Document:

esnd-ex42_121.htm

Exhibit 4.2

AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT

This AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT, dated as of January 27, 2016 (this “Amendment”), is entered into by and among Essendant Co., an Illinois corporation (formerly known as United Stationers Supply Co.; the “Company”), Essendant Inc., a Delaware corporation (formerly known as United Stationers Inc.; the “Parent”), and the holders of Notes issued by the Company that are parties hereto.

RECITALS

A.Pursuant to a Note Purchase Agreement dated as of November 25, 2013, among the Company, the Parent and the purchasers listed on Schedule A thereto (the “Note Purchase Agreement”), the Company issued $150,000,000 of its 3.75% Secured Senior Notes due January 15, 2021 (the “Notes”).  Capitalized terms that are used herein without definition and that are defined in the Note Purchase Agreement shall have the same meanings herein as in the Note Purchase Agreement

B.The parties hereto wish to amend the Note Purchase Agreement in the respects, but only in the respects, hereinafter set forth.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.Amendment to the Note Purchase Agreement.  (a)  Effective as of the date first above written and subject to the satisfaction of the conditions precedent set forth in Section 2 below, the definition of “Consolidated EBITDA” in Schedule B to the Note Purchase Agreement is hereby amended and restated to read in its entirety as follows:

“Consolidated EBITDA” means, with respect to any period, (A) Consolidated Net Income for such period, plus (B) to the extent deducted from revenues in determining Consolidated Net Income for such period, (i) Consolidated Interest Expense, (ii) expense for taxes paid or accrued, (iii) depreciation, (iv) amortization, (v) losses attributable to equity in Affiliates, (vi) non-cash charges related to employee compensation, (vii) any extraordinary non-cash or nonrecurring non-cash charges or losses, (viii) fees, costs and expenses incurred in connection with Acquisitions in an aggregate amount not to exceed $10,000,000 in any fiscal year, (ix) any expense under settlement accounting arising from an offer to terminated vested participants in the Essendant Pension Plan to accept a lump sum in lieu of future pension payments made during a window offering period in 2016 and (ix x) in connection with any Qualifying Permitted Acquisition or Material Disposition, calculated on a pro forma basis based on the Parent’s most recent financial statements delivered pursuant to Section 7.1, (1) any cost savings and expenses that relate to such Qualifying Permitted Acquisition or Material Disposition in accordance with Article 11 of Regulation S-X under the Securities Act and (2) any demonstrable cost-savings and operating expense reductions (net of continuing associated expenses) that relate to such Qualifying Permitted Acquisition or Material Disposition or are reasonably anticipated by the Company to be achieved in connection with such Qualifying Permitted Acquisition or Material Disposition within the 12-month period following the 

 

 

consummation thereof, which the Company determines in good faith are reasonable and which are so set forth in a certificate of a financial officer of the Company delivered to the holders of Notes; provided that amounts added back pursuant to this subclause (2) shall be permitted only to the extent to the aggregate additions under subclauses (1) and (2) for such period do not exceed 10% of the amount which could have been included in Consolidated EBITDA in the absence of the adjustment under this clause (ix x), minus (C) to the extent included in Consolidated Net Income for such period, any extraordinary non-cash or nonrecurring non-cash gains, all calculated for the Parent and its Subsidiaries on a consolidated basis.

Solely for the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”), if at any time during such Reference Period, the Parent or any of its Subsidiaries shall have made any Material Disposition, Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period, in each case, calculated on a pro forma basis based on the Parent’s most recent financial statements delivered pursuant to Section 7.1.

(b)The Company hereby agrees to pay an amendment fee to or on behalf of the holders of the Notes (the “Noteholders’ Amendment Fee”) as set forth in Exhibit A hereto.  The holders hereby waive the requirements of the first sentence of Section 17.2(b) of the Note Purchase Agreement. 

2.Conditions of Effectiveness.  This Amendment shall become effective and be deemed effective as of the date hereof, if, and only if, each of the following conditions is satisfied:

(a)The warranties and representations of the Company and the Parent contained in Section 3 of this Amendment shall be true and correct as of the date of this Amendment.

(b)Executed counterparts of this Amendment, duly executed by the Company and the holders and acknowledged and agreed to by the Subsidiary Guarantors, shall have been delivered to Chapman and Cutler LLP, as special counsel to the holders.

(c)The holders (or Chapman and Cutler LLP, on behalf of the holders) shall have received (i) a true, complete and correct copy of the amendment to the Credit Agreement relating to the subject matter of this Amendment (the “Credit Agreement Amendment”) and (ii) a true, complete and correct copy of the consent of the lenders under the Company’s asset backed securities facility (the “ABS Facility”) relating to the subject matter of this Amendment (the “ABS Consent”), and each of such Credit Agreement Amendment and ABS Consent shall be in full force and effect prior to the effective date of this Amendment or simultaneously therewith.

(d)The Company shall have paid the Noteholders’ Amendment Fee.  

2

 

 

(e)The Company shall have paid the reasonable and documented fees and expenses of Chapman and Cutler LLP, special counsel to the holders, in connection with the preparation, execution and delivery of this Amendment, to the extent invoiced prior to the date hereof. 

3.Representations and Warranties.  Each of the Company and the Parent hereby represents and warrants (which representations shall survive the execution and delivery of this Amendment) to the holders that:

(a)this Amendment and the Note Purchase Agreement as amended hereby, constitute legal, valid and binding obligations of the Company and the Parent and are enforceable against the Company and the Parent in accordance with their terms;

(b)the execution, delivery and performance by the Company and the Parent of this Amendment (i) have been duly authorized by all necessary corporate action on the part of the Company and the Parent; (ii) do not require the consent, approval or authorization of any Governmental Authority, except for the filing of a Form 8-K with the SEC or any state blue sky laws; and (iii) do not and will not (A) contravene, result in any breach of, or constitute a default under, or, except for the Liens under the Collateral Documents, result in the creation of any Lien in respect of any property of the Parent, the Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, shareholders agreement or any other agreement or instrument to which the Parent, the Company or any Subsidiary is bound or by which the Parent, the Company or any Subsidiary or any of their respective properties may be bound, (B) 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 Parent, the Company or any Subsidiary, or (C) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Parent, the Company or any Subsidiary;

(c)no Default or Event of Default has occurred which is continuing as of the date hereof or would exist after giving effect to this Amendment; and

(d)neither the Company nor the Parent has paid any fees or other form of consideration in connection with the solicitation of an amendment or consent in connection with any other agreements pursuant to which Indebtedness of the Company is outstanding which relate to the subject matter of this Amendment (including, without limitation, the Credit Agreement and the ABS Facility), except for the Noteholders’ Amendment Fees and an amendment fee to the lenders under Credit Agreement as described in the Credit Agreement Amendment.

4.Reference to and Effect on the Note Purchase Agreement.

(a)Upon the effectiveness of Section 1 hereof, on and after the date hereof, each reference in the Note Purchase Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of like import shall mean and be a reference to the Note Purchase Agreement, as amended hereby.

3

 

 

(b)Except as specifically amended above, the Financing Documents and all other documents, instruments and agreements executed and/or delivered in connection therewith shall remain in full force and effect, and are hereby ratified and confirmed. 

(c)The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any of the holders of the Notes, nor constitute a waiver of any provision of any Financing Document or any other documents, instruments and agreements executed and/or delivered in connection therewith.

5.Governing Law.  This Amendment shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the state of New York excluding choice of law principles of the law of such state that would require the application of the laws of a jurisdiction other than such state.

6.Headings.  Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

7.Counterparts; Electronic Execution.  This Amendment may be executed by one or more of the parties to the Amendment on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed counterpart hereof by facsimile or email transmission shall be effective as delivery of a manually executed counterpart of this Amendment.

8.Entirety.  This Amendment embodies the entire agreement among the parties hereto and supersedes all prior agreements and understandings, oral or written, if any, relating to the subject matter hereof.

 [signature pages begin on next page]

 

 

 

 

4

 

 

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.

ESSENDANT CO.

 

 

By:

Name:  

Title:  

 

 

ESSENDANT INC.

 

 

By:

Name: 

Title: 

 

 

 

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

 

 

By:

Name:

Title: 

 

 

 

PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY COMPANY

 

By: PGIM, Inc. 

   (as Investment Manager) 

 

 

By:

Name:

Title: 

 

THE PRUDENTIAL LIFE INSURANCE COMPANY, LTD.

 

By: Prudential Investment Management (Japan), Inc. (as Investment Manager)

 

By:  PGIM, Inc. (as Sub-Adviser)

 

 

By:

Name:

Title: 

 

 

 

FARMERS INSURANCE EXCHANGE 

MID CENTURY INSURANCE COMPANY 

FARMERS NEW WORLD LIFE INSURANCE COMPANY 

PHYSICIANS MUTUAL INSURANCE COMPANY 

 

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

 

By:  Prudential Private Placement Investors, Inc. 

(as its General Partner)

 

 

By:

Name:

Title: 

 

 

METLIFE INSURANCE COMPANY USA

f/k/a METLIFE INSURANCE COMPANY OF CONNECTICUT 

 

by Metropolitan Life Insurance Company, its Investment Manager

 

 

METROPOLITAN LIFE INSURANCE COMPANY

 

 

By:

Name:

Title: 

 

 

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY 

 

By:  Babson Capital Management LLC as Investment Adviser 

 

 

By:

Name:

Title: 

 

 

MASSMUTUAL ASIA LIMITED 

 

By:  Babson Capital Management LLC as Investment Adviser

 

 

By:

Name:

Title: 

 

 

WOODMEN OF THE WORLD LIFE INSURANCE SOCIETY

 

 

By:

Name:

Title: 

 

 

 

	

	

 

 

	
Acknowledged and agreed to by:
	
SUBSIDIARY GUARANTORS: 

 

ESSENDANT FINANCIAL SERVICES LLC

ESSENDANT MANAGEMENT SERVICES LLC

ESSENDANT INDUSTRIAL, LLC

O.K.I. SUPPLY, LLC

OKI MIDDLE EAST HOLDING CO.

CPO COMMERCE ACQUISITION, LLC

CPO COMMERCE, LLC

LIBERTY BELL EQUIPMENT CORPORATION

TRANSSUPPLY GROUP, LLC

LABEL INDUSTRIES, INC.

XL CHAMPION HOLDINGS, LLC

AJS GROUP, LLC

NESTOR HOLDING COMPANY

NESTOR SALES HOLDCO, LLC

NESTOR SALES, LLC

 

 

By:

Name: 

Title:

 

 

 

 

EXHIBIT A

NOTEHOLDERS’ AMENDMENT FEES

 

 

			
	
AMOUNT
	
PAYABLE TO
	
WIRING INSTRUCTIONS

	
$2,500
	
See Appendix I.

 
	
See Appendix I.

	
$2,500
	
Metropolitan Life Insurance Company
	
Bank Name:         

ABA Routing #:   

Account No.:        

Account Name:    

Ref:  Amendment Fee 

	
$2,500
	
Massachusetts Mutual Life Insurance Company
	
Citibank

New York, New York

ABA # 

Acct #  

RE:  

	
$2,500
	
Woodmen of the World Life Insurance Society
	
Northern CHGO/Trust

ABA # 

Credit Wire Account #

Account #

Account Name:  

Swift# 

RE: Amendment Fee

 

 

 

 

Appendix 1esnd-ex101_119.htm

Exhibit 10.1

Essendant Inc.

2016 Annual Cash Incentive Award Plan

For Section 16 Officers

 

Essendant Inc. maintains the 2015 Long-Term Incentive Plan, as the same may be subsequently amended, restated or modified (the “LTIP”), under which the Human Resources Committee (“Committee”) has the discretion to grant Cash Incentive Awards (“Awards”). Pursuant to the LTIP, the Committee has established a 2016 Umbrella Bonus Pool (the “Umbrella Bonus Pool”, also referred to as the “LTIP Cash Award Pool”) that, within the individual limitations specified under the LTIP for Cash Incentive Awards, determines the maximum potential Cash Incentive Awards that can be paid to the Chief Executive Officer and the other “covered employees” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended, and to certain other executive officers. The Committee wishes to exercise its discretion to grant Awards pursuant to the terms and conditions of the LTIP, the Umbrella Bonus Pool, and this 2016 Annual Cash Incentive Award Plan (the “CIP”), which is hereby established by the Committee for the purpose of granting Awards (subject to the terms and conditions of the LTIP and the Umbrella Bonus Pool).  This CIP has been designated by the Committee as a part of the Umbrella Bonus Pool. 

Any term that is capitalized but not defined in this CIP will have the meaning set forth in the LTIP or in the Umbrella Bonus Pool. 

	
 
	
1.
	
Eligibility. For any Performance Period (as defined in Section 3 below), the Committee shall determine and designate those officers of the Company for purposes of Section 16 of the Securities Exchange Act of 1934 (“Section 16 Officers”) and who will be granted an Award under this CIP and such persons shall be “Participants” in this CIP for that Performance Period. 

	
 
	
2.
	
Awards. Unless otherwise designated by the Committee pursuant to Section 6 below, Awards made under this CIP are intended to be “performance-based compensation” as defined under the LTIP to meet the requirements for Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) and are subject to the maximum Award amounts specified in the LTIP and the Umbrella Bonus Pool.  Any Award granted under this CIP will be evidenced by a separate writing and subject to the terms and conditions of the LTIP, the Umbrella Bonus Pool, and this CIP.

	
 
	
3.
	
Performance Period. The Performance Period for an Award granted under this CIP shall be the calendar year specified by the Committee in the separate writing evidencing the Award.

	
 
	
4.
	
Performance Measurement. Payment of Awards granted under this CIP will be conditioned upon the achievement of one or more performance measures during the applicable Performance Period. The applicable performance measures will be (a) determined by the Committee, (b) set forth in the separate writing evidencing the Award, and (c) based on one or more of the Performance Measures (as defined in Section 9(z) of the LTIP).

	
 
	
5.
	
Employment on Last Day of Performance Period. Except as otherwise provided in Section 6 below or in a superseding Employment Agreement, a Participant must be actively employed by the Company on the last day of the Performance Period to receive any payment due for that Performance Period for a final Award determined under Section 7 below.

	
 
	
6.
	
Partial Year Participation. The Committee or President and Chief Executive Officer, as applicable, may allow an individual who transfers into or out of an eligible position (Section 16 Officers) or who terminates employment under certain circumstances during a Performance Period to participate in the CIP for that Performance Period on a prorated basis.  In such a case, the Participant’s final Award will be prorated based on the number of active months of participation during the Performance Period, and credit for active months of participation will be given as specified below.  Such situations include, but are not limited to: (a) new hire, (b) transfer from a position that does not meet the eligibility criteria to a position that meets the eligibility 

	
 
		
criteria, (c) transfer from a position that does meet the eligibility criteria to a position that does not meet the eligibility criteria, (d) changes in participation such as target incentive level, salary, leave of absence, etc. during the Performance Period, and (e) terminations under certain circumstances which are described below. In the case of prorated Awards, the Participant’s final Award will be the sum of all prorated Awards.

	
 
	
a.
	
Transfers and New Hires – An associate who becomes eligible and is designated as a Participant (whether due to transfer or new hire) during the 1st through 15th day of a month will receive credit for that month. An associate who becomes eligible and is designated as a Participant (whether due to transfer or new hire) during the 16th through last day of a month will not receive credit for that month, but rather will receive credit beginning on the first day of the following month. A Participant who ceases to be eligible (for a reason other than termination of employment) during the 1st through 15th day of a month will not receive credit for that month, but rather will receive credit through the last day of the previous month. A Participant who ceases to be eligible (for a reason other than termination of employment) during the 16th through last day of a month will receive credit through the last day of that month.

	
 
	
b.
	
Terminations – Except as otherwise provided in any written employment agreement between the Participant and the Company, if a Participant's employment terminates during a Performance Period due to death, disability (as defined by the Social Security Administration), retirement (which is a voluntary termination of employment by the Participant on or after reaching age 60 if the Participant also has at least 10 years of service with the Company) or a reduction in force to be determined by the Company in its sole discretion, the Participant shall be eligible to receive a prorated portion of the Award as determined based on actual performance through the end of the Performance Period in accordance with Section 7 below.  The prorated portion shall be determined by multiplying the Award by a fraction, the numerator of which shall be the number of months elapsed during the Performance Period at termination (as determined in the following sentence), and the denominator of which shall be twelve. For purposes of determining the months elapsed during the Performance Period, a Participant whose employment terminates during the 1st through 15th day of a month will not receive credit for that month, but rather will receive credit through the last day of the previous month; and a Participant whose employment terminates during the 16th through last day of a month will receive credit through the last day of that month. Payment of all such prorated Awards shall be made at the same time as Awards are paid to Participants who remain employed through the end of the Performance Period.

	
 
	
c.
	
Leaves of Absence - Incentive compensation, including any Award payable under the CIP,  is prorated based on the number of days a Participant takes an unpaid leave of absence during the incentive measurement timeframe (i.e., the Performance Period) unless otherwise required by state law.  A leave day where a Participant only receives benefit payments (e.g., short term disability, long term disability and workers’ compensation) is deemed unpaid for the purpose of determining incentive pay.  An approved intermittent, partial leave day is deemed paid for the purpose of determining incentive compensation.

	
 
	
7.
	
Adjustment of Performance Measure Targets and Determination and Payment of Final Awards – The Committee has the right to adjust the performance measure targets (either up or down) during the Performance Period if it determines that external changes or other unanticipated business conditions have materially affected the fairness of the targets or unduly influenced the Company’s ability to meet them, subject to the terms and provisions of the Umbrella Bonus Pool.  The Committee also has the right to adjust the performance measure targets during the Performance Period in the event an extraordinary and unanticipated corporate event such as a Change of Control requires that the CIP be amended to provide for a Performance Period consisting of less than twelve months.  The occurrence of the event requiring an amendment to the CIP to provide for a Performance Period of less than twelve months must be objectively determinable and must be certified by the Committee, and the certification of the event must be 

	
 
		
strictly ministerial and not involve any discretionary authority.  Notwithstanding the foregoing, the Committee has the right to adjust Awards in accordance with the provisions of the Umbrella Bonus Pool.

As soon as practicable after the close of the Performance Period, the Committee or President and Chief Executive Officer, as applicable, will review performance against the previously established performance measures and approve final Awards for each Participant who remains actively employed by the Company on the last day of the Performance Period (or who satisfies the provisions of Section (6)). A Participant will be eligible to receive payment with respect to an Award only to the extent that the performance measures for such Award are achieved and it is determined that all or some portion of the Participant’s Award has been earned for the Performance Period.  In the case of the Participants whose compensation is subject to Section 162(m) of the Code, the Committee must certify, in writing, prior to payment of the final Awards that the performance measures were achieved and, if so, calculate and certify in writing the amount of the Award earned by each such Participant for the Performance Period. Such amount may be adjusted in accordance with the provisions of the Umbrella Bonus Pool. The Company will pay the final Awards in cash as soon as administratively practicable, but no later than March 15th following the last day of the Performance Period, in accordance with each Participant's payroll election (i.e., direct deposit or pay card) at the time the Award is distributed. Final Awards shall be a liability of the Company on the last day of the Performance Period.

 

	
 
	
8.
	
No Right to Employment. Nothing herein confers upon a Participant any right to continue in the employ of the Company or any Subsidiary.

	
 
	
9.
	
Administration and Interpretation.  The Committee has the authority to control and manage the operation and administration of the LTIP, the Umbrella Bonus Pool and this CIP. Any interpretations of the LTIP, the Umbrella Bonus Pool or this CIP by the Committee and any decisions made by it under the LTIP, the Umbrella Bonus Pool or this CIP are final and binding on the Participant and all other persons. 

	
 
	
10.
	
Governing Law. This CIP and the rights and obligations hereunder shall be governed by and construed in accordance with the laws of the state of Delaware, without regard to principles of conflicts of law of Delaware or any other jurisdiction.

	
 
	
11.
	
Controlling Terms and Conditions. Notwithstanding anything in this CIP to the contrary, the terms of this CIP shall be subject to all of the terms and conditions of the LTIP and the Umbrella Bonus Pool (as the same may be amended in accordance with its terms), a copy of which may be obtained by the Participant from the office of the Secretary of the Company.  In addition, this CIP and the Participant’s rights hereunder shall be subject to all interpretations, determinations, guidelines, rules and regulations adopted or made by the Committee from time to time pursuant to the LTIP, the Umbrella Bonus Pool and this CIP.  The LTIP (along with the Umbrella Bonus Pool, this CIP and any individual Award granted to a Participant) supersedes any and all prior oral and written discussions, commitments, undertakings, representations or agreements (including, without limitation, any terms of any employment offers, discussions or agreements) involving cash incentive Awards.

 

	
 
	
12.
	
Recovery of Payments. Notwithstanding any contrary provision of this CIP, the Companies may recover any Award granted or paid under the CIP, to the extent required by the terms of any clawback or compensation recovery policy adopted by the Companies.

 

Amendment and Termination. This CIP may be amended or terminated in accordance with the provisions of the LTIP and the Umbrella Bonus Pool, and may otherwise be amended or terminated by the Company without the consent of any other person, provided that this CIP shall not be amended or terminated in any manner that would be inconsistent with Section 162(m) (unless otherwise provided pursuant to Section 6 above) or Section 409A of the Code (to the extent applicable).

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