EXHIBIT 10.8
THIRD AMENDMENT
TO
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT (this "amendment") dated as of February 23, 1998 is
entered into by and among PEN-TAB INDUSTRIES, INC., a Delaware corporation (the
"Borrower"), PEN-TAB HOLDINGS, INC. (formerly known as Pen Tab Industries,
Inc.), a Virginia corporation (the "parent"), and BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION (as successor by merger to Bank of America Illinois)
(the "Bank").
WITNESETH
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WHEREAS, THE Borrower, the Parent and the Bank are parties to a certain
Second Amended and Restated Loan and Security Agreement dated as of February 4,
1997, as amended and modified through the date hereof (herein called the "Credit
Agreement"; terms used but not otherwise defined herein are used herein as
defined in the Credit Agreement);
WHEREAS, the Borrower and the Parent have requested that the Credit
Agreement be retroactively amended in certain respects; and
WHEREAS, subject to the terms and conditions set forth herein, the Bank is
willing to so amend the Credit Agreement.
NOW, THEREFORE, in consideration of the premises, and intending to be
legally bound hereby, the Borrower, the Parent and the Bank hereby agree as
follows:
SECTION 1. AMENDMENTS.
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Upon receipt of the documents and fees to be deliverd by the Borrower
pursuant to Section 2 below and in reliance on the Borrower's and the Parent's
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warranties set forth in Section 3 below, as of December 31, 1997 the Credit
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Agreement is amended as follows:
(a) The title page and the preamble to the Credit Agreement are bereby
amended by deleting each reference therein to "Bank of America Illinois" and in
its place substitutiong "Bank of America National Trust and Savings Association
(as successor by merger to Bank of America Illinois)".
(b) The pricing matrix set forth in the definition of "Applicable Margin"
set forth in Section 1.1 of the Credit Agreement is hereby amended to read in
its entirety as set forth on Annex I hereto.
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(c) The definition of "Termination Date" in Section 1.1 of the Credit
Agreement is hereby amended to read in its entirety as follows:
"Termination Date" means February 3, 1999.
(d) Section 9.7(3) of the Credit Agreement is hereby amended by (i)
deleting the word "and" between clauses "(a) and "(b)" thereto and (ii) adding
to the end of such section immediately before the semicolon the following new
language:
", and (c) with computations showing as of the last day of such month, for
the four consecutive fiscal quarter period then ended, the ratio of (i)
Consolidated EBITDA minus Consolidated Capital Expenditures, to (ii)
Consolidated Fixed Changes."
(e) Section 1.1 of the Credit Agreement is hereby amended by adding the
following new definition in appropriate alphabetical order:
""Vinylweld" means Vinylweld, L.L.C., a Delaware limited liability
company."
(f) Section 3.10 of the Credit Agreement is hereby amended by (i)
renumbering paragraph "(2)" of such section to be paragraph "(3)" and (ii)
adding a new paragraph "(2)" immediately after paragraph "(1)" which reads in
its entirety as follows:
"(2)" The Borrower agrees to pay to the Bank a letter of credit fee for
each performance stand-by Letter of Credit in an amount equal to 1.0% per
annum of the undrawn face amount of each such performance stand-by Letter of
Credit, such fee to be payable in arrears on each Interest Payment Date."
(g) Section 10.2(7) of the Credit Agreement is hereby deleted and in its
place is substituted the following:
"(7)" Debt of Vinylweld of the type described in clause (6) of Section
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10.8; and
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(8) Other unsecured Debt of a type not otherwise permitted pursuant to the
preceding clauses (1) through (7) in an aggregate amount not to exceed
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$250,000."
(h) Section 10.7 of the Credit Agreement is hereby amended by (i) deleting
the word "and" between clauses "(3)" and "(4)" therefore and (ii) adding to the
end of such section immediately before the period the following new language:
"and (5) the transfer by Borrower to Vinylweld of all of the existing assets
of the Borrower's Vinylweld division in exchange for the issuance by
Vinylweld to Borrower as of such date of not less than 80% of the membership
units of Vinylweld"
(i) Section 10.8 of the Credit Agreement is hereby amended by adding at the
end of such section immediately before the period the following new language:
"; and (6) loans, advances and capital contributions by the Borrower to, and
acquisitions by the Borrower of, capital stock of Vinylweld, provided, that
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(a) the aggregate amount of all such investments actually made by the
Borrower to Vinylweld (including the fair market value of all tangible
assets transferred by the Borrower to Vinylweld as a capital contribution or
otherwise) at any time outstanding shall in no event exceed $4,000,000 and
(b) at all times during which such investments remain outstanding Vinylweld
shall be a Subsidiary of the Borrower, provided, further, that the Borrower
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may accept from Vinylweld a promissory note issued by Vinylweld in the
principal amount of up to $5,000,000 if the consideration for the issuance
of such note does not include the transfer of funds or tangible assets from
the Borrower to Vinylweld."
(j) Section 10.11 of the Credit Agreement is hereby amended by adding at the
end of such section immediately before the period the following new language:
"and the creation of Vinylweld"
(k) Section 11.1 of the Credit Agreement is amended to read in its entirety
as follows:
"Section 11.1. Debt Service Coverage Ratio. Not permit, as at December 31,
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1998, for the four consecutive fiscal quarter period then ended, the ratio
of (a) Consolidated EBITDA minus Consolidated Capital Expenditures, to (b)
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Consolidated Fixed Charges to be less than 1.30:1."
(1) Section 11.2 of the Credit Agreement is amended to read in its entirety
as follows:
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"Section 11.2. Consolidated EBITDA. Not permit, at the end of any fiscal
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quarter set forth below, for the four consecutive fiscal quarter period then
ended, Consolidated EBITDA to be less than the minimum amount set forth below
opposite such fiscal quarter:
Fiscal Quarter Consolidated
Ending EBIDTA
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December 31, 1997 $10,000,000
March 31, 1998 8,800,000
June 30, 1998 10,500,000
September 30, 1998 13,000,000
SECTION 2. CONDITIONS PRECEDENT.
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Concurrently herewith the Borrower has paid the Bank a non-refundable
amendment fee of $7,500 and has delivered to the Bank the following, duly
executed and appropriately dated and in form and substance satisfactory to the
Bank:
(a) Counterparts of this Amendment duly executed by the Borrower and the
Parent; and
(b) Such other documents as the Bank may reasonably request.
SECTION 3. WARRANTIES.
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To induce the Bank to enter into this Amendment, the Borrower and the
Parent warrant to the Bank as of the date hereof that:
(a) After giving effect to this Amendment, all representations and
warranties contained in the Credit Agreement and the Loan Documents are true and
correct in all material respects on and as of the date hereof (except to the
extent such representations and warranties expressly refer to an earlier date).
(b) After giving effect to this Amendment, no Default or Event of Default
has occurred and is continuing.
(c) The execution, delivery and performance by the Borrower and the Parent
of this Amendment have been duly authorized by all necessary corporate and other
action and do not and will not require any registration with, consent or
approval of, notice to or action by, any Person (including any Governmental
Authority) in order to be effective and enforceable. The Credit Agreement as
modified by this Amendment constitutes
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the legal, valid and binding obligations of the Borrower and the Parent,
enforceable against them in accordance with its terms, without defense,
counterclaim or offset.
SECTION 4. GENERAL.
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(a) As hereby modified, the Credit Agreement shall remain in full force
and effect and is hereby ratified, approved and confirmed in all respects.
(b) The Borrower and the Parent each acknowledge and agree that the
execution and delivery by the Bank of this Amendment shall not be deemed to
create a course of dealing or otherwise obligate the Bank to execute similar
waivers under the same or similar circumstances in the future.
(c) This Amendment shall be binding upon and shall inure to the benefit of
the Borrower, the Parent and the Bank and their respective successors and
assigns.
(d) This Amendment may be executed in any number of counterparts and by
the different parties on separate counterparts, and each such counterpart shall
be deemed to be an original, but all such counterparts shall together constitute
but one and the same Amendment.
* * * * * *
Delivered at Chicago, Illinois, as of the date and year first above written.
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
PEN-TAB INDUSTRIES, INC., a
Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
PEN-TAB HOLDINGS, INC. (formerly
known as Pen-Tab Industries, Inc.)
a Virginia Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
ANNEX I
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Offshore
Rate Base Rate
Debt Service Applicable Applicable
Tier Coverage Ratio Margin Margin
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I Less than 1.50:1 2.25% 0.75%
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II Greater than or equal 2.00% 0.50%
to 1.50:1 but less
than 1.75:1
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III Greater than or equal 1.75% 0.25%
to 1.75:1 but less
than 2.25:1
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IV Greater than or equal 1.50% 0.00%
to 2.25:1 but less
than 4.75:1
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V Greater than or equal 1.25% 0.00%
to 3.25:1 but less
than 4.75:1
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VI Greater than equal to 1.00% 0.00%
4.75:1
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