Exhibit 10.16
EXECUTION COPY
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Holdings
LLC (the "Parent"). The Parent has formed ▇▇▇▇▇▇ 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) ▇▇▇▇▇▇ 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
▇▇▇▇▇▇ 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
2
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 ▇▇▇▇▇▇ Associates, Inc. or ▇▇▇▇▇▇ 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.
3
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,"
4
"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.
5
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.
▇▇▇▇▇▇ ASSOCIATES LLC
By: C. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, III
----------------------------
Name: C. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, III
Title: Authorized Representative
S-1
▇▇▇▇▇▇ Associates LLC
1996 Note Purchase Agreement
The foregoing is hereby agreed
to as of the date thereof.
ALLSTATE LIFE INSURANCE COMPANY [LOGO]
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Authorized Signatories
S-2
▇▇▇▇▇▇ 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
▇▇▇▇▇▇ Associates LLC
1996 Note Purchase Agreement
SECURITY CONNECTICUT LIFE INSURANCE COMPANY
By:ING Investment Management LLC, as Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Title: Senior Vice President
-----------------------------
RELIASTAR LIFE INSURANCE COMPANY OF
NEW YORK
By:ING Investment Management LLC, as Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Title: Senior Vice President
-----------------------------
S-4
▇▇▇▇▇▇ 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: ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
S-5A
▇▇▇▇▇▇ 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: ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
S-5B
▇▇▇▇▇▇ 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: ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
S-5C
▇▇▇▇▇▇ 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/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
S-6A
▇▇▇▇▇▇ 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/ ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Title: Vice President
-------------------------------
▇▇▇▇▇▇ Associates LLC
1996 Note Purchase Agreement
S-6B
AMERICAN STATES LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Title: V.P. Treasurer
----------------------------------
S-7
▇▇▇▇▇▇ 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
▇▇▇▇▇▇ Associates LLC
1996 Note Purchase Agreement
EXHIBIT A
PARENT GUARANTY
THIS GUARANTY (this "Guaranty") dated as of May 31, 2002 is made by ▇▇▇▇▇▇
HOLDINGS LLC, a limited liability company organized under the laws of Illinois
(the "Guarantor"), in favor of the holders from time to time of the Notes
hereinafter referred to, including each holder named in the Note Purchase
Agreement, as supplemented and amended, hereinafter referred to, and their
respective successors and assigns (collectively, the "Holders" and each
individually, a "Holder").
WITNESSETH:
WHEREAS, ▇▇▇▇▇▇ ASSOCIATES LLC, a limited liability company organized under
the laws of Illinois (the "Company"), and the initial Holders entered into a
Note Purchase Agreement dated as of May 1, 1996 (the Note Purchase Agreement as
amended by the First Amendment and Waiver (the "First Amendment and Waiver")
dated as of May 31, 2002, and as it may hereafter be amended, supplemented,
restated or otherwise modified from time to time in accordance with its terms
and in effect, the "Note Purchase Agreement");
WHEREAS, pursuant to the Note Purchase Agreement the Company issued and
sold $50,000,000 aggregate principal amount of Notes (as defined in the Note
Purchase Agreement), which are now held by the Holders;
WHEREAS, the Company is a wholly owned Subsidiary of the Guarantor and the
Guarantor has agreed to guaranty the obligations related to the Notes in
connection with the execution by the Holders of the First Amendment and Waiver,
from which the Guarantor will derive substantial benefits;
WHEREAS, it is a condition precedent to the effectiveness of the First
Amendment and Waiver that the Guarantor shall have executed and delivered this
Guaranty to the Holders; and
WHEREAS, the Guarantor desires to execute and deliver this Guaranty to
satisfy the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the premises and other benefits to the
Guarantor, and of the execution of the First Amendment and Waiver by the
Holders, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Guarantor makes this Guaranty as
follows:
SECTION 1. Definitions. Any capitalized terms not otherwise herein defined
shall have the meanings ascribed to them in the Note Purchase Agreement or in
the First Amendment and Waiver.
SECTION 2. Guaranty. The Guarantor unconditionally and irrevocably
guarantees to the Holders the due, prompt and complete payment by the Company of
the principal of, Make-Whole Amount, if any, and interest on, and each other
amount due under, the Notes or the Note Purchase Agreement, when and as the same
shall become due and payable (whether at stated
Exhibit A
maturity or by required or optional prepayment or by declaration or otherwise)
in accordance with the terms of the Notes and the Note Purchase Agreement (the
Notes and the Note Purchase Agreement being sometimes hereinafter collectively
referred to as the "Note Documents" and the amounts payable by the Company under
the Note Documents, and all other monetary obligations of the Company
thereunder, being sometimes collectively hereinafter referred to as the
"Obligations"). This Guaranty is a guaranty of payment and not just of
collectibility and is in no way conditioned or contingent upon any attempt to
collect from the Company or upon any other event, contingency or circumstance
whatsoever. If for any reason whatsoever the Company shall fail or be unable
duly, punctually and fully to pay such amounts as and when the same shall become
due and payable, the Guarantor, without demand, presentment, protest or notice
of any kind, will forthwith pay or cause to be paid such amounts to the Holders
under the terms of such Note Documents, in lawful money of the United States, at
the place specified in the Note Purchase Agreement, or perform or comply with
the same or cause the same to be performed or complied with, together with
interest (to the extent provided for under such Note Documents) on any amount
due and owing from the Company. The Guarantor, promptly after demand, will pay
to the Holders the reasonable costs and expenses of collecting such amounts or
otherwise enforcing this Guaranty, including, without limitation, the reasonable
fees and expenses of counsel.
SECTION 3. Guarantor's Obligations Unconditional. The obligations of the
Guarantor under this Guaranty shall be primary, absolute and unconditional
obligations of the Guarantor, shall not be subject to any counterclaim, set-off,
deduction, diminution, abatement, recoupment, suspension, deferment, reduction
or defense based upon any claim the Guarantor or any other person may have
against the Company or any other person, and to the full extent permitted by
applicable law shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected by, any circumstance or
condition whatsoever (whether or not the Guarantor or the Company shall have any
knowledge or notice thereof), including:
(a) any termination, amendment or modification of or deletion from or
addition or supplement to or other change in any of the Note Documents or
any other instrument or agreement applicable to any of the parties to any
of the Note Documents;
(b) any furnishing or acceptance of any security, or any release of
any security, for the Obligations, or the failure of any security or the
failure of any person to perfect any interest in any collateral;
(c) any failure, omission or delay on the part of the Company to
conform or comply with any term of any of the Note Documents or any other
instrument or agreement referred to in paragraph (a) above, including,
without limitation, failure to give notice to the Guarantor of the
occurrence of a "Default" or an "Event of Default" under any Note Document;
(d) any waiver of the payment, performance or observance of any of the
obligations, conditions, covenants or agreements contained in any Note
Document, or any other waiver, consent, extension, indulgence, compromise,
settlement, release or other action or inaction under or in respect of any
of the Note Documents or any other
2
Exhibit A
instrument or agreement referred to in paragraph (a) above or any
obligation or liability of the Company, or any exercise or non-exercise of
any right, remedy, power or privilege under or in respect of any such
instrument or agreement or any such obligation or liability;
(e) any failure, omission or delay on the part of any of the Holders
to enforce, assert or exercise any right, power or remedy conferred on such
Holder in this Guaranty, or any such failure, omission or delay on the part
of such Holder in connection with any Note Document, or any other action on
the part of such Holder;
(f) any voluntary or involuntary bankruptcy, insolvency,
reorganization, arrangement, readjustment, assignment for the benefit of
creditors, composition, receivership, conservatorship, custodianship,
liquidation, marshaling of assets and liabilities or similar proceedings
with respect to the Company, the Guarantor or to any other person or any of
their respective properties or creditors, or any action taken by any
trustee or receiver or by any court in any such proceeding;
(g) any discharge, termination, cancellation, frustration,
irregularity, invalidity or unenforceability, in whole or in part, of any
of the Note Documents or any other agreement or instrument referred to in
paragraph (a) above or any term hereof;
(h) any merger or consolidation of the Company or the Guarantor into
or with any other corporation, or any sale, lease or transfer of any of the
assets of the Company or the Guarantor to any other person;
(i) any change in the ownership of any shares of capital stock of the
Company or any change in the corporate relationship between the Company and
the Guarantor, or any termination of such relationship;
(j) any release or discharge, by operation of law, of the Guarantor
from the performance or observance of any obligation, covenant or agreement
contained in this Guaranty; or
(k) any other occurrence, circumstance, happening or event whatsoever,
whether similar or dissimilar to the foregoing, whether foreseen or
unforeseen, and any other circumstance which might otherwise constitute a
legal or equitable defense or discharge of the liabilities of a guarantor
or surety or which might otherwise limit recourse against the Guarantor.
SECTION 4. Full Recourse Obligations. The obligations of the Guarantor set
forth herein constitute the full recourse obligations of the Guarantor
enforceable against it to the full extent of all its assets and properties.
SECTION 5. Waiver. The Guarantor unconditionally waives, to the extent
permitted by applicable law, (a) notice of any of the matters referred to in
Section 3, (b) notice to the Guarantor of the incurrence of any of the
Obligations, notice to the Guarantor or the Company of any breach or default by
the Company with respect to any of the Obligations or any other notice
3
Exhibit A
that may be required, by statute, rule of law or otherwise, to preserve any
rights of the Holders against the Guarantor, (c) presentment to or demand of
payment from the Company or the Guarantor with respect to any amount due under
any Note Document or protest for nonpayment or dishonor, (d) any right to the
enforcement, assertion or exercise by any of the Holders of any right, power,
privilege or remedy conferred in the Note Purchase Agreement or any other Note
Document or otherwise, (e) any requirement of diligence on the part of any of
the Holders, (f) any requirement to exhaust any remedies or to mitigate the
damages resulting from any default under any Note Document, (g) any notice of
any sale, transfer or other disposition by any of the Holders of any right,
title to or interest in the Note Purchase Agreement or in any other Note
Document and (h) any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge, release or defense of a guarantor or
surety or which might otherwise limit recourse against the Guarantor.
SECTION 6. Subrogation, Contribution, Reimbursement or Indemnity. Until one
year and one day after all Obligations have been indefeasibly paid in full, the
Guarantor agrees not to take any action pursuant to any rights which may have
arisen in connection with this Guaranty to be subrogated to any of the rights
(whether contractual, under the United States Bankruptcy Code, as amended,
including section 509 thereof, under common law or otherwise) of any of the
Holders against the Company or against any collateral security or guaranty or
right of offset held by the Holders for the payment of the Obligations. Until
one year and one day after all Obligations have been indefeasibly paid in full,
the Guarantor agrees not to take any action pursuant to any contractual, common
law, statutory or other rights of reimbursement, contribution, exoneration or
indemnity (or any similar right) from or against the Company which may have
arisen in connection with this Guaranty. So long as the Obligations remain, if
any amount shall be paid by or on behalf of the Company to the Guarantor on
account of any of the rights waived in this paragraph, such amount shall be held
by the Guarantor in trust, segregated from other funds of the Guarantor, and
shall, forthwith upon receipt by the Guarantor, be turned over to the Holders
(duly endorsed by the Guarantor to the Holders, if required), to be applied
against the Obligations, whether matured or unmatured, in such order as the
Holders may determine. The provisions of this paragraph shall survive the term
of this Guaranty and the payment in full of the Obligations.
4
Exhibit A
SECTION 7. Effect of Bankruptcy Proceedings, etc. This Guaranty shall
continue to be effective or be automatically reinstated, as the case may be, if,
at any time prior to the termination of this Guaranty pursuant to Section 9(ii),
payment, in whole or in part, of any of the sums due to any of the Holders
pursuant to the terms of the Note Purchase Agreement or any other Note Document
is rescinded or must otherwise be restored or returned by the Holder upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company or any other person, or upon or as a result of the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to the Company or other person or any substantial part of its property, or
otherwise, all as though such payment had not been made. If an event permitting
the acceleration of the maturity of the principal amount of the Notes shall at
any time have occurred and be continuing, and such acceleration shall at such
time be prevented by reason of the pendency against the Company or any other
person of a case or proceeding under a bankruptcy or insolvency law, the
Guarantor agrees that, for purposes of this Guaranty and its obligations
hereunder, the maturity of the principal amount of the Notes and all other
Obligations shall be deemed to have been accelerated with the same effect as if
any Holder had accelerated the same in accordance with the terms of the Note
Purchase Agreement or other applicable Note Document, and the Guarantor shall
forthwith pay such principal amount, Make-Whole Amount, if any, and interest
thereon and any other amounts guaranteed hereunder without further notice or
demand.
SECTION 8. Restrictions on Transfer of Certain Assets. So long as this
Guaranty remains in effect:
(a) The Guarantor will own at least 85% of the capital stock of ▇▇▇▇▇▇
Associates Inc., a Delaware corporation ("Associates"), and will own or
cause Associates to own 100% of the ownership interests in the Company.
(b) The Guarantor will not pledge or encumber any capital stock of
Associates and will not, and will not permit Associates to, pledge or
encumber any ownership interests in the Company.
(c) Except for liens or encumbrances permitted by the Security
Documents, the Guarantor will not, and will not permit any of its
subsidiaries to, encumber, sell, lease, transfer or otherwise dispose of
any of the real property owned by it, except that it may dispose of the
office buildings located in Newport Beach, California, and Rowayton,
Connecticut.
(d) The Guarantor will own 100% of the ownership interests in each of
its subsidiaries that owns any real property.
(e) The Guarantor will not, and will not permit Associates to,
distribute to members of the Guarantor more than 50% of the proceeds of the
Distribution.
5
Exhibit A
SECTION 9. Term of Agreement. This Guaranty and all guaranties, covenants
and agreements of the Guarantor contained herein shall continue in full force
and effect and shall not be discharged until the occurrence of one of the
following events: (i) all of the Obligations shall be paid and performed in full
and all of the agreements of the Guarantor hereunder shall be duly paid and
performed in full or (ii) the Company demonstrates compliance with Section 10.3
of the Note Purchase Agreement in the manner set forth in Section 2 of the
Second Amendment and Waiver.
SECTION 10. Representations and Warranties. The Guarantor represents and
warrants to each Holder that:
(a) the Guarantor is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has the
requisite power and authority to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged;
(b) the Guarantor owns all of the ownership interests in the Company
and all of the capital stock of Associates;
(c) the Guarantor has the requisite power and authority and the legal
right to execute and deliver, and to perform its obligations under, this
Guaranty, and has taken all necessary action to authorize its execution,
delivery, and performance of this Guaranty;
(d) this Guaranty constitutes a legal, valid and binding obligation of
the Guarantor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(e) the execution, delivery and performance of this Guaranty will not
(i) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of the
Guarantor under any indenture, mortgage, deed of trust, loan, credit
agreement, corporate charter or by-laws, or any other agreement evidencing
Debt, (ii) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of
the Guarantor under, any other agreement or instrument to which the
Guarantor is bound or by which the Guarantor or any of its properties may
be bound or affected, except as could not reasonably be expected to have a
Material Adverse Effect, (iii) conflict with or result in a breach of any
of the terms, conditions or provisions of any order, judgment, decree, or
ruling of any court, arbitrator or Governmental Authority applicable to the
Guarantor, except as could not reasonably be expected to have a Material
Adverse Effect, or (iv) violate any provision of any statute or other rule
or regulation of any Governmental Authority applicable to the Guarantor,
except as could not reasonably be expected to have a Material Adverse
Effect.
6
Exhibit A
SECTION 11. Notices. All notices under the terms and provisions hereof
shall be in writing, and shall be delivered or sent by telex or telecopy or
mailed by first-class mail, postage prepaid, addressed to the Guarantor at ▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: General Counsel, or any
Holder at the address set forth in the Note Purchase Agreement, or in each case
at such other address as the Guarantor or any Holder shall from time to time
designate in writing to the other parties. Any notice so addressed shall be
deemed to be given when actually received.
SECTION 12. Survival. All warranties, representations and covenants made by
the Guarantor herein or in any certificate or other instrument delivered by it
or on its behalf hereunder shall be considered to have been relied upon by the
Holders and shall survive the execution and delivery of this Guaranty,
regardless of any investigation made by any of the Holders. All statements in
any such certificate or other instrument shall constitute warranties and
representations by such Guarantor hereunder.
SECTION 13. Submission to Jurisdiction. The Guarantor irrevocably submits
to the jurisdiction of the courts of the State of Illinois and of the courts of
the United States of America having jurisdiction in the State of Illinois for
the purpose of any legal action or proceeding in any such court with respect to,
or arising out of, this Guaranty, the Note Purchase Agreement or the Notes. The
Guarantor consents to process being served in any suit, action or proceeding by
mailing a copy thereof by registered or certified mail, postage prepaid, return
receipt requested, to its address specified in or designated pursuant to the
Note Purchase Agreement. The Guarantor agrees that such service upon receipt (i)
shall be deemed in every respect effective service of process upon it in any
such suit, action or proceeding and (ii) shall, to the fullest extent permitted
by law, be taken and held to be valid personal service upon and personal
delivery to it.
SECTION 14. Miscellaneous. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the Guarantor hereby waives any provision of law that renders
any provisions hereof prohibited or unenforceable in any respect. The terms of
this Guaranty shall be binding upon, and inure to the benefit of, the Guarantor
and the Holders and their respective successors and assigns. No term or
provision of this Guaranty may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the Guarantor and the
Holders.
The section and paragraph headings in this Guaranty and the table of contents
are for convenience of reference only and shall not modify, define, expand or
limit any of the terms or provisions hereof, and all references herein to
numbered sections, unless otherwise indicated, are to sections in this Guaranty.
This Guaranty shall in all respects be governed by, and construed in accordance
with, the laws of the State of Illinois, including all matters of construction,
validity and performance.
7
Exhibit A
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed as of the day and year first above written.
▇▇▇▇▇▇ HOLDINGS LLC,
an Illinois limited liability company
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
8
Exhibit A
SCHEDULE I
Outstanding Principal
Amount as of May 31, 2002
-------------------------
Name of Holder
--------------
Allstate Life Insurance Company $20,000,000
The Lincoln National Life Insurance Company 8,500,000
First Penn-Pacific Life Insurance Company 500,000
Sons of Norway 500,000
London Life International Reinsurance Corporation 1,000,000
Transamerica Occidental Life Insurance Company 2,000,000
Minnesota Life Insurance Company 8,000,000
MTL Insurance Company 1,000,000
Protected Home Mutual Life Insurance Company 500,000
Guarantee Reserve Life Insurance Company 500,000
Security Connecticut Life Insurance Company 1,000,000
Reliastar Life Insurance Company of New York 500,000
American States Life Insurance Company 500,000
Reassure America Life Insurance Company 1,000,000
Exhibit 1