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Transaction Process Management Committee | Issuer | Original Noteholders' Special Counsel | Special Amendment Counsel | Noteholders | Exhibit A - First Amendment Short Form | Exhibit B - First Amendment Long Form, Version 1 | Exhibit C - First Amendment Long Form, Version 2 | Exhibit D - First Amendment, Consent and Waiver | Exhibit E - Amendment Log TRANSACTION PROCESS MANAGEMENT COMMITTEEThe ACIC Transaction Process Management Committee (the "Committee") was originally formed to develop enhancement proposals for industry consideration which would serve to increase the efficiency of the private placement process. In January 1995 the Committee published its Private Placement Process Enhancements brochure which includes numerous enhancement recommendations for use in the documentation process of a private placement. In January 1996 the Committee published its Guide to Amendments brochure which sets forth recommended procedures and enhancements for the amendment process and includes numerous amendment forms for use by counsel in such process. GUIDE TO AMENDMENTSThe amendment process in private transactions accomplishes several goals. Some amendments update covenants, many anticipate and accommodate acquisitions by the Issuer and some involve a more material restructuring of the outstanding securities or a total restructuring of the Issuer itself. This Guide is intended to set forth recommended procedures and enhancements for the amendment process. The Committee believes that the implementation of efficiencies in the amendment process will serve to improve the private placement product as a whole. As was the case in the Enhancements brochure, the recommendations have been organized by deal participants. ISSUERSchedule of Current NoteholdersThe Issuer should prepare a schedule of the current Noteholders from the note register including the outstanding principal amount owed to each Noteholder with respect to its note. The Issuer should review the note agreement to confirm the required percentage of outstanding principal of the Notes which will be needed to effect the amendment. Such schedule should be forwarded to the Special Amendment Counsel mentioned below if such Counsel is retained. Preliminary Business DiscussionThe appropriate financial officer of the Issuer should discuss the business issues and the nature of the proposed amendment with the business professionals of the Noteholders. In many instances, this preliminary discussion will provide useful feedback to the Issuer regarding the acceptability of the proposed request and serve to notify the Noteholders in advance about the upcoming amendment request. Written Amendment RequestAll of the Issuer's appropriate internal professionals should identify and analyze the business issues which prompted the amendment request. Internal legal counsel or the appropriate financial officer should prepare and circulate to the Noteholders a letter detailing the specific business circumstances and describing the nature of the amendments being requested by the Issuer. If Special Amendment Counsel is retained, a copy of such letter should be forwarded to such Counsel. Special Amendment CounselIf the amendment request is complex, requires the attention of numerous Noteholders or is particularly time sensitive, the Issuer should encourage the retention of Special Amendment Counsel by the Noteholders. This retention is contemplated by most note agreements, which typically provide that such counsel is retained at the expense of the Issuer. Because the original Noteholders' special counsel will be familiar with the transaction and the Noteholders' representatives involved in the transaction, it can be expected to expeditiously draft the amendment and coordinate all aspects of the amendment process from the initial contact with the Noteholders through the execution of the formal amendment. There may also be situations in which the scope and complexity of the amendment merit the retention of independent counsel for the Issuer. Coordinate Amendments To Other Credit FacilitiesThe Issuer and its counsel should carefully consider and review the impact such amendment request may have on all other debt facilities of the Issuer. Specifically, all bank facilities of the Issuer should be reviewed to determine whether corresponding amendments may be required to such agreements. All required amendments to such facilities should be coordinated and executed simultaneously and counsel for the lenders under such other facilities should be contacted in due course to assist in the coordination of the amendment process. Final copies of such other amendments, and if appropriate, drafts thereof, should be distributed to Special Amendment Counsel and the Noteholders on a timely basis. Distribution of Amendment Proposal and DocumentationCopies of the written amendment request and all related documentation should be forwarded to all Noteholders as soon as possible to allow adequate time for the review of the request. ORIGINAL NOTEHOLDERS' SPECIAL COUNSELContact ListSubsequent to the closing of each private placement transaction, special counsel should supply the Issuer with a list setting forth the name, address, telephone and facsimile number of the business professional and internal legal contact for each original Noteholder. While this information may be available from a variety of sources, such list should be provided in a summary form as a convenience to the Issuer. The list should be identified as a preliminary source of contacts (subject of course to a post-closing transfer of the notes) in the event that a modification or amendment might be sought. Guide To Amendment BrochureAs an additional convenience to the Issuer, special counsel should include a copy of this brochure in the Issuer's closing transcript of original documents for future reference. SPECIAL AMENDMENT COUNSELDraft Form of Amendment and Conduct Legal Due DiligenceAmendments come in all shapes and sizes. Some require a simple word or number change, some affect numerous covenants and definitions. Special Amendment Counsel should analyze the effect of the business issues prompting the amendment on the note agreement and prepare a draft of the requested amendment. Exhibit A sets forth a "short form" of an amendment and Exhibit B sets forth a "long form" of an amendment which includes the provisions necessary to describe a corresponding amendment to the Notes. Included as Exhibit C is another variation of a "long form" amendment which includes representations, warranties and specific closing conditions. Finally, Exhibit D is a suggested form of amendment which includes a consent and waiver provision for those amendments which are necessitated due to the occurrence of a default. If the notes are to be amended, provision may be made to distribute amended notes to the Noteholders at their request or to distribute an allonge reflecting the amendment to be attached to the existing notes. Based on the facts and circumstances of the proposed amendment, Special Amendment Counsel, in consultation with the Noteholders, should determine the appropriate form of the amendment agreement, whether legal opinions might be appropriate and the nature of the legal due diligence to be performed. All or portions of the Exhibits can be selected to fit the particular requirements of the proposed amendment. If the notes are amended, Special Amendment Counsel should determine whether a new Private Placement Number from Standard & Poor's Corporation CUSIP Service Bureau may be required. In addition, Special Amendment Counsel should confirm with the Noteholders' internal counsel whether such amendment to the notes would require an amended filing with the Securities Valuation Office of the National Association of Insurance Commissioners. Negotiation, Distribution and Execution of AmendmentSpecial Amendment Counsel should coordinate and facilitate every aspect of the negotiation of the amendment request and the distribution of the written amendment proposal, if necessary. In addition, it is responsible for the proper distribution and preparation of the various drafts of the amendment including the execution thereof and the completion of the appropriate legal due diligence. NOTEHOLDERSSpecial Amendment CounselIf the amendment request is complex, requires the attention of numerous Noteholders or is particularly time sensitive, the Noteholders should encourage the retention of Special Amendment Counsel at the Issuer's expense to coordinate the drafting, distribution and execution of the amendment. The demands placed on both the Noteholders' legal and business internal staffs may be alleviated by such retention and generally the efficiency of the amendment process will be improved by such Counsel's involvement. While the original Noteholders' Special Counsel will have the original documentation, in many cases it will not have copies of the intervening amendments, if any. Noteholders should be sure to provide Special Amendment Counsel with a complete amendment file. Internal CommitmentAmendments are occurring more frequently and are becoming increasingly more important in highly structured and complex private transactions. The ability of the Noteholders to respond to these requests efficiently may have a significant effect on the overall attractiveness and competitiveness of the private placement product. Noteholders should consider increasing their effort in this area by dedicating the appropriate internal resources to the amendment process and by promptly responding to all amendment requests from Issuers. Encourage Immediate Legal Review of Amendment RequestAmendments are typically required as a result of specific business needs or operational developments and as such are generally time sensitive. Noteholders should develop internal procedures to promote timely and early legal review of each amendment request. Early attention to an amendment request by the appropriate internal counsel will shorten the amendment documentation process and enhance the efficiency and quality of the amendment review process from both the Noteholders' and the Issuer's perspective. Amendment LogA recommended best practice is to maintain a formal Amendment Log for each transaction. It should be a standard form filed with each Noteholder's reference copy of the note agreement. A suggested form is included as Exhibit E. The form is most useful if it is reproduced on heavy paper stock printed in a distinctive, eye-catching color. Of course, a complete copy of every amendment should be filed in the reference file with the original note agreement and, if maintained separately, with the conformed copy of the note agreement. The purpose of the Amendment Log is to summarize in one location the entire history of the transaction from the date of the first amendment. It is often quite useful to have the Amendment Log as part of the permanent file to guard against the actual amendments being removed from the file for various reasons. It is also often particularly useful when the same sections of a note agreement are repeatedly amended with different effective dates. The more complex and frequent amendments are, the more useful the Amendment Log is. The provisions of a note agreement that are amended are often particularly important or sensitive. The Noteholders may wish to consider an annual review of the note agreement "as amended to date" with the Issuer. Such periodic reviews which can be done in connection with annual reviews of the credit may prevent disputes from arising in the future and could serve to confirm such particulars as which financial reporting period was subject to an amendment or when a waiver or consent authorizing a particular transaction expires. EXHIBIT A - FIRST AMENDMENT SHORT FORMEXHIBIT B - FIRST AMENDMENT LONG FORM, VERSION 1EXHIBIT C - FIRST AMENDMENT LONG FORM, VERSION 2EXHIBIT D - FIRST AMENDMENT, CONSENT AND WAIVEREXHIBIT E - AMENDMENT LOGMicrosoft Word is required to view or print these materials.To open a file:
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