EXHIBIT 10.1
SECOND AMENDMENT AGREEMENT
This SECOND AMENDMENT AGREEMENT ("Agreement") is made and entered into
as of February 14, 1997 by and between XXXXXXX XXXXX MEZZANINE CAPITAL FUND,
L.P., an Illinois limited partnership ("Xxxxx"); 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 Xxxxx, 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 Xxxxx 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 Xxxxx'x 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
Xxxxx pursuant to an Amendment Agreement of even date therewith.
C. Consistent with certain amendments proposed to be made by Eagle,
Pacific and Arrow to their credit facility with Fleet on the date hereof, the
parties hereto desire 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 Xxxxx hereunder on the date hereof,
(x) Xxxxx hereby consents to the terms of that certain First Amendment to Loan
and Security Agreement of even date herewith by and between Fleet and Eagle,
Pacific and Arrow, and (y) the parties hereto agree to amend the terms of the
Debenture Acquisition Agreement as follows:
(a) The following definition shall be inserted immediately
after the definition of "Capitalized Lease Obligations" contained in
Section 1.1 of the Debenture Acquisition Agreement:
"'Carryover Amount' shall mean (a) in respect to the
fiscal year ending December 31, 1997, Six Million Fifty
Thousand Dollars ($6,050,000), less the amount of Capital
Expenditures made in the fiscal year of Borrower ending
December 31, 1996 and (b) in respect to subsequent fiscal
years, the amount of permitted Capital Expenditures (without
giving effect to any Carryover Amount) for the previous two
fiscal years minus the amount of Capital Expenditures made in
such fiscal years."
(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 and
Guarantors 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 ($50,000)
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 and
Guarantors 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 1.45 to 1
January 1 to June 30 3.15 to 1
January 1 to September 30 4.05 to 1
January 1 to December 31 2.15 to 1"
(c) Sections 5.2(d) and (w) of the Debenture Acquisition
Agreement shall be deleted in their entirety and replaced with the
following:
"(d) Restriction on Operating Leases. Borrower and
Guarantors shall not become liable for in any way whether
directly or indirectly, by assignment or as guarantor or other
surety for the obligations of the lessee under, any Operating
Lease, unless immediately after giving effect to the
incurrence of liability with respect to such lease, the
aggregate amount of all rental and all other payments under
such Operating Lease and all other Operating Leases of
Borrower and Guarantors in the aggregate at the time in effect
during any current or future period of 12 consecutive months
does not exceed $900,000.
(w) Capital Expenditures. Neither Borrower nor any
Guarantor shall, 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
Guarantors 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 $1,650,000 plus the
each subsequent fiscal year Carryover Amount"
Notwithstanding anything to the contained to the contrary in the Debenture
Acquisition Agreement, Lender acknowledges that Borrower and Guarantors
contemplate making certain Capital Expenditures or other expenditures in
connection with the construction of a new facility in Salt Lake City, Utah.
Lender further acknowledges and consents to any sale and leaseback transaction
entered into in connection with such improvements, provided that such sale and
leaseback transaction do not cause Borrower and Guarantors to violate any other
covenants contained in the Debenture Acquisition Agreement.
3. Performance of the Company's Obligations. On the date hereof:
(a) Eagle shall pay to Xxxxx in cash, by wire transfer to the
account specified in Section 2.5 of the Debenture Acquisition Agreement
all accrued Fixed Interest as defined in and payable pursuant to the
Debenture through and including the date hereof; and
(b) EPII shall deliver to Xxxxx a certificate (the form and
substance of which are satisfactory to Xxxxx and its counsel), signed
by the secretary or an assistant secretary of EPII, certifying as to
(i) 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, (ii) specimens of the
true signatures of such officers, on which Xxxxx may conclusively rely,
and (iii) the truth and correctness of documents and instruments
executed and/or delivered in connection herewith and therewith.
4. Affirmation of Guarantee. EPII, Pacific and Arrow hereby acknowledge
that the Debenture Acquisition Agreement is being amended hereby and hereby also
acknowledges and affirms that (a) their respective Guarantees are in full force
and effect and the liability of each of EPII, Pacific and Arrow as Guarantors
therewith continue in accordance with the terms thereof and are in no way
affected or impaired by such amendment to the Debenture Acquisition Agreement,
(b) Xxxxx'x agreement to such amendment is in Xxxxx'x sole discretion, (c) Xxxxx
is not required to provide notice to anyone of such amendment and (d) Xxxxx'x
provision of such notice to each of EPII, Pacific and Arrow, as guarantors,
shall not operate as a waiver of Xxxxx'x right to agree to further amendments in
their sole discretion without notice to each of EPII, Pacific and Arrow or any
other person that is or shall be a guarantor of the Company's obligations under
the Debenture Acquisition Agreement.
5. Representations and Warranties of the Company. As a further
inducement for Xxxxx to consent to an amendment of the Company's senior
indebtedness by Fleet, the Company hereby represents and warrants to Xxxxx 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 AExchange
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. Xxxxx 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
amendment of the Company's senior indebtedness by Fleet on the date hereof and
(c) Borrower's failure during its 1996 fiscal year to comply with its limitation
on Capital Expenditures (as defined in the Debenture Acquisition Agreement) as
set forth in Section 5.2(t) of the Debenture Acquisition Agreement.
7. Miscellaneous.
(a) Further Assurances. The Company shall, from time to time
at the request of Xxxxx, do all further acts and things as may in the
opinion of Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx, to:
Xxxxxxx Xxxxx Mezzanine Capital Fund, L.P.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
with copy to:
Altheimer & Xxxx
00 X. Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxxx, Esq.
and Xxxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
If to the Company, to:
c/o Eagle Pacific Industries, Inc.
0000 Xxxxxxx Xxxxxx
000 X. 0xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
with copy to:
Xxxxxxxxxx & Xxxxx, P.A.
1100 International Centre
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxx Xxxxxx, Esq.
Telecopy: (000) 000-0000
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:___________________________________________
Title:________________________________________
EAGLE PACIFIC INDUSTRIES, INC.
By:___________________________________________
Title:________________________________________
PACIFIC PLASTICS, INC.
By:___________________________________________
Title:________________________________________
ARROW PACIFIC PLASTICS, INC.
By:___________________________________________
Title:________________________________________
XXXXXXX XXXXX MEZZANINE CAPITAL FUND, L.P.
By: Xxxxxxx Xxxxx Mezzanine Capital Partners,
L.P., its general partner
By:______________________________________
A General Partner
