EXHIBIT 4.1
AMERICAN BILTRITE INC.
Amendment No. 5
This Amendment No. 5, dated as of January 29, 2004 (this
"Amendment"), is among American Biltrite Inc., a Delaware corporation (the
"Company"); K&M Associates L.P., a Rhode Island limited partnership (the
"Guarantor" and, together with all Subsidiaries party to a Guarantor Joinder
Agreement, the "Guarantors"); and The Prudential Insurance Company of America
("Prudential"). The parties hereto agree as follows:
1. Note Agreement; Definitions. This Amendment amends the Note
Purchase and Private Shelf Agreement and Facility Guarantee dated as of August
28, 2001 among the parties hereto (as amended by Amendment No. 1, dated
December 31, 2002; Amendment No. 2, dated March 31, 2003; Amendment No. 3,
dated June 30, 2003; and Amendment No. 4, dated October 14, 2003; together
with any other amendment, modification or replacement thereof, the "Note
Agreement"). Terms defined in the Note Agreement as amended hereby (the
"Amended Note Agreement") and not defined herein are used herein as so
defined.
2. Amendments to Note Agreement. Effective upon the date upon which
all the conditions set forth in paragraph 4 hereof are satisfied (the
"Amendment Date"), which conditions must be satisfied no later than the date
provided therein, the Note Agreement is amended as follows:
2.1. Amendment to paragraph 6A. The introductory paragraph of
paragraph 6A of the Note Agreement is amended and restated to read in its
entirety as follows:
"6A. Financial Ratios. The Company covenants that, from and
as of October 14, 2003 until December 31, 2004, it will not permit
the items specified in Annex I hereto, and thereafter, as follows, in
each case determined at the end of each fiscal quarter:"
2.2. Amendment to paragraph 6B. Paragraph 6B of the Note
Agreement is amended by replacing the words "ending on or after March 1, 2004"
with the words "ending on or after December 31, 2004".
2.3. Amendment to paragraph 7A(xvii). Paragraph 7A(xvii) of the
Note Agreement is amended and restated to read in its entirety as follows:
"(xvii) the Company shall (A) fail to enter into, on or
before November 14, 2004, a definitive commitment relating to the
replacement or refinancing of not less than $15,000,000 of the
facilities under the Bank Agreement to be effective by December 31,
2004 or such other date prior to the termination of the current Bank
Agreement, on terms substantially similar to the Bank Agreement and
with a maturity of not less than one year, (B) fail to consummate on
or before December 31, 2004, such replacement or refinancing of not
less than $15,000,000 of the facilities under the Bank Agreement or
(C) fail to cause the lenders party to such replacement or
refinancing to enter into an intercreditor agreement with the holders
of the Notes on terms substantially similar to the Intercreditor
Agreement;"
2.4. Amendments to Annex I. Annex I to the Note Agreement is
amended as follows:
2.4.1. Amendment to Opening Paragraph of Annex I. The
opening paragraph of Annex I is amended by replacing the reference to "March
1, 2004" contained therein with "December 31, 2004".
2.4.2. Amendment to Paragraph (i) of Annex I. Paragraph
(i) of Annex I is amended and restated to read in its entirety as follows:
"(i) Consolidated Total Liabilities to Consolidated Tangible
Net Worth. On the last day of each fiscal quarter of the Company,
Consolidated Total Liabilities shall not exceed not exceed the
percentage set forth in the table below of Consolidated Tangible Net
Worth on such date:
Quarter Ending Percentage
-------------- ----------
9/30/03 to 6/30/04 225%
9/30/04 and thereafter 200%"
2.4.3. Amendment to Paragraph (ii) of Annex I. Paragraph
(ii) of Annex I is amended and restated to read in its entirety as follows:
"(ii) Consolidated Adjusted EBITDA to Consolidated Interest
Expense. For each period of four consecutive fiscal quarters of the
Company, Consolidated Adjusted EBITDA shall equal or exceed the
percentage set forth in the table below of Consolidated Interest
Expense.
Quarter Ending Percentage
-------------- ----------
9/30/03 60%
12/31/03 80%
3/31/04 70%
6/30/04 and 9/30/04 100%
12/31/04 and thereafter 150%"
2.4.4 Amendment to Paragraph (v) of Annex I. Paragraph
(v) of Annex I is amended and restated to read in its entirety as follows:
"(v) Income or Loss from Continuing Operations. Net loss
from continuing operations (excluding, in all events, net income
relating to Janus Flooring Corporation) of the Company and its
Subsidiaries reporting Congoleum on the equity method shall not
exceed $500,000 in the fiscal quarter of the Company ending December
31, 2003. Net income from continuing operations (excluding, in all
events, net income relating to Janus Flooring Corporation) of the
Company and its Subsidiaries reporting Congoleum on the equity method
shall equal or exceed $1.00 in at least one of any two consecutive
fiscal quarters of the Company for any two consecutive fiscal
quarters of the Company ending March 31, 2004 and thereafter."
2.4.5. Amendment to the Definition of "Consolidated
Adjusted EBITDA" Contained in Annex I. The definition of "Consolidated
Adjusted EBITDA" contained in Annex I is amended by replacing the reference to
"June 30, 2004" contained therein with "December 31, 2004".
3. Representations and Warranties. Each of the Company and the
Guarantor jointly and severally represents and warrants as follows:
3.1. Legal Existence, Organization, Authorization. Each of the
Company, the Guarantor, ABTRE, Inc. ("ABTRE"), Aimpar, Inc. ("Aimpar"),
American Biltrite Intellectual Properties, Inc. ("ABIP"), Ocean State Jewelry,
Inc. ("OSJ"), American Biltrite Far East, Inc. ("ABFE"), Ideal Tape Co., Inc.
("Ideal"), 425 Dexter Associates, L.P. ("Dexter") and Majestic Jewelry, Inc.
("Majestic", and together with the Company, the Guarantor, ABTRE, Aimpar,
ABIP, OSJ, ABFE, Ideal and Dexter, the "Credit Parties") is duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its organization, with all power and authority, corporate, limited liability
company, partnership or otherwise, necessary (as is applicable to each) (a) to
enter into and perform this Amendment and the Amended Note Agreement and (b)
to own its properties and carry on the business now conducted or proposed to
be conducted by it. Each of the Credit Parties has taken all corporate,
limited liability company, partnership or other action (as is applicable to
each) required to make the provisions of this Amendment and the Amended Note
Agreement the valid and enforceable obligations they purport to be.
3.2. Enforceability. Each Credit Party has duly authorized,
executed and delivered this Amendment. This Amendment will, upon execution, be
the legal, valid and binding obligation of each Credit Party, enforceable
against each Credit Party in accordance with its terms, except to the extent
that such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors rights generally and by general equitable principles (regardless of
whether enforcement is considered in a proceeding in equity or at law).
3.3. No Legal Obstacle to Agreements. Neither the execution,
delivery or performance of this Amendment, nor the performance of the Amended
Note Agreement, nor the consummation of any other transaction referred to or
contemplated by this Amendment, nor the fulfillment of the terms hereof, has
constituted or resulted in or will constitute or result in:
(a) any breach or termination of any Material Agreement;
(b) the violation of any law, judgment, decree or governmental
order, rule or regulation applicable to the Company or any of its
Restricted Subsidiaries;
(c) the creation under any agreement, instrument, deed or lease
of any Lien upon any of the assets of the Company or any of its
Restricted Subsidiaries (other than the Liens created pursuant to the
Security Agreement); or
(d) any redemption, retirement or other repurchase obligation
of the Company or any of its Restricted Subsidiaries under any
charter, by-law, agreement, instrument, deed or lease.
No approval, authorization or other action by, or declaration to or filing
with, any governmental or administrative authority or any other Person is
required to be obtained that has not been obtained or made that has not been
made by the Company or any of its Restricted Subsidiaries in connection with
the execution, delivery and performance of this Amendment or the performance
of the Amended Note Agreement, or the consummation of the transactions
contemplated hereby or thereby, except for any filings which may be required
pursuant to the federal securities laws and regulations.
3.4. Defaults. Immediately before and after giving effect to
the amendments set forth in paragraph 2 hereof, no Default will exist.
3.5. Incorporation of Representations and Warranties. The
representations and warranties set forth in paragraph 8 of the Amended Note
Agreement are true and correct on the date hereof as if originally made on and
as of the date hereof, except (a) to the extent that any such representations
or warranties speak as of an earlier date, in which case they shall be true
and correct as of such earlier date, (b) for any exhibits or schedules to the
Note Agreement, which exhibits and schedules shall be true and correct as of
the date of the Note Agreement, (c) the Security Agreement creates a Lien in
favor of the Collateral Agent on behalf of the Lenders and the Noteholders (in
each case, as defined therein) and (d) except as disclosed by the Company in
any filing with the Securities and Exchange Commission.
4. Conditions. The effectiveness of this Amendment shall be subject
to the satisfaction of the following conditions, which conditions must be
satisfied no later than January 29, 2004 or this Amendment shall terminate:
4.1. Officer's Certificate. Except, in each case as may have
occurred with respect to the dissolution or performance of Janus Flooring
Corporation, the representations and warranties of the Company and the
Guarantor set forth or incorporated by reference herein shall be true and
correct as of the Amendment Date as if originally made on and as of the
Amendment Date, except (a) to the extent that any such representations or
warranties speak as of an earlier date, in which case they shall be true and
correct as of such earlier date, (b) for any exhibits or schedules to the Note
Agreement, which exhibits and schedules shall be true and correct as of the
date of the Note Agreement and (c) except as disclosed by the Company in any
filing with the Securities and Exchange Commission; no Default shall have
occurred on or prior to the Amendment Date; and Prudential shall have received
a certificate to these effects signed by a Responsible Officer in the event
the Amendment Date occurs after the date hereof.
4.2. Proper Proceedings. This Amendment and the transactions
contemplated hereby shall have been authorized by all necessary proceedings of
the Company and the Guarantor, and each of the Company and the Guarantor shall
provide a certificate to such effect. All necessary consents, approvals and
authorizations of any governmental or administrative agency or any other
Person with respect to any of the transactions contemplated hereby shall have
been obtained and shall be in full force and effect. Prudential shall have
received copies of all documents, including certificates, records of
corporate, limited liability company, partnership or other proceedings and
opinions of counsel, which Prudential may have reasonably requested in
connection therewith, such documents where appropriate to be certified by
proper corporate, limited liability company, partnership or governmental
authorities.
4.3. Executed Agreements. Prudential shall have received a
counterpart of each of (i) this Amendment, executed by the Company and the
Guarantor and (ii) an executed copy of the amendment to the Bank Agreement, in
each case in form and substance satisfactory to Prudential.
4.4. Costs and Expenses. The Company shall have paid (i) all
costs and expenses (including attorney's fees and expenses) incurred by
Prudential through the date hereof, pursuant to statements submitted to the
Company (which statements may include estimates of time and expenses to be
incurred on and after the dates of posting of actual time and expenses set
forth therein, which estimated amounts shall be subject to subsequent
adjustment to reflect actual time and expenses subsequently posted) and (ii)
an amendment fee in the amount of $20,000.
Notwithstanding anything to the contrary contained herein, the
Company hereby acknowledges and agrees that failure of the Company to comply
with the covenants set forth above in this Section 5 by the date indicated
shall constitute an Event of Default under the Amended Note Agreement.
5. General. The Amended Note Agreement, the Security Agreement and
the Notes are each confirmed as being in full force and effect. This
Amendment, the Amended Note Agreement, the Notes, the Security Agreement, the
Consent Letter, dated as of August 1, 2003, by Prudential in favor of the
Company and the documents referred to therein constitute the entire
understanding of the parties with respect to the subject matter hereof and
thereof and supersede all prior and current understandings and agreements,
whether written or oral. This Amendment may be executed in any number of
counterparts (including by way of facsimile transmission), which together
shall constitute one instrument, and shall bind and inure to the benefit of
the parties and their respective successors and assigns. This Amendment shall
be governed by and construed in accordance with the laws of the State of New
York without regard to conflicts of law principles.
[Signature Page Follows]
Each of the undersigned has caused this Amendment to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
AMERICAN BILTRITE INC.
By /s/ Xxxxxx X. Xxxxx III
---------------------------------
Name: Xxxxxx X. Xxxxx III
Title: Vice President, Finance
K&M ASSOCIATES L.P.
By: AIMPAR, INC., its General Partner
By /s/ Xxxxxx X. Xxxxx III
---------------------------------
Name: Xxxxxx X. Xxxxx III
Title: Vice President and
Assistant Secretary
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
