FIRST LETTER AMENDMENT
EXHIBIT 99.1
Dated as of June 16, 2006
Deutsche Bank Trust Company Americas,
as Administrative Agent under the
Credit Agreement referred to below
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
as Administrative Agent under the
Credit Agreement referred to below
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Xxxxx & Xxxxx Company Credit Facility
Ladies and Gentlemen:
Reference is made to the Amended and Restated Credit Agreement dated as of April 14, 2006 (the
“Credit Agreement”) by and among Xxxxx & Xxxxx Company (the “Borrower”), the guarantors named
therein, Deutsche Bank Trust Company Americas, as administrative agent (the “Administrative
Agent”), the financial institutions identified therein as lender parties (the “Lender Parties”),
Deutsche Bank Trust Company Americas, as syndication agent, and Deutsche Bank Securities Inc., as
sole book running manager and sole lead arranger. Capitalized terms not otherwise defined herein
shall have their respective meanings set forth in the Credit Agreement.
It is hereby agreed by you and us as follows:
1. Amendments to Credit Agreement. (a) The following definitions set forth
in Section 1.01 of the Credit Agreement are hereby amended and restated to read as follows:
“Acquisition” means (a) the acquisition of all or substantially all of the
assets of another Person or of a business or division of another Person, (b) the
acquisition of all or substantially all of the Equity Interests of a Person
unaffiliated with the Borrower and its Subsidiaries, (c) the establishment of a
joint venture with another Person unaffiliated with the Borrower and its
Subsidiaries or (d) the merger, consolidation or amalgamation with one or more other
Persons.
“Consolidated Fixed Charges” means, for any date of determination, for the
Measurement Period most recently ended, the sum (without duplication) of (a)
Consolidated Interest Expense (net of Consolidated Interest Income) for such
Measurement Period, (b) cash income taxes paid by the Borrower or any of its
Restricted Subsidiaries on a Consolidated basis in respect of such Measurement
Period, (c) scheduled principal payments made during such Measurement Period on
account of principal of Debt of the Borrower or any of its Restricted Subsidiaries
(including Capitalized Lease payments), (d) the aggregate amount actually paid by
the Borrower and its Restricted Subsidiaries in cash during such Measurement Period
on account of Capital Expenditures and (e) Earnouts and other cash dividends paid or
distributed by the Borrower during such Measurement Period.
“Debt/EBITDA Ratio” means, at any date of determination, the ratio of (a)(i)
Consolidated total Debt for Borrowed Money of the Borrower and its Restricted
Subsidiaries at such date, less (ii) all cash and Cash Equivalents of the Borrower
and its Restricted Subsidiaries at such date to the extent the same exceed the
aggregate amount, if any, required to satisfy on such date the minimum Liquidity
financial covenant set forth in Section 5.04(f), to (b) Consolidated EBITDA of the
Borrower and its Restricted Subsidiaries for the most recently completed Measurement
Period.
1
“Interest Coverage Ratio” means, for any date of determination, for the
Measurement Period most recently ended, the ratio of (a) Consolidated EBITDA to
(b)(i) Consolidated Interest Expense less (ii) Consolidated Interest Income, for
such Measurement Period.
(b) The following new definitions are hereby inserted into Section 1.01 of the Credit
Agreement in proper alphabetical order:
“Consolidated Interest Income” means, for any date of determination, for the
Measurement Period most recently ended, the sum of all cash interest income of the
Borrower and its Restricted Subsidiaries for such Measurement Period.
“Consolidated Net Worth” means, for any date of determination, the Consolidated
net worth on such date of the Borrower and its Restricted Subsidiaries determined in
accordance with GAAP.
“Delayed Draw Term Advance” has the meaning specified in Section 2.01(a).
“First Amendment Effective Date” means June 16, 2006.
“Initial Term Advance” has the meaning specified in Section 2.01(a).
“Limited Joint Venture” means any joint venture (a) in which the Borrower or
any of its Subsidiaries holds any Equity Interest, (b) that is not a Subsidiary of
the Borrower or any of its Subsidiaries and (c) the accounts of which would not
appear on the Consolidated financial statements of the Borrower.
“Liquidity” means, at any date of determination, an amount equal to the same of
(a) the aggregate Unused Revolving Credit Commitments at such time with respect to
which all conditions precedent set forth in Section 3.02 remain satisfied other than
delivery of the officer’s certificate referred to therein, and (b) cash and Cash
Equivalents of the Borrower and its Restricted Subsidiaries on hand at such time.
“New Hire Bonuses” has the meaning specified in Section 5.02(r).
“Revolver Usage” means, with respect to any Revolving Credit Lender at any
time, without duplication, the sum of (a) the aggregate principal amount of all
Revolving Credit Advances, Swing Line Advances and Letter of Credit Advances made by
such Lender (in its capacity as a Lender) and outstanding at such time plus (b) such
Lender’s Pro Rata Share of (i) the aggregate Available Amount of all Letters of
Credit outstanding at such time, (ii) the aggregate principal amount of all Letter
of Credit Advances made by the Issuing Bank pursuant to Section 2.03(c) and
outstanding at such time and (iii) the aggregate principal amount of all Swing Line
Advances made by the Swing Line Bank pursuant to Section 2.03(b) and outstanding at
such time.
“Special Term Loan Repayment” has the meaning set forth in Section 2.01(a).
“Unused Term Commitment” means, with respect to any Term Lender at any time,
(a) such Lender’s Term Commitment at such time minus (b) the sum of the aggregate
principal amount of all Term Advances made by such Lender (in its capacity as a
Lender) on or prior to such date, whether or not then outstanding (exclusive,
however,
2
of any Term Advance repaid on the First Amendment Effective Date pursuant to
the Special Term Loan Repayment).
(c) The definition of “Applicable Margin” set forth in Section 1.01 of the Credit
Agreement is hereby amended by adding at the end thereof the following new paragraph:
“Notwithstanding the foregoing, the Applicable Margin shall be at Pricing Level
I from the First Amendment Effective Date through March 31, 2007.”
(d) The definition of “Capital Expenditures” set forth in Section 1.01 of the Credit
Agreement is hereby amended by adding at the end thereof the following sentence:
“Further, tenant improvement costs and expenses that would otherwise qualify as
Capital Expenditures shall be excluded from the definition thereof to the extent
such costs and expenses are reimbursable by the landlord.”
(e) The definition of “Permitted Acquisition” set forth in Section 1.01 of the Credit
Agreement is hereby amended by inserting in clause (a)(ii) thereof, immediately after the
words “the Administrative Agent shall have” the words “approved such Acquisition in writing
prior to the consummation thereof and”.
(f) Section 2.01(a) of the Credit Agreement is hereby amended and restated to read as
follows:
“(a) The Term Advances. Pursuant to the terms of the Existing
Agreement, the Term Lenders made a single advance (the “Initial Term Advance”) to
the Borrower on the Effective Date (as defined in the Existing Agreement) in an
amount equal to the Term Lenders’ Term Commitments at such time. On the First
Amendment Effective Date, the Borrower repaid Term Advances in an aggregate
principal amount of $40,000,000 (the “Special Term Loan Repayment”) with the
proceeds of Revolving Credit Advances made on such date. The Lenders have agreed,
subject to the terms and conditions hereinafter set forth, to make advances (each
such advance, a “Delayed Draw Term Advance”, and together with the Initial Term
Advance, a “Term Advance”) to the Borrower from time to time on any Business Day
during the period from the First Amendment Effective Date until the Termination Date
in respect of the Term Facility in an amount for each such Advance not to exceed
such Lender’s Unused Term Commitment at such time. Each Term Borrowing shall be in
an aggregate amount of $1,000,000 or an integral multiple of $500,000 in excess
thereof and shall consist of Term Advances made simultaneously by the Term Lenders
ratably according to their Term Commitments. After the First Amendment Effective
Date, amounts borrowed under this Section 2.01(a) (or the corresponding section of
the Existing Agreement) and repaid or prepaid may not be reborrowed.”
(g) Section 2.02(b)(v) is hereby amended by (i) deleting the two references therein to
“Revolving Credit Advances” and substituting therefor references to “Advances”, and (ii)
deleting the two references therein to “Revolving Credit Lender’s” and substituting therefor
references to “Lender’s”.
(h) Section 2.08(a) of the Credit Agreement is hereby amended and restated to read as
follows:
3
“(a) Unused Commitment Fees. The Borrower shall pay to the
Administrative Agent for the account of the Lenders the following unused commitment
fees, from the date hereof in the case of each Initial Lender and from the effective
date specified in the Assignment and Acceptance pursuant to which it became a Lender
in the case of each other Lender, in each case until the Termination Date, payable
in arrears quarterly on the last day of each March, June, September and December,
commencing June 30, 2006, and on the Termination Date in respect of the applicable
Facility:
(i) (A) for each such quarter during which the average daily Revolver
Usage of all Revolving Credit Lenders is greater than or equal to
$30,000,000, an unused revolving commitment fee at the rate of 0.25% per
annum on the sum of the average daily Unused Revolving Credit Commitment of
each Appropriate Lender plus such Appropriate Lender’s Pro Rata Share of the
average daily outstanding Swing Line Advances during such quarter, and (B)
for each such quarter during which the average daily Revolver Usage of all
Revolving Credit Lenders is less than $30,000,000, an unused revolving
commitment fee at the rate of 0.50% per annum on the sum of the average
daily Unused Revolving Credit Commitment of each Appropriate Lender plus
such Appropriate Lender’s Pro Rata Share of the average daily outstanding
Swing Line Advances during such quarter;
(ii) a term commitment fee at the rate of 0.50% per annum on the sum
of the average daily Unused Term Commitment of each Appropriate Lender
during such quarter;
provided, however, that any revolving unused commitment fee or term unused
commitment fee accrued with respect to any of the Commitments of a Defaulting Lender
during the period prior to the time such Lender became a Defaulting Lender and
unpaid at such time shall not be payable by the Borrower so long as such Lender
shall be a Defaulting Lender except to the extent that such unused commitment fee
shall otherwise have been due and payable by the Borrower prior to such time; and
provided further that no unused commitment fee shall accrue on any of the
Commitments of a Defaulting Lender so long as such Lender shall be a Defaulting
Lender.”
(i) Section 2.14 of the Credit Agreement is hereby amended and restated to read as
follows:
“SECTION 2.14 Use of Proceeds. The proceeds of the Initial Term
Advance were used by the Borrower solely (i) to refinance certain Existing Debt,
(ii) to finance, from and after the date hereof, the repurchase or exchange by the
Borrower of Equity Interests and related payments permitted pursuant to Section
5.02(g)(iv), (iii) to pay transaction fees and expenses and (iv) for other general
corporate purposes. The proceeds of all Delayed Draw Term Advances shall be
available (and the Borrower agrees that it shall use such proceeds) solely for the
purpose of financing Permitted Acquisitions by the Borrower or its Restricted
Subsidiaries. The proceeds of the Revolving Credit Advances and issuances of
Letters of Credit shall be available (and the Borrower agrees that it shall use such
proceeds and Letters of Credit) solely (v) to fund the Special Term Loan Repayment,
(w) to provide working capital for the Borrower and its Restricted Subsidiaries, (x)
to finance acquisitions by the Borrower or its Restricted Subsidiaries, (y) to
finance, from and after the date hereof, the repurchase or exchange by
4
the Borrower of Equity Interests and related payments permitted pursuant to
Section 5.02(g)(iv) and (z) for other general corporate purposes.”
(j) Section 5.02(f)(ix) of the Credit Agreement is hereby amended and restated to read
as follows:
“(ix) Investments in Permitted Acquisitions, provided that Acquisitions
qualifying under clause (c) of the definition thereof and constituting Limited Joint
Ventures shall not exceed $5,000,000 in the aggregate.”
(k) Section 5.02(f)(xi) of the Credit Agreement is hereby amended by striking the word
“and” at the end thereof. Section 5.02(f)(xii) of the Credit Agreement is hereby amended by
replacing “.” at the end thereof with “; and”. The following new Section 5.02(f)(xiii) is
hereby inserted after Section 5.02(f)(xii):
“(xiii) Investments by the Borrower and its Restricted Subsidiaries in
warrants (trading under the ticker symbol XXX.XX) representing rights
to purchase shares of common stock of XXXX in an aggregate amount not to exceed $3,500,000.”
(l) Section 5.02(o) of the Credit Agreement is hereby amended and restated to read as
follows:
“(o) [Intentionally omitted.]”
(m) The following new Section 5.02(r) is hereby inserted into the Credit Agreement
immediately following Section 5.02(q):
“(r) Maximum New Hire Bonuses. Make aggregate cash payments in any
Measurement Period of the Borrower in connection with the hiring or engagement of
officers, employees or representatives of the Borrower (“New Hire Bonuses”) in
excess of the amount set forth below for such Measurement Period unless any payments
in excess of such amount in any Measurement Period is approved in writing by the
Administrative Agent in advance of such payment:
| Maximum Amount of | ||||
| Measurement Period Ending | New Hire Bonuses | |||
June 30, 2006 |
$ | 6,500,000 | ||
September 30, 2006 |
$ | 15,000,000 | ||
December 31, 2006 |
$ | 20,000,000 | ||
March 31, 2007 |
$ | 20,000,000 | ||
June 30, 2007 |
$ | 20,000,000 | ||
September 30, 2007 |
$ | 15,000,000 | ||
December 31, 2007 and thereafter |
$ | 7,500,000 | ||
(n) Section 5.04
of the Credit Agreement is hereby amended and restated to read as
follows:
5
“SECTION 5.04 Financial
Covenants. So long as any Advance or any
other Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any Commitment
hereunder, the Borrower will:
(a) Debt/EBITDA Ratio. Maintain
at all times a Debt/EBITDA
Ratio of not more than the amount set forth below for each Measurement
Period set forth below:
| Quarter Ending | Ratio | |||
June 30, 2006 |
3.50:1.00 | |||
September 30, 2006 |
3.50:1.00 | |||
December 31, 2006 |
3.50:1.00 | |||
March 31, 2007 |
3.00:1.00 | |||
June 30, 2007 |
3.00:1.00 | |||
September 30, 2007 |
3.00:1.00 | |||
December 31, 2007 |
3.00:1.00 | |||
March 31, 2008 and thereafter |
2.50:1.00 | |||
(b) Interest Coverage Ratio. Maintain at all times an
Interest Coverage Ratio of not less than the amount set forth below for each
Measurement Period set forth below:
| Quarter Ending | Ratio | |||
June 30, 2006 |
3.50:1.00 | |||
September 30, 2006 |
3.50:1.00 | |||
December 31, 2006 |
3.50:1.00 | |||
March 31, 2007 |
3.75:1.00 | |||
June 30, 2007 |
3.75:1.00 | |||
September 30, 2007 |
3.75:1.00 | |||
December 31, 2007 |
3.75:1.00 | |||
March 31, 2008 and thereafter |
4.00:1.00 | |||
(c) EBITDA. Maintain
at all times EBITDA of the Borrower and
its Restricted Subsidiaries of not less than the amount set forth below for
each Measurement Period set forth below:
| Quarter Ending | EBITDA | |||
June 30, 2006 |
$ | 8,500,000 | ||
September 30, 2006 |
$ | 8,500,000 | ||
6
December 31, 2006 |
$ | 10,000,000 | ||
March 31, 2007 |
$ | 15,000,000 | ||
June 30, 2007 |
$ | 17,500,000 | ||
September 30, 2007 |
$ | 17,500,000 | ||
December 31, 2007 |
$ | 19,000,000 | ||
March 31, 2008 |
$ | 19,000,000 | ||
June 30, 2008 |
$ | 19,000,000 | ||
September 30, 2008 |
$ | 19,000,000 | ||
December 31, 2008 and thereafter |
$ | 22,000,000 |
(d) Fixed Charge
Coverage Ratio. Maintain at all times a
Consolidated Fixed Charge Coverage Ratio of not less than the ratio set
forth below for each Measurement Period set forth below:
| Quarter Ending | Ratio | |
June 30, 2006
|
1.25:1.00 | |
September 30, 2006
|
1.00:1.00 | |
December 31, 2006
|
1.00:1.00 | |
March 31, 2007 and thereafter
|
1.25:1.00 | |
(e) Minimum Net
Worth. Commencing with the Measurement Period
ending March 31, 2007, maintain at all times a Consolidated Net Worth of not
less than the sum of $10,000,000 plus 50% of the sum of (i) the net proceeds
of all issuances of Equity Interests in the Borrower or any of its
Restricted Subsidiaries issued following the First Amendment Effective Date,
and (ii) all Consolidated Net Income generated from and after July 1, 2006.
(f) Minimum
Liquidity. Maintain at all times Liquidity of at
least $5,000,000.”
2. Effectiveness of
Amendment. This First Letter Amendment (this “Amendment”) shall
become effective as of the date first above written solely when the Administrative Agent shall have
received counterparts of this Amendment executed by the Borrower, the Guarantors, the
Administrative Agent and the Required Lenders or, as to any of the Lender Parties, advice
satisfactory to the Administrative Agent that such Lender Party has executed this Amendment.
3. Ratification. The
Credit Agreement, as amended hereby, the Notes and each of the
other Loan Documents are and shall continue to be in full force and effect and are hereby in all
respects ratified and confirmed. The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of any Lender Party or the Administrative
Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan
Documents.
4. Counterparts. This
Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so executed shall be deemed
to be
7
an original and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this Amendment.
8
This Amendment
constitutes a Loan Document and shall be governed by, and construed in
accordance with, the laws of the State of New York.
| Very truly yours, XXXXX & XXXXX COMPANY, as Borrower |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
(Signatures continued on next page)
Agreed as of the date first above written:
DEUTSCHE
BANK TRUST COMPANY AMERICAS,
as Administrative Agent and a Lender
as Administrative Agent and a Lender
| By | /s/ Xxxxx Xxxxxxx | |||
| Name: | Xxxxx Xxxxxxx | |||
| Title: | Director | |||
| By | /s/ Xxxxx Xxxx | |||
| Name: | Xxxxx Xxxx | |||
| Title: | Vice President | |||
(Signatures continued on next page)
CONSENT
Dated as of June 16, 2006
Each of the
undersigned, as a Guarantor under the Guaranty set forth in Article VIII of the
Amended and Restated Credit Agreement dated as of April 14, 2006, in favor of the Administrative
Agent, for its benefit and the benefit of the Lender Parties party to the Credit Agreement referred
to in the foregoing First Letter Amendment, hereby consents to such First Letter Amendment and
hereby confirms and agrees that notwithstanding the effectiveness of such First Letter Amendment,
the Guaranty is, and shall continue to be, in full force and effect and is hereby ratified and
confirmed in all respects.
| XXXXX & XXXXX AFFILIATES, INC. |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| XXXXX & XXXXX MANAGEMENT SERVICES, INC. |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| XXXXX & XXXXX OF ARIZONA, INC. |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| XXXXX & XXXXX ASSET
SERVICES COMPANY |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| XXXXX & XXXXX CONSULTING SERVICES COMPANY |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| XXXXX & XXXXX INSTITUTIONAL PROPERTIES, INC. |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| XXXXX & XXXXX OF MICHIGAN, INC. |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| XXXXX & XXXXX MORTGAGE GROUP, INC. |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| XXXXX & XXXXX OF NEVADA, INC. |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| XXXXX & XXXXX NEW YORK, INC. |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| XXXXX & XXXXX ADVISERS OF CALIFORNIA, INC. |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| XXXXX & XXXXX SOUTHEAST PARTNERS, INC. |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| HSM INC. |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| WM. X. XXXXX/XXXXX & XXXXX INC. |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| XXXXXXXX HOSPITALITY INTERNATIONAL, INC. |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| XXXXXXXX SECURITIES, INC. |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| XXXXX & XXXXX MANAGEMENT SERVICES OF MICHIGAN, INC. |
||||
| By | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
