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 premises 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 1/2% 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 a 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 parties have executed this Agreement as of the
date first above written.
SPINNAKER INDUSTRIES, INC. XXXXX CORPORATION
By: By:
Xxx X. Xxxxxxx, III
President
