Amendment No. 1 to Ratification and Amendment Agreement and Amendment No. 3 to Loan and Security Agreement by and among Congoleum Corporation, Congoleum Fiscal, Inc., Congoleum Sales, Inc., and Congress Financial Corporation
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This amendment, dated December 14, 2004, is between Congoleum Corporation, its subsidiaries, and Congress Financial Corporation. It modifies the existing Loan and Security Agreement and related documents, updating definitions, adjusting capital expenditure and EBITDA requirements, and extending the loan term to June 30, 2005. The amendment also imposes a $150,000 fee payable by the borrower. The changes are authorized by the bankruptcy court and are part of ongoing debtor-in-possession financing during bankruptcy proceedings.
EX-10.11.4 2 ex10-11_4.txt Exhibit 10.11.4 [Execution] AMENDMENT NO. 1 TO RATIFICATION AND AMENDMENT AGREEMENT AND AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT AMENDMENT NO. 1 TO RATIFICATION AND AMENDMENT AGREEMENT AND AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT, dated as of December 14, 2004 (this "First Ratification Amendment"), by and among CONGOLEUM CORPORATION, a Delaware corporation, as debtor and debtor-in-possession ("Borrower"), CONGOLEUM FISCAL, INC., a New York corporation, as debtor and debtor-in-possession ("CFI"), CONGOLEUM SALES, INC., a New York corporation, as debtor and debtor-in-possession ("CSI" and together with CFI, collectively, "Guarantors" and each individually, a "Guarantor"), and CONGRESS FINANCIAL CORPORATION, a Delaware corporation ("Lender"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, Lender, Borrower and Guarantors have entered into financing arrangements pursuant to which Lender may make loans and advances and provide other financial accommodations to Borrower as set forth in the Loan and Security Agreement, dated December 10, 2001, between Lender and Borrower, as amended by Amendment No. 1 to Loan and Security Agreement, dated September 29, 2002, between Lender and Borrower, Amendment No. 2 to Loan and Security Agreement, dated as of February 27, 2003, among Lender, Borrower and Guarantors, and as further amended and ratified by the Ratification and Amendment Agreement, dated as of January 7, 2004 (the "Ratification Agreement"), between Lender and Borrower, as acknowledged by Guarantors, permitting debtor and debtor-in-possession financing for Borrower and Guarantors, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced (all of the foregoing, as amended hereby and as the same may hereafter be further amended, modified, supplemented, extended, renewed, restated or replaced, collectively, the "Loan Agreement", and together with all agreements, documents and instruments at any time executed and/or delivered in connection therewith or related thereto, including the Reaffirmation and Amendment of Guarantor Documents, dated as of January 7, 2004, between Lender and Guarantors, as from time to time amended, modified, supplemented, extended, renewed, restated or replaced, collectively, the "Financing Agreements"); WHEREAS, Borrower and each Guarantor has commenced a case under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of New Jersey and has retained possession of its assets and is authorized under the Bankruptcy Code to continue the operation of its businesses as a debtor-in-possession; WHEREAS, Borrower and Guarantors have requested that Lender make certain amendments to the Loan Agreement, and Lender is willing to agree to such request, subject to the terms and conditions contained herein; WHEREAS, by this First Ratification Amendment, Lender, Borrower and Guarantors desire and intend to evidence such amendments; and WHEREAS, this First Ratification Amendment has been authorized by the Bankruptcy Court pursuant to an Order entered by the Bankruptcy Court authorizing Borrower and Guarantors to execute and deliver this First Ratification Amendment; NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lender, Borrower and Guarantors hereby covenant, warrant and agree as follows: 1. DEFINITIONS. 1.1 Additional Definition. "First Ratification Amendment" shall mean this First Ratification Amendment, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. 1.2 Amendments to Definitions in Financing Agreements. (a) All references to the term "Budget" in the Ratification Agreement and any of the other Financing Agreements shall be deemed and each such reference is hereby amended to mean the Budget attached to the Ratification Agreement as Exhibit A, as supplemented by the Budget attached hereto as Exhibit A, in each case delivered to Lender pursuant to Section 5.3 of the Ratification Agreement and setting forth the cash expenditures of Borrower and Guarantors on a monthly or quarterly basis, as applicable, for the estimated and projected periods covered thereby, together with any further amendments, modifications and supplements thereto or any subsequent budget, satisfactory in form and substance to Lender, setting forth such information for any subsequent period or periods. (b) All references to the term "Financing Agreements" in this First Ratification Amendment and in any of the Financing Agreements shall be deemed and each such reference is hereby amended to include, in addition and not in limitation, this First Ratification Amendment, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. (c) All references to the term "Ratification Agreement" in this First Ratification Amendment and in any of the Financing Agreements shall be deemed and each such reference is hereby amended to mean the Ratification Agreement, as amended hereby, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. 1.3 Interpretation. For purposes of this First Ratification Amendment, unless otherwise defined herein, all capitalized terms used herein, including, 2 but not limited to, those terms used and/or defined in the recitals above, shall have the respective meanings assigned to such terms in the Loan Agreement. 2. AMENDMENTS TO LOAN AGREEMENT 2.1 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, provided, that, if the aggregate amount of Capital Expenditures made by Borrower and its Subsidiaries during fiscal year 2004 is less than $5,000,000, then the amount of Capital Expenditures permitted to be made by Borrower and its Subsidiaries hereunder during fiscal year 2005 shall be increased by $2,000,000." 2.2 EBITDA. Section 9.23 of the Loan Agreement is hereby amended by adding the following subsection (c) to the end of such Section: "(c) Borrower and its Subsidiaries shall not, as to any fiscal quarter during the fiscal year 2005 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 ------ -------------- January 1, 2005 through $3,500,000 March 31, 2005 January 1, 2005 through $9,500,000" June 30, 2005 2.3 Term. (a) The first sentence of Section 12.1(a) of the Loan Agreement is hereby deleted in its entirety and replaced with the following: "This Agreement and the other Financing Agreements shall become effective as of the date set forth on the first page hereof and shall continue in full force and effect for a term ending on June 30, 2005 (the "Termination Date")." 3 (b) Section 12.1(c)(iii) of the Loan Agreement is hereby amended by deleting the reference to "December 31, 2004" and replacing it with "June 30, 2005". 3. AMENDMENT FEE. In addition to and not in limitation of all other fees, costs and expenses payable to Lender under the Financing Agreements, in consideration of this First Ratification Amendment, Borrower shall pay Lender an amendment fee in the amount of $150,000, which fee shall be fully earned as of and payable on the date hereof and may be charged directly to the loan account of Borrower. 4. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS. In addition to the continuing representations, warranties and covenants heretofore made in the Loan Agreement or otherwise and hereafter made by Borrower and Guarantors to Lender, whether pursuant to the Financing Agreements or otherwise, and not in limitation thereof, Borrower and Guarantors hereby represent, warrant and covenant with, to and in favor of Lender the following (which shall survive the execution and delivery of this Agreement), the truth and accuracy of which, or compliance with, to the extent such compliance does not violate the terms and provisions of the Bankruptcy Code, being a continuing condition of the making of loans by Lender: 4.1 The Budget attached hereto as Exhibit A has been thoroughly reviewed by Borrower and Guarantors and their respective appropriate management and sets forth, among other things, the actual through September 30, 2004 and the projected through June 30, 2005 quarterly statements of cash flow, including cash receipts and cash disbursements, quarterly statements of loan availability of Borrower on a quarterly "roll-forward" basis and monthly statements of asbestos/bankruptcy costs. Borrower and Guarantors hereby acknowledge, confirm and agree that Lender has relied upon the Budget and on the information set forth therein in determining to enter into this First Ratification Amendment. Borrower shall furnish to Lender all other financial information, projections, budgets, business plans, cash flows and such other information as Lender shall reasonably request from time to time. 4.2 This First Ratification Amendment has been duly authorized, executed and delivered by Borrower and Guarantors and the agreements and obligations of Borrower and Guarantors contained herein constitute legal, valid and binding obligations of Borrower and Guarantors enforceable against Borrower and Guarantors in accordance with their respective terms. 4.3 No Event of Default or act, condition or event which with notice or passage of time or both would constitute an Event of Default exists or has occurred as of the date of this First Ratification Amendment. 5. CONDITIONS PRECEDENT. In addition to any other conditions contained herein or in the Loan Agreement, as in effect immediately prior to the date hereof, with respect to the Loans, Letter of Credit Accommodations and other financial accommodations available to Borrower (all of which conditions, except as modified or made pursuant to this First Ratification Amendment shall remain applicable to the Loans and be applicable to Letter of Credit Accommodations and other financial accommodations available to Borrower), the following are 4 conditions to Lender's obligation to extend further loans, advances or other financial accommodations to Borrower pursuant to the Loan Agreement: 5.1 No trustee, examiner or receiver or the like shall have been appointed or designated with respect to Borrower or any Guarantor, as debtor and debtor-in-possession, or its business, properties and assets; 5.2 Borrower and Guarantors shall execute and/or deliver to Lender this First Ratification Amendment, and all other Financing Agreements that Lender may request to be delivered in connection herewith, in form and substance satisfactory to Lender; 5.3 Borrower and Guarantors shall execute and/or deliver to Lender all other Financing Agreements, and other agreements, documents and instruments, in form and substance satisfactory to Lender, which, in the good faith judgment of Lender are necessary or appropriate and implement the terms of this First Ratification Amendment and the other Financing Agreements, as modified pursuant to this First Ratification Amendment, all of which contains provisions, representations, warranties, covenants and Events of Default, as are reasonably satisfactory to Lender and its counsel; 5.4 Each of Borrower and Guarantors shall comply in full with the notice and other requirements of the Bankruptcy Code and the applicable Federal Rules of Bankruptcy Procedure with respect to any relevant Order approving this First Ratification Amendment in a manner acceptable to Lender and its counsel, and an Order shall have been entered by the Bankruptcy Court authorizing Borrower and Guarantors to execute and deliver this First Ratification Amendment; and 5.5 No Event of Default shall be continuing under any of the Financing Agreements, as of the date hereof. 6. MISCELLANEOUS. 6.1 Amendments and Waivers. Neither this First Ratification Amendment nor any other instrument or document referred to herein or therein may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought. 6.2 Further Assurances. Each of Borrower and Guarantors shall, at its expense, at any time or times duly execute and deliver, or shall cause to be duly executed and delivered, such further agreements, instruments and documents, including, without limitation, additional security agreements, collateral assignments, Uniform Commercial Code financing statements or amendments or continuations thereof, landlord's or mortgagee's waivers of liens and consents to the exercise by Lender of all the rights and remedies hereunder, under any of the other Financing Agreements, any Financing Order or applicable law with respect to the Collateral, and do or cause to be done such further acts as may be necessary or proper in Lender's opinion to evidence, perfect, maintain and enforce the security interests of Lender, and the priority thereof, in the Collateral and to otherwise effectuate the provisions or purposes of this First Ratification Amendment, any of the other Financing Agreements or the Financing Order. Upon the request of Lender, at any time and from time to time, Borrower and Guarantors shall, at its cost and expense, do, make, execute, deliver and 5 record, register or file, financing statements, mortgages, deeds of trust, deeds to secure debt, and other instruments, acts, pledges, assignments and transfers (or cause the same to be done) and will deliver to Lender such instruments evidencing items of Collateral as may be requested by Lender. 6.3 Headings. The headings used herein are for convenience only and do not constitute matters to be considered in interpreting this First Ratification Amendment. 6.4 Counterparts. This First Ratification Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which shall together constitute one and the same agreement. 6.5 Additional Events of Default. The parties hereto acknowledge, confirm and agree that the failure of Borrower or any Guarantor to comply with any of the covenants, conditions and agreements contained herein or in any other agreement, document or instrument at any time executed by Borrower or any Guarantor in connection herewith shall constitute an Event of Default under the Financing Agreements. 6.6 Effectiveness. This First Ratification Amendment shall become effective upon the execution hereof by Lender. [BALANCE OF PAGE INTENTIONALLY LEFT BLANK] 6 IN WITNESS WHEREOF, the parties hereto have caused this First Ratification Amendment to be duly executed as of the day and year first above written. CONGRESS FINANCIAL CORPORATION By: /s/ Dionne S. Rice --------------------------------------- Title: Vice President ------------------------------------ CONGOLEUM CORPORATION, as Debtor and Debtor-in-Possession By: --------------------------------------- Title: ------------------------------------ CONGOLEUM SALES, INC., as Debtor and Debtor-in-Possession By: --------------------------------------- Title: ------------------------------------ CONGOLEUM FISCAL, INC., as Debtor and Debtor-in-Possession By: --------------------------------------- Title: ------------------------------------ 7 IN WITNESS WHEREOF, the parties hereto have caused this First Ratification Amendment to be duly executed as of the day and year first above written. CONGRESS FINANCIAL CORPORATION By: --------------------------------------- Title: ------------------------------------ CONGOLEUM CORPORATION, as Debtor and Debtor-in-Possession By: /s/ Howard N. Feist III --------------------------------------- Title: Chief Financial Officer ------------------------------------ CONGOLEUM SALES, INC., as Debtor and Debtor-in-Possession By: /s/ Howard N. Feist III --------------------------------------- Title: Vice President ------------------------------------ CONGOLEUM FISCAL, INC., as Debtor and Debtor-in-Possession By: /s/ Howard N. Feist III --------------------------------------- Title: Vice President ------------------------------------ 8 EXHIBIT A TO AMENDMENT NO. 1 TO RATIFICATION AND AMENDMENT AGREEMENT AND AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT Budget See attached 9 Page 1 CONGOLEUM CORPORATION Quarterly Operating Results ($ in 000's)
* excludes any asbestos related charges Page 2 CONGOLEUM CORPORATION Balance Sheet Dollars in thousands
Page 3 CONGOLEUM CORPORATION Statement of Cash Flows ($ In thousands)
Page 4 Monthly Statement of Asbestos/Bankruptcy Costs
Congoleum Corporation Page 5