EXHIBIT 10.17
EXECUTION COPY
XXXXXX ASSOCIATES LLC
SECOND AMENDMENT AND WAIVER TO
NOTE PURCHASE AGREEMENT
$15,000,000, 7.94% Senior Notes, Series A, Tranche 1
$35,000,000, 8.08% Senior Notes, Series A, Tranche 2
$lO,000,000, 8.11% Senior Notes, Series B
$15,000,000, 7.93% Senior Notes, Series C
$l0,000,000, 7.65% Senior Notes, Series D
$15,000,000, 7.90% Senior Notes, Series E
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 March 15, 2000
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 relating to the 7.94% Senior Notes, Series A, Tranche 1 and the 8.08%
Senior Notes, Series A, Tranche 2 (as amended by the First Amendment to Note
Purchase Agreement dated as of June 15, 2000 and as supplemented by the
Supplemental Note Purchase Agreements dated as of June 15, 2000 relating to the
8.11% Senior Notes, Series B; dated as of June 15, 2000 relating to the 7.93%
Senior Notes, Series C; dated as of October 1, 2000 relating to the 7.65% Senior
Notes, Series D and dated October 1, 2000 relating to the 7.90% Senior Notes
Series E; the "Note Agreement"). 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 Wavier 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 3
1, 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
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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 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 Wavier.
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
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(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 October 1, 2000 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.
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 Wavier.
3.4. Authorization. The execution, delivery and performance by the Company
of this Amendment and Wavier 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 Wavier 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 Wavier 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 Wavier. 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 Wavier.
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
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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 Wavier, each reference in the Note Agreement
and in other documents describing or referencing the Note Agreement to the
"Agreement," "Note Agreement," "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 Wavier 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 Wavier shall be governed by and
construed in accordance with Illinois law.
5.5. Counterparts. This Amendment and Wavier may be executed in any
number of counterparts, each executed counterpart constituting an original, but
altogether only one instrument.
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IN WTTNESS WHEREOF, the Company and the Holders have caused this Second
Amendment and Wavier to the Note Purchase Agreement to be executed and delivered
by their respective officer or officers thereunto duly authorized.
XXXXXX ASSOCIATES LLC
By: /s/ X. X. Xxxxxxxx III
-----------------------------------
Name: C. Xxxxxxxx Xxxxxxxx,III
Title: Authorized Represenative
S-1
Xxxxxx Associates LLC
2000 Note Purchase Agreement, as Supplemented
The foregoing is hereby agreed
to as of the date thereof.
Series A Holders:
----------------
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Name: XXXXXX X. XXXXX
---------------------------
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: XXXXX X. XXXXXXX
---------------------------
Authorized Signatories
ALLSTATE LIFE INSURANCE COMPANY
OF NEW YORK
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Name: XXXXXX X. XXXXX
---------------------------
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: XXXXX X. XXXXXXX
---------------------------
Authorized Signatories
S-2
Xxxxxx Associates LLC
2000 Note Purchase Agreement, as Supplemented
[Series A Holders (cont.):]
===========================
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: Xxxxx X. Xxxxxx & Company Inc., as
Investment Advisor
By: /s/ Xxxxxxx X. XxXxxxxx
------------------------------------
Name: Xxxxxxx X. XxXxxxxx
----------------------------------
Title: Managing Director
---------------------------------
C.M. LIFE INSURANCE COMPANY
By: Xxxxx X. Xxxxxx & Company Inc., as
Investment Sub-Adviser
By: /s/ Xxxxxxx X. XxXxxxxx
------------------------------------
Name: Xxxxxxx X. XxXxxxxx
----------------------------------
Title: Managing Director
---------------------------------
S-3
Xxxxxx Associates LLC
2000 Note Purchase Agreement, as Supplemented
Series A Holders (cont.):
------------------------
PACIFIC LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
-------------------------------
Title: Assistant Vice President
-------------------------------
By: /s/ Xxxxx X. Xxxx
-------------------------------
Name: Xxxxx X. Xxxx
-------------------------------
Title: Assistant Secretary
-------------------------------
S-4
Xxxxxx Associates LLC
2000 Note Purchase Agreement, as Supplemented
Series A Holders (cont.):
PHOENIX LIFE INSURANCE COMPANY
(f/k/a PHOENIX HOME LIFE MUTUAL
INSURANCE COMPANY)
By: Xxxxxxxxxxx Xxxxxx
----------------------------
Name:___________________________
Title:__________________________
XXXXXXXXXXX X. XXXXXX
Senior Vice President
Corporate Portfolio Management
PHOENIX LIFE INSURANCE COMPANY
S-5
Series B Holders:
----------------
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: Xxxxx X. Xxxxxx and Company Inc., as
Investment Adviser
By: /s/ Xxxxxxx X. XxXxxxxx
------------------------------
Name: Xxxxxxx X. XxXxxxxx
----------------------------
Title: Managing Director
---------------------------
C.M. LIFE INSURANCE COMPANY
By: Xxxxx X. Xxxxxx and Company Inc., as
Investment Sub-Adviser
By: /s/ Xxxxxxx X. XxXxxxxx
------------------------------
Name: Xxxxxxx X. XxXxxxxx
----------------------------
Title: Managing Director
---------------------------
S-6
Xxxxxx Associates LLC
2000 Note Purchase Agreement, as Supplemented
Series C Holder
---------------
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION
By: New York Life Investment
Management LLC, Its Investment
Manager
By: /s/ R Xxxxxx Xxxxxxxx
---------------------------
Name: R. Xxxxxx Xxxxxxxx
---------------------------
Title: Director
---------------------------
S-7
Xxxxxx Associates LLC
2000 Note Purchase Agreement, as Supplemented
Series D Holder
---------------
THE CANADA LIFE ASSURANCE
COMPANY, as beneficial owner
By: Xxxx Xxxxxxx
--------------------
Name: C. Xxxx Xxxxxxx
------------------
Title: Associate Treasurer
-------------------
S-8
Xxxxxx Associates LLC
2000 Note Purchase Agreement, as Supplemented
Series D Holders (cont.):1
--------------------------
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Xxxxxx Xxxxx
----------------------------
Name: Xxxxxx Xxxxx
---------------------------
By: /s/ Xxxxx X. Zinkwa
----------------------------
Name: Xxxxx X. Zinkwa
--------------------------
Authorized Signatories
S-9
Xxxxxx Associates LLC
2000 Note Purchase Agreement, as Supplemented
Series E Holder:
---------------
PACIFIC LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
----------------------------
Title: Assistant Vice President
---------------------------
By: /s/ Xxxxx X. Xxxx
------------------------------
Name: Xxxxx X. Xxxx
----------------------------
Title: Assistant Secretary
---------------------------
S-10
Xxxxxx Associates LLC
2000 Note Purchase Agreement, as Supplemented
