EXHIBIT 10.28.2
AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT (this "Amendment No. 2"),
dated as of February 27, 2003, by and between Congress Financial Corporation, a
Delaware corporation ("Lender"), and Congoleum Corporation, a Delaware
corporation ("Borrower").
W I T N E S S E T H
WHEREAS, Lender, Borrower, Congoleum Financial Corporation, a Delaware
corporation ("CFC"), and Congoleum Intellectual Properties, Inc., a Delaware
corporation ("CIPI" and, together with CFC, collectively, the "Existing
Guarantors" and each individually an "Existing Guarantor"), have entered into
financing arrangements pursuant to which Lender has made and may make loans and
advances to Borrower as set forth in the Loan and Security Agreement, dated
December 10, 2001, as amended by Amendment No. 1 to Loan and Security Agreement,
dated September 19, 2002, by and between Lender and Borrower (as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced, the "Loan Agreement") and other agreements, documents and
instruments referred to therein or at any time executed and/or delivered in
connection therewith or related thereto, together with this Amendment No. 2 (all
of the foregoing, including the Loan Agreement, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, being collectively referred to herein as the "Financing Agreements");
and
WHEREAS, Borrower has requested certain amendments to the Loan Agreement
and the other Financing Agreements and Lender is willing to agree to such
amendments, subject to the terms and conditions contained herein. By this
Amendment No. 2, the parties desire and intend to evidence such amendments.
NOW, THEREFORE, in consideration of the foregoing, and the respective
agreements and covenants contained herein, the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) Additional Definitions. As used herein, in the Loan Agreement
and in all of the other Financing Agreements, the following terms shall have the
meanings given to them below, and the Loan Agreement shall be deemed and is
hereby amended to include, in addition and not in limitation, the following
definitions:
(i) "Amendment No. 2" shall mean Amendment No. 2 to Loan and
Security Agreement, dated as of February 27, 2003, by and between
Borrower and Lender; as the
same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(ii) "Asbestos Insurance Policies" shall mean, collectively,
the insurance policies pursuant to which Borrower is the insured
with respect to asbestos related personal injuries, wrongful death
or property damage claims, including without limitation the
insurance policies listed on Schedule A to Amendment No. 2; each
sometimes being referred to herein individually as an "Asbestos
Insurance Policy".
(iii) "Asbestos Proceedings" shall mean, collectively, all
actions, suits, investigations, litigation, proceedings or claims
pending or threatened by any Person against Borrower and/or any of
its Affiliates or Subsidiaries for asbestos related personal
injuries, wrongful death or property damage; each sometimes being
referred to herein individually as an "Asbestos Proceeding".
(iv) "Asbestos Settlements" shall mean, collectively, all
arrangements and agreements made or agreed in respect of Borrower
and/or any of its Affiliates or Subsidiaries for the purpose of
resolving, restructuring, determining, settling, paying, funding,
discharging or compromising present or future liabilities or claims
arising from or constituting Asbestos Proceedings, including without
limitation any settlement agreements, settlement trusts and
Permitted Asbestos Settlement Transactions, so long as no judgment
for the payment of money is rendered against Borrower or any Obligor
or injunction, attachment, garnishment or execution is rendered
against Borrower or any Obligor or any of their assets in excess of
$5,000,000 in the aggregate (to the extent not covered by insurance
in accordance with the terms of such Asbestos Settlement); each
sometimes being referred to herein individually as an "Asbestos
Settlement".
(v) "CFC" shall mean Congoleum Financial Corporation, a
Delaware corporation, and its successors and assigns.
(vi) "CFC/CFI Merger" shall mean the merger of CFC with and
into CFI, with CFI as the surviving corporation.
(vii) "CFI" shall mean Congoleum Fiscal, Inc., a New York
corporation, and its successors and assigns.
(viii) "CII" shall mean Congoleum International, Inc., a U.S.
Virgin Islands corporation, and its successors and assigns.
(ix) "CIPI" shall mean Congoleum Intellectual Properties,
Inc., a Delaware corporation, and its successors and assigns.
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(x) "Congoleum Reorganization" shall mean, individually and
collectively, the mergers, dissolutions and transactions effected
under the Congoleum Reorganization Agreements and the Congoleum
Dissolution Agreements.
(xi) "Congoleum Reorganization Agreements" shall mean,
collectively, the agreements, documents and instruments executed,
delivered or filed in connection with, or otherwise evidencing, each
of the transactions consented to in Section 2(a) of Amendment No. 2,
as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(xii) "Congoleum Dissolution Agreements" shall mean,
collectively, the agreements, documents and instruments executed,
delivered or filed in connection with, or otherwise evidencing, the
dissolution of CII and CIPI consented to in Section 2(b) of
Amendment No. 2, as the same now exist or may hereafter be entered
into, amended, modified, supplemented, extended, renewed, restated
or replaced.
(xiii) "CSI" shall mean Congoleum Sales, Inc., a New York
corporation, and its successors and assigns.
(xiv) "EBITDA" shall mean, with respect to any period, an
amount equal to: (a) the Net Income of Borrower and its Subsidiaries
for such period, including any proceeds actually received by
Borrower from an Asbestos Insurance Policy, plus (b) depreciation,
amortization and, except as set forth below, other non-cash charges
for such period (to the extent deducted in the computation of Net
Income of Borrower), all in accordance with GAAP, plus (c) Interest
Expense for such period (to the extent deducted in the computation
of Net Income of Borrower), plus (d) the Provision for Taxes for
such period (to the extent deducted in the computation of Net Income
of Borrower). Notwithstanding the foregoing, the calculation of
EBITDA for any period after September 30, 2002 shall not include the
following non-cash charges for such period: (1) asbestos liability
reserves, (2) pension liability charges, (3) valuation reserves
against deferred tax assets and (4) write-downs of fixed assets.
(xv) "Guarantors" shall mean, collectively, the following
(together with their respective successors and assigns): (A) CFI;
(B) CSI; and (C) any other Person that from time to time guarantees
any or all of the Obligations; each sometimes being referred to
herein individually as a "Guarantor".
(xvi) "Interest Expense" shall mean, for any period, as
determined in accordance with GAAP, the total interest expense of
Borrower, whether paid or accrued during such period (including the
interest component of Capital Leases for such period), including,
without limitation, bank fees, commissions, discounts and other fees
and charges owed with respect
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to letters of credit, banker's acceptances or similar instruments,
but excluding interest paid in property other than cash and any
other interest expense not payable in cash; provided, that, Interest
Expense shall not include interest paid in kind (as opposed to in
cash).
(xvii) "Permitted Asbestos Effects" shall mean, at any time,
or from time to time, any effects on or consequences to the Borrower
and/or any of its Affiliates or Subsidiaries and their respective
businesses, properties, performance, condition (financial or
otherwise), operations, prospects or reserves, which are directly
attributable to entering into or preparing to enter into any
Asbestos Settlement that is entered into after the date hereof or
the assertion, existence, negotiation, litigation, payment or other
resolution or treatment of any present, future or alleged
asbestos-related personal injury, wrongful death and/or property
damage claims, whether or not contingent, against and liabilities of
Borrower and/or any of its Affiliates and Subsidiaries, provided,
that, the liability of Borrower and/or any of its Subsidiaries in
respect of such Permitted Asbestos Effects (inclusive of amounts
payable or to become payable in respect of any Asbestos Settlement)
shall not, in the aggregate, exceed $10,000,000 (to the extent not
covered by insurance in accordance with the terms of such Asbestos
Settlement); each sometimes being referred to herein individually as
a "Permitted Asbestos Effect".
(xviii) "Permitted Asbestos Settlement Transactions" shall
mean, collectively, the following arrangements: (i) the
establishment of a trust or trusts (collectively, the "Prepetition
Trust") to assume certain liabilities of Borrower, American Biltrite
Inc. ("American Biltrite") and their respective Affiliates arising
from or relating to Asbestos Proceedings; and (ii) the assignment of
or grant of a security interest by Borrower and/or American Biltrite
to the Prepetition Trust in certain rights in and proceeds of
Asbestos Insurance Policies; provided, that, (A) each such
arrangement shall be completed prior to the commencement of a
bankruptcy proceeding of Borrower under the United States Bankruptcy
Code, (B) such arrangements shall be entered into in connection with
Asbestos Settlements, and (C) at the time of entering into any such
arrangement, and after giving effect to such arrangement, no Default
or Event of Default shall exist or have occurred and be continuing;
each sometimes being referred to herein individually as a "Permitted
Asbestos Settlement Transaction".
(xix) "Trademark Licensor Agreement" shall mean the Trademark
Licensor Agreement, dated December 10, 2002, among Lender, Borrower
and CIPI, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
(b) Amendments to Definitions.
(i) Adjusted Tangible Net Worth. Section 1.3 of the Loan
Agreement is hereby
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amended by deleting such Section in its entirety and replacing it with the
following:
"1.3 'Adjusted Tangible Net Worth' shall mean, at any time, in
accordance with GAAP (except as otherwise specifically set forth
below), on a consolidated basis for Borrower and its Subsidiaries
(if any), the amount equal to the difference between: (a) the
aggregate net book value of all assets of Borrower and its
Subsidiaries (excluding the value of patents, trademarks,
tradenames, copyrights, licenses, goodwill, leasehold improvements,
prepaid assets, Net Income resulting from income or gain derived
from the conversion of Indebtedness to equity or forgiveness of
Indebtedness, deferred taxes, other intangible assets and other
"current assets" and other "non-current assets", as such terms are
defined in the most recent audited year-end financial statements of
Borrower delivered to Lender, and including, to the extent not
included as an other "current asset" or an other "non-current
asset", any insurance receivables for asbestos related liabilities),
calculating the book value of Inventory for this purpose on a
last-in-first-out basis, after deducting from such book values all
appropriate reserves in accordance with GAAP (including all reserves
for doubtful receivables, obsolescence, depreciation and
amortization) and (b) the aggregate amount of the Indebtedness and
other liabilities of Borrower and its Subsidiaries (including tax
and other proper accruals). Notwithstanding the foregoing, the
calculation of Adjusted Tangible Net Worth for any period after
September 30, 2002 shall not include the following non-cash charges
for such period: (1) asbestos liability reserves, (2) pension
liability charges, (3) valuation reserves against deferred tax
assets and (4) write-downs of fixed assets."
(ii) Indebtedness. Section 1.37 of the Loan Agreement is
hereby amended by deleting such Section in its entirety and replacing it
with the following:
"1.37 'Indebtedness' shall mean with respect to any Person,
any liability, whether or not contingent, (a) in respect of borrowed
money (whether or not the recourse of the lender is to the whole of
the assets of such Person or only to a portion thereof) or evidenced
by bonds, notes, debentures or similar instruments; (b) representing
the balance deferred and unpaid of the purchase price of any
property or services (except any such balance that constitutes an
account payable to a trade creditor (whether or not an Affiliate)
created, incurred, assumed or guaranteed by such Person in the
ordinary course of business of such Person in connection with
obtaining goods, materials or services that is not overdue by more
than ninety (90) days, unless the trade payable is being contested
in good faith); (c) all obligations as lessee under leases which
have been, or should be, in accordance with GAAP recorded as Capital
Leases; (d) any contractual obligation, contingent or otherwise, of
such Person to pay or be liable for the payment of any indebtedness
described in this definition of another Person, including, without
limitation, any such indebtedness, directly or indirectly
guaranteed, or any agreement to purchase, repurchase, or otherwise
acquire such indebtedness, obligation or liability or any security
therefor, or to provide funds for the
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payment or discharge thereof, or to maintain solvency, assets, level
of income, or other financial condition; (e) all obligations with
respect to redeemable stock and redemption or repurchase obligations
under any Capital Stock or other equity securities issued by such
Person; (f) all reimbursement obligations and other liabilities of
such Person with respect to surety bonds (whether bid, performance
or otherwise), letters of credit, banker's acceptances, drafts or
similar documents or instruments issued for such Person's account;
(g) all indebtedness of such Person in respect of indebtedness of
another Person for borrowed money or indebtedness of another Person
otherwise described in this definition which is secured by any
consensual lien, security interest, collateral assignment,
conditional sale, mortgage, deed of trust, or other encumbrance on
any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal
liability of such Person, all as of such time; (h) all obligations,
liabilities and indebtedness of such Person (marked to market)
arising under swap agreements, cap agreements and collar agreements
and other agreements or arrangements designed to protect such person
against fluctuations in interest rates or currency or commodity
values; (i) all obligations owed by such Person under License
Agreements with respect to non-refundable, advance or minimum
guarantee royalty payments and (j) all obligations owed by such
Person in connection with Asbestos Settlements or Asbestos
Proceedings, other than (1) payment obligations to professionals in
connection therewith and (2) obligations with respect to amounts
that are or shall be, under the terms of an Asbestos Settlement or
as mandated pursuant to the terms of an Asbestos Proceeding,
satisfied other than by payment, directly or indirectly, of an
amount by Borrower or a Subsidiary of Borrower."
(iii) Interest Rate. Section 1.41 of the Loan Agreement is
hereby amended by deleting such Section in its entirety and replacing it
with the following:
"1.41 'Interest Rate' shall mean, as to Prime Rate Loans, a
rate equal to three-quarters (0.75%) percent per annum in excess of
the Prime Rate and, as to Eurodollar Rate Loans, a rate of three and
one-quarter (3.25%) percent per annum in excess of the Adjusted
Eurodollar Rate (based on the Eurodollar Rate applicable for the
Interest Period selected by Borrower as in effect three (3) Business
Days after the date of receipt by Lender of the request of Borrower
for such Eurodollar Rate Loans in accordance with the terms of the
Loan Agreement, whether such rate is higher or lower than any rate
previously quoted to Borrower); provided, that, notwithstanding
anything to the contrary contained in the Loan Agreement or the
other Financing Agreements, the Interest Rate shall mean the rate of
two and three-quarters (2.75%) percent per annum in excess of the
Prime Rate as to Prime Rate Loans and the rate of five and
one-quarter (5.25%) percent per annum in excess of the Adjusted
Eurodollar Rate as to Eurodollar Rate Loans, at Lender's option,
without notice, (a) either (i) for the period on and after the date
of termination or non-renewal of the Loan Agreement until such time
as all Obligations are indefeasibly paid and satisfied in full in
immediately available funds, or (ii) for the period from and after
the date of
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the occurrence of any Event of Default, and for so long as such
Event of Default is continuing as determined by Lender in good faith
and (b) on the Revolving Loans at any time outstanding in excess of
the amounts available to Borrower under Section 2 (whether or not
such excess(es) arise or are made with or without Lender's knowledge
or consent and whether made before or after an Event of Default)."
(iv) Material Adverse Effect. Solely for purposes of Sections
4.2(b), 8.6, 8.7, 8.8, 8.9, 8.11, 8.13, 8.17 and 9.3(b) of the Loan
Agreement, the term "Material Adverse Effect" shall mean a material
adverse effect on (a) the condition (financial or otherwise), business,
performance, operations or properties of Borrower (except if such material
adverse effect is the direct result of the existence of any Permitted
Asbestos Effect); (b) the legality, validity or enforceability of the Loan
Agreement or any of the other Financing Agreements (except if such
material adverse effect is the direct result of the existence of any
Permitted Asbestos Effect); (c) the legality, validity, enforceability,
perfection or priority of the security interests, liens, charges or
hypothecs of Lender upon the Collateral (except if such material adverse
effect is the direct result of the existence of any Permitted Asbestos
Effect); (d) the Collateral or the value of the Collateral (except if such
material adverse effect is the direct result of the existence of any
Permitted Asbestos Effect); (e) the ability of Borrower to repay the
Obligations or of any Obligor to perform its obligations under the Loan
Agreement or any of the other Financing Agreements (except if such
material adverse effect is the direct result of the existence of any
Permitted Asbestos Effect); (f) the ability of Lender to enforce the
Obligations or realize upon the Collateral or (g) the rights and remedies
of Lender under the Loan Agreement or any of the other Financing
Agreements.
(c) Interpretation. All capitalized terms used herein shall have the
meanings assigned thereto in the Loan Agreement and the other Financing
Agreements, unless otherwise defined herein.
2. Consents.
(a) Consent to Congoleum Reorganization.
(i) Subject to the terms and conditions contained herein and
in the Loan Agreement and in the other Financing Agreements, and notwithstanding
anything to the contrary contained in the Loan Agreement, Lender hereby
consents, subject to the satisfaction of the conditions set forth herein and in
Section 2(a)(ii) below, to the following transactions:
(A) the formation of CFI by CFC in accordance with the
applicable Congoleum Reorganization Agreements;
(B) the formation of CSI by Borrower in accordance with
the applicable Congoleum Reorganization Agreements; and
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(C) the merger of CFC with and into CFI pursuant to the
CFC/CFI Merger, with CFI as the surviving corporation, in accordance with the
applicable Congoleum Reorganization Agreements; provided, that, Lender shall
have received, in form and substance satisfactory to Lender, either (1)
evidence, in form and substance reasonably satisfactory to Lender, of the
forgiveness and/or cancellation of the Junior Debt (as defined in the
Subordination Agreement, dated December 10, 2001, between Lender and CFC, as
acknowledged and agreed to by Borrower) or (2) a subordination agreement, duly
authorized, executed and delivered by CFI in favor of Lender, on the terms and
conditions set forth in Section 9.10(g) of the Loan Agreement, with respect to
the Indebtedness of Borrower to CFC assumed by CFI in connection with the
CFC/CFI Merger.
(ii) The effectiveness of the consent of Lender to the
transactions set forth in Section 2(a)(i) above is subject to the satisfaction
of the conditions set forth below:
(A) Lender shall have received an original of a Limited
Guarantee by each of CFI and CSI (collectively referred to hereinafter as "New
Guarantors" and each individually as a "New Guarantor") in favor of Lender with
respect to the Obligations of Borrower to Lender (the "New Guarantee"), which
shall be in form and substance satisfactory to Lender and which Lender agrees
shall be substantially similar to the form and substance of the Limited
Guarantee, dated December 10, 2001, by CFC and CIPI in favor of Lender (the
"Original Guarantee");
(B) Lender shall have received, in form and substance
satisfactory to Lender (1) true, correct and complete photocopies of all of the
Congoleum Reorganization Agreements and (2) evidence, in form and substance
reasonably satisfactory to Lender, that the Congoleum Reorganization Agreements
have been (x) duly authorized, executed and delivered by and to the appropriate
parties thereto and that the transactions contemplated by the Congoleum
Reorganization have been consummated as set forth herein, and (y) if applicable,
filed with the Secretary of State of the States of Delaware and New York or
other applicable offices;
(C) Lender shall have received for each New Guarantor,
(1) a copy of its Certificate of Incorporation, and all amendments thereto,
certified by the Secretary of State of the State of New York as of the most
recent practicable date certifying that each of the foregoing documents remains
in full force and effect and has not been modified or amended, except as
described therein, (2) a copy of its By-Laws, certified by the Secretary or
Assistant Secretary of each such corporation, and (3) a certificate from its
Secretary or Assistant Secretary dated on or about the date of the New Guarantee
certifying that each of the foregoing documents remains in full force and effect
and has not been modified or amended, except as described therein;
(D) Lender shall have received, in form and substance
satisfactory to Lender, for each New Guarantor, a Secretary's or Assistant
Secretary's Certificate of Directors' Resolutions with Shareholder's Consent
evidencing the adoption and subsistence of corporate resolutions approving the
execution, delivery and performance by each New Guarantor of the agreements,
documents and
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instruments to be delivered by such New Guarantor pursuant to this Amendment No.
2;
(E) prior to the effectiveness of the Congoleum
Reorganization, no court of competent jurisdiction shall have issued any
injunction, restraining order or other order which prohibits the consummation of
the Congoleum Reorganization or any part thereof, and no governmental action or
proceeding shall have been threatened or commenced, seeking any injunction,
restraining order or other order which seeks to void or otherwise modify the
transactions described in the Congoleum Reorganization Agreements; and
(F) the Congoleum Reorganization shall be completed no
later than February 28, 2003.
(b) Consent to Dissolution of CII and CIPI. Subject to the terms and
conditions contained herein and in the Loan Agreement and in the other Financing
Agreements, and notwithstanding anything contained in the Loan Agreement to the
contrary, Lender hereby consents, effective upon the effective date of the
applicable Congoleum Dissolution Agreements, to the dissolution of each of CII
and CIPI; provided, that, Lender shall have received, in form and substance
satisfactory to Lender (i) true, correct and complete photocopies of all of the
Congoleum Dissolution Agreements, (ii) evidence, in form and substance
reasonably satisfactory to Lender, that the Congoleum Dissolution Agreements
have been (A) duly authorized, executed and delivered by and to the appropriate
parties thereto, and (B) if applicable, filed with the Secretary of State of the
State of Delaware or other applicable offices, and (iii) evidence, in form and
substance reasonably satisfactory to Lender, of the valid assignment and
transfer of the Trademarks (as defined in the Trademark Licensor Agreement) from
CIPI to Borrower. Lender, Borrower and CIPI hereby agree that the Trademark
Licensor Agreement shall be deemed terminated effective on the effective date of
the dissolution of CIPI.
(c) Consent to Amendment to Senior Note Indenture. Subject to the
terms and conditions contained herein and in the Loan Agreement and in the other
Financing Agreements, and notwithstanding anything contained in the Loan
Agreement to the contrary, Lender hereby consents to Borrower entering into an
amendment to the Senior Note Indenture to permit Borrower to enter into Asbestos
Settlements and Permitted Asbestos Settlement Transactions and to amend the
covenants and events of default provisions of the Senior Note Indenture so that
such provisions shall be, in the good faith determination of Lender, no more
restrictive or burdensome to Borrower than the terms and conditions of the Loan
Agreement, as amended hereby; provided, that: (i) promptly following the
execution and delivery thereof, Lender shall have received, in form and
substance satisfactory to Lender, true, correct and complete photocopies of such
amendment and all agreements, documents and instruments executed and/or
delivered in connection therewith or related thereto, in each case duly
authorized, executed and delivered by Borrower and each of the other parties
thereto, and (ii) Lender shall have promptly received any other information with
respect thereto as Lender may reasonably request.
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3. Assumption of Obligations; Acknowledgments with respect to Congoleum
Reorganization. Effective as of the completion of the CFC/CFI Merger, CFI, as
the surviving corporation, hereby expressly (i) assumes and agrees to be
directly liable to Lender, jointly and severally with CSI, for all Guaranteed
Obligations under, contained in, or arising out of the Original Guarantee
applicable to CFC arising prior to the effective time of the CFC/CSI Merger, and
(ii) agrees to perform, comply with and be bound by all terms, conditions and
covenants of the Financing Agreements applicable to CFC, with the same force and
effect as if CFI had originally executed and been an original party signatory to
the Original Guarantee
4. Conditions Precedent to All Revolving Loans and Letter of Credit
Accommodations. Section 4.2(a) of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
"(a) all representations and warranties contained herein and
in the other Financing Agreements shall be true and correct in all
material respects with the same effect as though such
representations and warranties had been made on and as of the date
of the making of each such Revolving Loan or providing each such
Letter of Credit Accommodation and after giving effect thereto,
except to the extent that (i) such representations and warranties
expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on
and as of such earlier date) or (ii) such representations and
warranties would be, or would be deemed to be, untrue or incorrect
as a direct result of the existence of any Permitted Asbestos
Effect."
5. Collection of Accounts. Section 6.3(a) of the Loan Agreement is hereby
amended so that the following sentence is added to the end of such Section:
"Lender acknowledges and agrees that so long as no Default or Event
of Default shall exist or have occurred and be continuing,
notwithstanding anything to the contrary set forth herein, Borrower
shall have no obligation to deposit or direct any Person to remit
into a Blocked Account any amounts payable under the terms of an
Asbestos Insurance Policy which has been assigned, transferred,
pledged or has otherwise become unavailable to Borrower in
connection with an Asbestos Settlement, and Borrower has previously
notified Lender to that effect."
6. Collateral Reporting. Section 7.1 of the Loan Agreement is hereby
amended so that the following subsections (vii) and (viii) are added to the end
of such Section:
"(vii) subject to Section 12.7 hereof, on a bi-weekly basis or
more frequently as Lender may request, a written report, in a form
satisfactory to Lender, setting forth the current status of all
Asbestos Proceedings and all Asbestos Settlements (including,
without limitation, (i) amounts paid and owed to professionals, and
(ii) amounts insurers in respect of Asbestos Insurance Policies have
agreed to pay Borrower and evidence of such
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payments); and
(viii) subject to Section 12.7 hereof, promptly following the
execution and delivery thereof, true and complete copies of all
settlement agreements and all other material agreements, documents
and instruments related to Asbestos Settlements, in each case duly
authorized, executed and delivered by the parties thereto."
7. Adjusted Tangible Net Worth. Section 9.17 of the Loan Agreement is
hereby deleted in its entirety and replaced with the following:
"9.17 Adjusted Tangible Net Worth. At any time that Excess
Availability is less than $15,000,000, Borrower and its Subsidiaries
on a consolidated basis shall have and maintain Adjusted Tangible
Net Worth of not less than the amounts set forth below at all times
during the periods set forth below:
Period Minimum Adjusted Tangible Net Worth
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January 1, 2003 through ($25,500,000)
March 31, 2003
April 1, 2003 through ($29,000,000)
June 30, 2003
July 1, 2003 through ($34,000,000)
September 30, 2003
October 1, 2003 through ($28,500,000)
December 31, 2003
All times thereafter ($31,000,000)
The use of the parentheses in this Section 9.17 is intended to
reflect negative numbers. Compliance with this Section 9.17 shall be
determined utilizing the formula set forth on Exhibit 9.17 hereto."
8. Minimum Excess Availability. Section 9.18 of the Loan Agreement is
hereby deleted in its entirety and replaced with the following:
"9.18 Minimum Excess Availability. The Excess Availability of
Borrower shall, at all times be equal to or greater than
$5,000,000."
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9. Capital Expenditures. Section 9.19 of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
"9.19 Capital Expenditures. Borrower and its Subsidiaries
shall not, directly or indirectly, make any Capital Expenditures in
excess of: (i) $8,500,000 in fiscal year 2003 and (ii) $7,000,000 in
any other fiscal year."
10. EBITDA. Section 9 of the Loan Agreement is hereby amended so that the
following Section 9.23 is added at the end thereof:
"9.23 EBITDA. Borrower and its Subsidiaries shall not, as to
any fiscal quarter during the fiscal year 2003 of Borrower and its
Subsidiaries, permit EBITDA of Borrower and its Subsidiaries
commencing on the first day of such fiscal year and ending on the
last day of the applicable fiscal quarter set forth below on a
cumulative year-to-date basis to be less than the respective amount
set forth below opposite such fiscal quarter end year-to-date
period:
Period Minimum EBITDA
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January 1, 2003 through ($8,000,000)
March 31, 2003
January 1, 2003 through ($7,750,000)
June 30, 2003
January 1, 2003 through ($7,500,000)
September 30, 2003
January 1, 2003 through ($5,000,000)
December 31, 2003
The use of the parentheses in this Section 9.23 is intended to
reflect negative numbers."
11. Events of Default.
(a) Section 10.1(a) of the Loan Agreement is hereby amended so that
the following is inserted at the end of such Section:
"provided, that, notwithstanding anything herein to the contrary,
the provisions set forth in Sections 9.5, 9.7, 9.8 and 9.12 hereof
shall be understood so as not to limit the entering into a Permitted
Asbestos Settlement Transaction."
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(b) Section 10.1(d) of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
"(d) any judgment for the payment of money is rendered against
Borrower or any Obligor in excess of $500,000 in any one case or in
excess of $750,000 in the aggregate, other than such a judgment in
respect of a Permitted Asbestos Effect, and shall remain
undischarged or unvacated for a period in excess of thirty (30) days
or execution shall at any time not be effectively stayed, or any
judgment other than for the payment of money, or injunction,
attachment, garnishment or execution is rendered against Borrower or
any Obligor or any of their assets;"
(c) Section 10.1(h) of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
"(h) Intentionally Omitted;"
(d) Section 10.1(o) of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
"(o) there shall be a material adverse change in the business
or assets of Borrower or any Obligor after the date hereof (except
if such material adverse change is the direct result of the
occurrence and continuance of any Permitted Asbestos Effect); or"
12. Confidentiality. Section 12 of the Loan Agreement is hereby amended so
that the following Section 12.7 is added at the end thereof:
"12.7 Confidentiality.
(a) Lender shall use all reasonable efforts to keep
confidential, in accordance with its customary procedures for
handling confidential information and safe and sound lending
practices, any non-public information supplied to it by Borrower
pursuant to this Agreement which is clearly and conspicuously marked
as confidential at the time such information is furnished by
Borrower to Lender, provided, that, nothing contained herein shall
limit the disclosure of any such information: (i) to the extent
required by statute, rule, regulation, subpoena or court order, (ii)
to bank examiners and other regulators, auditors and/or accountants,
in connection with any litigation to which Lender is a party, (iii)
to Lender or any participant (or prospective participant) or to any
Affiliate of Lender so long as Lender or such participant (or
prospective participant) or Affiliate shall have been instructed to
treat such information as confidential in accordance with this
Section 12.7, or (iv) to counsel for Lender or any participant (or
prospective participant).
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(b) In the event that Lender receives a request or demand to
disclose any confidential information pursuant to any subpoena or
court order, Lender agrees (i) to the extent permitted by applicable
law or if permitted by applicable law, to the extent Lender
determines in good faith that it will not create any risk of
liability to Lender, Lender will promptly notify Borrower of such
request so that Borrower may seek a protective order or other
appropriate relief or remedy and (ii) if disclosure of such
information is required by law or pursuant to an order of a
Governmental Authority, disclose such information and, subject to
reimbursement by Borrower of Lender's expenses, cooperate with
Borrower in the reasonable efforts to obtain an order or other
reliable assurance that confidential treatment will be accorded to
such portion of the disclosed information which Borrower so
designates, to the extent permitted by applicable law or if
permitted by applicable law, to the extent Lender determines in good
faith that it will not create any risk of liability to Lender.
(c) In no event shall this Section 12.7 or any other provision
of this Agreement, any of the other Financing Agreements or
applicable law be deemed: (i) to apply to or restrict disclosure of
information that has been or is made public by Borrower, any Obligor
or any third party or otherwise becomes generally available to the
public other than as a result of a disclosure in violation hereof,
(ii) to apply to or restrict disclosure of information that was or
becomes available to Lender (or any Affiliate of Lender) on a
non-confidential basis from a person other than Borrower, (iii) to
require Lender to return any materials furnished by Borrower to
Lender or prevent Lender from responding to routine informational
requests in accordance with the Code of Ethics for the Exchange of
Credit Information promulgated by The Xxxxxx Xxxxxx Associates or
other applicable industry standards relating to the exchange of
credit information. The obligations of Lender under this Section
12.7 shall supersede and replace the obligations of Lender under any
confidentiality letter signed prior to the date hereof."
13. Amendment Fee. In addition to all other fees, charges, interest and
expenses payable by Borrower to Lender under the Loan Agreement and the other
Financing Agreements, Borrower shall pay to Lender, contemporaneously with the
effectiveness of this Amendment No. 2, an amendment fee in the amount of
$200,000, which fee shall be fully earned and nonrefundable as of the date
hereof and may be charged to the loan account of Borrower.
14. Representations, Warranties and Covenants. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by Borrower, Existing Guarantors and New Guarantors to Lender pursuant to
the Loan Agreement and the other Financing Agreements, Borrower and New
Guarantors hereby represent, warrant and covenant with and to Lender as follows
(which representations, warranties and covenants are continuing and shall
survive the execution and delivery hereof and shall be incorporated into and
made a part of the Financing Agreements):
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(a) This Amendment No. 2 and each other agreement or instrument to
be executed and delivered by Borrower and New Guarantors hereunder have been
duly authorized, executed and delivered by all necessary action on the part of
Borrower and New Guarantors party hereto and thereto and, if necessary, their
respective stockholders, and is in full force and effect as of the date hereof,
as the case may be, and the agreements and obligations of Borrower or New
Guarantors, as the case may be, contained herein and therein constitute legal,
valid and binding obligations of Borrower and New Guarantors, as the case may
be, enforceable against them in accordance with their terms, subject to (i)
Permitted Asbestos Effects and (ii) applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
(b) Neither the execution and delivery of the Congoleum
Reorganization Agreements or any other agreements, documents or instruments in
connection therewith, nor the filing of any of the applicable merger documents,
nor the consummation of the transactions contemplated thereby, nor compliance
with the provisions thereof, (i) does or shall result in the creation or
imposition of any lien, claim, charge or encumbrance upon any of the Collateral;
(ii) has violated or shall violate any Bulk Sales Act, Bulk Transfer Act or
Article 6 of the UCC, if applicable, the Xxxx-Xxxxx-Xxxxxx Anti-Trust
Improvements Act of 1976, as amended, if applicable, or any Federal or State
securities laws or any other law or regulation or any order or decree of any
court or governmental instrumentality in any respect, (iii) does or shall
conflict with or result in the breach of, or constitute a default in any respect
under any material mortgage, deed of trust, security agreement, agreement or
instrument to which Borrower or any New Guarantor is a party or may be bound, or
(iv) does or shall violate any provision of the Certificate of Incorporation or
By-Laws of Borrower or any New Guarantor.
(c) All of the outstanding shares of capital stock of each New
Guarantor have been duly authorized, validly issued and are fully paid and
non-assessable, free and clear of all claims, liens, pledges and encumbrances of
any kind. Effective as of the consummation of the Congoleum Reorganization,
Borrower shall be the beneficial and direct owner of record of one hundred
(100%) percent of the issued and outstanding shares of capital stock of each New
Guarantor.
(d) As of the date hereof, each New Guarantor (i) is a corporation,
duly organized and validly existing in good standing under the laws of the State
of New York and (ii) is duly licensed or qualified to do business as a foreign
corporation and is in good standing in all jurisdictions wherein the character
of the properties owned or licensed by it or the nature of its business makes
such licensing or qualification to do business necessary, except to the extent
that the failure to do so would not be expected to have a Material Adverse
Effect; and (iii) has all requisite power and authority to own, lease and
operate its properties and to carry on its business as it is now being conducted
and will be conducted in the future.
(e) Except as permitted by the terms of the Financing Agreements,
the assets and properties of each New Guarantor are owned by it, free and clear
of all security interests, liens and
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encumbrances of any kind, nature or description, as of the date hereof.
(f) The CFC/CFI Merger became effective in accordance with the terms
of the applicable Congoleum Reorganization Agreements and pursuant to the
applicable corporate statutes of the States of Delaware and New York. As of the
date of the effectiveness of the CFC/CFI Merger, CFI was and will continue to be
and shall be the surviving corporation of the CFC/CFI Merger.
(g) All actions and proceedings required by the Congoleum
Reorganization Agreements, applicable law and regulation were taken prior to the
effectiveness of such merger and all transactions required thereunder have been
and shall be duly and validly consummated.
(h) As of the date hereof, no Default or Event of Default has
occurred or is continuing.
15. Conditions Precedent. The effectiveness of this Amendment No. 2 shall
be subject to the satisfaction of the following conditions precedent:
(a) Lender shall have received, in form and substance satisfactory
to Lender, an original of this Amendment No. 2, duly authorized, executed and
delivered by Borrower and New Guarantors;
(b) Lender shall have received, in form and substance reasonably
satisfactory to Lender, an original of the New Guarantee, duly authorized,
executed and delivered by each of the New Guarantors;
(c) Lender shall have received, in form and substance reasonably
satisfactory to Lender, updated Schedules 8.6 and 8.8 (Pending Litigation &
Environmental Compliance) to the Information Certificate; and
(d) As of the date hereof, no Default or Event of Default shall have
occurred or be continuing.
16. Additional Event of Default. Notwithstanding anything to the contrary
contained in the Loan Agreement or in any of the other Financing Agreements, in
addition to the Events of Default set forth therein, the failure of Lender to
receive lien and judgment search results for the jurisdiction of incorporation
of Borrower, Existing Guarantors and New Guarantors, the jurisdiction of the
chief executive office of Borrower, Existing Guarantors and New Guarantors and
all jurisdictions in which assets of Borrower, Existing Guarantors and New
Guarantors are located within forty-five (45) days following the date of this
Amendment No. 2, which search results shall be in form and substance reasonably
satisfactory to Lender, shall also constitute an Event of Default under the
Financing Agreements.
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17. Effect of Bankruptcy Filing. Notwithstanding anything to the contrary
set forth in this Amendment No. 2 or the other Financing Agreements, Borrower
and Lender hereby agree that upon the filing by Borrower or any Obligor (or
against Borrower or any Obligor) of a case or proceeding under the bankruptcy
laws of the United States of America now or hereafter in effect, (i) Lender may
at its option, without notice, cease making Revolving Loans or arranging for
Letter of Credit Accommodations or adjust the lending formulas or amounts of
Revolving Loans and Letter of Credit Accommodations available to Borrower and
(ii) each of Borrower and Lender expressly reserves all of its rights and
remedies under such laws.
18. Effect of this Amendment No. 2. Except as modified pursuant hereto, no
other changes or modifications in the Loan Agreement or the other Financing
Agreements are intended or implied and the Financing Agreements are hereby
specifically ratified and confirmed by the parties hereto as of the effective
date hereof. To the extent of conflict between the terms of this Amendment No. 2
and the other Financing Agreements, the terms of this Amendment No. 2 shall
control; provided, that, in the event that Borrower shall fail to deliver to
Lender, by August 31, 2003, evidence, in form and substance reasonably
satisfactory to Lender, that Borrower has entered into settlements with at least
seventy-five (75%) percent of the plaintiffs in the Asbestos Proceedings ongoing
as of the date hereof, then, all of the modifications to the Loan Agreement set
forth in this Amendment No. 2 shall automatically and without any further action
by Lender, be deemed voided and of no force and effect and the Loan Agreement
shall be deemed specifically ratified and confirmed by the parties hereto as if
this Amendment No. 2 had never been executed by the parties hereto.
19. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York without regard to principals of conflicts
of laws, but excluding any rule of law that would cause the application of the
law of any jurisdiction other that the laws of the State of New York.
20. Binding Effect. This Amendment No. 2 shall be binding upon and inure
to the benefit of each of the parties hereto and their respective successors and
assigns.
21. Counterparts. This Amendment No. 2 may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment No. 2, it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties hereto. This Amendment No. 2 may be executed and delivered
by telecopier with the same force and effect as if it were a manually executed
and delivered counterpart.
22. Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary or
reasonably desirable to effectuate the provisions and purposes of this Amendment
No. 2.
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IN WITNESS WHEREOF, the parties have caused these presents to be duly
executed as of the day and year first above written.
CONGRESS FINANCIAL CORPORATION
By: /s/ Xxxxxx X. Xxxx
----------------------------
Title: A VP
-------------------------
CONGOLEUM CORPORATION
By: /s/ Xxxxxx X. Xxxxx III
----------------------------
Title: Chief Financial Officer
and Secretary
-------------------------
ACKNOWLEDGED AND AGREED:
CONGOLEUM FISCAL, INC.,
for itself and as successor by merger to
Congoleum Financial Corporation
By: /s/ Xxxxxx X. Xxxxx III
----------------------------
Title: Vice President, Treasurer
and Secretary
-------------------------
CONGOLEUM SALES, INC.
By: /s/ Xxxxxx X. Xxxxx III
----------------------------
Title: Vice President, Treasurer
and Secretary
-------------------------
