SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 23, 1998
MARYLAND 333-8043 52-0822639
(State or other jurisdiction of (Commission file number) (I.R.S. employer
incorporation or organization) identification no.)
115 STEVENS AVENUE
VALHALLA, NY 10595 10595
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (914) 749-3200
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Item 4. Changes in Registrant's Certifying Accountants
On December 23, 1998, Registrant's Board of Directors appointed Ernst
and Young LLP as its certifying accountants replacing BDO Seidman, LLP (the
"Former Accountants").
During the Registrant's two most recent fiscal years and the subsequent
interim period through December 23, 1998, there were no disagreements with the
Former Accountants on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of the Former Accountants,
would have caused them to make reference to the subject matter of the
disagreement in their report. None of the Former Accountants' reports on the
Registrant's financial statements for the fiscal years ended December 31, 1997
and July 31, 1996 and the five month period ended December 31, 1996 contained an
adverse opinion or disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope, or accounting principles.
In addition, there were no reportable events in accordance with Item
304(a)(1)(A)-(D) of Regualtion S-K.
A letter from the Former Accountants addressed to the Securities and
Exchange Commission in accordance with Item 304(a)(3) of Regulation S-K, stating
that they agree with the Registrant's response to Item 4 of the Registrant's
Current Report on Form 8-K, dated December 23, 1998, is filed as an Exhibit
hereto.
Item 5. Other Events.
On December 15, 1998, the Company received waivers from NationsBank
waiving the Company's compliance with certain financial covenants as of
September 30, 1998. In addition, the Credit Facility was amended to, among other
things, increase the mininum unused borrowing base availability to not less than
$10 million and amend certain of the financial covenants. Pursuant to such
amendment, NationsBank shall only be required to make advances to the Company
for the payment of current operating expenses incurred in the ordinary course of
business and for the payment of Obligations (as defined in the Credit Facility)
to NationsBank. In no event shall NationsBank be required to make any advance or
allow the use of Collateral (as defined in the Credit Facility) for the purpose
of making, any payment, directly or indirectly, with respect to the Output
Purchase Agreement, the Florida Coast Joint Venture, Stone Container (other than
ordinary course trade payables), Florida Coast Paper Holding Co. L.L.C. or
Florida Coast Paper Company, L.L.C., or the Senior Secured Notes.
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Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
(c) Exhibits
A letter from BDO Seidman, LLP addressed to the Securities and
Exchange Commission in accordance with Item 304(a)(3) of Regulation
S-K.
Sixth Amendment to Financing and Security Agreement, dated as of
December 15, 1998, among the Company, the Guarantors, the Lenders, the
Agent .
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant as duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FOUR M CORPORATION
By: /s/ Chris Mehiel
------------------
Chief Operating Officer
Date: December 23, 1998
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO.
10.11 Sixth Amendment to Financing
and Security Agreement, dated
as of December 15, 1998, among
the Company, the Guarantors, the
Lendors, the Agent.
16.1 Letter from BDO Seidman, LLP
in accordance with Item 304 (a)(3)
of Regulation S-K
Exhibit 10.11
SIXTH AMENDMENT
TO
FINANCING AND SECURITY AGREEMENT
THIS SIXTH AMENDMENT TO FINANCING AND SECURITY AGREEMENT (this
"Agreement") is made as of the 15th day of December, 1998, by and among:
Four M Corporation, a corporation organized under the laws of the State
of Maryland ("FMC"), Box USA Group, Inc., a corporation organized under the laws
of the State of New York ("Box"), Four M Paper Corporation, a corporation
organized under the laws of the State of Delaware ("Paper"), Four M
Manufacturing Group of Georgia, Inc., a corporation organized under the laws of
the State of Pennsylvania ("Georgia"), Page Packaging Corporation, a corporation
organized under the laws of the State of California ("Page"), Box USA of
Florida, L.P., a limited partnership organized under the laws of the State of
Georgia (the "Florida Partnership"), and Fibre Marketing Group, LLC, a limited
liability company organized under the laws of the State of Maryland ("Fibre
Marketing") jointly and severally (FMC, Box, Georgia, Page, and the Florida
Partnership, are sometimes herein collectively referred to as the "Borrowers;"
and individually, as a "Borrower");
NATIONSBANK, N.A., a national banking association ("NationsBank") and
the other financial institutions listed on the signature pages hereof
(NationsBank and the other financial institutions are herein collectively
referred to as the "Lenders" and individually, as a "Lender"); and
NATIONSBANK, N.A., a national banking association (the "Agent").
RECITALS
A. The Agent, the Lenders and the Borrowers are parties to the Financing
and Security Agreement dated as of May 30, 1996 (as amended by First Amendment
to Financing and Security Agreement dated February 28, 1997 (the "First
Amendment"), Second Amendment to Financing and Security Agreement dated March
27, 1997, Third Amendment to Financing and Security Agreement dated July 31,
1997, Fourth Amendment to Financing and Security Agreement dated December 5,
1997, Fifth Amendment to Financing and Security Agreement dated May 11, 1998,
and as amended, modified, restated), substituted, extended and renewed at any
time and from time to time, the Financing Agreement"). Capitalized terms not
otherwise defined in this Agreement shall have the meanings given to them in the
Financing Agreement.
B. Based on the financial statements and officer's certificate for the
period ending September 30, 1998, the Borrowers are in default under the
following covenants contained in Section 6.1.14 of the Financing Agreement: (1)
Section 6.1.14(a), which requires that the Borrowers at all time maintain a Net
Worth of not less than $2,400,000; (ii) Section
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6.1.14(b), which requires that the Borrowers maintain an Interest Coverage Ratio
of not less than 1.60 to 1.0 for the period ending September 30, 1998; (iii)
Section 6.1.14(d), which requires that the Borrowers maintain a Funded Debt to
EBITDA of not more than 5.50 to 1.0 for the period ending September 30, 1998 and
(iv) Section 6.1.14(f), which requires that the Borrowers maintain at all times
a Current Ratio of not less than 1.0 to 1.0 ending September 30, 1998 (the
"9/30/98 Defaults"). The Borrowers have requested that the Agent and the Lenders
waive the 9/30/98 Defaults as set forth in a Waiver Agreement dated the same
date as this Agreement (the "Waiver Agreement") in substantially the form
attached to this Agreement as EXHIBIT A.
C. A condition, among others, of the execution and delivery of the
Waiver Agreement by the Agent and the Lenders was that the parties execute and
deliver this Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, the Borrowers,
the Agent and the Lenders agree that the Financing Agreement is hereby amended
as follows:
1. The Borrowers, the Agent and the Lenders agree that the Recitals
above are a part of this Agreement. Unless otherwise expressly defined in this
Agreement, terms defined in the Financing Agreement shall have the same meaning
under this Agreement.
2. As a condition of the agreements of the Lenders under this Agreement
and the Waiver Agreement, there shall be due and payable to the Lenders, at the
time this Agreement is executed and delivered, a waiver fee in the amount of
$100,000. The Borrowers acknowledge and agree that such waiver fee is part of
the Fees and Obligations (as those terms are defined in the Financing Agreement)
and the Agent shall make an advance under the Revolving Loan to pay such waiver
fee.
3. Section 2.1.12(b) of the Financing Agreement is hereby amended in
its entirety to read as follows:
(b) The Borrowers shall not at any time permit the aggregate
outstanding principal amount of the Revolving Loan to exceed an amount
equal to (i) Borrowing Base minus (ii) Ten Million Dollars
($10,000,000).
4. The Agent, the Lenders and the Borrowers agree that the financial
covenants set forth in Section 6.1.14 of the Financing Agreement shall not be
tested for the periods ending December 31, 1998 and March 31, 1999, except that
for those periods (a) the Borrowers shall maintain a Fixed Charge Coverage Ratio
of not less than 1.0 to 1.0, tested in the manner provided by Section 6.1.14(c),
and (b) the Borrowers shall maintain an Interest Coverage Ratio of not less than
1.2 to 1.0., tested in the manner provided by Section 6.1.14(b).
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5. In order to induce the Agent and the Lenders to enter into this
Agreement and the Waiver Agreement, the Borrowers represent, warrant and agree
(without implying any limitation on any provision of the Financing Agreement or
any of the other Financing Documents) that notwithstanding any other provision
in the Financing Agreement that may be construed to the contrary, the Borrowers
shall not use any advances under the Revolving Credit Facility, and shall not
use the Collateral, other than for (a) the payment of the Obligations, and (b)
payment of current operating expenses incurred in the ordinary course of the
Borrower's businesses. The Borrowers acknowledge and agree that for the purposes
of this Agreement "current operating expenses" do not include, and that in no
event shall the Lenders be required to make any advance or to allow the use of
Collateral for the purpose of making, any payment, directly or indirectly, with
respect to the Output Purchase Agreement, the Joint Venture, Stone Container
(other than for ordinary course trade payables), Florida Coast Holding, Florida
Coast Paper Corporation, or the Senior Secured Notes and in no event shall such
payments be included among the three (3) general purpose categories described in
Paragraph 6 below for written Loan Notices. The Borrowers agree and acknowledge
that any breach of the terms of this Paragraph 5 shall constitute a material
breach of the Borrowers' obligations under the Financing Agreement, which shall
be an "Event of Default" within the meaning of Section 7.1 of the Financing
Agreement.
6. The Agent, the Lenders and the Borrowers agree that Loan Notices
required by Section 2.1.2 of the Financing Agreement shall hereafter be in
writing and shall state the purpose of the requested borrowing. The written Loan
Notice shall follow the previous, general practice for oral Loan Notices by
categorizing the purposes under three (3) categories, "paper purchases,"
"payroll" and "general payables," unless other purposes are intended and
included in the Loan Notice or unless further information is requested from time
to time by the Agent. The Borrowers agree that a telecopy of any such Loan
Notice is intended to be, and shall be, an executed and delivered original
writing and that the Agent and the Lenders may rely thereon as such.
7. The Borrowers, Agent and the Lenders acknowledge that an Event of
Default may occur under Section 7.1.9 of the Financing Agreement because the
payment due on December 1, 1998 on the Senior Secured Notes was not made. The
Borrowers acknowledge and agree that the Agent and the Lenders by such
acknowledgment and otherwise have not waived any Event of Default which may
result from the continuance of such non-payment.
8. Each of the Borrowers hereby represents and warrants that all of the
representations and warranties contained in the Financing Documents are true and
correct on and as of the date hereof as if made on and as of such date, both
before and after giving effect to this Agreement, and that no Event of Default
or Default has occurred and is continuing or exists or would occur or exist
after giving effect to this Agreement, unless (except in the case of the Default
described in Section 7 of this Agreement) such Default or Event of Default has
been expressly waived by this Agreement or by the Waiver Agreement. Each of the
Borrowers hereby issues, ratifies and confirms the representations, warranties
and covenants contained in the Financing Agreement, as amended hereby. Each of
the Borrowers agrees that this Agreement is not intended to and shall not cause
a novation with respect to any or all of the Obligations. This Agreement is one
of the Financing Documents.
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9. The Borrowers each hereby jointly and severally, knowingly and
voluntarily, forever release, acquit and discharge the Agent, each of the
Lenders and any past, present or future agent, attorney, legal representative,
predecessor in interest, affiliate, successor, assign, employee, director or
officer any one or more of the Agent and the Lenders (collectively, with the
Agent and each of the Lenders, the "Lender Group") from and of any and all
claims that any of Lender Group is in any way responsible for the past, current
or future condition or deterioration of the business operations and/or financial
condition of any of the Borrowers, and from and of any and all claims that any
of the Lender Group breached any agreement to loan money or make other financial
accommodations available to the Borrowers or to fund any operations of the
Borrowers at any time. The Borrowers each further hereby jointly and severally,
knowingly and voluntarily forever release, acquit and discharge the Lender
Group, from and of any and all other claims, damages, losses, actions,
counterclaims, suits, judgments, obligations, liabilities, defenses, affirmative
defenses, setoffs, and demands of any kind or nature whatsoever, in law or in
equity, whether presently known or unknown, which any or all of the Borrowers
may have had, now have, or which they can, shall or may have for, upon, or by
reason of any matter, course or thing whatsoever relating to, arising out of,
based upon, or in any manner connected with, any transaction, event,
circumstance, action, failure to act, or occurrence of any sort or type, whether
known or unknown, which occurred, existed, was taken, permitted, begun, or
otherwise related or connected to or with any or all of the Obligations, this
Agreement, any or all of the Financing Documents, and/or any direct or indirect
action or omission any of the Lender Group. The Borrowers further agree that
from and after the date hereof, they will not assert to any person or entity
that any deterioration of the business operations or financial condition of any
of the Borrowers was caused by any breach or wrongful act of any of the Lender
Group.
10. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Maryland, without regard to principles
of choice of law.
11. The Borrowers shall pay at the time this Agreement is executed and
delivered all fees, commissions, costs, charges, taxes and other expenses
incurred by the Agent and its counsel in connection with this Agreement,
including, but not limited to, reasonable fees and expenses of the Agent's
counsel and all recording fees, taxes and charges.
12. This Agreement may be executed in any number of duplicate originals
or counterparts, and each of such duplicate originals or counterparts shall be
deemed to be an original and all taken together shall constitute but one and the
same instrument. The Borrowers agree that the Agent and the Lenders may rely on
a telecopy of any signature of any Borrower. The Agent and the Lenders agree
that the Borrower may rely on a telecopy of this Agreement executed by the Agent
and the Lenders, respectively.
IN WITNESS WHEREOF, each of the parties hereto have executed and
delivered this Agreement under their respective seals as of the day and year
first written above.
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WITNESS OR ATTEST: FOUR M CORPORATION
/s/Lurline Arco
- --------------- By:/s/Chris Mehiel (Seal)
-------------------
Chris Mehiel
Chief Operating Officer
WITNESS OR ATTEST: BOX USA GROUP, INC.
/s/Lurline Arco By:/s/Chris Mehiel (Seal)
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Chris Mehiel
Chief Operating Officer
WITNESS OR ATTEST: FOUR M PAPER CORPORATION
/s/Lurline Arco By:/s/Chris Mehiel (Seal)
- ------------------- -------------------
Chris Mehiel
Chief Operating Officer
WITNESS OR ATTEST: FOUR M MANUFACTURING GROUP
OF GEORGIA, INC.
/s/Lurline Arco By:/s/Chris Mehiel (Seal)
- --------------- -------------------
Chris Mehiel
Chief Operating Officer
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SIGNATURE PAGE TO
SIXTH AMENDMENT TO FINANCING AND SECURITY AGREEMENT
WITNESS OR ATTEST: PAGE PACKAGING CORPORATION
/s/Lurline Arco By:/s/Chris Mehiel (Seal)
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Chris Mehiel
Chief Operating Officer
WITNESS OR ATTEST: BOX USA OF FLORIDA, L.P.
BY: FOUR M MANUFACTURING
GROUP OF GEORGIA, INC.,
General Partner
/s/Lurline Arco By:/s/Chris Mehiel (Seal)
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Chris Mehiel
Chief Operating Officer
WITNESS OR ATTEST: FIBRE MARKETING GROUP, LLC
BY: Four M Corporation
/s/Lurline Arco By:/s/Chris Mehiel (Seal)
- --------------- -------------------
Chris Mehiel
Chief Operating Officer
WITNESS: NATIONSBANK, N.A., in its capacity
as Agent
/s/Carole Nunez By:/s/Thomas A. Buckelew (Seal)
- --------------- -------------------------
Thomas A. Buckelew
Vice President
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<PAGE>
SIGNATURE PAGE TO
SIXTH AMENDMENT TO FINANCING AND SECURITY AGREEMENT
WITNESS: NATIONSBANK, N.A., in its capacity
as Lender
/s/Carole Nunez By:/s/Thomas A. Buckelew (Seal)
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Thomas A. Buckelew
Vice President
WITNESS: IBJ SCHROEDER BUSINESS CREDIT
CORPORATION
/s/Alfred Suarez By:/s/ Robert R. Waccuse (Seal)
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Name: Robert R. Waccus
Title: Vice President
WITNESS: SANWA BUSINESS CREDIT
CORPORATION
/s/ M. Clasdell By:/s/ Jeff A. Grey (Seal)
- --------------- -------------------
Name: Jeff A. Grey
Title: Vice President
WITNESS: BNY FINANCIAL CORPORATION (As
Successor by Merger to The Bank
of New York Commercial Corporation
/s/Stephen V. Maugriante By:/s/ Robert Nuytkers (Seal)
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Name: Robert Nuytkers
Title: Vice President
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SIGNATURE PAGE TO
SIXTH AMENDMENT TO FINANCING AND SECURITY AGREEMENT
WITNESS: FLEET CAPITAL CORPORATION
/s/Lisa Giambresio By:/s/ John W. Stanesati (Seal)
- ------------------------ -----------------------
Name: John W. Stanesat
Title:Vice President
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EXHIBIT 16.1
December 23, 1998
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir/Madam:
We have read Item 4 included in the attached Form 8-K dated
December 23, 1998 of Four M Corporation to be filed with the Securities and
Exchange Commission and are in agreement with the statements contained therein.
Very truly yours,
/s/BDO SEIDMAN, LLP
