Exhibit 10.1
SEVENTH AMENDMENT AND CONSENT TO CREDIT AGREEMENT
THIS SEVENTH AMENDMENT AND CONSENT (this "Amendment"), to the
Credit Agreement dated as of October 23, 1996, among CENTRAL PRODUCTS COMPANY, a
Delaware corporation ("Central"), SPINNAKER COATING, INC., a Delaware
corporation formerly known as Xxxxx-Bridge Industries, Inc. ("Coating"),
SPINNAKER COATING-MAINE, INC., a Delaware corporation ("SCM"), ENTOLETER, INC.,
a Delaware corporation ("Entoleter" and, together with Central, Coating and SCM,
the "Borrowers"), SPINNAKER INDUSTRIES, INC., a Delaware corporation (the
"Guarantor" and, together with the Borrowers, the "Credit Parties"), each of the
financial institutions from time to time parties thereto, as lenders (the
"Lenders"), BT COMMERCIAL CORPORATION, as agent (in such capacity, the "Agent")
for the Lenders, TRANSAMERICA BUSINESS CREDIT CORPORATION, as collateral agent
(in such capacity, the "Collateral Agent"), and BANKERS TRUST COMPANY, as
issuing bank (the "Issuing Bank"), is made as of June 30, 1998 among the
Borrowers, the Guarantor, the Agent, the Collateral Agent, the Issuing Bank and
the Lenders.
W I T N E S S E T H :
WHEREAS, the Borrowers, the Guarantor, the Lenders, the Agent,
the Collateral Agent and the Issuing Bank are parties to the Credit Agreement,
dated as of October 23, 1996 (as amended by the First Amendment dated as of
December 31, 1996, the Second Amendment dated as of March 31, 1997, the Third
Amendment dated as of September 30, 1997, the Fourth Amendment dated as of
December 31, 1997, the Fifth Amendment dated as of March 17, 1998 and the Sixth
Amendment dated as of March 17, 1998 and as the same may be further amended,
supplemented or otherwise modified from time to time, the "Credit Agreement";
capitalized terms used herein shall have the meanings assigned to them in the
Credit Agreement unless otherwise defined herein); and
WHEREAS, the Guarantor intends to form Spinnaker Electrical
Tape Company, a Delaware corporation and an Unrestricted Subsidiary ("Electrical
Tape"), to acquire substantially all of the assets of the electrical tape
business of tesa tape, inc. ("tesa") pursuant to an Asset and Operations
Purchase Agreement dated as of June 19, 1998 (the "Tesa Purchase Agreement")
between tesa and Electrical Tape (as assignee of the Guarantor);
WHEREAS, the Borrowers and the Guarantor have requested the
Lenders to permit (a) the Borrowers to apply the proceeds of a $2,000,000
Revolving Loan to pay a cash dividend to the Guarantor, (b) the Guarantor to
immediately apply the proceeds of such dividend to make a capital contribution
to Electrical Tape, (c) the Guarantor to issue to tesa shares of common stock of
the Guarantor to pay up to $4,500,000 of the purchase price under the Tesa
Purchase Agreement and (d) the Guarantor to issue to tesa additional shares of
common stock of the Guarantor to the extent necessary to make payments-in-kind
of principal and interest under the Nonnegotiable Subordinated Promissory made
by Electrical Tape in favor of tesa (collectively, the "Tape Investment");
WHEREAS, the Lenders are willing to consent to the Tape
Investment, but only on the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the parties hereto hereby agree as follows:
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SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. Effective as of the
date hereof, but subject to the satisfaction of the conditions precedent set
forth in Section 3, the Credit Agreement is hereby amended as follows:
(a) Section 1.1 of the Credit Agreement is amended by
inserting the following definitions in their proper
alphabetical order:
"'Consolidated Fixed Charge Coverage Ratio' means
with respect to the Guarantor and its Restricted
Subsidiaries for any period, the ratio of (X) (i)
EBITDA for such period, less (ii) all Capital
Expenditures paid or payable by such Persons during
such period (other than Capital Expenditures financed
with (A) the proceeds of Indebtedness permitted
hereunder and (B) the Equity Proceeds Amount), to (Y)
(i) scheduled principal amounts of all Indebtedness
paid or payable by such Person in such period,
whether or not such payments are actually made (other
than (A) payments on the Line of Credit which do not
permanently reduce the Commitments, (B) payments
under the SDW Subordinated Note and (C) payments made
under the Tesa Note solely in shares of common stock
of the Guarantor), plus (ii) all interest and fees
for the use of money or the availability of money,
including commitment, facility and like fees and
charges upon Indebtedness (including Indebtedness to
the Lenders) payable by such Persons during such
period whether or not such interest or fees are
actually paid, but excluding the amortization of
deferred financing fees incurred and/or paid between
October 1996 and July 28, 1998, plus (iii) all loans
and Investments made by such Persons in or to any
other Person made during such period (other than (A)
Investments financed with the Equity Proceeds Amount
and (B) Investments made with shares of common stock
of the Guarantor), plus (iv) all cash dividends paid
or declared by the Guarantor during such period,
regardless of whether or when such dividends are
actually paid, plus (v) all cash taxes paid or
payable by such Persons during such period."
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"'Electrical Tape' means Spinnaker Electrical Tape
Company, a Delaware corporation and an Unrestricted
Subsidiary."
"'Tesa Note' means the nonnegotiable subordinated
promissory note dated July 30, 1998 made by Electrical Tape in
favor of tesa tape, Inc., as amended, supplemented or
otherwise modified from time to time."
(b) The definition of "Xxxxx Line of Credit" in Section
1.1 of the Credit Agreement is amended by deleting
"$20,000,000" and substituting therefor
"$24,000,000".
(c) The definition of "Central Line of Credit" in Section
1.1 of the Credit Agreement is amended by deleting
"$20,000,000" and substituting therefor
"$22,000,000".
(d) The definition of "Entoleter Line of Credit" in
Section 1.1 of the Credit Agreement is amended by
deleting "$5,000,000" and substituting therefor
"$1,000,000".
(e) The definition of "SCM Line of Credit" in Section 1.1
of the Credit Agreement is amended by deleting
"$15,00,000" and substituting therefor "13,000,000".
(f) Section 7.2(g) of the Credit Agreement is amended by
adding at the end thereof the following new sentence:
"The Credit Parties will not, nor will they permit
any of their Restricted Subsidiaries to, sell any
goods or render any services to Electrical Tape on
credit terms (it being understood that Electrical
Tape shall pay for any such goods or services
immediately upon its receipt thereof)."
(g) Section 7.2(r) of the Credit Agreement is amended by
(i) deleting "6,000,000" from the second place it
appears and substituting therefor "$5,000,000" and
(ii) deleting the proviso in clause (i) of such
Section and substituting therefor the following:
"provided, however, that for any six-month period
commencing with the six-month period ending June 30,
1997 (excluding the six-month period ending June 30,
1999), the Base Amount set forth above may be
increased by carrying over to any such six-month
period any portion of the Base Amount not spent in
the immediately preceding six-month period (but not
in any period prior thereto); and"
(h) Section 7.2(s) of the Credit Agreement is amended and
restated as follows:
"(s) Minimum Consolidated Net Worth. The Credit
Parties will not, on the last day of each fiscal
quarter set forth below, permit Consolidated Net
Worth to be less than the amount set forth below
opposite such quarter:
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Fiscal Quarter Ended Amount
-------------------- ------
June 30, 1998 $7,300,000
September 30, 1998 7,974,000
December 31, 1998 8,986,000
March 31, 1999 8,986,000
June 30, 1999 8,986,000
September 30, 1999 8,986,000
December 31, 1999 9,149,000
March 31, 2000 9,149,000
June 30, 2000 9,234,000
September 30, 2000 9,320,000
December 31, 2000 9,832,000
March 31, 2001 9,832,000
June 30, 2001 10,167,000
September 30, 2001 10,501,000
December 31, 2001 11,292,000
(i) Section 7.2(u) of the Credit Agreement is amended by
(i) deleting "(U) Minimum Consolidated Interest
Coverage Ratio." and substituting therefor "(U)
Minimum Consolidated Interest Coverage Ratio; Minimum
Consolidated Fixed Charge Coverage Ratio. (i)" and
(ii) adding the following at the end of such Section:
"(ii) The Credit Parties will not permit Consolidated Fixed
Charge Coverage Ratio, for each fiscal period set
forth below, to be less than the ratio set forth
below opposite such period:
Period Ratio
------ -----
July 1, 1998 through September 30, 1998 1.0:1.0
July 1, 1998 through December 31, 1998 1.0:1.0
July 1, 1998 through March 31, 1999 1.0:1.0
four fiscal quarters ended each June 30, September 30, 1.0:1.0"
December 31 and March 31 thereafter
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(j) Exhibit M to the Credit Agreement is amended and
restated in the form of Annex I hereto.
SECTION 2. CONSENT. Effective as of the date hereof, but
subject to the satisfaction of the conditions precedent set forth in Section 3,
the Agent and the Lenders hereby consent to the Tape Investment.
SECTION 3. EFFECTIVENESS; CONDITIONS PRECEDENT This Amendment
shall become effective upon the satisfaction of each of the following conditions
precedent, only if the Agent receives each of the following on or before August
31, 1998, each in form and substance satisfactory to the Agent and the
Collateral Agent:
(a) counterparts of this Amendment, duly executed by each
of the Credit Parties, the Issuing Bank, the Agent,
the collateral Agent and the Lenders;
(b) Certified copies of the resolutions of the respective
Board of Directors of the Guarantor, Central and
Coating approving this Amendment and the transactions
contemplated hereby.
(c) An opinion of Xxxxxx and Xxxxx, counsel for the
Guarantor, to the effect that the transactions
contemplated hereby do not conflict with or
constitute a default under any of the Senior Note
Documents.
(d) Evidence that the transactions contemplated by the
Tesa Purchase Agreement have closed (or will close
contemporaneously with the effectiveness of this
Amendment).
(e) A certificate signed by a duly authorized officer of
the Guarantor certifying that (i) the representations
and warranties contained in Section 4 hereof are true
and correct on and as of the date of such certificate
as though made on and as of such date, (ii) the
representations and warranties contained in Section
6.1 of the Credit Agreement are true and correct on
and as of the date of such certificate as though made
on and as of such date, except to the extent that
such representations and warranties expressly relate
solely to an earlier date (in which case such
representations and warranties shall have been true
and correct on and as of such earlier date), (iii) no
Default or Event of Default has occurred and is
continuing and (iv) no holder of any Indebtedness of
Electrical Tape or any of its Subsidiaries has or
will have any recourse to any of the assets of the
Guarantor or any of its Restricted Subsidiaries with
respect to such Indebtedness.
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(f) Revolving Notes, substantially in the form of Exhibit
A, duly executed by Central in favor of each Lender.
(g) Revolving Notes, substantially in the form of Exhibit
B, duly executed by Coating in favor of each Lender.
(h) Revolving Notes, substantially in the form of Exhibit
C, duly executed by SCM in favor of each Lender.
(i) Revolving Notes, substantially in the form of Exhibit
D, duly executed by Entoleter in favor of each
Lender.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE CREDIT
PARTIES. Each of the Credit Parties represents and warrants as follows:
(a) The execution, delivery and performance by such
Credit Party of this Amendment and the documents
delivered in connection herewith to which such Credit
Party is a party (i) are within such Credit Party's
corporate powers and authority, have been duly
authorized by all necessary corporate action and do
not contravene (A) such Credit Party's Governing
Documents, (B) any Requirement of Law applicable to
it or any of its properties or (C) any franchise,
license, permit, indenture, contract, lease,
agreement, instrument or other commitment to which it
is a party or by which it or any of its properties
are bound, (ii) will not result in a Default or an
Event of Default and (iii) will not result in or
require the creation or imposition of any Lien upon
or with respect to any property now owned or
hereafter acquired by such Credit Party (other than
Liens permitted by the Credit Agreement).
(b) This Amendment and the documents delivered in
connection herewith to which such Credit Party is a
party constitute the legal, valid and binding
obligations of such Credit Party enforceable against
such Credit Party in accordance with its terms,
except as such enforceability may be limited by
bankruptcy, insolvency or similar laws affecting
creditor's rights generally and general principles of
equity.
(c) There is no pending or, to the best of its knowledge,
threatened litigation, proceeding, inquiry or other
action seeking an injunction or other restraining
order, damages or other relief with respect to the
transactions contemplated by this Amendment, the Tesa
Purchase Agreement or the transactions contemplated
hereby and thereby or any Credit Party's other
business activities.
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(d) Since March 31, 1998 there has occurred no material
adverse change in the financial condition,
operations, assets or prospects of the Credit
Parties.
SECTION 5. REFERENCE TO AND EFFECT ON THE CREDIT DOCUMENTS.
(a) Upon the effectiveness of this Amendment, on and
after the date hereof, each reference in the Credit
Agreement to (i) "this Agreement," "hereunder,"
"hereof," "herein" and words of like import, and such
words or words of like import in each reference in
the Credit Documents, shall mean and be a reference
to the Credit Agreement as amended hereby.
(b) Except as specifically amended hereby, all of the
terms and provisions of the Credit Agreement shall
remain in full force and effect and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided
herein, operate as an amendment to or a waiver of any
right, power or remedy of the Agent or the Lenders
under any of the Credit Documents, or constitute an
amendment to or a waiver of any provision of any of
the Credit Documents.
(d) This Amendment shall be deemed to be a Credit
Document for all purposes.
SECTION 6. EXECUTION IN COUNTERPARTS; ETC. This Amendment may
be executed in counterparts each of which when so executed and delivered shall
be deemed to be an original and all of which taken together shall constitute one
and the same instrument. This Amendment and each of the other documents
delivered in connection herewith may be executed and delivered by telecopier
with the same force and effect as if the same was a fully executed and delivered
original manual counterpart.
SECTION 7. EXPENSES. The Borrowers shall, jointly and
severally, pay for all of the reasonable costs and expenses incurred by the
Agent and the Collateral Agent in connection with the transaction contemplated
by this Amendment, including, without limitation, the reasonable fees and
expenses of counsel to the Agent.
SECTION 8. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND
ENFORCEMENT OF THIS AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF (OTHER
THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized
as of the date first above written.
BORROWERS
---------
CENTRAL PRODUCTS COMPANY
By: /s/ X.X. Xxxxxxxx
----------------------------------
Name: X.X. Xxxxxxxx
Title: Vice President
SPINNAKER COATING, INC.,
formerly known as
XXXXX-BRIDGE INDUSTRIES, INC.
By: /s/ X.X. Xxxxxxxx
----------------------------------
Name: X.X. Xxxxxxxx
Title: Vice President
ENTOLETER, INC.
By: /s/ X.X. Xxxxxxxx
----------------------------------
Name: X.X. Xxxxxxxx
Title: Vice President
SPINNAKER COATING-MAINE, INC.
By: /s/ X.X. Xxxxxxxx
----------------------------------
Name: X.X. Xxxxxxxx
Title: Vice President
GUARANTOR
---------
SPINNAKER INDUSTRIES, INC.
By: /s/ X.X. Xxxxxxxx
----------------------------------
Name: X.X. Xxxxxxxx
Title: Vice President, Corporate Development
[Signature page to Seventh Amendment]
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AGENT
-----
BT COMMERCIAL CORPORATION, as Agent
By: /s/ X.X. Xxxxxxxx
----------------------------------
Name: X.X. Xxxxxxxx
Title: Vice President
COLLATERAL AGENT
----------------
TRANSAMERICA BUSINESS CREDIT CORPORATION, as
Collateral Agent
By: /s/ X.X. Xxxxx
----------------------------------
Name: X.X. Xxxxx
Title: Division Credit Manager
ISSUING BANK
------------
BANKERS TRUST COMPANY, as Issuing Bank
By: /s/ X.X. Xxxxxxxx
----------------------------------
Name: X.X. Xxxxxxxx
Title: Vice President
LENDERS
-------
BT COMMERCIAL CORPORATION
By: /s/ X.X. Xxxxxxxx
----------------------------------
Name: X.X. Xxxxxxxx
Title: Vice President
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ X.X. Xxxxx
----------------------------------
Name: X.X. Xxxxx
Title: Division Credit Manager
[Signature page to Seventh Amendment]
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