EXHIBIT 7.8
AGREEMENT DATED OCTOBER 3, 1995, BETWEEN SPINNAKER INDUSTRIES, INC., A DELAWARE
CORPORATION ("SPINNAKER"), AND XXXXX CORPORATION, AN INDIANA CORPORATION
("XXXXX").
WHEREAS Spinnaker requires loans from ALCO Standard Corporation ("ALCO")
aggregating approximately $25,000,000 (the Loans"), in order to close the
acquisition of its Central Products business; and
WHEREAS ALCO is only willing to make the Loans if (i) Spinnaker agrees
to repurchase the Loans from ALCO if ALCO, upon at least 15 days prior
notice, exercises on or shortly after January 1, 1996, its right to put the
Loans to Spinnaker (the "Put"), which Put would be payable on or shortly
after January 31, 1996, (ii) if Xxxxx agrees to provide funds for Spinnaker
to pay for the Put and (iii) Xxxxx agrees to guarantee the Loans, which
guarantees will terminate if ALCO does not exercise the Put on or shortly
after January 1, 1996.
NOW, THEREFORE, in consideration of the mutual promises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged and to induce Xxxxx to agree (i) to provide funds on or shortly
after January 31, 1996, for Spinnaker to pay for the Put and (ii) to guarantee
the Loans, which guarantees will terminate if ALCO does not exercise the Put on
or shortly after January 1, 1996, the parties agree as follows:
1. As compensation for Xxxxx agreeing to guarantee the Loans, Spinnaker
will pay Xxxxx a fee of 1/2 of 1% per month of the principal amount to be
guaranteed, commencing October 3, 1995, and with a minimum payment of $150,000.
2. The Xxxxx loan to Spinnaker, if made, shall be represented by a demand
note with interest of 1 1/3 % per month for the first month (with a minimum
payment of $375,000), 2% per month for the second month and 2 1/2% per month
thereafter. The Xxxxx guarantees and loan to Spinnaker (including the demand
note) will be secured by (i) second security interests in the stock of Xxxxx-
Bridge Industries, Inc. ("B-B"), and Central Products Acquisition Corp. ("CPC"),
owned by Spinnaker (to the extent permitted by the holders of the first security
interests) and (ii) first liens on any indebtedness of B-B (or its subsidiaries)
and CPC (or its subsidiaries) to Spinnaker or its other subsidiaries. Spinnaker
will provide Xxxxx with prompt notice of the 15 days prior notice of exercise
received by Spinnaker from ALCO (or its assignee) and all other related notices
received by Spinnaker. Spinnaker has represented to Xxxxx that the holder of
the first security interest on the B-B stock has signed off orally that it would
consent to the granting of a second security interest to Xxxxx, and Xxxxx has
relied on that representation. Spinnaker will use its best efforts to obtain
the consent of the holder of the first security interest on the CPC stock. If
notwithstanding its best efforts Spinnaker cannot obtain the necessary consents
to the second liens on B-B and/or CPC stock, or the terms of the second liens
are not
reasonably satisfactory to Xxxxx, Spinnaker will, so long as Xxxxx is committed
to loan funds to Spinnaker or the demand note has not been paid in full, (i) not
give a security interest therein to any other person, (ii) give Xxxxx the right
on behalf of Spinnaker to refinance on such terms as may be required the debt of
the holder of the first security interest in order to have Spinnaker pay it off,
(iii) give Xxxxx'x conditional (a) second security interest in the stock in the
event the holder of the first security interest subsequently permits it and (b)
first security interest in the stock in the event the holder of the first
security interest is paid off, (iv) give Xxxxx a power of attorney to instruct
the holder of the first security interest to deliver the stock as collateral to
Xxxxx in the event such holder is paid off and (v) give Xxxxx such other
collateral, security, and support as Xxxxx may xxxx reasonably appropriate in
order to borrow the funds necessary to make the loan to Spinnaker or to get
another person to fund Spinnaker's obligation to honor the Put. Spinnaker
further represents to Xxxxx that the Xxxxxx Finance loan may be prepaid at any
time without penalty. Xxxxx shall have the right to assign the demand note, the
security interest and/or the related rights set forth in this Section 2.
3. To further document the parties' agreement, appropriate documents
reflecting the above, including without limitation, (i) an agreement by Xxxxx to
loan funds to Spinnaker, (ii) the demand promissory note, and (iii) any security
agreements and related agreements and documents, shall be prepared and executed
as soon as
possible; provided, however, that notwithstanding the fact that such agreements
have not been executed, Section 1 and 2 (and all other provisions of this
Agreement) are binding upon execution of this document.
4. Spinnaker shall pay all of Xxxxx'x reasonable out-of-pocket expenses,
including without limitation reasonable attorneys fees and any fees and expenses
paid by Xxxxx to obtain commitments for the funds necessary to loan to Spinnaker
whether or not such commitments are used by Xxxxx or Spinnaker.
5. This Agreement shall be governed by the internal law of the State of
Delaware.
IN WITNESS WHEREOF, the parites have executed this Agreement as of the date
first above written.
SPINNAKER INDUSTRIES, INC. XXXXX CORPORATION
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
---------------------- -----------------------
Xxxxxxx X. Xxxxx Chief Financial Officer
Chairman
