AMENDMENT NO. 12 TO RATIFICATION AND AMENDMENT AGREEMENT AND AMENDMENT NO. 14 TO LOAN AND SECURITY AGREEMENT
Exhibit
10.8
AMENDMENT
NO. 12 TO RATIFICATION AND AMENDMENT AGREEMENT AND
AMENDMENT NO. 14 TO LOAN AND
SECURITY AGREEMENT
AMENDMENT
NO. 12 TO RATIFICATION AND AMENDMENT AGREEMENT AND AMENDMENT NO. 14 TO LOAN AND
SECURITY AGREEMENT, dated as of June 9, 2009 (this
“Twelfth Ratification Amendment”), by and among CONGOLEUM CORPORATION, a
Delaware corporation, as debtor and debtor-in-possession (“Borrower”), CONGOLEUM
FISCAL, INC., a New York corporation, as debtor and debtor-in-possession
(“CFI”), CONGOLEUM SALES, INC., a New York corporation, as debtor and
debtor-in-possession (“CSI” and together with CFI, collectively, “Guarantors”
and each individually, a “Guarantor”), and WACHOVIA BANK, NATIONAL ASSOCIATION,
successor by merger to Congress Financial Corporation
(“Lender”).
W I T N E S S E T H:
WHEREAS,
Lender, Borrower and Guarantors have entered into financing arrangements
pursuant to which Lender may make loans and advances and provide other financial
accommodations to Borrower as set forth in the Loan and Security Agreement,
dated December 10, 2001, between Lender and Borrower, as amended by
Amendment No. 1 to Loan and Security Agreement, dated September 19, 2002,
between Lender and Borrower, Amendment No. 2 to Loan and Security Agreement,
dated as of February 27, 2003, among Lender, Borrower and Guarantors, and as
further amended and ratified by the Ratification and Amendment Agreement, dated
as of January 7, 2004 (the “Ratification Agreement”), between Lender and
Borrower, as acknowledged by Guarantors, Amendment No. 1 to Ratification
Agreement and Amendment No. 3 to Loan and Security Agreement, dated as of
December 14, 2004, between Lender and Borrower, as acknowledged by Guarantors,
Amendment No. 2 to Ratification Agreement and Amendment No. 4 to Loan and
Security Agreement, dated as of January 13, 2005, between Lender and Borrower,
as acknowledged by Guarantors, Amendment No. 3 to Ratification Agreement and
Amendment No. 5 to Loan and Security Agreement, dated as of June 7, 2005,
between Lender and Borrower, as acknowledged by Guarantors, Amendment No. 4 to
Ratification Agreement and Amendment No. 6 to Loan and Security Agreement, dated
as of December 19, 2005, as acknowledged by Guarantors, Amendment No. 5 to
Ratification Agreement and Amendment No. 7 to Loan and Security Agreement, dated
as of September 27, 2006 between Lender and Borrower, as acknowledged by
Guarantors, Amendment No. 6 to Ratification Agreement and Amendment No. 8 to
Loan and Security Agreement, dated as of November 27, 2006 between Lender and
Borrower, as acknowledged by Guarantors, Amendment No. 7 to Ratification
Agreement and Amendment No. 9 to Loan and Security Agreement dated as of June
12, 2007 between Lender and Borrower, as acknowledged by Guarantors, Amendment
No. 8 to Ratification and Amendment Agreement and Amendment No. 10 to Loan and
Security Agreement dated as of December 11, 2007, between Lender and Borrower,
as acknowledged by Guarantors, Amendment No. 9 to Ratification and Amendment
Agreement and Amendment No. 11 to Loan and Security Agreement dated as of June
4, 2008, between Lender and Borrower, as acknowledged by Guarantors, Amendment
No. 10 to Ratification and Amendment Agreement and Amendment No. 12 to Loan and
Security Agreement dated as of October 6, 2008, between Lender and Borrower, as
acknowledged by Guarantors, and Amendment No. 11 to Ratification and Amendment
Agreement and
Amendment
No. 13 to Loan and Security Agreement dated as of March 16, 2009, between Lender
and Borrower, as acknowledged by Guarantors, permitting debtor and
debtor-in-possession financing for Borrower and Guarantors, as the same now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or
replaced (all of the foregoing, as amended hereby and as the same may
hereafter be further amended, modified, supplemented, extended, renewed,
restated or replaced, collectively, the “Loan Agreement”, and together with all
agreements, documents and instruments at any time executed and/or delivered in
connection therewith or related thereto, including the Reaffirmation and
Amendment of Guarantor Documents, dated as of January 7, 2004, between Lender
and Guarantors, as from time to time amended, modified, supplemented, extended,
renewed, restated or replaced, collectively, the “Financing
Agreements”);
WHEREAS,
Borrower and each Guarantor have each commenced a case (collectively, the
“Cases”) under Chapter 11 of Title 11 of the United States Code in the United
States Bankruptcy Court for the District of New Jersey (the “Court”) and have
each retained possession of its assets and is authorized under the Bankruptcy
Code to continue the operation of its businesses as a
debtor-in-possession;
WHEREAS,
the Financing Agreements are currently scheduled to expire on June 30,
2009;
WHEREAS,
Borrower and Guarantors have requested that Lender (i) extend the expiration of
the Financing Agreements through and including December 31, 2009, and (ii) make
certain other amendments to the Loan Agreement, and Lender is willing to agree
to such request, subject to the terms and conditions contained
herein;
WHEREAS,
by this Twelfth Ratification Amendment, Lender, Borrower and Guarantors desire
and intend to evidence such amendments;
WHEREAS,
this Twelfth Ratification Amendment has been filed with the Bankruptcy Court and
notice thereof has been served upon all parties that have requested notice in
the Borrower’s and Guarantors’ bankruptcy cases pursuant to the Final Order
(1) Authorizing Debtors’ Use of Cash Collateral, (2) Authorizing Debtors to
Obtain Post-Petition Financing, (3) Granting Senior Liens and Priority
Administrative Expense Status Pursuant to 11 U.S.C. §§105 and 364(c), (4)
Modifying the Automatic Stay Pursuant to 11 U.S.C. §362, and (5) Authorizing
Debtors to Enter Into Agreements with Congress Financial Corporation (as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, the “Final DIP Financing Order”), which was approved by the Bankruptcy
Court on February 2, 2004;
WHEREAS, no objection has been filed by
any interested party to the terms and conditions of this Twelfth Ratification Amendment and Borrower and
Guarantors are authorized to execute and deliver this Twelfth Ratification Amendment in accordance
with the terms of the Final DIP Financing Order; and
NOW,
THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Lender, Borrower and
Guarantors hereby covenant, warrant and agree as follows:
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1. DEFINITIONS.
1.1
Additional
Definition. “Twelfth Ratification Amendment” shall mean this
Twelfth Ratification Amendment, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or
replaced.
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1.2 Amendments
to Definitions in Financing
Agreements.
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(a) All references to the term
“Financing Agreements” in this Twelfth Ratification Amendment and in any of the
Financing Agreements shall be deemed and each such reference is hereby amended
to include, in addition and not in limitation, this Twelfth Ratification
Amendment, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(b) All
references to the term “Ratification Agreement” in this Twelfth Ratification
Amendment and in any of the Financing Agreements shall be deemed and each such
reference is hereby amended to mean the Ratification Agreement, as amended
hereby, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.3 Interpretation. For
purposes of this Twelfth Ratification Amendment, unless otherwise defined
herein, all capitalized terms used herein, including, but not limited to, those
terms used and/or defined in the recitals above, shall have the respective
meanings assigned to such terms in the Loan Agreement.
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2. AMENDMENTS TO LOAN
AGREEMENT
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2.1 Minimum
EBITDA. Section 9.23(c) of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
(a) Borrower
and its Subsidiaries shall not, for any period set forth below during fiscal
year 2009 of Borrower and its Subsidiaries commencing on or after April 1, 2009
(each, a “Test Period”), permit EBITDA of Borrower and its Subsidiaries to be less than the
respective amount set forth below opposite such Test Period; provided, that,
Borrower and its Subsidiaries shall not be required to comply with this Minimum
EBITDA covenant in the event Excess Availability (including any Excess
Availability considered in satisfaction of Section 9.18) on each Business Day
during the Test Period is greater than $5,000,000. In the event (A)
Excess Availability (including any Excess Availability considered in
satisfaction of Section 9.18) is less than $5,000,000 (x) on any Business Day up
to a maximum of three (3) Business Days during the period from the effective
date of this Twelfth Ratification Amendment through June 30, 2009 or (y) on any
Business Day up to a maximum of four (4) Business Days for the ninety (90) day
period ending on December 31, 2009, and (B) Borrower and its Subsidiaries are in
possession of at least $3,000,000 of unrestricted cash during any day that
Excess Availability (including any Excess Availability considered in
satisfaction of Section 9.18) is less than $5,000,000, then Borrower and its
Subsidiaries shall not be required to comply with the terms of this Minimum
EBITDA covenant for such Test Period:
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Test
Period
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Minimum
EBITDA
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For
the two (2) months ending May 31, 2009
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$250,000
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For
the three (3) months ending June 30, 2009
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$400,000
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For
the four (4) months ending July 31, 2009
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$400,000
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For
the five (5) months ending August 31, 2009
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$520,000
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For
the six (6) months ending September 30, 2009
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$730,000
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For
the seven (7) months ending October 31, 2009
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$1,000,000
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For
the eight (8) months ending November 30, 2009
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$1,000,000
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For
the nine (9) months ending December 31, 2009
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$700,000”
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2.2 Term.
(a) The
first sentence of Section 12.1(a) of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
“This Agreement and the other Financing
Agreements shall become effective as of the date set forth on the first page
hereof and shall continue in full force and effect for a term ending on the
earlier of (i) December 31, 2009 and (ii) the date the plan of reorganization in
the Borrower’s and Guarantors’ bankruptcy cases, as confirmed by the Bankruptcy
Court, becomes effective (such earlier date, the “Termination
Date”).”
(b) Section
12.1(c)(iii) of the Loan Agreement is hereby amended by deleting the reference
to “June 30, 2009” and replacing it with “December 31, 2009”.
2.3 Acknowledgement.
As
of the date hereof, Borrower and Guarantors acknowledge that the entry of the
Order of Dismissal Effective Twenty Days from the Date of This Order, dated
February 26, 2009 (the “Dismissal Order”) and the Order Granting Stay Pending
Appeal, dated March 3, 2009 the “Stay Order”) constitute a violation of Section
10.1(v) of the Loan Agreement, which violation Lender has not waived, presently
does not intend to waive and may never waive and nothing herein or the
amendments contemplated hereby, and no failure, delay or course of dealing in
exercising such rights shall be construed as a waiver of any such rights or
remedies. Notwithstanding the foregoing, Lender has agreed to forbear
until August 14, 2009 from exercising its rights and remedies provided that the
stay of the Dismissal Order remains in full force and effect and no other
Default or Event of Default or act, condition or event which with notice or
passage of time or both would constitute an Event of Default exists or has
occurred.
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3. COVENANT MODIFICATION AND
AMENDMENT FEE. In addition to and not in limitation of all
other fees, costs and expenses payable to Lender under the Financing Agreements,
in consideration of this Twelfth Ratification Amendment, Borrower shall pay
Lender a monthly extension fee (the “Monthly Extension Fee”) in the amount of
$15,000 a month, which Monthly Extension Fee shall be fully earned and payable
upon the first day of each month on and after the date hereof through and
including the earlier of December 1, 2009, or, upon the indefeasible payment in
full of all Obligations under the Financing Agreements, and a covenant
modification and extension fee (the “Covenant Modification and Extension Fee”)
in the amount of $25,000, which will be fully earned and payable upon approval
of this Twelfth Amendment. All Monthly Extension Fees and/or the
Covenant Modification and Extension Fee may be charged directly to
the loan account of Borrower.
4. ADDITIONAL REPRESENTATIONS,
WARRANTIES AND COVENANTS. In addition to the continuing
representations, warranties and covenants heretofore made in the Loan Agreement
or otherwise and hereafter made by Borrower and Guarantors to Lender, whether
pursuant to the Financing Agreements or otherwise, and not in limitation
thereof, Borrower and Guarantors hereby represent, warrant and covenant with, to
and in favor of Lender the following (which shall survive the execution and
delivery of this Agreement), the truth and accuracy of which, or compliance
with, to the extent such compliance does not violate the terms and provisions of
the Bankruptcy Code, being a continuing condition of the making of loans by
Lender:
4.1 This
Twelfth Ratification Amendment has been duly authorized, executed and delivered
by Borrower and Guarantors and the agreements and obligations of Borrower and
Guarantors contained herein constitute legal, valid and binding obligations of
Borrower and Guarantors enforceable against Borrower and Guarantors in
accordance with their respective terms.
4.2 Except
as set forth above, no Default or Event of Default or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default exists or has occurred as of the date of this Twelfth Ratification
Amendment.
5. CONDITIONS
PRECEDENT. In addition to any other conditions contained
herein or in the Loan Agreement, as in effect immediately prior to the date
hereof, with respect to the Loans, Letter of Credit Accommodations and other
financial accommodations available to Borrower (all of which conditions, except
as modified or made pursuant to this Twelfth Ratification Amendment shall remain
applicable to the Loans and be applicable to Letter of Credit Accommodations and
other financial accommodations available to Borrower), the following are
conditions to Lender’s obligation to extend further loans, advances or other
financial accommodations to Borrower pursuant to the Loan
Agreement:
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5.1 Borrower
and Guarantors shall execute and/or deliver to Lender this Twelfth Ratification
Amendment, and all other Financing Agreements that Lender may request to be
delivered in connection herewith, in form and substance satisfactory to
Lender;
5.2 No
trustee, examiner or receiver or the like shall have been appointed or
designated with respect to Borrower or any Guarantor, as debtor and
debtor-in-possession, or its business, properties and assets;
5.3 Borrower
and Guarantors shall execute and/or deliver to Lender all other Financing
Agreements, and other agreements, documents and instruments, in form and
substance satisfactory to Lender, which, in the good faith judgment of Lender
are necessary or appropriate and implement the terms of this Twelfth
Ratification Amendment and the other Financing Agreements, as modified pursuant
to this Twelfth Ratification Amendment, all of which contains provisions,
representations, warranties, covenants and Events of Default, as are reasonably
satisfactory to Lender and its counsel;
5.4 Each
of Borrower and Guarantors shall comply in full with the notice and other
requirements of the Bankruptcy Code, the applicable Federal Rules of Bankruptcy
Procedure, and the terms and conditions of the Final DIP Financing Order in a
manner acceptable to Lender and its counsel;
5.5 No
objection has been filed by any interested party to the terms and conditions of
this Twelfth Ratification Amendment and Borrower and Guarantors are authorized,
in accordance with the terms of the Final DIP Financing Order, to execute,
deliver, comply with and fully be bound by this Twelfth Ratification Amendment;
and
5.6 Except
as set forth above, no Default or Event of Default shall be continuing under any
of the Financing Agreements, as of the date hereof.
6. MISCELLANEOUS.
6.1 Amendments and
Waivers. Neither this Twelfth Ratification Amendment nor any
other instrument or document referred to herein or therein may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought.
6.2 Further
Assurances. Each of Borrower and Guarantors shall, at its
expense, at any time or times duly execute and deliver, or shall cause to be
duly executed and delivered, such further agreements, instruments and documents,
and do or cause to be done such further acts as may be necessary or proper in
Lender’s opinion to evidence, perfect, maintain and enforce the security
interests of Lender, and the priority thereof, in the Collateral and to
otherwise effectuate the provisions or purposes of this Twelfth Ratification
Amendment, any of the other Financing Agreements or the Financing
Order.
6.3 Headings. The
headings used herein are for convenience only and do not constitute matters to
be considered in interpreting this Twelfth Ratification Amendment.
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6.4 Counterparts. This
Twelfth Ratification Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which shall together
constitute one and the same agreement.
6.5 Additional Events of
Default. The parties hereto acknowledge, confirm and agree
that the failure of Borrower or any Guarantor to comply with any of the
covenants, conditions and agreements contained herein or in any other agreement,
document or instrument at any time executed by Borrower or any Guarantor in
connection herewith shall constitute an Event of Default under the Financing
Agreements.
6.6 Effectiveness. This
Twelfth Ratification Amendment shall become effective upon the execution hereof
by Lender.
IN
WITNESS WHEREOF, the parties hereto have caused this Twelfth Ratification
Amendment to be duly executed as of the day and year first above
written.
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WACHOVIA BANK, NATIONAL
ASSOCIATION,
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successor
by merger to Congress Financial Corporation
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By: /s/
Xxxx X. Xxxxxx
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Title: Managing
Director
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CONGOLEUM
CORPORATION,
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as Debtor and
Debtor-in-Possession
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By: Xxxxxx
X. Xxxxx III
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Title: CFO
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CONGOLEUM SALES,
INC.,
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as Debtor and
Debtor-in-Possession
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By: Xxxxxx
X. Xxxxx III
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Title: VP
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CONGOLEUM FISCAL,
INC.,
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as Debtor and
Debtor-in-Possession
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By: Xxxxxx
X. Xxxxx III
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Title: VP
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