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THIRD AMENDMENT TO CREDIT AGREEMENT
Dated as of June 19, 2001
Between
LILY CUPS INC.
as Borrower
and
GENERAL ELECTRIC CAPITAL CANADA INC.
as Lender
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TABLE OF CONTENTS
RECITALS.......................................................................1
Section 1 - INTERPRETATION.....................................................1
1.1 Definitions....................................................1
1.2 Incorporation into Existing Credit Agreement...................1
Section 2 - REPRESENTATIONS AND WARRANTIES.....................................1
2.1 Representations and Warranties.................................1
Section 3 - AMENDMENTS TO ANNEX A OF THE EXISTING CREDIT AGREEMENT -
DEFINITIONS....................................................................2
3.1 Amended Definitions............................................2
3.2 Additional Definitions.........................................3
Section 4 - AMENDMENT TO SECTION 1 OF THE EXISTING CREDIT AGREEMENT - AMOUNT AND
TERMS OF CREDIT................................................................3
4.1 Amendment to Section 1.1(2)(b) - Term Loan.....................3
4.2 Amendment to Section 1.5 - Interest and Applicable Margins.....4
4.3 Amendment to Section 1.9 - Fees................................5
Section 5 - AMENDMENT TO ANNEX G (SECTION 6.9) TO CREDIT AGREEMENT - FINANCIAL
COVENANTS......................................................................5
5.1 Amendment of Paragraph (1) - Maximum Capital Expenditures......5
5.2 Amendment of Paragraph (2) - Minimum Fixed Charge Coverage
Ratio..........................................................6
Section 6 - conditions precedent...............................................6
6.1 Effective Third Amendment......................................6
Section 7 - POST CLOSING MATTERS...............................................7
7.1 Searches in Respect of Borrower and the Mortgaged Property.....7
Section 8 - MISCELLANEOUS......................................................7
8.1 Amendment of Existing Credit Agreement; Reaffirmation of Loan
Documents......................................................7
8.2 Reservation of Rights and Remedies.............................7
8.3 Severability...................................................7
8.4 Parties........................................................8
8.5 A Loan Document................................................8
8.6 Credit Agreement...............................................8
8.7 Section Titles.................................................8
8.8 Governing Law..................................................8
8.9 Time of the Essence............................................9
8.10 Counterparts...................................................9
(i)
THIRD AMENDMENT TO CREDIT AGREEMENT
THIRD AMENDMENT TO CREDIT AGREEMENT, dated as of June 19, 2001 (this "Third
Amendment"), between LILY CUPS INC., an Ontario corporation ("Borrower"), and
GENERAL ELECTRIC CAPITAL CANADA INC., a Canada corporation, as Lender.
RECITALS
A. Borrower and Lender are parties to a Credit Agreement dated as of June 15,
1998, as amended by a First Amendment to Credit Agreement (the "First
Amendment") dated as of June 28, 1999 and a Second Amendment to Credit Agreement
(the "Second Amendment") dated as of November 15, 1999 (collectively, the
"Existing Credit Agreement").
B. Borrower has requested that Lender increase each of the Revolving Term Loan
Commitment and the Term Loan Commitment by Five Million Dollars ($5,000,000) and
extend the Commitment Termination Date to June 15, 2004.
C. Lender has agreed to Borrower's request upon the terms and subject to the
conditions set forth in this Third Amendment.
FOR VALUE RECEIVED, the parties agree as follows:
Section 1 - INTERPRETATION
1.1 Definitions
In addition to the defined terms appearing above, capitalized terms
used in this Third Amendment have (unless otherwise provided elsewhere in this
Third Amendment) the meanings given to them in the Existing Credit Agreement and
the term "Effective Date" has the meaning given to that term in Section 0 of
this Third Amendment.
1.2 Incorporation into Existing Credit Agreement
The Existing Credit Agreement and this Third Amendment shall be read
together and shall have the effect as if all the provisions of such agreements
were contained in one instrument.
Section 2 - REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties
Borrower makes the following representations and warranties to Lender,
each and all of which shall survive the execution and delivery of this Third
Amendment:
(1) each representation and warranty of Borrower contained in each Loan
Document is true and correct in all material respects on and as of the Effective
Date except to the extent that any such representation or warranty relates
solely to an earlier date and except for changes therein expressly permitted or
contemplated by any Loan Document;
(2) the execution, delivery and performance by Borrower of this Third
Amendment are (a) within Borrower's corporate power; (b) have been duly
authorized by all necessary corporate and shareholder action; (c) are not in
contravention of any provision of Borrower's constating documents or by-laws;
(d) do not violate any law or regulation, or any order or decree of any court or
Governmental Authority; (e) do not conflict with or result in the breach or
termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any indenture, mortgage, deed of
trust, lease, agreement or other instrument to which Borrower is a party or by
which Borrower or any of its property is bound; (f) do not result in the
creation or imposition of any lien upon any of the property of Borrower;
and (g) do not require the consent or approval of any Governmental Authority
or any other Person;
(3) this Third Amendment has been duly executed and delivered by Borrower
and each of this Third Amendment and the Existing Credit Agreement, as amended
by this Third Amendment, constitutes a legal, valid and binding obligation of
Borrower, enforceable against it in accordance with its terms; and
(4) after giving effect to this Third Amendment, no Default or Event of
Default has occurred and is continuing.
Section 3 - AMENDMENTS TO ANNEX A OF THE EXISTING CREDIT AGREEMENT - DEFINITIONS
3.1 Amended Definitions
On and after the Effective Date, the definitions of "Commitments",
"Commitment Termination Date", "Revolving Loan Commitment" and "Term Loan
Commitment", contained in Annex A of the Existing Credit Agreement, are amended
as follows:
(1) the definition of "Commitments" is amended and restated as follows:
"(31) Commitments shall mean the aggregate of the Revolving Loan
Commitment and the Term Loan Commitment, which aggregate commitment
shall be Twenty Million Dollars ($20,000,000) on the Closing Date and
Thirty Million Dollars ($30,000,000) on June 19, 2001, as such
Commitments may be reduced, amortized or adjusted from time to time in
accordance with the Agreement."
(2) paragraph (a) of the definition of "Commitment Termination Date" is
amended and restated as follows:
"June 15, 2004"
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(3) the definition of "Revolving Loan Commitment" is amended and restated
as follows:
"(113) Revolving Loan Commitment shall mean the commitment of Lender to
make Revolving Credit Advances, which commitment shall be Ten Million
Dollars ($10,000,000) on the Closing Date, and Fifteen Million Dollars
($15,000,000) on June 19, 2001; and, provided that no Default or Event
of Default has occurred and is continuing, such commitment shall be
increased by an amount equal to the principal amount of the Term Loan
that Borrower prepays or repays from time to time, as such amount may
be further adjusted, if at all, from time to time in accordance with
the Agreement. For greater certainty, at no time shall the sum of the
Revolving Loan Commitment and the Term Loan Commitment exceed Thirty
Million Dollars ($30,000,000)."
(4) the definition of "Term Loan Commitment" is amended and restated as
follows:
"(123) Term Loan Commitment shall mean the commitment of Lender to make
the Term Loan, which commitment shall be Ten Million Dollars
($10,000,000) on the Closing Date and increased by Five Million Dollars
($5,000,000) to Fifteen Million Dollars ($15,000,000) on June 19, 2001,
as such Term Loan Commitment may be reduced, amortized or adjusted from
time to time in accordance with the Agreement."
3.2 Additional Definitions
On and after the Effective Date, the following definitions are hereby
added to Annex A of the Existing Credit Agreement in the applicable alphabetical
order in such Annex:
"Net Worth shall mean, with respect to any Person as of any date of
determination, the book value of the assets of such Person, minus (a)
reserves applicable thereto, and minus (b) all of such Person's
liabilities on a consolidated basis (including accrued and deferred
income taxes), all as determined in accordance with GAAP."
"Tangible Net Worth shall mean, with respect to any Person at any date,
the Net Worth of such Person at such date, excluding, however, from the
determination of the total assets at such date, (a) all goodwill,
capitalized organizational expenses, capitalized research and
development expenses, trademarks, trade names, industrial designs,
copyrights, patents, patent applications, licenses and rights in any
thereof, and other intangible items, (b) all unamortized debt discount
and expense, (c) treasury Stock, and (d) any write-up in the book value
of any asset resulting from a revaluation thereof."
Section 4 - AMENDMENT TO SECTION 1 OF THE EXISTING CREDIT AGREEMENT - AMOUNT AND
TERMS OF CREDIT
4.1 Amendment to Section 1.1(2)(b) - Term Loan
On and after the Effective Date, Section 1.1(2)(b) of the Existing
Credit Agreement is amended and restated as follows:
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"(b) Borrower shall repay to Lender the principal amount of the
Term Loan in twenty-three (23) consecutive quarterly
installments on the first day of February, May, August and
November of each year, commencing November 1, 1998, as
follows:
Payment Date Installment Amount
November 1, 1998 $357,143
February 1, 1999; May 1, 1999; $357,143
August 1, 1999; November 1, 1999
February 1, 2000; May 1, 2000; $357,143
August 1, 2000; November 1, 2000
February 1, 2001; May 1, 2001 $357,143
August 1, 2001; November 1, 2001 $535,714
February 1, 2002; May 1, 2002; $535,714
August 1, 2002; November 1, 2002
February 1, 2003; May 1, 2003; $535,714
August 1, 2003; November 1, 2003
February 1, 2004; May 1, 2004; $535,714
Notwithstanding the foregoing, the aggregate outstanding principal
balance of the Term Loan shall be due and payable to Lender in full for
value on the Commitment Termination Date, if not sooner paid in full."
4.2 Amendment to Section 1.5 - Interest and Applicable Margins
On and after the Effective Date, Section 1.5 of the Existing Credit
Agreement is amended and restated by substituting "1.75%" for "2.25%" in
paragraph (a) and by substituting "2.00%" for "2.50%" in paragraph (b).
For greater certainty, the amounts of interest that have accrued at the
interest rates applicable under Section 1.5(1) of the Existing Credit Agreement
prior to the Effective Date shall not be affected by the foregoing amendments to
Section 1.5 of the Existing Credit Agreement (i.e. those amendments shall not
apply retroactively for the purpose of calculating interest payable on the next
Interest Payment Date).
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4.3 Amendment to Section 1.9 - Fees
(1) On and after the Effective Date, Section 1.9(2) of the Existing Credit
Agreement is amended and restated as follows:
"(2) As additional compensation for Lender's Revolving Loan
Commitment, Borrower agrees to pay to Lender, in arrears, on the first
Business Day of each month prior to the Commitment Termination Date and
on the Commitment Termination Date, a fee for Borrower's non-use of
available funds in an amount equal to the sum of:
(a) three eighths of one percent (.375%) per annum (calculated
on the basis of a 365 day year for actual days elapsed) of the
difference between (x) the average for the period for which
such fee is due of the daily Borrowing Base, less, $500,000
and (y) the average of the daily closing balances of the
Revolving Loan outstanding during such period; plus
(b) one eighth of one percent (.125%) per annum (calculated on
the basis of a 365 day year for actual days elapsed) of the
difference between (x) the Maximum Amount determined as of the
last day of the period for which such fee is due and (y) the
average for such period of the daily Borrowing Base, less,
$500,000.
(2) On and after the Effective Date, Section 1.9(5) of the Existing Credit
Agreement is amended and restated as follows:
"(5) If Borrower terminates the Revolving Loan Commitment prior to the
fourth anniversary of the Closing Date, whether voluntarily or
involuntarily and whether before or after acceleration of the
Obligations, Borrower shall pay to Lender, as liquidated damages and
compensation for the costs of being prepared to make funds available
hereunder, $300,000. Notwithstanding the foregoing, no prepayment fee
shall be payable by Borrower upon a mandatory prepayment made pursuant
to Section 1.3(2); provided, that Borrower does not permanently reduce
the Revolving Loan Commitment upon any such prepayment and, in the case
of prepayments made pursuant to Section 1.3(2)(b) or 1.3(2)(c), the
transaction giving rise to the applicable prepayment is expressly
permitted under Section 6".
Section 5 - AMENDMENT TO ANNEX G (SECTION 6.9) TO CREDIT AGREEMENT - FINANCIAL
COVENANTS
5.1 Amendment of Paragraph (1) - Maximum Capital Expenditures.
On and after the Effective Date, paragraph (1) of Annex G to the Credit
Agreement is deleted and replaced with the following:
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"(1) Maximum Capital Expenditures. Borrower shall not make Capital
Expenditures during the following periods that exceed in the aggregate
the amounts set forth opposite each of such periods:
Period Maximum Capital Expenditures per Period
------ ---------------------------------------
1998 Fiscal Year $7,800,000
1999 Fiscal Year $7,350,000
2000 Fiscal Year $2,000,000
2001 Fiscal Year $2,500,000
2002 Fiscal Year $2,500,000
2003 Fiscal Year $2,500,000
Nine (9) consecutive Fiscal $2,000,000
Months ending June 30,
2004
; provided, however, that the amount of permitted Capital Expenditures
referenced above will be increased in any period by the positive amount
equal to the amount (if any), equal to the difference obtained by
taking the Capital Expenditures limit specified above for the
immediately prior period minus the actual amount of any Capital
Expenditures expended during such prior period (the "Carry Over
Amount"), and for purposes of measuring compliance herewith, the Carry
Over Amount shall be deemed to be the first amount spent on Capital
Expenditures in that succeeding year."
5.2 Amendment of Paragraph (2) - Minimum Fixed Charge Coverage Ratio.
On and after the Effective Date, paragraph (2) of Annex G to the Credit
Agreement is deleted and replaced with the following:
"(2) Minimum Tangible Net Worth. Borrower shall maintain at all times
Tangible Net Worth equal to or greater than $11,746,500, which
maintenance, for the purpose of Annex E, shall be calculated as of the
last day of each Fiscal Month."
Section 6 - conditions precedent
6.1 Effective Third Amendment
This Third Amendment shall become effective on the date on which the
following conditions precedent are satisfied (the "Effective Date"):
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(1) Execution and Delivery of Third Amendment. This Third Amendment, or
counterparts hereof, shall have been duly executed by, and delivered to,
Borrower and Lender.
(2) Execution and Delivery of Revolving Note. Lender shall have received
from Borrower a duly executed Revolving Note substantially in the form of
Exhibit 1.1(1)(b) to the Existing Credit Agreement, evidencing the increased
amount of the Revolving Loan Commitment.
(3) Execution and Delivery of Term Note. Lender shall have received from
Borrower a duly executed Term Note substantially in the form of Exhibit 1.1(2)
to the Existing Credit Agreement, evidencing the increased amount of the Term
Loan Commitment.
(4) Delivery of Legal Opinion by Borrower's Counsel. Lender shall have
received from Borrower's counsel a legal opinion in form and substance
satisfactory to Lender, acting reasonably.
Section 7 - POST CLOSING MATTERS
7.1 Searches in Respect of Borrower and the Mortgaged Property
Borrower agrees to deliver to Lender and its counsel, XxXxxxxx Xxxxx,
on or before July 19, 2001 the results of appropriate searches showing no
outstanding work orders, realty taxes or executions which could adversely affect
title to 0000 Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxx.
Section 8 - MISCELLANEOUS
8.1 Amendment of Existing Credit Agreement; Reaffirmation of Loan Documents
The Existing Credit Agreement has not been amended except pursuant to
the First Amendment, the Second Amendment and this Third Amendment, and the
Existing Credit Agreement, as amended by this Third Amendment, is in full force
and effect. Borrower hereby reaffirms each Loan Document.
8.2 Reservation of Rights and Remedies
Lender reserves all of its rights to proceed to enforce its rights and
remedies at any time and from time to time in connection with any and all
Defaults and Events of Default now existing or hereafter arising.
8.3 Severability
Wherever possible, each provision of this Third Amendment shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Third Amendment shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Third Amendment.
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8.4 Parties
This Third Amendment shall be binding upon, and enure to the benefit
of, Borrower and Lender and their respective successors and permitted assigns.
8.5 A Loan Document
For greater certainty, Borrower acknowledges that this Third Amendment
constitutes a Loan Document.
8.6 Credit Agreement
Each reference to "Credit Agreement" or "Agreement" contained in each
Loan Document shall be a reference to the Existing Credit Agreement, as amended
by this Third Amendment, without further amendment to any Loan Document.
8.7 Section Titles
The section titles and table of contents contained in this Third
Amendment are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of this Third Amendment.
8.8 Governing Law
In all respects, including all matters of construction, validity and
performance, this Third Amendment shall be governed by, and construed and
enforced in accordance with, the laws of the Province of Ontario applicable to
contracts made and performed in that province and the laws of Canada applicable
therein. Borrower hereby consents and agrees that the courts located in the
Province of Ontario shall have non-exclusive jurisdiction to hear and determine
any claims or disputes between Borrower and Lender pertaining to this Third
Amendment or to any matter arising out of or relating to this Third Amendment;
provided, that nothing in this Third Amendment shall be deemed or operate to
preclude Lender from bringing suit or taking other legal action in any other
jurisdiction to realize on the Collateral or any other security for the
Obligations or to enforce a judgment or other court order. Borrower expressly
submits and consents in advance to such jurisdiction in any action or suit
commenced in any such court and each party hereby waives any objection which
that party may have based upon lack of personal jurisdiction, improper venue or
forum non conveniens and hereby consents to the granting of such legal or
equitable relief as is deemed appropriate by such court. Borrower hereby waives
personal service or process issued in any such action or suit and agrees that
service of process may be delivered in the manner set out in Section 11.10 of
the Existing Credit Agreement and that service so delivered shall be deemed
completed upon the date of receipt thereof or, if such date is not a Business
Day, on the next following Business Day.
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8.9 Time of the Essence
Time shall be of the essence of every provision of this Third
Amendment.
8.10 Counterparts
This Third Amendment may be executed in any number of separate
counterparts, which shall collectively constitute one agreement.
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The parties have executed this Agreement.
LILY CUPS INC. , as Borrower
By:
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Name: Xxxxx Xxxxx
Title: Vice-President, Finance
GENERAL ELECTRIC CAPITAL CANADA INC. ,
as Lender
By:
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Name:
Duly Authorized Signatory
