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Exhibit 4.3 (b)
August 20, 1997
Outlook Group Corp.
Outlook Label Systems, Inc.
Outlook Foods, Inc.
Outlook Packaging, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxx 00000
Re: Waiver of and Amendment No. 3 to Loan and Security Agreement
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Ladies/Gentlemen:
Reference is hereby made to that certain Loan and Security Agreement, dated as
of November 5, 1996, as amended prior to the date hereof (as so amended, the
"Loan Agreement"), and executed by and among Outlook Group Corp. (the
"Parent"), Outlook Label Systems, Inc. ("Outlook Label"), Outlook Foods, Inc.
("Outlook Foods"), and Outlook Packaging, Inc. ("Outlook Packaging"; the
Parent, Outlook Label, Outlook Foods and Outlook Packaging being herein
collectively called the "Borrowers" and individually called a "Borrower"), and
BankAmerica Business Credit, Inc. (the "Lender"). Certain capitalized terms
used herein and not otherwise defined shall have the meaning attributed to them
in the Loan Agreement.
The Lender and the Borrowers hereby agree as follows:
1. The Borrowers have provided the Lender with financial information which
reflects that the following Events of Default have occurred under the Loan
Agreement: (a) the Fixed Charge Coverage Ratio for the three consecutive
fiscal quarter period ended May 31, 1997 was 1.16 to 1.0, which was less
than the minimum Fixed Charge Coverage Ratio required under Section 10.21
of the Loan Agreement of 1.20 to 1.0; and (b) the Adjusted Tangible Net
Worth as of May 31, 1997 was $32,833,000, which was less than the Adjusted
Tangible Net Worth required under Section 10.23 of the Loan Agreement of
$35,000,000.
Subject to the conditions set forth in Paragraph 3 below, the Lender
hereby waives the foregoing Events of Default with the understanding that
the waivers are only applicable and shall only be effective in the
specific instance and for the
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Exhibit 4.3 (b)
specific purpose for which given and for the specific period made. The
waivers are expressly limited to the facts and circumstances referred to
herein and shall not operate (a) as a waiver of or consent to
non-compliance with any other sections of the Loan Agreement, (b) as a
waiver of, or a restriction on or prejudice with respect to, any right,
power or remedy of the Lender under the Loan Agreement, or (c) as a waiver
of or consent to any other Event of Default or Event under the Loan
Agreement.
2. The Loan Agreement is hereby amended as follows:
a. The definition of "Adjusted Tangible Assets" appearing in Section 1 of
the Loan Agreement is hereby amended and restated to read in its
entirety as follows:
"Adjusted Tangible Assets" means all of the Borrowers'
consolidated assets except: (a) goodwill; (b) assets of any
Borrower constituting Intercompany Accounts; (c) fixed assets
to the extent of any write-up in the book value thereof
resulting from a revaluation effective after the Closing
Date; and (d) promissory notes payable to any Borrower,
including (i) promissory notes taken by such Borrower in
payment of an Account, and (ii) that certain promissory note
dated May 12, 1997 made by Barrier Films Corporation in favor
of the Parent in the face principal amount of $2,300,000.
b. The definition of "Fixed Charges" appearing in Section 1 of the Loan
Agreement is hereby amended and restated to read in its entirety as
follows:
"Fixed Charges" means as to the Borrowers on a
consolidated basis, for any fiscal period, the sum of (i)
interest expenses paid or payable in cash; (ii) scheduled
installments of principal paid or payable with respect to
Debt for borrowed money and Capital Leases; (iii) that
portion of Capital Expenditures not financed by borrowings
from third parties; (iv) income taxes paid or payable in
cash; and (v) scheduled increases in the IRB Reserve of
$142,857 per fiscal quarter.
c. Subparagraph (b) of Section 3.1 of the Loan Agreement is hereby
amended and restated to read in its entirety as follows:
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Exhibit 4.3 (b)
(b)(i) The "Revolver Reference Margin" and "Revolver
LIBOR Margin" mean per annum rates of interest charged in
addition to the applicable Reference Rate or LIBOR Rate with
respect to Revolving Loans. On the effective date of the
Waiver and Amendment No. 3 to this Agreement, the Revolver
Reference Margin and Revolver LIBOR Margin shall equal
three-quarters of one percent (0.75%) and two and
three-quarters percent (2.75%) respectively. Commencing
with the first day of the month following the Lender's
receipt of the Borrowers' financial statements for the
fiscal quarter ending August 31, 1997, and prospectively, on
the first day of each month following the Lender's receipt
of the Borrowers' financial statements for each fiscal
quarter thereafter, the Revolver Reference Margin and
Revolver LIBOR Margin shall be subject to adjustment (up or
down) based on the following grid:
If Borrowers' The Revolver The Revolver
Fixed Charge Reference LIBOR
Coverage Ratio is Margin is Margin is
Greater than 1.50 to 1.0 0.00% 2.00%
Less than or equal to
1.50 to 1.0, but greater
than 1.30 to 1.0 0.25% 2.25%
Less than or equal to
1.30 to 1.0, but greater
than 1.20 to 1.0 0.50% 2.50%
Less than or equal to
1.20 to 1.0, but greater
than 1.10 to 1.0 0.75% 2.75%
Less than or equal to
1.20 to 1.0 1.00% 3.00%
(ii) The "Term Reference Rate Margin" and "Term LIBOR
Margin" mean per annum rates of interest charged in addition
to the applicable Reference Rate or LIBOR Rate with respect
to Term Loans. On the effective date of the Waiver and
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Exhibit 4.3(b)
Amendment No. 3 to this Agreement, the Term Reference Rate
Margin and Term LIBOR Margin shall equal one and one-quarter
percent (1.25%) and three and one-quarter percent (3.25%),
respectively. Commencing with the first day of the month
following the Lender's receipt of the Borrowers' financial
statements for the fiscal quarter ending August 31, 1997,
and, prospectively, on the first day of each month following
the Lender's receipt of the Borrowers' financial statements
for each fiscal quarter thereafter, the Term Reference Rate
Margin and Term LIBOR Margin shall be subject to adjustment
(up or down) based on the following grid:
If Borrowers' The Revolver The Revolver
Fixed Charge Reference LIBOR
Coverage Ratio is Margin is Margin is
Greater than 1.50 to 1.0 0.50% 2.50%
Less than or equal to
1.50 to 1.0, but greater
than 1.30 to 1.0 0.75% 2.75%
Less than or equal to
1.30 to 1.0, but greater
than 1.20 to 1.0 1.00% 3.00%
Less than or equal to
1.20 to 1.0, but greater
than 1.10 to 1.0 1.25% 3.25%
Less than or equal to
1.10 to 1.0 1.50% 3.30%
d. Section 10.19 of the Loan Agreement is hereby amended and restated to
read in its entirety as follows:
10.19 Capital Expenditures. Borrowers and their
Subsidiaries shall not make or incur any Capital Expenditure
if, after giving effect thereto, the aggregate amount of all
Capital Expenditures by Borrowers on a consolidated basis
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Exhibit 4.3 (b)
would exceed the following respective amounts in the
following respective Fiscal Years: (i) $2,500,000 for the
1998 Fiscal Year; and (ii) $3,000,000 for the 1999 Fiscal
Year and each Fiscal Year thereafter.
e. Section 10.21 of the Loan Agreement is hereby amended and restated to
read in its entirety as follows:
10.21 Fixed Charge Coverage Ratio. The Borrowers will
maintain a Fixed Charge Coverage Ratio of not less than 1.0
to 1.0 for each period of four consecutive fiscal quarters
(in each case taken as one accounting period) ending on the
last day of each fiscal quarter of the Borrowers.
f. Section 10.22 of the Loan Agreement is hereby amended and restated to
read in its entirety as follows:
10.22 Debt Ratio. The Borrowers will not permit the
ratio of Debt to Adjusted Tangible Net Worth to exceed 1.50
to 1.0 as at the last day of each fiscal quarter.
g. Section 10l.23 of the Loan Agreement is hereby amended and restated to
read in its entirety as follows:
10.23 Adjusted Tangible Net Worth. The Borrowers will
maintain Adjusted Tangible Net Worth of not less than the
following amounts during the following periods: (i)
$27,500,000 for the period from and including the last day
of the fiscal quarter ended in August, 1997 to but excluding
the last day of the fiscal quarter ended in November, 1997;
(ii) $28,000,000 for the period from and including the last
day of the fiscal quarter ended in November, 1997 to but
excluding the last day of the fiscal quarter ended in May,
1998; (iii) $29,500,000 for the period from and including
the last day of the fiscal quarter ended in May, 1998 to but
excluding the last day of the fiscal quarter ended in
February, 1999; and (iv) thereafter, increasing by the
amount of $500,000 on the last day of the third fiscal
quarter of each subsequent Fiscal Year.
3. The waivers of the Events of Default under the Loan Agreement set forth
in Paragraph 1 above and the amendments to the Loan Agreement set forth in
Paragraph 2 above shall be effective
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Exhibit 4.3 (b)
upon the Lender's receipt of all of the following, each in form and
substance satisfactory to the Lender:
a. A counterpart original of this letter agreement duly executed by the
Borrowers;
b. A photocopy of a letter or other instrument duly executed by The State
of Wisconsin Investment Board ("SWIB") relating to the Amended and
Restated Note Purchase Agreement, dated as of November 5, 1996, as
amended or otherwise modified prior to the date hereof, between the
Parent and SWIB (the "Note Purchase Agreement"), pursuant to which
SWIB shall have (i) waived the events of default that may have
occurred under the Note Purchase Agreement as a result of the
financial information described in Paragraph 1 above, and (ii) amended
the Note Purchase Agreement in a manner consistent with the amendments
to the Loan Agreement described in Paragraph 2 above; and
c. A photocopy of all such other notices, consents and/or waivers that
may be required to be delivered or obtained by the Borrowers in
connection with the occurrence of the Events of Default under the Loan
Agreement (including, without limitation, a waiver from General
Electric Capital Corporation), all of which items shall reflect any
necessary consents and/or waivers that are required to be obtained by
the Borrowers with respect to such Events of Default.
4. The Borrowers shall pay to the Lender on demand all costs and expenses that
the Lender pays or incurs in connection with the negotiation, preparation
and consummation of this letter agreement and any and all matters
incidental thereto, including, without limitation, attorneys' fees and
disbursements which shall include the allocated costs of the Lender's
in-house counsel fees and disbursements.
5. This letter agreement shall be deemed to have been made in the State of
Illinois and shall be governed by and interpreted in accordance with the
laws of such state, except that no doctrine of choice of law shall be used
to apply the laws of any other state or jurisdiction.
6. This letter agreement may be executed by one or more of the parties hereto
on any number of counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
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Exhibit 4.3(b)
7. Except to the extent expressly waived or amended herein, the Loan
Agreement and the other Loan Documents remain in full force and effect and
are each hereby ratified and confirmed.
8. This letter agreement shall become effective in accordance with its terms
upon its execution by the Lender and the Borrowers, whereupon each
reference to the Loan Agreement in the Loan Agreement and in any other
document, instrument or agreement executed and/or delivered in connection
with the Loan Agreement shall mean and be a reference to the Loan
Agreement as amended hereby.
Please evidence the agreement of the Borrowers (as borrowers and as guarantors)
with the terms of this letter agreement by signing in the spaces below.
Sincerely,
BANKAMERICA BUSINESS CREDIT, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
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Title: V.P.
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Exhibit 4.3(b)
ACCEPTED AND AGREED
this 21st day of August, 1997:
OUTLOOK GROUP CORP.
By: /s/ Xxxxxx X. Xxxxxxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxxxxxx
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Title: CFO
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OUTLOOK LABEL SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxxxxxx
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Title: CFO
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OUTLOOK FOODS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxxxxxx
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Title: CFO
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OUTLOOK PACKAGING, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxxxxxx
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Title: CFO
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