AMENDMENT NO. 1 TO FORBEARANCE AGREEMENT
Exhibit
10.2
AMENDMENT
NO. 1 TO FORBEARANCE AGREEMENT
AMENDMENT
NO. 1 (the “Amendment”), dated as of February 14, 2008, to the
Forbearance Agreement (the “Agreement”)1 dated as of January 16,
2008 by and among
Tekni-Plex, Inc. (the “Company”), each of the Company’s subsidiaries
identified on the signature pages thereof (the “Subsidiaries”), the
Holders of the Company’s 12 3/4% Senior Subordinated Notes due 2010 (the
“Notes”) that were issued pursuant to that certain Indenture, dated as of
June 21, 2000 (as supplemented on May 6, 2002, August 22, 2002, and April 25,
2005, the “Indenture”), that are signatories thereto (each a
“Noteholder,” and collectively, the “Noteholders,” and together
with the Company, the “Parties”) and U.S. Bank National Association,
as
successor indenture trustee (the “Indenture Trustee”) under the
Indenture.
RECITALS
WHEREAS,
the parties hereto are desirous of extending the Agreement on the terms set
forth herein;
WHEREAS,
the Noteholders continue to collectively hold not less than $286,650,000 in
aggregate principal amount of the Notes, representing not less than 91% of
the
aggregate principal amount of the Notes that are outstanding, and not less
than
$184,250,000 in aggregate principal amount of the Second Lien Notes,
representing not less than 67% of the aggregate principal amount of the Second
Lien Notes that are outstanding.
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Each
capitalized term used but not
defined herein shall have the meaning ascribed to it in the Agreement (and
to
the extent not defined therein, the meaning ascribed to it in the
Indenture).
NOW
THEREFORE, in consideration of the premises and the respective covenants and
agreements set forth in this Agreement, the Parties, each intending to be
legally bound, agree as follows:
1. Forbearance. Section
1(c) of the Agreement is hereby amended and restated in its entirety as
follows:
“(c) As
used herein, the term “Forbearance Period” shall mean the period
beginning on January 17, 2008 and ending upon the occurrence of a Termination
Event. As used herein, “Termination Event” shall mean the
earliest to occur of (i) March 17, 2008; (ii) four Business Days after the
delivery by Paul, Weiss, as counsel to the Noteholder Group, to the Company
and
the Indenture Trustee of a written notice terminating the Forbearance Period
(the “Termination Notice”), which notice may be delivered at any time but
only upon or after the occurrence of any Forbearance Default (as defined below);
provided, however, that notwithstanding the foregoing, this
Agreement shall immediately terminate upon the occurrence of a Forbearance
Default under subsection (G) below, without the need for delivery of the
Termination Notice or any other notice. As used herein, the term
“Forbearance Default” shall mean: (A) the valid acceleration of
obligations arising under (i) the 8 3/4% Senior Secured Notes due 2013 (the
“Second Lien Notes”) issued pursuant to that certain indenture dated as
of November 21, 2003 (the “Second Lien Indenture”); (ii) the 10 7/8 %
Senior Secured Notes due 2012 (the “First Lien Notes”) issued pursuant to
that certain indenture dated as of June 10, 2005 (the “First Lien
Indenture”); or (iii) the Credit Agreement dated as of June 10, 2005,
between the Company, as borrower, Citicorp USA, Inc. as administrative
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agent,
General Electric Capital Corporation as syndication agent, and the lenders
and
issuers party thereto (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”); (B) the Company’s payment of
or entry into an agreement to pay the fees or expenses of any ad-hoc group
of
holders of First Lien Notes or Second Lien Notes (other than the Noteholder
Group); (C) the failure of the Company, after four business days’ written notice
from Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP (“Xxxx Xxxxx”,
together with Houlihan, Lokey, Xxxxxx & Xxxxx Capital, Inc. (“Xxxxxxxx
Xxxxx”), the “Advisors”) as counsel to the Noteholder Group alleging
such a failure, to (i) engage in good faith negotiations with the Noteholder
Group regarding a potential restructuring transaction, which determination
shall
be made by the holders of a majority in principal amount of the Notes in good
faith and their reasonable discretion or (ii) engage in good faith efforts
to
produce documentation and due diligence materials reasonably requested by the
Advisors, which determination shall be made by the holders of a majority in
principal amount of the Notes in good faith and their reasonable discretion;
(D)
the occurrence of any Event of Default other than the Interest Default; (E)
the
failure of the Company to comply with any material term, condition, covenant
or
agreement set forth in this Agreement; (F) the failure of any representation
or
warranty made by the Company under this Agreement to be true and correct in
all
material respects as of the date when made; (G) the commencement by or against
the Company or any Subsidiary that is a Significant Subsidiary as defined in
the
Indenture of a case under title 11 of the United States Code; (H) the Company
engages in any material asset sales (other than the disposition of inventory),
material sale-leaseback, or material financing transaction (including any
increase in commitment under the Credit Agreement) without
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the
consent of a majority in principal amount of the Notes held by the Noteholder
Group; (I) the Company pays any management, sponsor or consulting fees to its
preferred stockholders or their affiliates; (J) from and after February 14,
2008, the Company enters into any material amendment, restatement, supplement
or
modification to or under the Credit Agreement without the consent of a majority
in principal amount of the Notes held by the Noteholder Group (except to the
extent that such requirement that the Company obtain such consent would violate
Section 6.8 of the Credit Agreement); or (K) the failure of the Company to
deliver to the Advisors on or before February 22, 2008 a preliminary valuation
report prepared by Rothschild Inc.”
2. Limitation
on and Notice of Transfers of Notes. Section 15 of the Agreement
is hereby amended by:
(a) adding
the
following proviso at the end of the first sentence of such section:
“;
provided, however, that each of Barclays Bank, PLC, Glenview Capital
Management, LLC (and any funds for which it is an investment advisor) and Xxxxxx
Xxxxxxx & Co., Inc. may sell, assign, pledge, hypothecate or otherwise
transfer Notes (or any rights in respect thereof, including the right to vote)
held by such Noteholder as of the execution date of this Agreement, each in
an
amount of up to the amount of Notes disclosed in writing to the Advisors and
the
Company on February 14, 2008, without complying with the foregoing restrictions
or the notice requirements set forth below.”; and
(b) adding
the
following sentence at the end of such section:
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“Notwithstanding
anything contained herein to the contrary, each of Barclays Bank PLC, Glenview
Capital Management, LLC (and any funds for which it is an investment advisor)
and Xxxxxx Xxxxxxx & Co., Inc. may sell, assign, pledge, hypothecate or
otherwise transfer any Notes (or any rights in respect thereof, including the
right to vote) that such Noteholder acquired from and after February 14, 2008
from any person who is not a Noteholder, without complying with any of the
restrictions or notice requirements contained in this Section 15.”
3. Amendments. Section
6 of the Agreement is hereby amended by deleting the first sentence thereof
and
replacing it with the following sentence:
“This
Agreement constitutes the full agreement between the Parties with respect to
the
subject matter hereof, and it may not be modified or amended except by a written
instrument, signed by each of the Parties, expressing such amendment or
modification; provided, however, that any extension of this Agreement
on or after March 17, 2008 shall be effective only as to those Noteholders
that
are signatory thereto.”
4. Effectiveness. This
Amendment shall become effective on the first date on which each of the
following conditions is satisfied and evidence of its satisfaction has been
delivered to counsel to the Noteholder Group:
(a) execution
and delivery of counterparts of this Agreement by the Noteholders, the Company
and the Subsidiaries;
(b) execution
and delivery of an amendment and restatement of the Credit Agreement
substantially in the form delivered to the Advisors on February 13,
2008.
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(c) execution
and delivery of Xxxxxxxx Lokey’s engagement letter by the Company;
and
(d) payment
of
the third monthly fee of $150,000 to Xxxxxxxx Xxxxx for the period through
March
14, 2008.
This
Amendment shall be effective as to the Noteholders, the Company and the
Subsidiaries in accordance with Section 4 hereof regardless of whether the
Indenture Trustee executes this Agreement. This Amendment shall be
effective as to the Indenture Trustee upon the Indenture Trustee becoming a
signatory hereto.
5. Representations,
Warranties and Covenants.
(a) The
Company and the Subsidiaries represent, warrant and covenant as
follows:
(i) Except
for
the Interest Default, no other Default or Event of Default has occurred and
is
continuing.
(ii) The
execution, delivery and performance by the Company and the Subsidiaries of
this
Agreement:
(1) are
within
their corporate powers;
(2) have
been
duly authorized by all necessary corporate action;
(3) do
not and
will not (A) contravene their certificate of incorporation or by-laws or limited
partnership or other constituent documents, (B) violate any (i) applicable
material requirement of law or (ii) material order or decree of any governmental
authority or arbitrator applicable to them, (C) materially conflict with or
result in the breach of, or constitute a default under, or result in or permit
the termination or acceleration of, any material contractual obligation of
the
Company or the Subsidiaries, or (D) result in the creation or imposition of
any
material lien or encumbrance upon any of the material property of the Company
or
the Subsidiaries; and
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(4) do
not and
will not require the consent of, authorization by, approval of any governmental
authority.
(b) The
Noteholders represent as follows:
(i) As
of the
date hereof, based on the representations of each of the individual Noteholders,
the Noteholders, in the aggregate, hold, with all rights, including without
limitation the right to vote, not less than $286,650,000 in principal amount
of
the Notes, representing not less than 91% of the aggregate principal amount
of
the Notes outstanding.
(ii) As
of the
date hereof, based on the representations of each of the individual Noteholders,
the Noteholders, in the aggregate, hold, with all rights, including without
limitation the right to vote, not less than $184,250,000 in principal amount
of
the Second Lien Notes, representing not less than 67% of the aggregate principal
amount of the Second Lien Notes outstanding.
6. Ratification
of Liability. The Company and its Subsidiaries hereby ratify and
reaffirm all of their payment and performance obligations and obligations to
indemnify, contingent or otherwise, under the Indenture.
7. Complete
Integration; Amendments. This Amendment, together with the
Agreement – which remains in full force and effect except as expressly modified
by this Amendment – constitutes the full and final agreement between the Parties
with respect to the subject matter hereof, and may not be modified or amended
except by a written instrument, signed by each of the Parties, expressing such
amendment or modification. The Parties warrant, promise and represent
that in executing this Amendment, each Party is not relying upon any oral
representation, promise or statement made by any other Party hereto and that
each Party is not relying upon any promise, statement or representation
contained in any other written instrument.
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8. No
Other Amendments; Reservation of Rights, No Waiver. Other than as
otherwise expressly provided herein, this Amendment shall not be deemed to
operate as an amendment or waiver of, or to prejudice, any right, power,
privilege or remedy of the Noteholders or the Indenture Trustee, as applicable,
under the Indenture or applicable law, nor shall the entering into this
Amendment preclude the Noteholders from refusing to enter into any further
amendments or forbearances with respect to the Indenture. Other than
as expressly provided herein, this Amendment shall not constitute a forbearance
with respect to (i) any failure by the Company to comply with any covenant
or
other provision in the Indenture or (ii) the occurrence or continuance of any
present or future Event of Default.
9. Counterparts/Facsimile
Transmission. This Amendment may be signed in counterparts, each
of which, when taken together, shall be deemed an original. Execution
of this Amendment is effective if a signature is delivered by facsimile
transmission or electronic (e.g., “pdf”) transmission.
10. Successors
and Assigns. This Amendment shall be binding upon and inure to
the benefit of the Parties hereto and each of their respective successors,
assigns, heirs and personal representatives.
11. Authority. Any
person signing this Amendment in a representative capacity (i) represents and
warrants that he/she is authorized to sign this Amendment on behalf of the
Party
he/she represents and that his/her signature upon this Amendment will bind
the
represented Party to the terms of this Amendment, and (ii) acknowledges that
the
other Party to this Amendment has relied upon such representation and
warranty.
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12. Governing
Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its choice
of law provisions.
13. Direction
to Indenture Trustee. The Noteholders’ agreement to forbear as
provided in the Agreement as amended by this Amendment shall constitute a
direction from such Noteholders to the Indenture Trustee to similarly forbear
during the Forbearance Period as extended hereby.
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IN
WITNESS
WHEREOF, each of the Parties hereto has caused this Amendment to be duly
executed and delivered as of the date first above written.
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Tekni-Plex,
Inc.,
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By:
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/s/
Xxxxx X. Xxxxxx
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Name:
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Xxxxx
X. Xxxxxx
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Title:
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Chief
Financial Officer
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SUBSIDIARIES
PURETEC
CORPORATION
XXXXXX
HOLDINGS, INC.
TRI-SEAL
HOLDINGS, INC.
PLASTIC
SPECIALTIES AND TECHNOLOGIES, INC.
BURLINGTON
RESINS, INC.
PLASTIC
SPECIALTIES AND TECHNOLOGIES
INVESTMENTS,
INC.
DISTRIBUTORS
RECYCLING, INC.
TPI
ACQUISITION SUBSIDIARY, INC.
TP/ELM
ACQUISITION SUBSIDIARY, INC.,
collectively,
as Guarantors
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By:
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/s/
Xxxxx X. Xxxxxx
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Name:
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Xxxxx
X. Xxxxxx
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Title:
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Chief
Financial Officer
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THE
NOTEHOLDERS
AVENUE
INVESTMENTS, L.P.
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By:
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Avenue
Partners,
LLC,
its
General
Partner
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By:
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/s/
Xxxxx Xxxxxxx
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Name:
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Xxxxx
Xxxxxxx
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Title:
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Member
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AVENUE-CDP
GLOBAL OPPORTUNITIES
FUND, L.P.
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By:
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Avenue
Global Opportunities Fund
GenPar, LLC,
its
General
Partner
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By:
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/s/
Xxxxx Xxxxxxx
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Name:
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Xxxxx
Xxxxxxx
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Title:
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Member
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AVENUE
INTERNATIONAL MASTER,
L.P.
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By:
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Avenue
International Master
GenPar, Ltd.,
its
General
Partner
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By:
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/s/
Xxxxx Xxxxxxx
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Name:
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Xxxxx
Xxxxxxx
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Title:
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Member
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AVENUE
SPECIAL SITUATIONS FUND IV,
L.P.
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By:
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Avenue
Capital Partners IV, LLC,
its General Partner
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By:
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GL
Partners IV,
LLC,
its
General
Partner
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By:
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/s/
Xxxxx Xxxxxxx
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Name:
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Xxxxx
Xxxxxxx
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Title:
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Member
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AVENUE
SPECIAL SITUATIONS FUND V,
L.P.
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By:
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Avenue
Capital Partners V,
LLC,
its
General
Partner
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By:
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GL
Partners V,
LLC,
its
General
Partner
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By:
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/s/
Xxxxx Xxxxxxx
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Name:
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Xxxxx
Xxxxxxx
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Title:
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Member
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BARCLAYS
BANK, PLC
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By:
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/s/
Xxxxx Xxxxxx
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Name:
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Xxxxx
Xxxxxx
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Title:
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Managing
Director
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GLENVIEW
CAPITAL MANAGEMENT, LLC,
as
investment adviser for GCM Little Arbor Partners, L.P.,
GCM
Little Arbor Institutional Partners, L.P., and
GCM
Little Arbor Master Fund, Ltd.
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By:
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/s/
Xxxx Xxxxxxxx
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Name:
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Xxxx
Xxxxxxxx
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Title:
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Chief
Operating Officer and General Counsel
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XXXXXX
XXXXXXX & CO.,
INC
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By:
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/s/
Xxxxxx Xxxxxxx
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Name:
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Xxxxxx
Xxxxxxx
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Title:
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Managing
Director
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OAKTREE
CAPITAL MANAGEMENT, L.P.,
on
behalf of itself and certain funds and accounts managed
by
it or its affiliates
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By:
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/s/
Xxx Xxxxx
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Name:
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Xxx
Xxxxx
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Title:
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Managing
Director
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By:
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/s/
Xxxxx Xxxxxxxxx
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Name:
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Xxxxx
Xxxxxxxxx
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Title:
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Senior
Vice President
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