Exhibit 10(a)

Execution Copy

 

 

 

 

 

 

 

STEPAN COMPANY

 

 

FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT

Dated as of October 25, 2011

to:

NOTE PURCHASE AGREEMENT

dated as of September 29, 2005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT

THIS FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT, dated as of October 25, 2011
(this “First Amendment”), is among STEPAN COMPANY, a Delaware corporation (the
“Company”), and each of the institutions which is a signatory to this First
Amendment (collectively, the “Noteholders”).

R E C I T A L S:

A. The Company and each of the purchasers named therein have heretofore entered
into (i) a Note Purchase Agreement dated as of September 29, 2005 (the “2005
Note Purchase Agreement”), pursuant to which the Company issued its $40,000,000
5.69% Series 2005-A Senior Notes, due November 1, 2018 (the “2005 Notes”) and
(ii) a First Supplement to Note Purchase Agreement dated as of June 1, 2010 (the
“2010 Supplement” and, together with the 2005 Note Purchase Agreement, the “Note
Purchase Agreement”), pursuant to which the Company issued its $40,000,000 5.88%
Series 2010-A Senior Notes due June 1, 2022 (the “2010 Notes” and, together with
the 2005 Notes, the “Notes”).

B. The Company and the Noteholders now desire to amend the Note Purchase
Agreement in the respects, but only in the respects, hereinafter set forth.

C. Capitalized terms used herein shall have the meanings ascribed thereto in the
Note Purchase Agreement unless herein defined or the context shall otherwise
require.

D. All requirements of law have been fully complied with and all other acts and
things necessary to make this First Amendment a valid, legal and binding
instrument according to its terms for the purposes herein expressed have been
done or performed.

NOW, THEREFORE, upon the full and complete satisfaction of the conditions
precedent to the effectiveness of this First Amendment set forth in Section 3.1
hereof, and in consideration of good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the Company and the Noteholders do
hereby agree as follows:

 

SECTION 1. FIRST AMENDMENT.

Section 1.1. Section 10.4 of the Note Purchase Agreement is hereby deleted in
its entirety and replaced with the following:

Section 10.4. Priority Debt. The Company will not at any time permit the
aggregate amount of all Priority Debt to exceed 25% of Consolidated Adjusted
Tangible Net Worth (Consolidated Adjusted Tangible Net Worth to be determined as
of the end of the then most recently ended fiscal quarter of the Company).

 

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Section 1.2. Section 10.8 of the Note Purchase Agreement is hereby deleted in
its entirety and replaced with the following:

Section 10.8. Restrictions on Investments. The Company will not and will not
permit any Restricted Subsidiary to make any Investment, or commit to make any
Investment, in any Unrestricted Subsidiaries after June 30, 2011, if,
immediately after giving effect to any such proposed Investment, the aggregate
amount of such proposed Investment (together with all prior Investments in
Unrestricted Subsidiaries made after June 30, 2011 pursuant to this Section 10.8
(all such Investments to be taken at the cost thereof at the time of making such
Investment without allowance for any subsequent write-offs or appreciation or
depreciation thereof, but less any amount repaid or recovered on account of
capital or principal after June 30, 2011) shall exceed 30% of Consolidated
Tangible Net Worth as of the date of such proposed Investment.

Section 1.3. Schedule B of the Note Purchase Agreement is hereby amended by
(i) deleting the definition of “Priority Debt” in its entirety and replacing it
with the following:

“Priority Debt” means (without duplication), as of the date of any determination
thereof, the sum of (i) all unsecured Debt of Subsidiaries (including all
Guaranties of Debt but excluding (x) Debt owing to the Company or any other
Subsidiary, (y) Debt outstanding at the time such Person became a Subsidiary,
provided that such Debt shall have not been incurred in contemplation of such
Person becoming a Subsidiary, and (z) all Guaranties of Debt of the Company by
any Subsidiary which has also guaranteed the Notes) and (ii) all Debt of the
Company and its Subsidiaries secured by Liens other than Debt secured by Liens
permitted by subparagraphs (a) through (i), inclusive, of Section 10.5
(including for purposes of such subparagraphs, Debt secured by Liens on assets
of Unrestricted Subsidiaries in the same manner as Liens are permitted on the
assets of Restricted Subsidiaries in such subparagraphs, except that, solely for
purposes of this definition of Priority Debt, subparagraph (f) of Section 10.5
shall be read as permitting only Liens existing as of the Closing Date and
reflected in Schedule 10.5 and Liens existing on the date of the First Amendment
and reflected in Exhibit A thereto with respect to Unrestricted Subsidiaries).

and (ii) adding the following new defined terms in the appropriate alphabetical
order therein:

“Consolidated Adjusted Tangible Net Worth” shall mean the sum of the amounts set
forth on the consolidated balance sheet of the Company and its Subsidiaries
prepared in accordance with GAAP and as of any date selected by the Company not
more than 45 days prior to the taking of any action for the purpose of which the
determination is being made, which appears as (a) the par or stated value of all
outstanding stock, (b) capital, paid-in and earned surplus and (c) long term
deferred tax liabilities, less the sum of (i) any surplus resulting from any
write-up of assets, (ii) good will, including any amounts (however designated

 

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on such balance sheet) representing the cost of acquisitions of Subsidiaries in
excess of underlying tangible assets, unless an appraisal of such assets made by
a reputable firm of appraisers at the time of acquisition shall indicate
sufficient value to cover such excess, (iii) any amounts by which Investments in
Persons appearing on the asset side of the balance sheet exceed the lesser of
cost or the proportionate share of such corporation in the book value of the
assets of such Persons, provided that such book value shall be reduced by any
amounts representing restrictions on the payment of dividends by such Persons
pursuant to any law, charter provisions, mortgage or indenture or, in lieu of
the foregoing, any Investment may be carried at its market value if the
securities representing such Investment are publicly traded, (iv) patents,
trademarks, copyrights, leasehold improvements not recoverable at the expiration
of a lease and deferred charges (including, but not limited to, unamortized debt
discount and expense, organization expenses, experimental and development
expenses, but excluding prepaid expenses), (v) any amounts at which shares of
capital stock of the Company appear on the asset side of such balance sheet,
(vi) any amount of Indebtedness not included on the liability side of such
balance sheet and (vii) other comprehensive income or expense (as defined by
GAAP), to the extent included in subclause (a), (b) or (c) above.

“First Amendment” means the First Amendment to Note Purchase Agreement dated as
of October 25, 2011, among the Company and each of the institutions which is a
signatory thereto.

 

SECTION 2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.

Section 2.1. To induce the Noteholders to execute and deliver this First
Amendment, the Company represents and warrants to the Noteholders (which
representations and warranties shall survive the execution and delivery of this
First Amendment) that:

(a) this First Amendment has been duly authorized, executed and delivered by it
and this First Amendment, and the Note Purchase Agreement as amended by this
First Amendment, constitutes the legal, valid and binding obligations, contracts
and agreements of the Company enforceable against it in accordance with their
respective terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles
relating to or limiting creditors’ rights generally;

(b) the execution, delivery and performance by the Company of this First
Amendment (i) has been duly authorized by all requisite corporate action and, if
required, shareholder action, (ii) does not require the consent or approval of
any governmental or regulatory body or agency, and (iii) will not (A) violate
(1) any provision of law, statute, rule or regulation or its certificate of
incorporation or bylaws, (2) any order of any court or any rule, regulation or
order of any other agency or government binding upon it, or (3) any provision of
any material indenture, agreement or other instrument to which it is a party or
by which its properties or assets are or may be bound, or (B) result in a breach
or constitute (alone or with due notice or lapse of time or both) a default
under any indenture, agreement or other instrument referred to in clause
(iii)(A)(3) of this Section 2.1(b);

 

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(c) as of the date hereof and after giving effect to this First Amendment, no
Default or Event of Default under the Note Purchase Agreement has occurred which
is continuing; and

(d) all of the representations and warranties contained in Section 5 of the Note
Purchase Agreement are true and correct in all material respects with the same
force and effect as if made by the Company on and as of the date hereof, except
that any representation or warranty made as of a specific date shall be deemed
made as of such specific date.

Execution and delivery by the Company of this First Amendment constitutes the
certification by the Company that the foregoing representations and warranties
are true and correct on and with respect to the date hereof.

 

SECTION 3. CONDITIONS TO EFFECTIVENESS OF THIS FIRST AMENDMENT.

Section 3.1. This First Amendment shall not become effective until, and shall
become effective when, each and every one of the following conditions shall have
been satisfied:

(a) executed counterparts of this First Amendment, duly executed by the Company
and the Required Holders of the Notes under the Note Purchase Agreement, shall
have been delivered to the Noteholders; and

(b) the representations and warranties of the Company set forth in Section 2
hereof are true and correct on and with respect to the date hereof.

Upon receipt of all of the foregoing, this First Amendment shall become
effective.

 

SECTION 4. PAYMENT OF NOTEHOLDERS’ COUNSEL FEES AND EXPENSES.

Section 4.1. The Company agrees to pay upon demand, the reasonable fees and
expenses of Chapman and Cutler LLP, counsel to the Noteholders, in connection
with the negotiation, preparation, approval, execution and delivery of this
First Amendment.

 

SECTION 5. MISCELLANEOUS.

Section 5.1. This First Amendment shall be construed in connection with and as
part of the Note Purchase Agreement, and except as modified and expressly
amended by this First Amendment, all terms, conditions and covenants contained
in the Note Purchase Agreement and each of the Notes are hereby ratified and
shall be and remain in full force and effect.

Section 5.2. Any and all notices, requests, certificates and other instruments
executed and delivered after the execution and delivery of this First Amendment
may refer to the Note Purchase Agreement without making specific reference to
this First Amendment but nevertheless all such references shall include this
First Amendment unless the context otherwise requires.

 

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Section 5.3. The descriptive headings of the various Sections or parts of this
First Amendment are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.

Section 5.4. This First Amendment shall be governed by and construed in
accordance with Illinois law.

Section 5.5. This First Amendment may be executed in any number of counterparts,
each executed counterpart constituting an original, but all together only one
agreement.

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this First
Amendment as of the date first written above

 

    STEPAN COMPANY     By   /s/ James E. Hurlbutt       Name: James E. Hurlbutt
      Title: Vice President and Chief Financial Officer

 

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Accepted as of the date first written above:

 

CONNECTICUT GENERAL LIFE INSURANCE COMPANY By:   CIGNA Investments, Inc.

 

By     /s/ Robert W. Eccles   Name: Robert W. Eccles   Title: Sr. Managing
Director

 

We acknowledge that Connecticut General Life Insurance Company holds $15,000,000
5.69% Series 2005-A Senior Notes, due November 1, 2018. We acknowledge that
Connecticut General Life Insurance Company holds $8,000,000 5.88% Series 2010-A
Senior Notes Due June 1, 2022. LIFE INSURANCE COMPANY OF NORTH AMERICA By:  
CIGNA Investments, Inc.

 

By     /s/ Robert W. Eccles   Name: Robert W. Eccles   Title: Sr. Managing
Director

 

We acknowledge that Life Insurance Company of North America holds $5,000,000
5.69% Series 2005-A Senior Notes, due November 1, 2018. We acknowledge that Life
Insurance Company of North America holds $2,000,000 5.88% Series 2010-A Senior
Notes Due June 1, 2022.

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Accepted as of the date first written above.

 

MONY LIFE INSURANCE COMPANY By   /s/ Amy Judd   Name:   Amy Judd   Title:  
Investment Advisor

We acknowledge that MONY Life Insurance

Company holds $5,500,000 5.69% Series 2005-A

Senior Notes, due November 1, 2018.

AXA EQUITABLE LIFE INSURANCE COMPANY By   /s/ Amy Judd   Name:   Amy Judd  
Title:   Investment Advisor

We acknowledge that AXA Equitable Life

Insurance Company holds $12,000,000 5.69%

Series 2005-A Senior Notes, due November 1, 2018.

We acknowledge that AXA Equitable Life

Insurance Company holds $10,000,000 5.88%

Series 2010-A Senior Notes Due June 1, 2022.

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Accepted as of the date first written above.

HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY

By: Alliance Capital Management LP, its

Investment Advisor

 

By       Name:       Title:        

We acknowledge that Horizon Blue Cross Blue

Shield of New Jersey holds $2,500,000 5.69%

Series 2005-A Senior Notes, due November 1, 2018.

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Accepted as of the date first written above.

 

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By:     /s/ Anthony Coletta   Vice
President

 

We acknowledge that The Prudential Insurance Company of America holds
$10,400,000 5.88% Series 2010-A Senior Notes Due June 1, 2022.

 

PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY COMPANY

 

By:   Prudential Investment Management, Inc.,
as investment manager

        By:   /s/ Anthony Coletta   Vice President

 

We acknowledge that Prudential Retirement Insurance and Annuity Company holds
$6,600,000 5.88% Series 2010-A Senior Notes Due June 1, 2022.

 

FORETHOUGHT LIFE INSURANCE COMPANY

 

By:   Prudential Private Placement Investors, L.P.
(as Investment Advisor)

 

By:   Prudential Private Placement Investors, Inc.
(as its General Partner)

        By:   /s/ Anthony Coletta   Vice President

 

We acknowledge that Forethought Life Insurance Company holds $3,000,000 5.88%
Series 2010-A Senior Notes Due June 1, 2022.

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EXHIBIT A

EXISTING LIENS

 

OBLIGOR

  

CREDITOR

  

DESCRIPTION
OF
INDEBTEDNESS

  

SECURITY

  

MATURITY

   OUTSTANDING
PRINCIPAL
AMOUNT
(000’S)  

Stepan Europe S.A.S.

   CIC    Short-Term Credit Line    Accounts Receivable    2016    $ 6,693   

Stepan Europe S.A.S.

   LCL    Short-Term Credit Line    Accounts Receivable    2015    $ 5,355   

Stepan Europe S.A.S.

   CIC, Paribas-BNP    Short-Term Credit Line    Accounts Receivable    Periodic
   $ 0   

Stepan UK Limited

   HSBC    Short-Term Credit Line    Accounts Receivable    2012    $ 126   

Stepan Quimica Ltda.

   Banco Itau    Short-Term Credit Line    Accounts Receivable    2012    $ 0   

Stepan Philippines, Inc.

   United Coconut Planters Bank    Term Loan    PP&E    2014    $ 1,697   

Stepan Philippines Quaternaries, Inc.

   United Coconut Planters Bank    Term Loan    PP&E    2014    $ 6,417