EXHIBIT 4.16
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Prudential Capital Group
Corporate Finance
Xxx Xxxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Tel 000-000-0000
Fax 000-000-0000
May 30, 2003
Xxxx X. Xxxxxxxxxx & Son, Inc.
0000 Xxxxx Xxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxxx, President
Ladies and Gentlemen:
Reference is made to that certain Second Amended and Restated
Note Agreement dated as of January 24, 1997 (as amended from time to
time, the "Note Agreement"), between Xxxx X. Xxxxxxxxxx & Son, Inc., a
Delaware corporation (the "Company"), and The Prudential Insurance
Company of America ("Prudential"), pursuant to which the Company
issued and sold and Prudential purchased the Company's Series A, B, C,
D, E and F Senior Notes in the original principal amounts of
$4,000,000, $6,000,000, $4,000,000, $3,000,000, $8,000,000 and
$10,000,000, respectively. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such
terms in the Note Agreement.
The Company has requested that Prudential agree to modifications
to the Note Agreement. Subject to the terms and conditions hereof,
and effective upon the satisfaction of the conditions set forth
herein, Prudential is willing to agree to such request. Accordingly,
and in accordance with the provisions of paragraph 11C of the Note
Agreement, the parties hereto agree as follows:
SECTION 1. Amendments to the Note Agreement. From and after the
time specified in Section 4 hereof, Prudential and the Company agree
that the Note Agreement shall be amended as follows:
1.1 Paragraph 6 of the Note Agreement is amended and restated
in its entirety as follows:
6. NEGATIVE COVENANTS So long as any Note shall
remain unpaid, the Company agrees to observe and perform
for the benefit of the holders of the Notes each of the
negative covenants set forth below:
6A. Encumbrances The Company shall not, and shall
not permit any of its Subsidiaries to, create, incur,
assume or suffer to exist any security interest, mortgage,
pledge, lien, levy, assessment, attachment, seizure, writ,
distress warrant, or other encumbrance of any nature
whatsoever on or with regard to any of its assets other
than: (a) Liens securing the payment of taxes, either not
yet due or the validity of which is being contested in good
faith by appropriate proceedings, and as to which the
Company or such Subsidiary shall, if appropriate under
Generally Accepted Accounting Principles, have set aside on
its books and records adequate reserves; (b) Liens securing
deposits under workmen's compensation, unemployment
insurance, social security and other similar laws, or
securing the performance of bids, tenders, contracts (other
than for the repayment of borrowed money) or leases, or
securing indemnity, performance or other similar bonds for
the performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases, or securing
statutory obligations or surety or appeal bonds, or
securing indemnity, performance or other similar bonds in
the ordinary course of business; (c) zoning restrictions,
easements, licenses, covenants and other restrictions
affecting the use of the Company's or a Subsidiary's real
property, and other liens, security interests and
encumbrances on property which are subordinate to any liens
and security interests of the holders of the Notes and
which do not, in the Required Holder(s)' reasonable
determination (i) materially impair the use of such
property or (ii) materially lessen the value of such
property for the purposes for which the same is held by the
Company or such Subsidiary; (d) purchase money security
interests securing indebtedness permitted to be incurred
under clause (e) of paragraph 6D; (e) any Liens in favor of
the holders of the Notes and liens, security interests and
other encumbrances existing by operation of law securing
the Notes, and (f) Liens granted prior to March 27, 1996 to
secure payment of Indebtedness of the type permitted and
described in clause (b) of paragraph 6D.
6B. Consolidations, Mergers or Acquisitions The
Company shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of the
Required Holder(s), recapitalize or consolidate with, merge
with, or otherwise acquire all or substantially all of the
assets or properties of any other Person. The Company shall
not have any Subsidiaries other than JBS, and JBS shall not
have any Subsidiaries.
6C. Deposits, Investments, Advances or Loans The
Company shall not, and shall not permit any of its
Subsidiaries to, make or permit to exist deposits,
investments, advances or loans in or to Affiliates or any
other Person, except: (a) investments in short-term direct
obligations of the United States Government; (b)
investments in negotiable certificates of deposit issued by
a bank satisfactory to the Required Holder(s) in their
reasonable determination, made payable to the order of the
Company, any Subsidiary or to bearer; (c) loans to
officers, directors, partners, employees or Affiliates as
and when permitted by paragraph 6H; and (d) demand deposits
held by a bank satisfactory to the Required Holder(s) in
their reasonable discretion. Without limiting the
generality of the foregoing, the Company shall not, and
shall not permit any of its Subsidiaries to, make or permit
to exist deposits or investments in Margin Accounts.
6D. Indebtedness The Company shall not, and shall
not permit any of its Subsidiaries to, incur, create,
assume, become or be liable in any manner with respect to,
or permit to exist, any Indebtedness, direct or indirect,
fixed or contingent, except: (a) Indebtedness under the
Bank Agreement; (b) Indebtedness existing as of March 27,
1996 which is identified in Exhibit I hereof (exclusive of
Indebtedness of the Company's Subsidiaries owing to the
Company); (c) obligations secured by liens or security
interests permitted under paragraph 6A or contingent
obligations permitted under paragraph 6E; (d) trade
obligations and normal accruals in the ordinary course of
business not yet due and payable, or with respect to which
the Company or any Subsidiary is contesting in good faith
the amount or validity thereof by appropriate proceedings,
and then only to the extent that the Company or such
Subsidiary has set aside on its books adequate reserves
therefor, if appropriate under Generally Accepted
Accounting Principles; (e) other Indebtedness secured by
liens permitted under clause (d) of paragraph 6A, not
exceeding $1,500,000 in the aggregate during any one Fiscal
Year; and (f) other unsecured Indebtedness, including
capitalized leases, not exceeding the lesser of (i)
$2,000,000 or (ii) $3,500,000 less the amount of
Indebtedness incurred under the preceding clause (e). JBS
shall not directly receive the proceeds of any Loan (as
defined in the Bank Agreement).
6E. Guarantees and Other Contingent Obligations The
Company shall not, and shall not permit any of its
Subsidiaries to, guarantee, endorse or otherwise in any way
become or be responsible for obligations of any other
Person, whether by agreement to purchase the indebtedness
of such Person or through the purchase of goods, supplies
or services, or maintenance of working capital or other
balance sheet covenants or conditions, or by way of stock
purchase, capital contribution, advance or loan for the
purpose of paying or discharging any indebtedness or
obligation of such Person or otherwise, except: (a) for
endorsements of negotiable instruments for collection in
the ordinary course of business; (b) that the Company or
any Subsidiary may indemnify its officers and directors to
the extent permitted under the laws of the State in which
the Company or such Subsidiary is organized; (c) guaranties
and other contingent obligations not exceeding $1,000,000
in the aggregate during any one Fiscal Year; and (d)
guaranties by JBS of the Notes and of the Teachers
Indebtedness.
6F. Disposition of Property The Company shall not,
and shall not permit any of its Subsidiaries to, sell,
lease, transfer or otherwise dispose of any of its
properties, assets or rights, to any Person, except: (a) in
the ordinary course of the Company's or such Subsidiary's
business; or (b) sales of obsolete, worn out or unusable
assets.
6G. Capital Expenditure Limitations Company shall
not, and shall not permit any of its Subsidiaries to,
purchase, invest in or otherwise acquire (including
acquisitions through capitalized leases) additional real
estate, equipment or other fixed assets in any Fiscal Year
in an amount in excess of $12,000,000 in the aggregate for
the Company and its Subsidiaries in any such Fiscal Year.
6H. Loans to Affiliates The Company shall not, and
shall not permit any of its Subsidiaries to, make any loans
to any of its officers, directors, Affiliates or
shareholders, except for (a) advances for travel and
expenses to its officers, directors or employees in the
ordinary course of business; and (b) loans (including
obligations under existing split-dollar life insurance
contracts) to its officers, directors or employees not
exceeding $2,500,000 in the aggregate at any one time
outstanding.
6I. Distributions, Prepayments of Debt The Company
shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly: (a) redeem any of its shares of
capital stock; (b) declare any dividends in any year on any
class of its capital stock, except that during each Fiscal
Year, the Company may make, declare and pay dividends to
its shareholders in amounts up to the lesser of (i) 25% of
the Company's consolidated net income during the previous
Fiscal Year, or (ii) $5,000,000; or (c) prepay, redeem,
purchase or deposit funds for the prepayment, redemption or
purchase of any principal, interest or other obligations
related to any Indebtedness of the Company for borrowed
money, other than the Notes and the Bank Obligations.
6J. Change of Control; Amendment of Organization
Documents The Company shall not, and shall not permit any
of its Subsidiaries to, enter into any transaction which
would result in the failure of Xxxxxx X. Xxxxxxxxxx and
Xxxxxxx Xxxxxxxxx, their respective immediate family
members, and certain trusts created for the benefit of
their respective sons and daughters to own, in the
aggregate, shares of voting stock of the Company, on a
fully diluted basis, representing the right to elect a
majority of the directors of the Company. The Company
shall not, and shall not permit any of its Subsidiaries to,
enter into any transaction which would result in the
failure of the Company to own directly and beneficially,
100% of the outstanding shares of all classes of common
stock of JBS. The Company shall not, and shall not permit
any of its Subsidiaries to, amend its articles or certifi-
cate of incorporation, bylaws or any other agreement,
instrument or document affecting its organization,
management or governance, without the prior written consent
of the Required Holder(s), which consent shall not be
unreasonably withheld; provided, however, that so long as
no liability to the Company shall ensure therefrom, and so
long as any and all assets then owned by JBS shall be
transferred to the Company, the holders of the Notes hereby
consent to the dissolution of JBS at any time the Company
elects to do so.
6K. Use of Names Except to the extent that the
holders of the Notes have been notified in advance, the
Company shall not, and shall not permit any of its
Subsidiaries to, use any corporate names (as distinguished
from brand names) other than Xxxx X. Xxxxxxxxxx & Son,
Inc., Sunshine Nut Co., Inc., Midwest Nut & Seed, Inc., The
Home Economist, JBS International, Inc. and Quantz
Acquisition, Co., Inc., nor shall the Company change any of
said names.
6L. Payment of Certain Debt The Company shall not,
and shall not permit any of its Subsidiaries to, directly
or indirectly, pay, prepay, redeem or purchase, or deposit
funds or property for the payment, prepayment, redemption
or purchase of the indebtedness of the Company which is
subordinated to the payment of any portion of the Notes,
except that the Company may make scheduled payments to the
extent such payments do not conflict with any terms of
subordination applicable thereto. The Company shall not,
and shall not permit any of its Subsidiaries to, directly
or indirectly, prepay, redeem or purchase, or deposit funds
or property for the prepayment, redemption or purchase of
the Teachers Indebtedness.
6M. Amendments to Certain Documents. The Company
will not consent to or permit any amendment, supplement or
other modification of any of the terms or provisions
contained in, or applicable to, the Teachers Note
Agreement, the Bank Agreement or any document or instrument
evidencing or applicable to any Subordinated Debt, other
than any amendment, supplement or other modification which:
(i) extends the date or reduces the amount of
any required repayment or redemption,
(ii) causes the terms and provisions of such
agreement, document or instrument to conform to and in
any case not conflict with the terms and provisions of
this Agreement, or
(iii) solely with respect to the Bank Agreement
and subject to the terms of paragraph 6O, increases
the principal amount of Indebtedness thereunder or
pricing applicable thereto if no default or event of
default shall be continuing hereunder or under the
Bank Agreement at the time (or immediately prior to
the time) such amendment, supplement or modification
is entered into (or series of related amendments,
modifications or supplements entered into in concert),
without, in all cases, the consent of the Required
Holder(s), which consent shall not be unreasonably withheld
or delayed. Without limiting the generality of the
foregoing, the Company will not consent to or permit any
amendment, supplement or other modification which has the
effect of (i) increasing the interest rate or fees under
such agreement (other than the Bank Agreement to the extend
permitted by the immediately preceding sentence), (ii)
increasing the amount of obligations of the Company or any
Subsidiary under such agreement (other than the Bank
Agreement to the extend permitted by the immediately
preceding sentence), (iii) amending the financial covenants
contained in such agreement or (iv) with respect to the
Teachers Note Agreement, permitting any prepayment of
obligations under such agreement. The Company shall not,
and shall not permit any of its Subsidiaries to, amend the
Bainbridge Bond Documents or the Bainbridge Loan Documents
without the prior written consent of the Required
Holder(s).
6N. Fiscal Year The Company shall not, and shall not
permit any of its Subsidiaries to, change its Fiscal Year
without the prior written consent of the Required
Holder(s).
6O. Financial Covenants and Ratios. The Company
shall not permit:
(a) as of the end of each month, Tangible Net Worth
to be less than $95,000,000, plus for each Fiscal Year
beginning with the Fiscal Year 2003, 50% of the aggregate
cumulative annual positive net income of the Company and
its Subsidiaries during the previous Fiscal Year (with no
deductions for annual losses);
(b) as of the end of each month, the Working Capital
Ratio to be less than 1.5 to 1.0;
(c) as of the end of each fiscal quarter, and
measured on a rolling four quarter basis, EBITDA to be less
than (i) during Fiscal Year 2003, $25,000,000, (ii) during
Fiscal Year 2004, $28,000,000, and (iii) beginning with the
first fiscal quarter of Fiscal Year 2005 and at all times
thereafter, $30,000,000;
(d) as of the end of each month, Working Capital to
be less than $50,000,000;
(e) as of the end of each fiscal quarter, and
measured on a rolling four quarter basis, the Leverage
Ratio to be more than 3.50 to 1.00;
(f) as of the end of each fiscal quarter, and
measured on a rolling four quarter basis, the Fixed Charge
Coverage Ratio to be less than 1.20 to 1.00; and
(g) total assets of the Company on an unconsolidated
basis to be less than 75% of total assets of the Company
and its Subsidiaries on a consolidated basis at any time.
1.2 The following definitions appearing in paragraph 10B of the
Note Agreement are amended and restated in their entirety as follows:
"Bank Agent" shall mean U.S. Bank National
Association, a national banking association (as successor
to U.S. Bancorp Ag Credit, Inc., a Colorado corporation) in
its capacity as agent under the Bank Agreement.
"Bank Agreement" shall mean that certain Credit
Agreement dated as of March 31, 1998 by and among the
Company, JBS, Sunshine and Quantz, the financial
institutions named on the signature page thereto, and the
Bank Agent, as agent for such financial institutions,
together with the "Financing Agreements" (as defined
therein), all as amended, modified and in effect from time
to time pursuant to the terms hereof.
"Banks" shall mean the Bank Agent and each other
financial institution named on the signature page to the
Bank Agreement, and their respective successor and assigns
and any together party that becomes a lender under the Bank
Agreement.
"Fixed Charge Coverage Ratio" shall mean, for the then
preceding four fiscal quarters, the ratio of the aggregate
amount: (a) Unallocated Cash Flow, plus (b) the aggregate
cash interest paid during such period of by the Company and
its Subsidiaries; divided by (c) (i) the aggregate amount
of principal paid (or due to be paid if not paid on or
before the original due date) by the Company and its
Subsidiaries during such period with respect to long term
debt (excluding capitalized or synthetic leases), excluding
payments that were due and counted as of their original due
date, plus (ii) the aggregate amount of cash interest paid
by the Company and its Subsidiaries during such period
(excluding implicit interest expense on capitalized or
synthetic leases). For purposes of calculating the Fixed
Charge Coverage Ratio, the Company and its Subsidiaries
shall consider all payments made on subordinated debt to be
normalized to an annual amount of $1,500,000 based on a ten
(10) year amortization schedule.
"Funded Debt" shall mean, for the then preceding four
quarters, the aggregate amount of the outstanding principal
amount of all interest bearing indebtedness for borrowed
money (including without limitation, capitalized leases) of
the Company and its Subsidiaries. For purposes of
calculating Funded Debt, the outstanding principal amount
of Loans (as defined in the Bank Agreement), as of any date
of determination, shall be computed by averaging the
outstanding balance thereof as of the last day of the month
for each of the then preceding twelve months.
"Tangible Net Worth" shall mean as of any particular
date, the difference between: (a) the aggregate total
assets of the Company and its Subsidiaries as they would
normally be shown on a balance sheet in accordance with
Generally Accepted Accounting Principles, adjusted by
deducting: (i) all values attributable to general
intangibles, as determined in accordance with Generally
Accepted Accounting Principles, and by deducting (ii)
Accounts due from Affiliates with no further adjustment
required for Accounts due from Affiliates already
eliminated in combination except Accounts due from
Affiliates which the Company or any of its Subsidiaries
could legally collect by setoff against Accounts due to
Affiliates; and (b) the aggregate total liabilities of the
Company and its Subsidiaries as they would normally be
shown on a balance sheet, adjusted by adding as liabili-
ties: (i) all capitalized leases and guarantees of the
indebtedness of Affiliates, with no further adjustment
required for guaranteed indebtedness already included in
the balance sheet, and by deducting from liabilities: (ii)
any and all liabilities which are expressly subordinated on
terms satisfactory to the holders of the Notes (it being
agreed that the current terms of subordination are and
shall remain acceptable to the holders of the Notes).
1.3 The following definitions are added to paragraph 10B of the
Note Agreement in their alphabetically proper place:
"Accounts" shall mean all present and future rights
(including without limitation, rights under any Margin
Accounts) of the Company or any of its Subsidiaries to
payment for Inventory or other goods sold or leased or for
services rendered, which rights are not evidenced by
instruments or chattel paper, regardless of whether such
rights have been earned by performance.
"Bainbridge Bond Documents" shall mean all agreements,
instruments and documents as now in effect and executed or
delivered in connection with the Bainbridge Indenture, and
as the same may be amended, replaced, restated and/or
supplemented from time to time hereafter, including without
limitation, the Bainbridge Loan Agreement.
"Bainbridge Indenture" shall mean that certain Trust
Indenture dated as of June 1, 1987 between the Decatur
County - Bainbridge Industrial Development Authority and
Trust Company Bank, as now in effect and as the same may be
amended, replaced, restated and/or supplemented from time
to time hereafter.
"Bainbridge Loan Agreement" shall mean that certain
Loan Agreement dated as of June 1, 1987, between the
Decatur County - Bainbridge Industrial Development
Authority and the Company, as now in effect and as the same
may be amended, replaced, restated and/or supplemented
hereafter.
"Bainbridge Loan Documents" shall mean all agreements,
instruments and documents executed or delivered in
connection with the Bainbridge Loan Agreement, as now in
existence and as the same may be amended, replaced,
restated and/or supplemented from time to time.
"EBITDA" shall mean, for the then preceding four
fiscal quarters, the aggregate net income of the Company
and its Subsidiaries before provision for income taxes,
interest expense (including without limitation, implicit
interest expense on capitalized leases), depreciation,
amortization and other non-cash expenses or charges
(including (i) any non-cash charges associated with FAS 142
adjustments, and (ii) any one-time slotting fees or
distribution allowances), excluding (to the extent
otherwise included): (a) non-operating gains (including
without limitation, extraordinary or nonrecurring gains,
gains from discontinuance of operations and gains arising
from the sale of assets other than Inventory or property,
plant and equipment) during the applicable period; and (b)
similar non-operating losses during such period.
"Inventory" shall mean any and all goods which shall
at any time constitute "inventory" or "farm products" (in
each case, as defined in the Uniform Commercial Code as in
effect in the State of Colorado) of the Company and its
Subsidiaries, wherever located (including without
limitation, goods in transit), or which from time to time
are held for sale, lease or consumption, furnished under
any contract of service or held as raw materials, work in
process, finished inventory or supplies (including without
limitation, packaging and/or shipping materials).
"JBS" shall mean JBS International, Inc., a Barbados
corporation.
"Leverage Ratio" shall mean, for the then preceding
four fiscal quarters, the ratio: (a) Funded Debt, divided
by (b) EBITDA.
"Margin Accounts" shall mean all futures contracts or
funds and other property related to such futures contracts,
which the Company, any of its Subsidiary or any authorized
attorney-in-fact of the Company or any of its Subsidiary
may acquire, accumulate, withdraw or pay out, and which may
be held with any broker, including without limitation, any
balance credited to any Margin Account upon its closing.
"Working Capital" shall mean as of any particular
date, the amount of the aggregate current assets of the
Company and its Subsidiaries, less the aggregate current
liabilities of the Company and its Subsidiaries determined
in accordance with Generally Accepted Accounting
Principles, adjusted by deducting: (i) all values
attributable to general intangibles, as determined in
accordance with Generally Accepted Accounting Principles;
and by deducting (ii) Accounts due from Affiliates with no
further adjustment required for Accounts due from
Affiliates already eliminated in combination except
Accounts due from Affiliates which the Company or any of
its Subsidiaries could legally collect by setoff against
Accounts due to Affiliates, and treating as equity any and
all liabilities which are expressly subordinated on terms
satisfactory to the holders of the Notes (it being agreed
that the current terms of subordination are and shall
remain acceptable to the holders of the Notes).
"Working Capital Ratio" shall mean as of any
particular date, the ratio of the aggregate current assets
of the Company and its Subsidiaries, to the aggregate
current liabilities of the Company and its Subsidiaries
determined in accordance with Generally Accepted Accounting
Principles, treating all amounts currently owing to
Affiliates as current liabilities and giving no value as
assets to any amounts currently owing from Affiliates.
"Unallocated Cash Flow" shall mean, for any period of
determination, (a) EBITDA during such period, plus (b) the
aggregate amount of net new long term debt incurred by the
Company and its Subsidiaries during such period, plus (c)
the aggregate amount of net capital contributions made to
the Company and its Subsidiaries during such period, minus
(d) the aggregate amount of cash income taxes paid by the
Company and its Subsidiaries during such period, minus (e)
the aggregate amount of cash dividends paid by the Company
and its Subsidiaries during such period, minus (f) the
aggregate amount of cash interest paid by the Company and
its Subsidiaries during such period, minus (g) the
aggregate amount of the lesser of (i) depreciation, or (ii)
actual capital expenditures, in each case of the Company
and its Subsidiaries during such period.
1.4 The following definitions appearing in paragraph 10B of the
Note Agreement are deleted in their entirety: "Current Ratio," "Funded
Indebtedness," "Permitted Liens," "Rolling Fixed Charge Coverage
Ratio," "Senior Funded Indebtedness," "Subordinated Funded
Indebtedness," and "Total Capitalization."
SECTION 2. Consent. Subject to the complete satisfaction of all
of the conditions set forth in Section 4 below, pursuant to paragraph
6M of the Note Agreement, Prudential hereby consents to that certain
Fourth Amendment to Credit Agreement dated as of May 30, 2003 by and
among the Company, JBS, the Bank Agent and the Banks.
SECTION 3. Representations, Warranties and Covenant. The Company
represents and warrants to Prudential that, after giving effect hereto
(a) each representation and warranty set forth in paragraph 8 of the
Note Agreement is true and complete in all material respects as of the
date of the execution and delivery of this letter agreement by the
Company with the same effect as if made on such date (except to the
extent such representations and warranties expressly refer to an
earlier date, in which case they were true and complete in all
material respects as of such earlier date), (b) no Event of Default or
Default exists, (c) each of the representations and warranties made by
the Company, and, if applicable, any Subsidiary in the Credit
Agreement is true and complete in all material respects as of the date
of the execution and delivery of this letter agreement by the Company
with the same effect as if made on such date (except to the extent
such representations and warranties expressly refer to an earlier
date, in which case they were true and complete in all material
respects as of such earlier date), (d) the Company has paid a fee of
$145,000 to the Bank Agent and the Banks with respect to the amendment
and consent referred to in clauses (iii) and (iv) of Section 4(a)
below and the Company has not paid or agreed to pay, and the Company
will not pay or agree to pay, any other fees or other consideration to
any Person for or with respect to such amendment and consent, and (e)
the Company has not paid or agreed to pay, and the Company will not
pay or agree to pay, any fees or other consideration to any Person for
or with respect to the consent referred to in clause (v) of Section
4(a) below.
SECTION 4. Effectiveness. The amendments described in Section 1
above and the consent described in Section 2 above shall become
effective on the date (the "Effective Date") when each of the
following conditions has been satisfied in a manner satisfactory in
form and substance to Prudential:
(a) Prudential has received the following documents:
(i) counterparts of this letter agreement duly
executed by the Company;
(ii) a consent of guarantor, dated the date hereof,
duly executed by JBS International, Inc., in the form
attached hereto as Exhibit A;
(iii) a certified copy of an amendment to the Bank
Agreement and all agreements, instruments and documents
executed in connection therewith, in form and substance
satisfactory to Prudential;
(iv) a consent duly executed by the Bank Agent and
each Bank and dated the date hereof, in the form attached
hereto as Exhibit B;
(v) a consent duly executed by Teachers and dated the
date hereof, in the form attached hereto as Exhibit C; and
(vi) that certain letter agreement regarding setoff
rights dated March 31, 1998 by and among Prudential,
Teachers, the Bank Agent and the Banks shall be in full
force and effect;
(b) all corporate and other proceedings in connection with
the transactions contemplated by this letter agreement shall be
satisfactory to Prudential and its counsel, and Prudential shall
have received all such counterpart originals or certified or
other copies of such documents as they may reasonably request;
(c) Prudential has received payment of all costs and
expenses of Prudential (including reasonable fees and
disbursements of special counsel to Prudential) in connection
with this letter agreement and the transactions contemplated
hereby.
SECTION 5. Reference to and Effect on Note Agreement. Upon the
effectiveness of this letter agreement, each reference in the Note
Agreement or any other document, instrument or agreement to the "Note
Agreement" shall mean and be a reference to the Note Agreement as
modified by this letter agreement. Except as specifically set forth
in Section 1 hereof, the Note Agreement shall remain in full force and
effect and is hereby ratified and confirmed in all respects.
SECTION 6. Expenses. The Company hereby confirms its obligations
under the Note Agreement, whether or not the transactions hereby
contemplated are consummated, to pay, promptly after request by
Prudential, all reasonable out-of-pocket costs and expenses, including
attorneys' fees and expenses, incurred by Prudential in connection
with this letter agreement or the transactions contemplated hereby, in
enforcing any rights under this letter agreement, or in responding to
any subpoena or other legal process or informal investigative demand
issued in connection with this letter agreement or the transactions
contemplated hereby. The obligations of the Company under this
Section 6 shall survive transfer by Prudential of any Note and payment
of any Note.
SECTION 7. Governing Law. THIS LETTER AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF ILLINOIS, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS OF
SUCH STATE WHICH WOULD OTHERWISE CAUSE THIS LETTER AGREEMENT TO BE
CONSTRUED OR ENFORCED OTHER THAN IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ILLINOIS.
SECTION 8. Counterparts; Section Titles. This letter agreement
may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument. The section
titles contained in this letter agreement are and shall be without
substance, meaning or content of any kind whatsoever and are not a
part of the agreement between the parties hereto.
Very truly yours,
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ XXXXXX XXXXXXXX
-------------------
Title: Vice President
AGREED AND ACCEPTED:
XXXX X. XXXXXXXXXX & SON, INC.
By: /s/ XXXXXXX X. XXXXXXXXX
------------------------
Title: Chief Financial Officer
