Exhibit 10(27)
AMERICAN BILTRITE INC.
K&M ASSOCIATES L.P.
CREDIT AGREEMENT
Amendment No. 2
This Agreement, dated as of April 13,2004 (this "Agreement"), is among
American Biltrite Inc., a Delaware corporation ("American Biltrite"), K&M
Associates L.P., a Rhode Island limited partnership ("K&M"; American Biltrite
and K&M being collectively but jointly and severally, the "Borrower"), the
Lenders under the Credit Agreement (as defined below) and Fleet National Bank,
as Agent for itself and such Lenders.
RECITALS
WHEREAS, the parties hereto entered into the Credit Agreement dated as of
October 14, 2003 (as in effect prior to giving effect to this Agreement, the
"Credit Agreement"); and
WHEREAS, American Biltrite (Canada) Ltd., which is a Subsidiary of
American Biltrite, desires to enter into a credit facility with the Canadian
Imperial Bank of Commerce ("CIBC") (the "CIBC Credit Agreement") to be dated on
or about April 30,2004 and grant to CIBC a security interest in its properties
and assets and undertake certain other obligations each as set forth in the
agreements attached hereto as Exhibit 6.7.9 (the "CIBC Security Interest"); and
WHEREAS, the Credit Agreement prohibits Subsidiaries of American Biltrite
from creating, incurring or entering into, or suffering to exist any Liens (as
defined therein) except as set forth in Section 6.7 thereof and the Security
Agreement prohibits the parties thereto from taking certain actions with respect
to the Collateral Security (as defined therein).
NOW THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto agree as follows:
The parties agree as follows:
1. Credit Agreement; Definitions. This Agreement amends the Credit
Agreement. Terms defined in the Credit Agreement as amended hereby (the "Amended
Credit Agreement") and not otherwise defined herein are used with the meaning so
defined.
2. Amendment of Credit Agreement. Effective upon the date hereof, the
Credit Agreement is amended as follows:
2.1. Section 6.7.9. The Credit Agreement is amended to include a new
Section 6.7.9, which shall read in its entirety as follows:
"6.7.9. Security interest granted by American Biltrite
(Canada) Ltd. to the Canadian Imperial Bank of Commerce
pursuant to the terms of the
agreements attached hereto as Exhibit 6.7.9 and in connection
with the credit facility to be entered into between American
Biltrite (Canada) Ltd. and the Canadian Imperial Bank of
Commerce on or about April 30, 2004."
2.2. Amendment of Section 6.8.1. Section 6.8.1 of the Credit
Agreement is amended to read in its entirety as follows:
"6.8.1. Investments of the Company and its Subsidiaries in (a)
Unrestricted Subsidiaries or (b) Persons that have become
Unrestricted Subsidiaries after the date hereof; provided,
however, that no such Investment shall involve the transfer by
the Company or the Borrower of any material assets other than
cash or capital stock of the Company; and provided, further,
that the aggregate amount of Investments in American Biltrite
(Canada) Ltd. from and after April 13,2004 shall not exceed
$500,000."
2.3. Amendment of Section 6.8.8. Section 6.8.8 of the Credit
Agreement is amended to read in its entirety as follows:
"6.8.8 Investments not otherwise provided for in this Section
6.8 in Subsidiaries other than Janus Flooring Corporation not
to exceed $500,000 in the aggregate."
2.4. Section 6.17. The Credit Agreement is amended to include a new
Section 6.17, which shall read in its entirety as follows:
"6.17. American Biltrite (Canada) Ltd. In each month, the
Company will cause American Biltrite (Canada) Ltd. to make
payments to the Company for all management or other fees
incurred during the immediately preceding month, the
outstanding amount of which shall at no point during any month
exceed $250,000. Amounts incurred during a particular month
shall be paid no later than the last day of the immediately
subsequent month."
2.5. Amendment of Section 8.1.2. Section 8.1.2 of the Credit
Agreement is amended to read in its entirety as follows:
"8.1.2. Specified Covenants. The Company or any of its
Subsidiaries shall fail to perform or observe any of the
provisions of Sections 6.5 through 6.15 and Section 6.17."
3. Consent. The Agent hereby (i) irrevocably consents to the security
interest granted by American Biltrite (Canada) Ltd. to the Canadian Imperial
Bank of Commerce
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pursuant to the terms of the agreements attached hereto as Exhibit 6.7.9 and to
the transactions contemplated thereby and (ii) waives any conflicts, breaches
and defaults, if any, under the Credit Documents attributable to the execution,
delivery and performance of such documentation.
4. Representations and Warranties. In order to induce the Agent to enter
into this Agreement, each of the Borrowers jointly and severally represents and
warrants that, immediately after giving effect to this Agreement, no Default
exists.
5. General. The Amended Credit Agreement and all of the Credit Documents
are each confirmed as being in full force and effect. This Agreement, the
Amended Credit Agreement and the other Credit Documents referred to herein or
therein constitute the entire understanding of the parties with respect to the
subject matter hereof and thereof and supersede all prior and current
understandings and agreements, whether written or oral. Each of this Agreement
and the Amended Credit Agreement is a Credit Document and may be executed in any
number of counterparts (including by way of facsimile transmission), which
together shall constitute one instrument, and shall bind and inure to the
benefit of the parties and their respective successors and assigns, including as
such successors and assigns all holders of any Credit Obligation. This Agreement
shall be governed by and construed in accordance with the laws (other than the
conflict of law rules) of The Commonwealth of Massachusetts.
[The remainder of this page intentionally has been left blank.]
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Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
AMERICAN BILTRITE INC.
By /s/ Xxxxxx X. Xxxxx III
------------------------------------
Name: Xxxxxx X. Xxxxx III
Title: Vice President and
Chief Financial Officer
K&M ASSOCIATES L.P.
By: AIMPAR, INC., its General Partner
By /s/ Xxxxxx X. Xxxxx III
------------------------------------
Name: Xxxxxx X. Xxxxx III
Title: Vice President
FLEET NATIONAL BANK, as
Agent and Lender under the Credit Agreement
By
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
Signature Page to Amendment No. 2 to Credit Agreement
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
AMERICAN BILTRITE INC.
By
------------------------------------
Name: Xxxxxx X. Xxxxx III
Title: Vice President and
Chief Financial Officer
K&M ASSOCIATES L.P.
By: AIMPAR, INC., its General Partner
By
------------------------------------
Name: Xxxxxx X. Xxxxx III
Title: Vice President
FLEET NATIONAL BANK, as
Agent and Lender under the Credit Agreement
By /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
Signature Page to Amendment No. 2 to Credit Agreement
Exhibit 6.7.9
Forms of CIBC Agreements
(Please see attached.)
[LETTERHEAD OF CIBC]
March 16th, 2004
The President
American Biltrite (Canada) Ltd.
000 Xxxx Xx.
Xxxxxxxxxx, XX
X0X 0X0
Attention of Mr. Yves Massariol, Vice-president, Finance
RE: Credit Agreement
Dear Sir:
We are pleased to advise that, at the pleasure of the Bank, the
following line of credit is approved subject to the terms and conditions recited
below:
1.0 BORROWER: American Biltrite (Canada) Ltd.
2.0 AMOUNT:
2.1 $11,000,000 Operating loans by way of overdrafts and/or bankers
acceptances an/or libor loans.
2.2 $ 4,125,000 Fixed rate Fixed term loan.
2.3 $ 750,000 Documentary letters of credits and Financial letter
of Guarantee.
2.4 $ 400,000 Forward Exchange Contracts in US Dollar.
2.5 $ 25,000 Visa Corporate Card - Sub-credit with Visa Department.
2.6 $ 1,000,000 Visa Purchasing Card - Sub-credit with Visa
purchasing Card Department.
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American Biltrite (Canada) Ltd. -Page 2- March 16th, 2004
Credit agreement
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3.0 AVAILABILITY
3.1 Operating loans are availed of:
3.1.1 by way of overdraft, such in Canadian dollars or U.S. dollars.
3.1.2 The limit is established at $11,000,000 subject that all
amounts in excess of $10 millions will be covered by
hypothecated credit balances in US (Cdn equivalent).
3.1.3 The limit will be reduced at $8,000,000 with the first of the
following events:
o Sale of the commercial property of Janus Flooring
Co. at Toronto.
o June 30th, 2004
3.1.4 by way of LIBOR loans not exceeding US $5,000,000. (Refer to
attached Schedule "A" for credit specifications.
3.1.5 By way of overdrafts in US dollars to a maximum of US
$5,000,000
3.1.6 By way of Banker's Acceptances. Outstanding face amount, at
any time, must not exceed 50% of the total limit of operating
loans. (refer to attached Schedule "B" for credit
specifications)
3.2 The lender will issue letters of credit and guarantees in Canadian
dollar and/or other foreign currencies, on behalf of the Borrower
upon being satisfied as to the purpose, terms, conditions and
beneficiary (ies) thereof and upon execution by the borrower of the
lender's usual forms in respect thereof. Any letter of credit or
Guarantee issued under this agreement shall have a term to expire of
not greater than 12 months and the aggregate will be limited to Cdn
$750,000
3.3 Forward Exchange Contracts - An uncommitted foreign facility under
which the Customer may, at CIBC's discretion, enter into one or more
spot, forward to usual foreign exchange transactions with CIBC,
subject to Customer's usual foreign exchange documentation. Credit
usage will be determined by CIBC base on the Customer's outstanding
obligations under such transactions measured in accordance with
CIBC's policies and procedures in effect from time to time.
3.4 VISA; availed of by virtue of the Corporate Visa Agreement on the
Bank's Form 1754.
3.5 VISA purchasing card: availed of by virtue of the VISA Purchasing
Card Agreement.
4.0 REPAYMENT:
4.1 It is understood that the Bank may, on demand, require immediate
payment of all amounts outstanding or accrued in connection with the
operating loan facility and may, at any time, for any reason and
without notice, cancel the undrawn portion of the facility.
4.2 Capital loans:
o To be repaid by 11 regular quarterly payments of capital to
the amount of $375,000 Cdn, plus interest.
4.3 VISA: accounts are to be maintained current at all times.
4.4 Standby Letters of Credit, as per the terms stipulated in the
letters of indemnity.
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5.0 PREPAYMENT OF CAPITAL LOANS:
5.1 No prepayment will be permitted under the fixed rate/fixed term loan
option unless authorized by the Lender, which may involve an
interest penalty.*
*A prepayment fee for full or partial prepayment equal to the
interest differential, as determined by CIBC, for the remainder of
the term of the loan.
6.0 INTEREST RATES &/OR FEES:
6.1 Operating loans:
o Canadian Dollar: Prime rate + 1.6% payable monthly
o Banker's acceptances: Ba's + 300 basis points.
o US dollar: US Prime Rate + 1.5% payable monthly.
o Libor loans: Libor plus 300 basis points.
6.2 Capital Loan: Fixed rate of 6.03 up to July 27th, 2006
6.3 For documentary letters of credits: See Annex "C" for the fees.
For Financial Standby Letters of Guarantees, fees are 1% per year
(minimum: $250.00), plus out of pocket expenses.
6.4 Loan administration fees: $300.00 payable monthly.
6.5 Renewal fees: $5,000. payable at the acceptation of this offer of
renewal.
7.0 SECURITY
7.1 The whole account will be secured by:
o Movable hypothec for a principal amount of $25,000,000 to be
registered for $28,750,000 creating in favour of CIBC a first
ranking hypothec in all present and future undertaking and
movable property of the Borrower including, receivables,
inventory, incorporeal rights (intellectual property),
equipments et machineries.
o Adequate fire insurance on the assets taking in security with
loss payable to the bank.
o Postponement of claims signed by American Biltrite Inc for an
unlimited amount supported by a resolution of the board of
directors authorizing the persons to sign the document. Such
postponement of claim will only occur if the Borrower is in
default under its obligations towards the bank or if the
payment of such claim will cause the Borrower to be in
default.
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American Biltrite (Canada) Ltd. -Page 4- March 16th, 2004
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o Guarantee Bond and postponement of claim to be signed by Janus
Flooring Corporation for full liability supported by a
resolution of the Board of directors authorizing the persons
to sign the document.
o Letter of commitment to be signed by appropriate
signing officers of the Janus Flooring Co stating
that all incoming amounts providing from the sale
of immovable commercial property will be used to
reduce the operating loan in the name of American
Biltrite (Canada) ltd.
8.0 BORROWING BASE:
8.1 Operating loans and/or overdrafts of the Borrower, net of
hypothecated CIBC credit balances will not exceed at any time the
aggregate of:
a) 75% of the value of acceptable hypothecated accounts
receivable of the Borrower (excluding accounts due from
affiliates companies and/or shareholders and/or related
persons and/or priority claims and/or accounts due over 90
days the monthly amount owed to the government Federal Goods
and Services and Quebec Sales tax, to be acceptable for the
purposes of inclusion in the borrowing base.
b) 50% of the value of the raw materials inventory and the
finished goods inventory (after deducting priority accounts
payables from suppliers of inventory aged of 30 days and less)
of the Borrower
Provided that, for the purposes of calculating the borrowing
base at any time, the aggregate amounts of items (b) shall be
taken into consideration with a maximum amount of $7,500,000,
the latter amount to be reduced to $4,000,000 maximum upon
receipt of the proceeds of the sale of the commercial property
belonging to Janus Flooring Corporation or June 30th, 2004
whatever the ever event of these come first.
9.0 COVENANTS:
9.1 One the basis of financial statement of the Borrower, the following
financial ratios will be respected:
o A minimum effective working capital ratio of 1:25 at all
times.
o A maximum total debt to effective net worth of 1.50:1 at
all times.
o A minimum tangible net worth of Cdn $21,000,000 at all
times.
9.2 For the calculation of the effective working capital and the
tangible net worth, we deduct the amount of advances and accounts
receivables granted to the administrators and/or shareholders and/or
associated companies as well as intangible assets such as goodwill
and/or royalties and/or plus value and/or outside investments and we
add the amount of advances granted to the company by the
administrators and/or shareholders and/or associated companies
postponed to the Bank including the amount of grants reported, if
applicable.
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American Biltrite (Canada) Ltd. -Page 5- March 16th, 2004
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10.0 FINANCIAL REPORTS REQUIRED:
10.1 Audited financial statements of the Borrower and a non-audited
financial statement of the company, Janus Flooring Corporation and
Abican Ltd, will be provided within 90 days of the company's fiscal
year-end.
10.2 Audited Financial Statements on Consolidated basis of American
Biltrite Inc will be provided within 90 days of the company's fiscal
year-end.
10.3 In-house financial statements of the Borrower and Janus Flooring
Corporation to be certified by the Management will be provided
within 30 days of the end of each month including a written report
confirming the calculations and the respect of financial ratios on a
combined basis.
10.4 Within 30 days of the end of each month, a statement of available
credit (Form 6331) of the Borrower to be prepared on an in-house
basis. Statement of available credit limit as well as summary of
accounts receivable (including aged list of accounts receivables)
and inventory will be provided on a monthly basis.
11.0 OTHER PROVISIONS
11.1 It is understood that the Bank reserves the right to withdraw its
support at any time should be in the Bank's opinion:
(a) Any material adverse change in the financial condition of the
borrower.
(b) Any change in the company's ownership without the Bank's prior
written consent.
(c) Any legal implication detrimental to the affairs of the
borrower.
(d) Any unusual delays in the finalization of credit arrangements,
including the pledging of securities.
11.2 Without the prior written consent of the Bank, the Borrower and
Janus Flooring Co undertake:
(a) not to sell, transfer, assign, mortgage or otherwise pledge
any of their assets, including the shares of their
subsidiaries, wholly owned or not.
(b) not to incur, outside the normal course of business,
additional debt ranking senior or pari passu to this credit
facility.
(c) not to reimburse outside the normal course of business,
advances owing to the parent and/or to the associated
companies. Such advances will only occur if the Borrower is in
default under its obligations towards the bank or if the
payment of such advances will cause the Borrower to be in
default.
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American Biltrite (Canada) Ltd. -Page 6- March 16th, 2004
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12.0 GENERAL PURPOSE PROTECTION CLAUSES:
12.1 The rates of interest, fees and other charges herein set forth are
predicated on the terms and conditions hereof being strictly adhered
to by the Borrower (and by the guarantors, as the case may be).
In the event of a deviation from or failure to respect such
established terms and conditions, or should the Bank be called upon
to increase and/or modify such credit facilities, the Bank reserves
the right to charge additional fees and/or adjust the interest rates
in such manner as it shall deem justified in the exercise of its
reasonable discretion, and the Bank shall advise the Borrower
accordingly at the particular time.
12.2 While we have agreed these arrangements will remain in effect for a
fixed period, we anticipate that change in the laws, guidelines of
requirements with which the Bank must comply, brought about by the
Bank of Canada or other governmental authority, could increase the
Bank's cost of providing these services or reduce the Bank's
effective return under these arrangements.
If any such change occurs, the Bank reserves the right to
change the terms of these arrangements. Any change in terms made by
the Bank, however, will only bind you sixty (60) days after the Bank
gives you written notice, and you may at any time during that sixty
(60) days notice period terminate these arrangements effective the
last day of that sixty (60) day period.
13.0 ENVIRONMENTAL CLAUSES:
The Borrower covenants and agrees that:
13.1 The Borrower will operate its business in compliance with all
federal, provincial or municipal laws, regulations and by-laws,
including without limitation, environmental, land use and health and
safety laws and regulations;
13.2 The Borrower shall immediately notify the Bank of any notice it
receives of (i) any violation by it of any federal, provincial or
municipal environmental law, regulation or by-law, (ii) any
administrative or judicial complaint or order filed against it
alleging violations of any federal, provincial or municipal
environmental law, regulation or by-law, or (iii) any liability for
clean-up costs associated with the release of a contaminant,
pollutant, toxic substance or hazardous material or waste into the
environment or for any damages resulting from such release;
13.3 The Borrower shall not bring into or use on the Properties (whether
owned, leased or otherwise) any contaminant, pollutant, toxic
substance or hazardous material or waste other than in strict
compliance with all applicable laws, regulations, by-laws, prudent
industrial standards and any requirements of the Bank.
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American Biltrite (Canada) Ltd. -Page 7- March 16th, 2004
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14.0 INDEMNITY CLAUSE:
14.1 Without limiting the above, the Borrower hereby indemnifies the
Bank, its officers, directors, employees, agents and shareholders
and agrees to hold each of them harmless from and against any all
losses, liabilities, damages costs, expenses and claims of any and
every kind whatsoever, including without limitation, all legal fees
and disbursements, which at any time or from time to time may be
paid, incurred or asserted against any of them for or directly or
indirectly arising out of the use, production, storage, treatment,
or presence, in or on the properties or release from its properties
into the environment or any facility or structure of any
contaminant, pollutant, toxic substance or hazardous material or
waste. Such indemnification shall survive the satisfaction of the
indebtedness and liability of the Borrower to the Bank.
15.0 GOVERNING LAWS.
15.1 This Agreement shall be governed by the laws of the Civil code of
the Province of Quebec.
This credit is subject to review at any time but in any event, no later
than April 30th, 2004 in light of the company's fiscal year-end audited
statements.
Trusting you will find everything to your entire satisfaction, we remain.
Yours truly,
/s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Manager
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American Biltrite (Canada) Ltd. -Page 8- March 16th, 2004
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Acknowledgement: The undersigned certifies that all information provided to CIBC
is true, and acknowledges receipt of a copy of this Agreement
including the attached Schedules.
Accepted this _____ day of ___________, _______.
AMERICAN BILTRITE (CANADA) LTD.
By: __________________________
By: __________________________
The guarantor(s) hereby acknowledge(s) receipt of this credit agreement.
Janus Flooring Corporation
By: _______________________________________________________
By: _______________________________________________________
Date: _____________
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MOVABLE HYPOTHEC HM-QC 98/11 V-1
City: Sherbrooke Date:
BY: AMERICAN BILTRITE (CANADA) LTD/PRODUITS AMERICAN BILTRITE
(CANADA) LTEE (the "Grantor")
usual address: 000 Xxxx Xxxxxx
Xxxxxxxxxx, (Xxxxxx) X0X 0X0
IN FAVOUR OF: CANADIAN IMPERIAL BANK OF COMMERCE (the "Bank")
address: 1155, boul, Xxxx Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx X0X 0X0
1. HYPOTHEC
The Grantor hereby hypothecates in favour of the Bank to the extent of
$25,000,000, in Canadian currency together with interest thereon at the rate of
25% per annum, and also assigns to the Bank as collateral security, the movable
property set forth in Section 2, all substitutions and replacements thereof and
increases, additions and accessions thereto, and all proceeds, fruits and income
in any form derived from any dealing with any of the foregoing (the whole being
hereinafter called the "Collateral").
For the purpose of securing the payment of all other sums which may not be
secured by the principal hypothec created in the preceding paragraph, the
Grantor hypothecates again the Collateral for a further sum equal to 15% of the
amount stipulated above.
The security is created to guarantee the full and final payment of all present
and future obligations of the Grantor to the Bank under:
Check the relevant box(es), fill in the required information and have the
Grantor initial in the margin.
|X| the most recent credit offer made by the Bank to the Grantor, and all its
amendments and renewals.
|_| the promissory note in the principal amount of $ _Amount_ issued by the
Grantor in favour of the Bank and dated _Date_, and all its amendments,
renewals and replacements.
|_| the loan or credit agreement dated _Date_ entered into between the Bank
and the Grantor, and all its amendments, renewals and replacements.
|_| the guarantee dated _Date_ pursuant to which the Grantor has guaranteed
payment of all the debts and obligations of _Name of the Company_ to the
Bank, and all its amendments, renewals and replacements.
This security also secures the full and final payment of all other present and
future debts and obligations of the Grantor to the Bank, direct and indirect,
absolute or contingent, matured or not and of whatever nature, of the Grantor to
the Bank wheresoever and howsoever incurred, whether such indebtedness and
liabilities are arising from agreements or dealings between the Bank and the
Grantor, or from any agreements or dealings with any third person as a result of
which the Bank may become in any manner a creditor of the Grantor, and whether
the Grantor be bound alone or with another or others and whether as principal or
surety, together with all costs, if any, incurred by the Bank to recover its
claim or to protect the integrity of its security. This security is a continuous
security and shall subsist notwithstanding any fluctuation of the amounts hereby
secured.
2. DESCRIPTION OF THE COLLATERAL
This security covers the following movable property of the Grantor:
_Select item A or B but not both. Item C is optional_.
[Text illegible]
A. |X| Any and all movable property of every nature and description,
corporeal and incorporeal, present and future and wherever situate,
including but without limitation, all Claims, Property in Stock,
Equipment, Intellectual Property and Securities, present and future.
B. |_| The following universalities of movable property:
|_| All Claims present and future.
|_| All Property in Stock present and future
|_| All Equipment present and future
|_| All Intellectual Property present and future
|_| All Securities present and future
C. |_| The property described in Section A of the attached Schedule.
