AMENDMENT NO. 11 TO RATIFICATION AND AMENDMENT AGREEMENT AND AMENDMENT NO. 13 TO LOAN AND SECURITY AGREEMENT
Exhibit
10 (58)
AMENDMENT
NO. 11 TO RATIFICATION AND AMENDMENT AGREEMENT AND
AMENDMENT NO. 13 TO LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 13 TO LOAN AND SECURITY AGREEMENT
AMENDMENT
NO. 11 TO RATIFICATION AND AMENDMENT AGREEMENT AND AMENDMENT NO. 13 TO LOAN AND
SECURITY AGREEMENT, dated as of March 16, 2009 (this “Eleventh 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 WACHOVIA BANK, NATIONAL
ASSOCIATION, successor by merger to Congress Financial 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 19, 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, Amendment No. 1 to Ratification
Agreement and Amendment No. 3 to Loan and Security Agreement, dated as of
December 14, 2004, between Lender and Borrower, as acknowledged by Guarantors,
Amendment No. 2 to Ratification Agreement and Amendment No. 4 to Loan and
Security Agreement, dated as of January 13, 2005, between Lender and Borrower,
as acknowledged by Guarantors, Amendment No. 3 to Ratification Agreement and
Amendment No. 5 to Loan and Security Agreement, dated as of June 7, 2005,
between Lender and Borrower, as acknowledged by Guarantors, Amendment No. 4 to
Ratification Agreement and Amendment No. 6 to Loan and Security Agreement, dated
as of December 19, 2005, as acknowledged by Guarantors, Amendment No. 5 to
Ratification Agreement and Amendment No. 7 to Loan and Security Agreement, dated
as of September 27, 2006 between Lender and Borrower, as acknowledged by
Guarantors, Amendment No. 6 to Ratification Agreement and Amendment No. 8 to
Loan and Security Agreement, dated as of November 27, 2006 between Lender and
Borrower, as acknowledged by Guarantors, Amendment No. 7 to Ratification
Agreement and Amendment No. 9 to Loan and Security Agreement dated as of June
12, 2007 between Lender and Borrower, as acknowledged by Guarantors, Amendment
No. 8 to Ratification and Amendment Agreement and Amendment No. 10 to Loan and
Security Agreement dated as of December 11, 2007, between Lender and Borrower,
as acknowledged by Guarantors, Amendment No. 9 to Ratification and Amendment
Agreement and Amendment No. 11 to Loan and Security Agreement dated as of June
4, 2008, between Lender and Borrower, as acknowledged by Guarantors, and
Amendment No. 10 to Ratification and Amendment Agreement and Amendment No. 12 to
Loan and Security Agreement dated as of October 6, 2008, 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 have each 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 have each 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 notified Lender that as of December 31, 2008,
Borrower and Guarantors will be unable to comply with the Minimum EBITDA
covenant as set forth in Section 9.23(c) of the Loan Agreement;
WHEREAS,
Borrower and Guarantors hereby acknowledge and agree that the foregoing
constitutes an Event of Default under the Loan Agreement and/or the other
Financing Agreements (the “Specified Event of Default”);
WHEREAS,
Borrower and Guarantors have requested that Lender (i) waive the Specified Event
of Default, and (ii) 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 Eleventh Ratification Amendment, Lender, Borrower and Guarantors desire
and intend to evidence such amendments;
WHEREAS,
this Eleventh Ratification Amendment has been filed with the Bankruptcy Court
and notice thereof has been served upon all parties that have requested notice
in the Borrower’s and Guarantors’ bankruptcy cases pursuant to the Final Order
(1) Authorizing Debtors’ Use of Cash Collateral, (2) Authorizing Debtors to
Obtain Post-Petition Financing, (3) Granting Senior Liens and Priority
Administrative Expense Status Pursuant to 11 U.S.C. §§105 and 364(c), (4)
Modifying the Automatic Stay Pursuant to 11 U.S.C. §362, and (5) Authorizing
Debtors to Enter Into Agreements with Congress Financial Corporation (as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, the “Final DIP Financing Order”), which was approved by the Bankruptcy
Court on February 2, 2004;
WHEREAS, no objection has been filed by
any interested party to the terms and conditions of this Eleventh Ratification
Amendment and Borrower and Guarantors are authorized to execute and deliver this
Eleventh Ratification Amendment in accordance with the terms of the Final DIP
Financing Order; and
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:
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1. DEFINITIONS.
1.1 Additional
Definition. “Eleventh Ratification Amendment” shall mean this
Eleventh 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
“Financing Agreements” in this
Eleventh
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 Eleventh Ratification Amendment, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
(b) All
references to the term “Ratification Agreement” in this Eleventh 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 Eleventh Ratification Amendment, unless otherwise defined
herein, all capitalized terms used herein, including, 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. WAIVER OF THE SPECIFIED
EVENT OF DEFAULT
2.1 Subject
to all terms, conditions, and conditions precedent contained in this Eleventh
Ratification Amendment, Lender waives the Specified Event of
Default.
3. AMENDMENTS TO LOAN
AGREEMENT
3.1 Interest
Rate. Section 1.41 of the Loan Agreement is hereby deleted in
its entirety and replaced with the following:
“1.41 ‘Interest
Rate’ shall mean, as to
Prime Rate Loans, a rate equal to one and three-quarters (1.75%) percent per
annum in excess of the Prime Rate; provided, that, notwithstanding anything to the
contrary contained herein, the Interest Rate shall mean the rate of three and
three-quarters (3.75%) percent per annum in excess of the Prime Rate as to Prime
Rate Loans, at Lender’s option, without notice, (a) either (i) for the period on
and after the date of termination or non-renewal hereof 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 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
hereof (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).”
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3.2 Minimum
EBITDA. Section 9.23(c) of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
“(c) Borrower
and its Subsidiaries shall not, for any period set forth below during fiscal
year 2009 of Borrower and its Subsidiaries commencing on or after January 1,
2009 (each, a “Test Period”), permit EBITDA of Borrower and its
Subsidiaries to be
less than the respective amount set forth below opposite such Test Period; provided, that,
Borrower and its Subsidiaries shall not be required to comply with this Minimum
EBITDA covenant in the event Excess Availability (including any Excess
Availability considered in satisfaction of Section 9.18) on each Business Day
during the Test Period is greater than $5,000,000. In the event (A)
Excess Availability (including any Excess Availability considered in
satisfaction of Section 9.18) is less than $5,000,000 (x) on any Business Day up
to a maximum of three (3) Business Days during the period from the effective
date of this Eleventh Ratification Amendment through March 31, 2009 or (y) on
any Business Day up to a maximum of four (4) Business Days for the ninety (90)
day period ending on June 30, 2009, and (B) Borrower and its Subsidiaries are in
possession of at least $3,000,000 of unrestricted cash during any day that
Excess Availability (including any Excess Availability considered in
satisfaction of Section 9.18) is less than $5,000,000, then Borrower and its
Subsidiaries shall not be required to comply with the terms of this Minimum
EBITDA covenant for such Test Period:
|
Test
Period
|
Minimum
EBITDA
|
|
|
For the month ending January 31,
2009
|
$400,000
|
|
|
For the two (2) months ending
February 28, 2009
|
$900,000
|
|
|
For the three (3) months ending
March 31, 2009
|
$1,600,000
|
|
|
For the four (4) months ending
April 30, 2009
|
$2,400,000
|
|
|
For the five (5) months ending May
31, 2009
|
$3,350,000
|
|
|
For the six (6) months ending June
30, 2009
|
$4,300,000”
|
4. COVENANT MODIFICATION AND
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 Eleventh Ratification Amendment, Borrower shall pay
Lender a covenant modification and amendment fee (the “Amendment Fee”) in the
amount of $30,000, which Amendment Fee shall be fully earned and payable upon
the entry of an order approving and authorizing this Eleventh
Amendment. The Amendment Fee may be charged directly to the loan
account of Borrower.
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5. 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:
5.1 This
Eleventh 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.
5.2 Other
than the Specified Event of Default, no Default or 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 Eleventh
Ratification Amendment.
6. 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 Eleventh 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 conditions to Lender’s obligation to extend further loans,
advances or other financial accommodations to Borrower pursuant to the Loan
Agreement:
6.1 Borrower
and Guarantors shall execute and/or deliver to Lender this Eleventh Ratification
Amendment, and all other Financing Agreements that Lender may request to be
delivered in connection herewith, in form and substance satisfactory to
Lender;
6.2 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;
6.3 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 Eleventh
Ratification Amendment and the other Financing Agreements, as modified pursuant
to this Eleventh Ratification Amendment, all of which contains provisions,
representations, warranties, covenants and Events of Default, as are reasonably
satisfactory to Lender and its counsel;
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6.4 Each
of Borrower and Guarantors shall comply in full with the notice and other
requirements of the Bankruptcy Code, the applicable Federal Rules of Bankruptcy
Procedure, and the terms and conditions of the Final DIP Financing Order in a
manner acceptable to Lender and its counsel;
6.5 No
objection has been filed by any interested party to the terms and conditions of
this Eleventh Ratification Amendment and Borrower and Guarantors are authorized,
in accordance with the terms of the Final DIP Financing Order, to execute,
deliver, comply with and fully be bound by this Eleventh Ratification Amendment;
and
6.6 Other
than the Specified Event of Default, no Default or Event of Default shall be
continuing under any of the Financing Agreements, as of the date
hereof.
7. MISCELLANEOUS.
7.1 Amendments and
Waivers. Neither this Eleventh 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.
7.2 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,
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 Eleventh Ratification
Amendment, any of the other Financing Agreements or the Financing
Order.
7.3 Headings. The
headings used herein are for convenience only and do not constitute matters to
be considered in interpreting this Eleventh Ratification Amendment.
7.4 Counterparts. This
Eleventh 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.
7.5 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.
7.6 Effectiveness. This
Eleventh Ratification Amendment shall become effective upon the execution hereof
by Lender.
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IN
WITNESS WHEREOF, the parties hereto have caused this Eleventh Ratification
Amendment to be duly executed as of the day and year first above
written.
WACHOVIA BANK, NATIONAL
ASSOCIATION,
successor
by merger to Congress Financial Corporation
By: /s/
▇▇▇▇ ▇.
▇▇▇▇▇▇
Title: Managing
Director
CONGOLEUM
CORPORATION,
as Debtor and
Debtor-in-Possession
By: /s/ ▇▇▇▇▇▇
▇. ▇▇▇▇▇ III
Title: CFO
CONGOLEUM SALES,
INC.,
as Debtor and
Debtor-in-Possession
By: /s/ ▇▇▇▇▇▇
▇. ▇▇▇▇▇ III
Title: VP
CONGOLEUM FISCAL,
INC.,
as Debtor and
Debtor-in-Possession
By: /s/ ▇▇▇▇▇▇
▇. ▇▇▇▇▇ III
Title: VP
7