Exhibit 10(39)
AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT (this "Amendment"), dated
September 24, 2002, by and between Congress Financial Corporation, a Delaware
corporation ("Lender"), and Congoleum Corporation, a Delaware corporation
("Borrower").
W I T N E S S E T H
WHEREAS, Lender, Borrower, Congoleum Financial Corporation, a Delaware
corporation ("CFC") and Congoleum Intellectual Properties, Inc., a Delaware
corporation ("CIPI" and, together with CFC, collectively, "Guarantors" and each
individually a "Guarantor"), have entered into financing arrangements pursuant
to which Lender has made and may make loans and advances to Borrower as set
forth in the Loan and Security Agreement, dated December 10, 2001, by and
between Lender and Borrower (as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, the "Loan
Agreement") and other agreements, documents and instruments referred to therein
or at any time executed and/or delivered in connection therewith or related
thereto, together with this Amendment (all of the foregoing, including the Loan
Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, being collectively
referred to herein as the "Financing Agreements");
WHEREAS, Borrower has requested certain amendments to the Loan Agreement
and Lender is willing to agree to such amendments, subject to the terms and
conditions contained herein. By this Amendment, the parties desire and intend to
evidence such amendments.
NOW THEREFORE, in consideration of the foregoing, and the respective
agreements and covenants contained herein, the parties hereto agree as follows:
1. Definitions.
(a) Amendment to Definition of Adjusted Tangible Net Worth. Section 1.3 of
the Loan Agreement is hereby amended by deleting such Section in its entirety
and replacing it with the following:
"1.3 `Adjusted Tangible Net Worth' shall mean as to any Person, at any
time, in accordance with GAAP (except as otherwise specifically set forth
below), on a consolidated basis for such Person and its Subsidiaries (if
any), the amount equal to the difference between: (a) the aggregate net
book value of all assets of such Person and its Subsidiaries (excluding
the value of patents, trademarks, tradenames, copyrights, licenses,
goodwill, leasehold improvements, prepaid assets, Net Income resulting
from income or gain derived from the conversion of Indebtedness to equity
or forgiveness of Indebtedness, deferred taxes, other intangible assets
and other "current assets" and other "non-current assets", as such terms
are defined in the most recent audited year-end financial statements of
Borrower delivered to Lender, and including, to the extent not included as
an other "current asset" or an other "non-current asset", any
insurance receivables for asbestos related liabilities), calculating the
book value of Inventory for this purpose on a last-in-first-out basis,
after deducting from such book values all appropriate reserves in
accordance with GAAP (including all reserves for doubtful receivables,
obsolescence, depreciation and amortization) and (b) the aggregate amount
of the Indebtedness and other liabilities of such Person and its
Subsidiaries (including tax and other proper accruals)."
(b) Interpretation. All capitalized terms used herein shall have the
meanings assigned thereto in the Loan Agreement and the other Financing
Agreements, unless otherwise defined herein.
2. Minimum Adjusted Tangible Net Worth. Section 9.17 of the Loan Agreement
is hereby amended by deleting "negative $22,000,000" and replacing it with
"negative $12,400,000".
3. Amendment Fee. Borrower shall pay to Lender, contemporaneously
herewith, an amendment fee in the amount of $10,000, which fee shall be fully
earned and nonrefundable as of the date hereof and may be charged into the loan
account of Borrower.
4. Representations, Warranties and Covenants. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by Borrower and Guarantors to Lender pursuant to the Loan Agreement and the
other Financing Agreements, Borrower and Guarantors hereby represent, warrant
and covenant with and to Lender as follows (which representations, warranties
and covenants are continuing and shall survive the execution and delivery hereof
and shall be incorporated into and made a part of the Financing Agreements):
(a) The failure of Borrower or any Guarantor to comply with the covenants,
conditions and agreements contained herein shall constitute an Event of Default
under the Financing Agreements.
(b) This Amendment has been duly executed and delivered by Borrower and
Guarantors and is in full force and effect as of the date hereof, and the
agreements and obligations of Borrower and Guarantors contained herein
constitute legal, valid and binding obligations of Borrower and Guarantors
enforceable against Borrower and Guarantors in accordance with their respective
terms.
(c) As of the date hereof, no Event of Default or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default, has occurred or is continuing.
5. Conditions Precedent. The effectiveness of the other terms and
provisions contained herein shall be subject to the following conditions
precedent:
(a) Lender shall have received, in form and substance satisfactory to
Lender, an original of this Amendment, duly authorized, executed and delivered
by Borrower and Guarantors; and
(b) as of the date hereof, no Event of Default or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default, shall exist or have occurred and be continuing.
6. Effect of this Agreement. Except as modified pursuant hereto, no other
changes or modifications in the Loan Agreement or the other Financing Agreements
are intended or implied and the Financing Agreements are hereby specifically
ratified and confirmed by the parties hereto as of the effective date hereof. To
the extent of conflict between the terms of this Amendment and the other
Financing Agreements, the terms of this Amendment shall control.
7. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York without regard to principals of conflicts
of laws, but excluding any rule of law that would cause the application of the
law of any jurisdiction other that the laws of the State of New York.
8. Binding Effect. This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.
9. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto. This Amendment may be executed and delivered by telecopier
with the same force and effect as if it were a manually executed and delivered
counterpart.
10. Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary or
reasonably desirable to effectuate the provisions and purposes of this
Amendment.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have caused these presents to be duly
executed as of the day and year first above written.
CONGRESS FINANCIAL CORPORATION
By: ____________________________
Title: _________________________
CONGOLEUM CORPORATION
By: ____________________________
Title: __________________________
ACKNOWLEDGED AND AGREED:
CONGOLEUM FINANCIAL CORPORATION
By: ____________________________
Title: _________________________
CONGOLEUM INTELLECTUAL PROPERTIES, INC.
By: ____________________________
Title: _________________________
