EXHIBIT 10.16
CONSENT AND FOURTH AMENDMENT AGREEMENT
This CONSENT AND FOURTH AMENDMENT AGREEMENT ("Agreement") is made and entered
into as of December 31, 1997 by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇ MEZZANINE CAPITAL
FUND, L.P., an Illinois limited partnership ("▇▇▇▇▇"); and EAGLE PLASTICS, INC.,
a Nebraska corporation ("Eagle"), PACIFIC PLASTICS, INC., an Oregon corporation
("Pacific"), ARROW PACIFIC PLASTICS, INC., a Utah corporation ("Arrow"), and
EAGLE PACIFIC INDUSTRIES, INC., a Minnesota corporation ("EPII") (Eagle,
Pacific, Arrow and EPII are sometimes referred to herein collectively as the
"Company").
R E C I T A L S
A. Pursuant to that certain Plan of Recapitalization dated as of March 16, 1995
by and among ▇▇▇▇▇, Eagle and EPII (f/k/a Black Hawk Holdings, Inc.), the
parties entered into a Debenture Acquisition Agreement of even date therewith
(the "Debenture Acquisition Agreement"), and ▇▇▇▇▇ was issued, among other
things, a senior subordinated debenture of Eagle having a principal amount of
$7,500,000 (the "Debenture") ($4,500,000 of which remains unpaid on the date
hereof).
B. As an inducement for ▇▇▇▇▇'▇ consent to a refinancing of the Company's senior
indebtedness by Fleet Capital Corporation ("Fleet") as of May 10, 1996, the
parties hereto amended selected terms of the Debenture Acquisition Agreement and
the Debenture in exchange for certain financial accommodations to ▇▇▇▇▇ pursuant
to an Amendment Agreement of even date therewith.
C. The parties again amended selected terms of the Debenture Purchase Agreement
as of February 14, 1997, consistent with certain amendments made by Eagle,
Pacific and Arrow to their credit facility with Fleet.
D. The parties again amended selected terms of the Debenture Purchase Agreement
as of May 1, 1997, consistent with certain amendments made by Eagle, Pacific and
Arrow to their credit facility with Fleet.
E. In connection with the amendment and restatement of the Company's credit
facility with Fleet to reflect, among other things, the merger of Arrow with and
into Pacific and Eagle and Pacific with and into EPII effective as of the close
of business on the date hereof, the Company is seeking ▇▇▇▇▇'▇ consent thereto
and waiver of certain of its rights with respect thereto and, in connection
therewith, desires to again amend selected terms and conditions of the Debenture
Acquisition Agreement, all as hereinafter set forth.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the agreements set forth herein, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Incorporation of Recitals. The foregoing recitals are incorporated herein by
reference and made a part of this Agreement.
2. Amendment of the Debenture Acquisition Agreement. Subject to the Company's
performance of its obligations to ▇▇▇▇▇ hereunder on the date hereof and the
waiver by Fleet of any and all breaches in existence on the date hereof under
its Loan and Security Agreement with the Company, (x) ▇▇▇▇▇ hereby consents to
the terms of that certain Amended and Restated Loan and Security Agreement of
even date herewith (the "Amended and Restated Credit Agreement") by and between
Fleet and EPII and (y) the parties hereto agree to amend the terms of the
Debenture Acquisition Agreement as follows:
(a) The following (and only the following) definition contained in Section 1.1
of the Debenture Acquisition Agreement shall be deleted in its entirety and
replaced with the following:
"'Senior Loan Agreement' shall mean that certain Amended and Restated Loan and
Security Agreement dated as of December 31, 1997 by and between Senior Lender
and Eagle Pacific Industries, Inc. The Senior Loan Agreement shall include all
other documents, agreements, certificates and instruments attached thereto,
referred to therein or delivered in connection therewith as any or all of the
foregoing may be supplemented or amended from time to time in accordance with
the provisions hereof."
(b) Sections 5.1(u) and (v) of the Debenture Acquisition Agreement shall be
deleted in their entirety and replaced with the following:
"(u) Consolidated Net Cash Flow. Borrower shall achieve Consolidated Net Cash
Flow (as defined in the Senior Loan Agreement) for each of the periods listed
below equal to or greater than the amount set forth opposite such period:
Period Amount
------ ------
January 1, 1996 through and $135,000
including June 30, 1996
January 1, 1996 through and $585,000
including September 30, 1996
January 1, 1996 through and ($1,650,000)
including December 31, 1996
January 1, 1997 through and ($1,100,000)
including March 31, 1997
January 1, 1997 through and ($385,000)
including June 30, 1997
January 1, 1997 through and $135,000
including September 30, 1997
January 1, 1997 through and ($1,650,000)
including December 31, 1997
January 1, 1998 through and ($1,265,000)
including March 31, 1998
January 1, 1998 through and ($550,000)
including June 30, 1998
January 1, 1998 through and $0
including September 30, 1998
January 1, 1998 through and ($165,000)
including December 31, 1998
January 1, 1999 through and ($550,000)
including March 31, 1999
(v) Senior Interest Coverage Ratio. Borrower shall achieve, at the end of each
fiscal period listed below during the term hereof, a Senior Interest Coverage
Ratio (as defined in the Senior Loan Agreement) equal to or greater than the
ratio shown below for the fiscal period corresponding thereto:
Fiscal Period Ratio
------------- -----
January 1 to March 31 2.25 to 1
January 1 to June 30 3.15 to 1
January 1 to September 30 3.15 to 1
January 1 to December 31 2.15 to 1"
(c) Section 5.2(w) of the Debenture Acquisition Agreement shall be deleted in
its entirety and replaced with the following:
"(w) Capital Expenditures. Borrower shall not, unless otherwise consented to by
Purchaser in writing, make Capital Expenditures (as defined in the Senior Loan
Agreement) which, in the aggregate, as to Borrower and its subsidiaries during
any fiscal year of Borrower, exceeds the amount set forth opposite such fiscal
year in the following schedule:
Fiscal Year Ending Capital Expenditure
------------------ -------------------
December 31, 1996 $5,500,000
December 31, 1997 $4,400,000 plus the
Carryover Amount
December 31, 1998 and $2,750,000 plus the
each subsequent fiscal year Carryover Amount
Notwithstanding anything to the contrary contained in the Debenture Acquisition
Agreement, Purchaser acknowledges that during fiscal year 1998 Borrower intends
to make certain Capital Expenditures in connection with the expansion of its
facilities in Salt Lake City, Utah in an amount which, when aggregated with all
other Capital Expenditures made by Borrower in fiscal year 1998 shall not exceed
Eight Million Two Hundred Fifty Thousand Dollars (8,250,000). Purchaser further
acknowledges that Borrower shall not be deemed to have violated the
provisions of this Section 5.2(w) by reason of said Capital Expenditures if on
or prior to December 31, 1998 Borrower has refinanced said Capital Expenditures
through a sale and leaseback transaction or other similar transaction, the terms
and conditions of which are satisfactory to Purchaser, and the proceeds of which
payable to Borrower equal or exceed Five Million One Hundred Thousand Dollars
($5,100,000). For purposes of this Section 5.2(w), the amount of Capital
Expenditures made by Borrower within fiscal year 1998 shall be deemed reduced by
the amount of the proceeds received by Borrower from the sale and leaseback
transaction or other similar transaction contemplated above."
(d) By virtue of the mergers involving the Company effective as of the close of
business on the date hereof, all references in the Debenture Acquisition
Agreement to (i) the defined terms "Guarantors" and "New Guarantees" shall be
deleted in their entirety and (ii) the defined term "Borrower" shall be
construed as a reference to EPII (for itself and as successor by merger to
Eagle, Pacific and Arrow).
3. Performance of the Company's Obligations. On the date hereof, EPII shall
deliver to ▇▇▇▇▇ a certificate (the form and substance of which are satisfactory
to ▇▇▇▇▇ and its counsel), signed by the secretary or an assistant secretary of
EPII, certifying as to (a) the names of the officers of the Company authorized
to sign this Agreement and all other documents and instruments executed and/or
delivered in connection herewith or therewith, (b) specimens of the true
signatures of such officers, on which ▇▇▇▇▇ may conclusively rely, and (c) the
truth and correctness of documents and instruments executed and/or delivered in
connection herewith and therewith (including, without limitation, those entered
into with Fleet).
4. Assumption of Liability. EPII, Pacific and Arrow hereby acknowledges that the
Debenture Acquisition Agreement is being amended hereby and EPII, Eagle, Pacific
and Arrow hereby also acknowledge and affirm that (a) from and after the
effective time of the mergers to be completed on the date hereof, EPII shall be
fully responsible for all of Eagle's responsibilities to ▇▇▇▇▇ under the
Debenture Acquisition Agreement, the Debentures and related documents executed
and/or delivered in connection therewith (each, as amended to date)
(collectively, the "Debenture Documents"), as if EPII were the original borrower
thereunder, (b) each of the Debenture Documents remains in full force and
effect, (c) neither this Agreement nor the consummation of the mergers to be
completed on the date hereof shall adversely affect or otherwise impair ▇▇▇▇▇'▇
rights under the Debenture Documents, (d) ▇▇▇▇▇ is not required to provide
notice to anyone of this Agreement and (e) ▇▇▇▇▇'▇ actions hereunder shall not
operate as a waiver of ▇▇▇▇▇'▇ right to agree to further amendments in its sole
discretion without notice to EPII.
5. Representations and Warranties of the Company. As a further inducement for
▇▇▇▇▇ to consent to the mergers contemplated to be completed on the date hereof
and to EPII's execution and delivery of the Amended and Restated Credit
Agreement, the Company hereby represents and warrants to ▇▇▇▇▇ that:
(a) The Company (and each of them) has the requisite corporate power and
authority to execute, deliver and carry out this Agreement, all other agreements
and instruments contemplated or required by the provisions thereof and to be
executed, delivered or carried out by the Company (or any of them)
(collectively, the "Ancillary Agreements") and the transactions contemplated
hereby and thereby.
(b) The execution and delivery of this Agreement and the Ancillary Agreements,
and the
consummation by the Company of the transactions contemplated hereby or thereby
has been duly authorized by all necessary corporate action and other consents,
approvals and the like required on the part of the Company.
(c) Neither the execution and delivery by the Company (or any of them) of this
Agreement or any of the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby or thereby, nor compliance by the Company with
the terms, conditions and provisions hereof or thereof, shall (i) conflict with
or result in a breach of the terms, conditions or provisions of, (ii) constitute
a default under, (iii) result in the creation of any lien, security interest,
charge or encumbrance upon its capital stock or assets pursuant to, (iv) give
any third party the right to accelerate any obligation under, (v) result in a
violation of or (vi) require any authorization, consent, approval, exemption or
other action by or notice to any court or administrative or governmental body
pursuant to, the articles of incorporation or bylaws of the Company (or any of
them) or any law, statute, rule or regulation to which the Company (or any of
them) is subject, or any agreement, instrument, order, judgment or decree to
which the Company (or any of them) is subject.
(d) This Agreement and each of the Ancillary Agreements to which the Company (or
any of them) is a party have been duly and validly executed and delivered by
Eagle, Pacific, Arrow and/or EPII (as the case may be) and constitute legal,
valid and binding obligations, and all such obligations of the Company (or any
of them) are enforceable in accordance with their respective terms.
(e) All representations and warranties of Borrower and Guarantors in the
Debenture Acquisition Agreement, as amended to date, remain true and correct as
of the date hereof as though originally made on and as of the date hereof,
except to the extent any such representation or warranty expressly relates to an
earlier date (in which case such representation or warranty shall have been true
and correct on such earlier date).
(f) Neither this Agreement nor any of the Ancillary Agreements contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein and therein not misleading.
There is no fact known to the Company (or any of them) (other than general
conditions which are a matter of public knowledge) which materially adversely
affects the business, operations, properties, financial condition, operating
results or business prospects of the Company (or any of them). All documents
filed by EPII pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), contain all statements
that are required by the Exchange Act and do not contain any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements contained therein not misleading.
6. Waiver of Breach. ▇▇▇▇▇ hereby waives any and all breaches of the terms of
the Debenture Acquisition Agreement and the Debenture resulting from (a) the
execution and delivery by the Company of this Agreement and the other agreements
and instruments to be executed and delivered hereunder, (b) the execution and
delivery of the Amended and Restated Credit Agreement by EPII and the
consummation of the transaction contemplated thereunder and (c) the completion
of the mergers contemplated by EPII, Eagle, Pacific and Arrow to be effective at
the close of business on the date hereof.
7. Miscellaneous.
(a) Further Assurances. The Company shall, from time to time at the request of
▇▇▇▇▇, do all further acts and things as may in the opinion of ▇▇▇▇▇ be
necessary or advisable to effectuate the transaction and other matters
contemplated hereby, including, without limitation, the modification of or
amendment to any other agreements, certificates or instruments to which the
Company is a party.
(b) Joint and Several. The Company's obligations hereunder shall be joint and
several.
(c) Successors. This Agreement and the agreements and obligations contained
herein shall, as applicable, be binding upon and inure to the benefit of the
Company and ▇▇▇▇▇ and their respective successors and permitted assigns.
(d) Costs and Expenses. The Company agrees to pay all costs and expenses,
including, without limitation, attorney's fees and expenses, expended or
incurred by ▇▇▇▇▇ in connection with (i) the preparation and structuring of this
Agreement and the Ancillary Agreements, (ii) the enforcement of this Agreement
or any of the Ancillary Agreements, (iii) the collection of any amounts due
hereunder and (iv) any actions for declaratory relief in any way related to this
Agreement or the agreements, certificates and instruments described herein or
contemplated hereby (including, without limitation, the Ancillary Agreements),
or the protection or preservation of any rights of ▇▇▇▇▇ hereunder.
(e) Notices. All notices and other communications given to or made upon any
party hereto in connection with this Agreement shall, except as otherwise
expressly herein provided, be in writing (including telexed or telecopied
communication) and mailed, telexed, telecopied or delivered by hand or by
reputable overnight courier service to the respective parties, as follows:
If to ▇▇▇▇▇, to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mezzanine Capital Fund, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copy to:
Altheimer & ▇▇▇▇
▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, to:
c/o Eagle Pacific Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copy to:
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A.
1100 International Centre
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or in accordance with any subsequent written direction from the recipient party
to the sending party. All such notices and other communications shall, except as
otherwise expressly herein provided, be effective upon delivery if delivered by
hand; when deposited with a reputable courier service, delivery charges prepaid;
when deposited in the mail, postage prepaid; or in the case of telex or
telecopy, when received.
(f) Survival. All representations, warranties, covenants and agreements
contained herein or made in writing in connection herewith shall survive
indefinitely the execution and delivery of this Agreement.
(g) Assignability. This Agreement shall not be assignable by either party
without the prior written consent of the other party.
(h) Entire Agreement. This Agreement and the instruments to be delivered by the
parties pursuant to the provisions hereof constitute the entire agreement
between the parties hereto with respect to the subject matter hereof. Any
amendments or alternative or supplementary provisions to this Agreement must be
made in writing and duly executed by an authorized representative of each of the
parties hereto.
(i) Counterparts. This Agreement may be executed in any number of counterparts
and by any party hereto on separate counterparts, each of which, when so
executed and delivered, shall be an original, but all such counterparts shall
together constitute one and the same instrument.
(j) Captions. Section captions used in this Agreement are for convenience only,
and shall not affect the construction of this Agreement.
(k) No Further Amendments. Except as specifically amended hereby, the terms and
provisions of the Debenture Acquisition Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their duly authorized officers as of the day and year first
above written.
EAGLE PLASTICS, INC.
By:
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Title:
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EAGLE PACIFIC INDUSTRIES, INC.
By:
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Title:
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PACIFIC PLASTICS, INC.
By:
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Title:
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ARROW PACIFIC PLASTICS, INC.
By:
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Title:
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▇▇▇▇▇▇▇ ▇▇▇▇▇ MEZZANINE CAPITAL FUND, L.P.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mezzanine Capital Partners, L.P., its general partner
By:
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A General Partner
