AMENDMENT, CONSENT AND WAIVER AGREEMENT
AMENDMENT, CONSENT AND WAIVER dated as of August 27, 1999, by MASSACHUSETTS
MUTUAL LIFE INSURANCE COMPANY, CM LIFE INSURANCE COMPANY AND THE GUARDIAN LIFE
INSURANCE COMPANY OF AMERICA (the "Purchasers") in favor of MIDAMERICAN REALTY
SERVICES COMPANY, an Iowa corporation (the "Company").
RECITALS:
WHEREAS, the Company and the Purchasers are parties to a Note Purchase
Agreement dated as of November 1, 1998 (the "Note Agreement"); and
WHEREAS, MidAmerican Energy Holdings Company ("MidAmerican Holdings"),
a 95% shareholder of the Company, has formed a new Delaware subsidiary,
XxxxXxxxxxxx.Xxx Inc. ("HomeServices"), and proposes, pursuant to the terms of a
planned merger agreement (the "Merger Agreement"), to cause the Company to merge
with and into HomeServices (the "Merger"), with HomeServices as the surviving
corporation and succeeding to the business currently conducted by the Company;
and
WHEREAS, the Merger is being effected in connection with an initial
public offering of the common stock of HomeServices (the "IPO"), with the net
proceeds received by HomeServices to be used for general corporate purposes,
which are expected to include acquisitions and the continued development of
E-commerce operations; and
WHEREAS, the Merger is intended to facilitate the IPO by
reincorporating the Company's state of incorporation from Iowa to Delaware; and
WHEREAS, in connection with the Merger, HomeServices would assume all
of the Company's obligations, including the Company's obligations under the Note
Agreement; and
WHEREAS, in connection with the IPO, HomeServices, as successor to the
Company, and MidAmerican Holdings will enter into several agreements or
arrangements (the "Related Transactions"), as described in the Registration
Statement on Form S-1 (No. 333-82997) filed by HomeServices (the "Registration
Statement"), including, without limitation, (i) a Registration Rights Agreement
providing, in part, that HomeServices will grant to MidAmerican Holdings certain
"demand" and "piggyback" registration rights for the registration under the
Securities Act of 1933 of the shares of HomeServices' common stock that
MidAmerican Holdings owns, and (ii) a Services Agreement pursuant to which
MidAmerican Holdings will provide management, advisory, financial, accounting,
legal, employee benefit plan administration and other services to HomeServices
and HomeServices will pay MidAmerican Holdings a pre-determined monthly fee,
plus reimbursement of out-of-pocket costs; and
WHEREAS, the Note Agreement contains certain covenants, including
Section 10.10 that would restrict the ability of the Company or HomeServices (as
the Company's successor) to effect the Merger, the IPO and Related Transactions
such as entering into the Registration Rights Agreement and the Services
Agreement; and
WHEREAS, the Company believes that the Merger, the IPO and the Related
Transactions would be mutually beneficial by enabling HomeServices (as the
successor to the Company) to raise equity capital through the public market to
finance its operations growth while improving its leverage ratio; and
WHEREAS, it is currently expected that the common stock of the
Company's existing and future subsidiaries will be pledged as collateral for the
benefit of the Lenders under a credit facility and, for so long as such credit
facility is outstanding, for the benefit of the holders of the Notes under the
Note Agreement on a pari passu basis; and
WHEREAS, the Company desires to amend the definition of "EBITDA" in
Schedule B to the Note Agreement to include non-cash expense from pending
receivable allocations attributable to an acquisition's purchase price; and
NOW, THEREFORE, in consideration of the foregoing, and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
notwithstanding anything to the contrary in the Note Agreement, the Purchasers
hereby agree as follows:
AGREEMENT:
Section 1. AMENDED DEFINITION. The following definition from Schedule
B to the Note Agreement is hereby amended and restated in its entirety as of
such date to read as follows:
"EBITDA" means, with respect to any period, Consolidated Net Income
for such period plus all amounts deducted in the computation thereof on
account of all (a) Interest Charges during such period, (b) income taxes of
the Company and its Subsidiaries during such period, (c) amortization and
depreciation expense of the Company and its Subsidiaries during such period
and (d) non-cash expense from pending receivable allocations attributable
to an acquisition's purchase price during such period, all determined on a
consolidated basis in accordance with GAAP.
Section 2. CONSENT OF THE PURCHASERS. Notwithstanding anything to the
contrary in the Note Agreement, but subject to Section 3 hereof, the Purchasers
hereby consent to the proposed Merger, the Merger Agreement, the IPO, the
Related Transactions and the Amendment.
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Section 3. WAIVER. Subject to Section 8.7 of the Note Agreement and
provided that the Company complies with the provisions of Section 10.7 of the
Note Agreement within 10 business days following the month end of the month
during which the Merger is consummated, the Purchasers hereby waive any breach
of the covenants contained in the Note Agreement, including but not limited to
Section 10.10 of the Note Agreement, which may otherwise occur as a result of
the Merger, the Merger Agreement, the IPO, the Related Transactions and the
Amendment.
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IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
AMENDMENT, CONSENT AND WAIVER effective as of the date first set forth above.
MidAmerican Realty Services Company
By: /s/ X. X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President, Chief Financial Officer &
Chief Accounting Officer
Massachusetts Mutual Life Insurance Company
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Director
CM Life Insurance Company
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: Investment Officer
The Guardian Life Insurance Company of America
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Vice President
