Xxxxx
----------------------------------
Title: Vice President
----------------------------------
S-5B
Xxxxxx Associates LLC
1996 Note Purchase Agreement
SONS OF NORWAY
By: Delaware Lincoln Investment Advisers, a
Series of Delaware Management Business
Trust, Attorney-In-Fact
By: Xxxx X. Xxxxx
------------------------------------
Name: Xxxx X. Xxxxx
----------------------------------
Title: Vice President
----------------------------------
S-5C
Xxxxxx Associates LLC
1996 Note Purchase Agreement
LONDON LIFE INTERNATIONAL REINSURANCE
CORPORATION
By: Delaware Lincoln Investment Advisers, a
Series of Delaware Management Business
Trust, Attorney-In-Fact
By: /s/ Xxxx X. Xxxxx
---------------------------------
Name: Xxxx X. Xxxxx
---------------------------------
Title: Vice President
---------------------------------
S-6A
Xxxxxx Associates LLC
1996 Note Purchase Agreement
TRANSAMERICA OCCIDENTAL LIFE INSURANCE
COMPANY
By: Delaware Lincoln Investment Advisers, a
Series of Delaware Management Business
Trust, Attorney-In-Fact
By: /s/ Xxxx X. Xxxxx
-------------------------------
Name: Xxxx X. Xxxxx
-------------------------------
Title: Vice President
-------------------------------
Xxxxxx Associates LLC
1996 Note Purchase Agreement
S-6B
AMERICAN STATES LIFE INSURANCE COMPANY
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
----------------------------------
Title: V.P. Treasurer
----------------------------------
S-7
Xxxxxx Associates LLC
1996 Note Purchase Agreement
REASSURE AMERICA LIFE INSURANCE
COMPANY, successor to ALLIED LIFE
INSURANCE COMPANY
By: Swiss Re Asset Management
(Americas) Inc., as Attorney-in-Fact
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
S-8
Xxxxxx Associates LLC
1996 Note Purchase Agreement
