THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT (this "AMENDMENT") to CREDIT AGREEMENT among SPINNAKER
COATING, INC., a Delaware corporation, formerly known as Xxxxx-Bridge
Industries, Inc. ("COATING"), ENTOLETER, INC., a Delaware corporation
("ENTOLETER"), SPINNAKER COATING-MAINE, INC., a Delaware corporation ("SCM" and,
together with Coating and Entoleter, the "BORROWERS"), SPINNAKER INDUSTRIES,
INC., a Delaware corporation (the "GUARANTOR" and, together with the Borrowers,
the "CREDIT PARTIES"), the financial institutions from time to time party
thereto as lenders (the "LENDERS"), and TRANSAMERICA BUSINESS CREDIT
CORPORATION, as agent (in such capacity the "AGENT") for the Lenders, is made as
of March 28, 2000 among the Credit Parties and the undersigned Lenders.
W I T N E S S E T H :
WHEREAS, the Credit Parties, the Lenders and the Agent are parties to the
Credit Agreement, dated as of August 9, 1999 (as amended, restated or otherwise
modified from time to time prior to the date of effectiveness of this Amendment,
the "CREDIT AGREEMENT"; capitalized terms used herein shall have the meanings
assigned to such terms in the Credit Agreement unless otherwise defined herein);
WHEREAS, the Credit Parties have requested that the Lenders (i) reset the
financial covenant set forth in Section 7.2(u) of the Credit Agreement and (ii)
make certain other amendments to the Credit Agreement; and
WHEREAS, the Lenders are agreeable to such request, but only on the terms
and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the parties hereto hereby agree as follows:
1. AMENDMENT TO CREDIT AGREEMENT. Subject to the satisfaction of the
conditions to effectiveness set forth in Section 2 hereof, the Credit Parties
and the Lenders agree to amend the Credit Agreement effective as of December 31,
1999 as follows:
(a) The definition of Specified Net Income in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety to read as follows:
"SPECIFIED NET INCOME" means, in any fiscal period, Net Income of a
Person, minus Interest Income, plus or minus (as the case may be) losses
or gains from extraordinary items and from sales of assets, the Central
Sale and the Electrical Tape Sale, other than asset sales resulting in a
loss or a gain of less than $100,000 and sales of Inventory in the
ordinary course of business, in each case to the extent added or
subtracted in determining such Person's Net Income.
(b) Section 7.1 of the Credit Agreement is hereby amended by adding at
the end thereof, the following new subsection (u):
(u) REPAYMENT OF INTERCOMPANY ADVANCE. If Unused Availability shall
be equal to or less than $4,000,000 at any time (such event, an
"Affiliate Payment Event"), the Credit Parties shall, within two (2)
Business Days of the occurrence of such Affiliate Payment Event, cause
all of the intercompany advances made by any of the Credit Parties to
Spinnaker Electrical Tape Company ("Tape") in the aggregate amount of
approximately $2,000,000 to be immediately repaid by Tape and applied by
the applicable Credit Parties as a repayment of the Revolving Loans.
(c) Section 7.2(u) of the Credit Agreement is hereby amended and
restated to read as follows:
(u) MINIMUM CONSOLIDATED FIXED CHARGE COVERAGE RATIO. The Credit
Parties will not permit the Consolidated Fixed Charge Coverage Ratio, for
each fiscal period set forth below, to be less than the ratio set forth
below opposite such period.
PERIOD RATIO
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July 1, 1999 through September 30, 1999 0.50:1.00
July 1, 1999 through December 31, 1999 0.40:1.00
July 1, 1999 through March 31, 2000 0.40:1.00
July 1, 1999 through June 30, 2000 0.50:1.00
October 1, 1999 through September 30, 2000 0.60:1.00
January 1, 2000 through December 31, 2000 0.75:1.00
April 1, 2000 through March 31, 2001 0.85:1.00
July 1, 2000 through June 30, 2001 0.95:1.00
Four fiscal quarters ended each September 30, December 31,
March 31 and June 30 thereafter 1.00:1.00
(d) Section 8.1(c) of the Credit Agreement is hereby amended by deleting
the language "Section 7.1(b), (c), (e) and (f)" from the second and third
lines thereof and inserting the language "Section 7.1(b), (c), (e), (f) and
(u)" in place thereof.
(e) Section 11.7 of the Credit Agreement is hereby amended by
(i) deleting the reference to "1700 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxx 00000" appearing therein and inserting "518 Xxxxx Xxxxxx, Xxxx, Xxxx
00000-0000" in place thereof and (ii) deleting the reference to
"(000) 000-0000" appearing therein and inserting "(000) 000-0000" in place
thereof.
2. CONDITIONS TO EFFECTIVENESS. This Amendment shall become effective as
of December 31, upon satisfaction of the following conditions:
(a) the Agent shall have received this Amendment, duly executed by the
Credit Parties and the Required Lenders;
(b) Agent shall have received a secretary's or assistant secretary's
certificate of each Credit Party regarding the incumbency of each of the
officers authorized to sign this Amendment and certifying and attaching the
board resolutions authorizing the execution, delivery and performance of
this Amendment;
(c) each of the representations and warranties set forth in Section 3
hereof shall be true and correct in all respects; and
(d) the Agent shall have received for the ratable benefit of the Lenders
an amendment fee of $50,000 from Borrower which Borrower hereby directs the
Agent to charge as an Agent Advance under the Revolving Loans facility, the
proceeds of which shall be applied in satisfaction of such fee.
3. REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES. Each Credit Party
represents and warrants that:
(a) the execution, delivery and performance by such Credit Party of this
Amendment have been duly authorized by all necessary corporate action and
this Amendment is a legal, valid and binding obligation of such Credit Party
enforceable against such Credit Party in accordance with its terms, except
as the enforcement thereof may be subject to (i) the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally and (ii)
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general principles of equity (regardless of whether such enforcement is
sought in a proceeding in equity or at law);
(b) each of the representations and warranties contained in the Credit
Agreement is true and correct in all material respects on and as of the date
hereof as if made on the date hereof, except to the extent that such
representations and warranties expressly relate to an earlier date; and
(c) no Change of Control or other Event of Default has occurred or
remains outstanding as of the date hereof.
4. EXPENSES. The Credit Parties shall pay for all of the reasonable costs
and expenses incurred by the Agent in connection with the transactions
contemplated by this Amendment, including, without limitation, the reasonable
fees and expenses of counsel to the Agent.
5. MISCELLANEOUS.
(a) Except as expressly amended herein, all of the terms and provisions
of the Credit Agreement and the other Credit Documents are ratified and
confirmed in all respects and shall remain in full force and effect. Each
Credit Party hereby acknowledges and agrees that there is no defense, setoff
or counterclaim of any kind, nature or description to the Obligations or the
payment thereof when due.
(b) Upon the effectiveness of this Amendment, all references in the
Credit Documents to the Credit Agreement shall mean the Credit Agreement as
amended by this Amendment and all references in the Credit Agreement to
"this Agreement," "hereof," "herein," or similar terms, shall mean and refer
to the Credit Agreement as amended by this Amendment.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as an amendment to or
waiver of any right, power or remedy of the Agent or any Lender under any of
the Credit Documents, or constitute an amendment or waiver of any provision
of any of the Credit Documents.
(d) This Amendment may be executed by the parties hereto individually or
in combination, in one or more counterparts, each of which shall be an
original and all of which shall constitute one and the same agreement. This
Amendment may be executed and delivered by telecopier with the same force
and effect as if the same were a fully executed and delivered original
manual counterpart.
(e) This Amendment shall constitute a Credit Document.
6. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW).
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective duly authorized officers.
BORROWERS:
SPINNAKER COATING, INC.,
formerly known as Xxxxx-Bridge Industries, Inc.
By: /s/ XXXXXXX X. XXX
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Xxxxxxx X. Xxx
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL
OFFICER & COO
SPINNAKER COATING-MAINE, INC.
By: /s/ XXXXXXX X. XXX
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Xxxxxxx X. Xxx
VICE PRESIDENT, ASSISTANT SECRETARY AND
TREASURER
ENTOLETER, INC.
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
PRESIDENT
GUARANTOR:
SPINNAKER INDUSTRIES, INC.
By: /s/ XXXXX X. XXXXXXXX
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Xxxxx X. Xxxxxxxx
VICE PRESIDENT FINANCE & TREASURER
LENDERS:
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ XXXXXX X. XXXXX
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Xxxxxx X. Xxxxx
XXXXXX VICE PRESIDENT
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ XXXX XXXXX
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Xxxx Xxxxx
ASSISTANT VICE PRESIDENT
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