EXHIBIT 10.38
FIRST AMENDMENT TO SECURED CREDIT AGREEMENT
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This FIRST AMENDMENT (this "AMENDMENT") TO THE SECURED CREDIT
AGREEMENT, dated as of July 31, 1998 (the "CREDIT AGREEMENT") is made as of
September 1, 1998 by and between GIBRALTAR PACKAGING GROUP, INC., a Delaware
corporation (the "COMPANY") and FIRST SOURCE FINANCIAL LLP, as Agent and a
Lender ("FSFP").
R E C I T A L S:
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WHEREAS, the Company wishes, and FSFP is willing, to amend the
Credit Agreement, subject to the terms and conditions of this Amendment;
WHEREAS, FSFP is the only Lender which is a party to the Credit
Agreement as of the date hereof; and
WHEREAS, this Amendment shall constitute a Related Document and
these Recitals shall be construed as part of this Amendment.
NOW, THEREFORE, in consideration of the foregoing and the
agreements, promises and covenants set forth below, and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Amendment. (a) Section 1.1 of the Credit Agreement is hereby
amended as follows:
(i) by deleting the definition of "Borrowing Base" and
replacing such definition with the following:
"BORROWING BASE" shall mean an amount equal to: (i)
eighty-five percent (85%) of the face amount (less maximum
discounts, credits and allowances which may have been taken by or
granted to Account Debtors in connection therewith) then outstanding
of existing Eligible Accounts, plus (ii) sixty percent (60%) of the
book value of then existing Eligible Inventory (the book value of
Eligible Inventory to be determined at the lower of cost (determined
on a first-in-first-out ("FIFO") basis) or market).
(ii) by deleting the definition of "Required Lenders" and
replacing such definition with the following:
"REQUIRED LENDERS" shall mean (i) Lenders having sixty-six and
two-thirds percent (66_%) or more of the total Commitments then in
effect or (ii) if the Revolving Commitment has been terminated,
Lenders having in the aggregate sixty-six and two-thirds percent
(66_%) or more of the aggregate outstanding amount of the Loans;
provided, however, the required percentage shall be 100% so long as
(x) there are not more than two Lenders and (y) each such Lender has
(A) twenty percent (20%) or more of the total Commitments then in
effect or (B) if the Revolving Commitment has been terminated,
twenty percent (20%) or more of the aggregate outstanding amount of
the Loans).
(b) Section 9.1 of the Credit Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
SECTION 9.1 ELIGIBLE ACCOUNTS. "ELIGIBLE ACCOUNTS" shall mean
all Accounts of Borrower and each Guarantor other than the following: (i)
Accounts which remain unpaid as of the earlier to occur of ninety (90)
days after the due date specified in the original invoice with respect
thereto or one hundred twenty (120) days after the date of the original
invoice with respect thereto; (ii) all Accounts owing by a single Account
Debtor, including a currently scheduled Account, if twenty-five percent
(25%) or more of the balance owing by such Account Debtor is ineligible by
reason of the criterion set forth in clause (i) of this Section 9.1; (iii)
Accounts with respect to which the Account Debtor is an Affiliate of
either Borrower or a Guarantor or a director, officer or employee of
Borrower, any Guarantor or its Affiliates; (iv) Accounts with respect to
which the Account Debtor is a Governmental Authority or prime contractor
thereof unless Borrower or any Guarantor has complied in a manner
satisfactory to Agent with the Federal Assignment of Claims Act of 1940,
as amended, or similar law or statute of the relevant state, province,
municipality or other jurisdiction and any amendments thereto, relative to
the assignment of such Accounts; (v) Accounts with respect to which the
Account Debtor is not a resident of the United States or Canada (other
than the provinces of Xxxxxx Xxxxxx Island, Newfoundland and Nova Scotia
and the Northwest Territories) unless such Account is payable in United
States Dollars and the Account Debtor has supplied Borrower or any
Guarantor with an irrevocable letter of credit, issued by a financial
institution satisfactory to the Required Lenders, in an amount sufficient
to cover such Account and in form and substance satisfactory to the
Required Lenders and without right of setoff; (vi) Accounts arising with
respect to goods which have not been shipped and delivered to and accepted
as satisfactory by the Account Debtor or arising with respect to services
which have not been fully performed and accepted as satisfactory by the
Account Debtor; (vii) Accounts for which the prospect of payment in full
or performance in a timely manner by the Account Debtor is or is likely to
become impaired as determined by Agent in the exercise of its discretion;
(viii) Accounts which are not invoiced (and dated as of the date of such
invoice) and sent to the Account Debtor within five (5) days after
delivery of the underlying goods to or performance of the underlying
services for the Account Debtor; (ix) Accounts with respect to which
Agent, on behalf of the Lenders, does not have a first and valid fully
perfected Lien free and clear of any other Lien;
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(x) Accounts with respect to which the Account Debtor is the subject of
bankruptcy or a similar insolvency proceeding or has made an assignment
for the benefit of creditors or whose assets have been conveyed to a
receiver or trustee; (xi) Accounts with respect to which the Account
Debtor's obligation to pay the Account is conditional upon the Account
Debtor's approval or is otherwise subject to any repurchase obligation or
return right, as with sales made on a guaranteed sale, xxxx-and-hold,
sale-or-return, demonstration, sale on approval or other terms by reason
of which the payment by the Account Debtor is or may be conditional
(except with respect to Accounts in connection with which Account Debtors
are entitled to return Inventory solely on the basis of the quality of
such Inventory) or consignment basis; (xii) Accounts to the extent that
the Account Debtor's indebtedness to Borrower or any Guarantor exceeds a
credit limit determined by Agent in Agent's discretion following prior
written notice of such credit limit from Agent to Borrower or such
Guarantor; (xiii) Accounts with respect to which any disclosure is
required in accordance with Section 9.2; (xiv) contra Accounts to the
extent of the amount of the accounts payable owed by Borrower or any
Guarantor to the Account Debtor; (xv) Accounts with respect to which the
Account Debtor is located in Minnesota or any other state denying
creditors access to its courts in the absence of a Notice of Business
Activities Report or other similar filing unless Borrower or any Guarantor
has either qualified as a foreign corporation authorized to transact
business in such state or has filed a Notice of Business Activities Report
or similar filing with the applicable Governmental Authority in such state
for the then current year; (xvi) Accounts evidenced by Chattel Paper or
any Instrument of any kind, to the extent possession of such Chattel Paper
or Instrument is not granted to Agent, for the benefit of the Lenders;
(xvii) Accounts which Agent determines in good faith to be unacceptable
and (xviii) the Accounts do not arise from the sale of Inventory produced
in violation of the Fair Labor Standards Act so as to be subject to the
so-called "hot goods" provision contained in Title 19 U.S.C., Section
215(a)(1). In the event that an Eligible Account previously scheduled in a
Borrowing Base Certificate ceases to be an Eligible Account, Borrower
shall notify, or shall cause the applicable Guarantor to notify, Agent
thereof immediately.
(c) Section 14.1 of the Credit Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
SECTION 14.1 WAIVER; AMENDMENTS. No delay on the part of any Lender
or Agent or any holder of a Note or other Liability in the exercise of any
right, power or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise by any of them of any right, power or remedy
preclude other or further exercise thereof, or the exercise of any other
right, power or remedy. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement or a Note or any
Related Document shall in any event be effective unless the same shall be
in writing and signed and delivered by the Required Lenders, and then any
such amendment, modification, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given;
provided that no amendment, waiver or consent shall, unless in writing and
signed by each affected Lender, do any of the following: (i) increase the
Commitment of a Lender or subject a Lender
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to any additional obligations, (ii) except as otherwise expressly provided
in this Agreement, reduce the principal of, or interest on, the Notes, any
Reimbursement Obligations or any fees hereunder, (iii) postpone any date
fixed for any payment in respect of principal of, or interest on, the
Notes, any Reimbursement Obligations or any fees hereunder, (iv) change
the percentage of the Commitment, or any minimum requirement, necessary
for the Lenders or the Required Lenders to take any action hereunder, (v)
amend or waive this Section 14.1, or change the definition of Required
Lenders, (vi) increase the percentage of Eligible Accounts or Eligible
Inventory used in determining the Borrowing Base, or (vii) except as
otherwise expressly provided in this Agreement (including without
limitation as provided in Section 11.30 hereof), and other than in
connection with the financing, refinancing, sale or other disposition of
any asset of any Borrower or Subsidiary permitted under this Agreement,
release any Liens in favor of Agent on all or any substantial portion of
the Collateral; provided, further, that no amendment, waiver or consent
affecting the rights or duties of Agent under any Related Documents shall
in any event be effective, unless in writing and signed by Agent, in
addition to the Lenders required hereinabove to take such action.
Notwithstanding any of the foregoing to the contrary, the consent of
Borrower or any Guarantor shall not be required for any amendment,
modification or waiver of the provisions of Section 15.2 (other than the
provisions of Section 15.2.9). In addition, Borrower and the Lenders
hereby authorize Agent to modify this Agreement by unilaterally amending
or supplementing Schedule 1 from time to time in the manner requested by
Borrower, Agent or any Lender in order to reflect any assignments or
transfers of the Loans, as provided for hereunder; provided, however, that
Agent shall promptly deliver a copy of any such modification to Borrower
and each Lender. All Events of Default shall continue until the same are
waived in accordance with this Subsection 14.1.
(d) Section 14.23 of the Credit Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
SECTION 14.23 CONFIDENTIALITY. Borrower agrees that FSFP may
disclose information relating to Borrower to each of the Master Lenders
and the Master Agents which have agreed to use procedures substantially
comparable to those used by them in respect of non-public information as
supplied to them by or on behalf of FSFP to the extent that such
information is not and does not become publicly available and which FSFP
indicates at the time is to be treated confidentially; provided, however,
that each of the Master Lenders, and the Master Agents, as the case may
be, is hereby authorized to deliver a copy of each or any financial
statement of Borrower or any other information relating to the Loans, or
the Collateral, which may be furnished to it hereunder or otherwise to (a)
its legal counsel and auditors and other professional advisors, (b)
governmental or regulatory authorities having jurisdiction over it, (c)
independent financial rating agencies (including, without limitation the
Rating Agencies), (d) any person providing general liquidity or credit
enhancement to the Master Lenders , and (e) (subject to obtaining a
confidentiality agreement containing the foregoing confidentiality
restrictions) any Person to whom a Master Lender proposes to assign all or
any part of its interest or grant a participation in its interest. As used
herein:
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"MASTER AGENTS" shall mean Citicorp North America, Inc. ("CNAI"),
Bank of New York and any successor thereto or assignee thereof; "MASTER
LENDER" shall mean any person becoming a party "Lender" to that certain
Second Amended and Restated Credit Agreement dated as of May 24, 1996 (as
amended from time to time, the "MASTER CREDIT AGREEMENT") among First
Source Financial, Inc., FSFP, Master Agents and such Lenders; and "RATING
AGENCIES" shall mean Standard and Poor's and Moody's Ratings Group, a
division of XxXxxx-Xxxx, Inc., and Xxxxx'x Investors Services, Inc.
Borrower further agrees that Agent and any Lender may disclose information
relating to Borrower (a) to any regulatory authority having jurisdiction
over Agent or such Lender, (b) to any other Person in connection with a
Lender's proposed or actual assignment of, or sale of any participation
in, the Liabilities and (c) to any other Person in connection with the
exercise of Agent's or any Lender's rights hereunder or under any of the
other Related Documents, so long as each such party has agreed to use
procedures substantially comparable to those used by such Person in
respect of non-public information as supplied to such Person by or on
behalf of Agent or such Lender, as the case may be, to the extent that
such information is not and does not become publicly available and which
Agent or such Lender, as the case may be, indicates at the time is to be
treated confidentially.
(e) Section 15.4 of the Credit Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
SECTION 15.4 AGENT'S DISCRETION. In the event Borrower is unable to
comply with (i) the Borrowing Base limitations applicable to it set forth
in Section 2 or (ii) the conditions precedent to the making of a Revolving
Loan, the Lenders authorize Agent, in its sole discretion, to make
Revolving Loans (and Lenders shall fund their Pro Rata Share of such
Revolving Loans upon the request of Agent) (such Revolving Loans are
collectively referred to as "INTERIM REVOLVING LOANS") for a period
commencing on the date Agent first receives a request for an Interim
Revolving Loan until the earlier of (i) the 30th day after such date, or
(ii) the date Borrower is again able to comply with the Borrowing Base
limitations applicable to it and the conditions precedent to the making of
Revolving Loans set forth in Sections 2 and 12 hereof, or obtains an
amendment or waiver with respect thereto (such period, in each case, is
referred to as the "INTERIM REVOLVING LOAN PERIOD"). Agent shall not, in
any event, make any Interim Revolving Loan if at such time the amount of
such Interim Revolving Loan when added to the then aggregate outstanding
principal amount of other Interim Revolving Loans made to all Borrowers
would exceed the lesser of (a) 10% of the amount of the Revolving
Commitment or (b) 10% of the Borrowing Base; provided, that nothing in
this Section 15.4 shall limit Agent's right to make Agent's Advances;
provided, further, that, after giving effect to any Interim Revolving
Loans, the aggregate outstanding principal amount of the Total Revolving
and LC Exposure shall not exceed the aggregate Commitments. All Interim
Revolving Loans shall be Prime Rate Loans. An Interim Revolving Loan shall
cease to be an Interim Revolving Loan (and shall be deemed to be an
Advance consisting of Revolving Loans) if the unsatisfied conditions
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giving rise to such Interim Revolving Loan shall thereafter be satisfied
or the events which cause such Loan to be an Interim Revolving Loan shall
thereafter cease to exist. The provisions of this Section 15.4 are solely
for the benefit of Agent and the Lenders, and Borrower shall not have any
rights of a third-party beneficiary of any of the provisions hereof.
(f) Schedule 10.5 to the Credit Agreement is hereby deleted in its
entirety and Schedule 10.5 to this Amendment is substituted therefor.
2. Representations and Warranties of the Company. In order to induce
FSFP to enter into this Amendment, the Company hereby represents and warrants to
FSFP that:
(a) No Default. After giving effect to this Amendment, no Default
or Event of Default shall have occurred or be continuing;
(b) Representations and Warranties. As of the date hereof and after
giving effect to this Amendment, the representations and warranties of the
Company contained in the Credit Agreement and each of the Related Documents are
true, accurate and complete in all respects on and as of the date hereof to the
same extent as though made on and as of such date except to the extent such
representations and warranties specifically relate to an earlier date; and
(c) Corporate Authority; Enforceability. (i) The execution, delivery
and performance by the Company of this Amendment are within the Company's
corporate powers and have been duly authorized by all necessary corporate action
on the part of the Company, (ii) this Amendment is the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms and (iii) neither the execution, delivery or performance by the
Company of this Amendment (1) violates any law or regulation, or any order or
decree of any court or Governmental Authority, (2) conflicts with or results in
the breach or termination of, constitutes a default under or accelerates any
performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which the Company is a party or by which the
Company or any of its property is bound or (3) results in the creation or
imposition of any Lien (other than Liens created by the Collateral Documents and
Permitted Liens) upon any of the assets or property of the Company.
3. Conditions to Effectiveness. The effectiveness of this Amendment
shall be conditioned upon the satisfaction of the conditions set forth in this
Section 3 and the delivery of the following documents to FSFP, in each case in
form and substance satisfactory to FSFP.
(a) Documentation. The Company shall have delivered to FSFP a
counterpart of this Amendment duly executed by the Company.
(b) No Default. No Default or Event of Default under the Credit
Agreement, as amended hereby, shall have occurred and be continuing.
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(c) Warranties and Representations. After giving effect to this
Amendment, the respective warranties and representations of the Company
contained in the Related Documents shall be true and correct as of the effective
date hereof, with the same effect as though made on such date, except to the
extent that such warranties and representations expressly relate to an earlier
date, and all of such representations and warranties (except those relating to
an earlier date) are hereby remade by the Company as of the date hereof.
4. Miscellaneous.
(a) Headings. Section headings in this Amendment are included solely
for convenience of reference and are not intended to affect the interpretation
of any provision of this Amendment.
(b) Severability. Whenever possible each provision of this Amendment
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Amendment shall be prohibited by or
invalid under such 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 Amendment.
(c) Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument. Delivery of an
executed counterpart of a signature page to this Amendment by telecopy shall be
effective as delivery of a manually executed counterpart of this Amendment.
(d) Successors and Assigns. This Amendment shall be binding upon,
and shall inure to the sole benefit of, parties hereto and their respective
successors and assigns.
(e) References. Any reference to the Credit Agreement contained in
any notice, request, certificate, or other document executed concurrently with
or after the execution and delivery of this Amendment shall be deemed to include
this Amendment unless the context shall otherwise require.
(f) Continued Effectiveness. This Amendment shall be part of the
Credit Agreement, the terms of which are incorporated herein. Except as
specifically amended above, the Credit Agreement and the other Related Documents
shall remain in full force and effect and are each hereby ratified and
confirmed.
(g) Costs, Expenses and Indemnity. The Company affirms and
acknowledges that Section 14.4 of the Credit Agreement applies to this Amendment
and the agreements and documents contemplated hereunder.
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(h) Incorporation of Credit Agreement. The provisions contained in
Sections 14.6, 14.7 and 14.11 of the Credit Agreement are incorporated herein by
reference to the same extent as if reproduced herein in their entirety.
(i) Capitalized Terms. Capitalized terms used but not otherwise
defined in this Amendment shall have the meanings ascribed to them in the Credit
Agreement.
(j) Entire Agreement. This Amendment constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all other understandings, oral or written, with respect to the
subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
GIBRALTAR PACKAGING GROUP, INC.
By: /s/ Xxxx X. Xxxxx
Name Printed: Xxxx X. Xxxxx
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Title: Executive Vice President, Secretary &
Treasurer
FIRST SOURCE FINANCIAL LLP,
as Agent and a Lender
By: First Source Financial, Inc.
Its: Manager
By: /s/ Xxxx X. Xxxxxxx
Name Printed: Xxxx X. Xxxxxxx
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Title: Senior Vice President
SCHEDULE 10.5
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LIENS
Agent has elected not to take a mortgage on the real property owned by GB
Labels, Inc. in Burlington, North Carolina.
