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EXHIBIT 3
AMENDMENT NO. 1 AND WAIVER
AMENDMENT NO. 1 AND WAIVER dated as of October 30, 2000 (this
"AMENDMENT AND WAIVER"), to the Amended and Restated Credit Agreement dated as
of April 6, 2000 (the "CREDIT AGREEMENT"), each among SOVEREIGN SPECIALTY
CHEMICALS, INC., a Delaware corporation (the "DOMESTIC BORROWER"), the banks,
financial institutions and other institutional lenders party thereto (the
"LENDERS"), the Initial Issuing Bank and the Swing Line Bank (as therein
defined), MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as joint lead
arranger, joint book-running manager and syndication agent, J.P. MORGAN
SECURITIES INC., as joint lead arranger, joint book-running manager and
documentation agent, and THE CHASE MANHATTAN BANK, as administrative agent (the
"ADMINISTRATIVE AGENT") and as offshore currency agent. Capitalized terms not
otherwise defined in this Amendment and Waiver have the same meanings as
specified in the Credit Agreement.
PRELIMINARY STATEMENTS
(a) The Domestic Borrower and certain of its Subsidiaries
propose to acquire (the "CRODA ACQUISITION") the assets of the specialty
adhesives business (the "CRODA ASSETS") of Croda International plc and its
Subsidiaries (collectively, "CRODA") pursuant to a definitive agreement or
agreements to be delivered to the Administrative Agent pursuant to Section 5(p)
of this Amendment and Waiver (the "CRODA PURCHASE AGREEMENT").
(b) The Croda Acquisition is proposed to be financed, as
follows:
(i) Sovereign-U.K. (as hereinafter defined) proposes to
request an Offshore Acquisition Advance and to apply the proceeds
thereof (A) in part to pay the purchase price for the tangible Croda
Assets located in the United Kingdom (other than accounts receivable
and inventory), and (B) in part to fund an advance to each of
Sovereign-Belgium (as hereinafter defined) and Sovereign-Italy (as
hereinafter defined), the proceeds of which will be applied by
Sovereign-Belgium and Sovereign-Italy to pay the purchase price for
the tangible Croda Assets located in Belgium and Italy, respectively,
and for the goodwill related to the specialty adhesives business of
Croda of which such Croda Assets comprise a part;
(ii) the Domestic Borrower proposes to request a Term A
Advance and a Revolving Credit Advance and to contribute and/or
advance the proceeds thereof
(A) in part to Sovereign Adhesives, Inc. (as
hereinafter defined), which will apply the proceeds thereof
(1) in part to pay the purchase price for the tangible
Croda Assets located in the United States and for the
goodwill related to the specialty adhesives business of
Croda of which such Croda Assets comprise a part, and (2)
in part to pay a refundable deposit to Croda towards the
purchase price for all of the
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issued Equity Interests (the "SHARES") of a new Brazilian
company formed by Croda ("CRODA BRAZIL NEWCO"), which will
(x) on the first completion date contemplated by
the Croda Purchase Agreement (the "FIRST COMPLETION
DATE"), acquire all of the Croda Assets comprising the
specialty adhesives business of Croda in Brazil, and
(y) continue to operate such business as a
Subsidiary of Croda until the second completion date
contemplated by the Croda Purchase Agreement (the
"SECOND COMPLETION DATE"), on which date
Sovereign-Brazil (as hereinafter defined) will
purchase the Shares, and
(B) in part to Sovereign Holdings, LLC (as hereinafter
defined), which will apply the proceeds thereof (1) in part
to pay the purchase price of all intangible Croda Assets,
wherever located (other than goodwill), and (2) in part to
fund an advance and/or capital contribution to
Sovereign-U.K., its wholly-owned subsidiary, to facilitate
Sovereign-U.K.'s acquisition of the Croda Assets located in
the United Kingdom which consist of accounts receivable and
inventory;
(iii) the Domestic Borrower proposes to request the
issuance of a Letter of Credit (the "CRODA LETTER OF CREDIT") to
secure the obligations of Sovereign-Brazil under the Croda Purchase
Agreement to pay a portion of the purchase price for the Shares
payable on the Second Completion Date; and
(iv) at the time the consideration for the Shares becomes
due and payable by Sovereign-Brazil on the Second Completion Date,
(A) the amount of the deposit for the Shares previously paid by
Sovereign Adhesives, Inc. will be contributed and/or advanced to
Sovereign-Brazil, and (B) the Domestic Borrower proposes to request a
Revolving Credit Advance and to contribute and/or advance the
proceeds thereof to Sovereign Adhesives, Inc. which in turn will
contribute and/or advance the proceeds thereof (as one of the
Offshore Subsidiary Advances referred to below) to Sovereign-Brazil,
which will apply such proceeds to pay the portion of the purchase
price for the Shares payable on the Second Completion Date.
(c) In connection with the Croda Acquisition, the Domestic
Borrower has requested that the Credit Agreement be amended, as follows:
(i) to specify the terms on which Offshore Subsidiaries
(such as Sovereign-Brazil) may borrow amounts on an unsecured basis
from the Domestic Borrower directly or indirectly through a Domestic
Subsidiary on an intercompany basis to finance Offshore Permitted
Acquisitions (each such advance to an Offshore Subsidiary being an
"OFFSHORE SUBSIDIARY ADVANCE");
(ii) to provide for the issuance of the Croda Letter of
Credit as a Letter of Credit denominated in Pounds Sterling;
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(iii) to permit Sovereign U.K to enter into a 2 million
Pounds Sterling overdraft facility;
(iv) to provide that the making of Offshore Subsidiary
Advances will not limit the amount of Investments in Offshore
Subsidiaries which otherwise may be made by the Domestic Borrower and
its Domestic Subsidiaries.
(v) to provide that agreements relating to foreign exchange
transactions between the Domestic Borrower or any of its Subsidiaries
and any Lender Party or an Affiliate of a Lender Party will be
secured under the Collateral Documents on the same basis as Secured
Hedge Agreements; and
(vi) to provide that, if the Required Lenders have waived
the requirement under the Loan Documents that the Domestic Borrower
cause any newly organized or acquired Subsidiaries to become parties
to certain of the Loan Documents at the time any such Subsidiary is
organized or acquired, the Administrative Agent (at the direction of
the Required Lenders) may nonetheless subsequently request that the
Domestic Borrower cause such Subsidiary to comply with such
requirement at a later date.
(d) The Domestic Borrower has also requested that certain
requirements of the Credit Agreement be waived, as follows:
(i) with respect to the restriction in Section
5.02(g)(xiii)(3) of the Credit Agreement that the assets of a
business to be acquired in an Offshore Permitted Acquisition be
located in one or more Approved Countries, solely in order to permit
the proposed purchase of the Shares representing all of the issued
and outstanding Equity Interests (other than a de minimus number of
shares required to be held by another shareholder solely for local
law compliance purposes) of Croda Brazil Newco, which will, following
the First Completion Date, own the Croda Assets located in Brazil
(which is not currently an Approved Country);
(ii) with respect to the condition precedent in Section
3.03(a)(iii) to each Offshore Acquisition Advance that such Offshore
Acquisition Advance be secured by such Offshore Collateral Documents
as may be requested by the Administrative Agent, solely (A) to permit
Sovereign-U.K. to enter into certain of such Offshore Collateral
Documents as a condition subsequent to the proposed Offshore
Acquisition Advance described above and (B) to waive the requirement
that Sovereign-Belgium and Sovereign Italy grant any security
interests in any of their assets as collateral for such proposed
Offshore Acquisition Advance to Sovereign-U.K.; and
(iii) with respect to the requirement in Section 5.01(j)
that each new direct or indirect Subsidiary organized or acquired by
the Domestic Borrower or any of its Subsidiaries become a party to
certain Loan Documents and take the actions specified therein to
encumber their assets to secure their obligations thereunder, solely
to waive such obligations with respect to Sovereign-Belgium,
Sovereign-Italy, Sovereign-Brazil and Croda Brazil Newco.
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(e) The undersigned Lenders are willing to amend and waive the
Credit Agreement on the terms and conditions of this Amendment and Waiver.
NOW, THEREFORE, it is hereby agreed as follows:
SECTION 1. Amendments. The Credit Agreement is, effective as of
the Effective Date (as hereinafter defined), hereby amended as follows:
(a) Letter of Credit Denominated in Pounds Sterling.
(i) Section 1.04 of the Credit Agreement is amended to
delete the parenthetical phrase "(including pursuant to Section
8.13)" from the second line of said Section and to insert in lieu
thereof the parenthetical phrase "(including pursuant to Section 8.13
and in connection with the Croda Letter of Credit)".
(ii) Section 2.01(e) of the Credit Agreement is amended to
add the following new sentence to the end of said Section:
"Notwithstanding the requirement in this Section 2.01(e) that
Letters of Credit be denominated in U.S. Dollars, the Domestic
Borrower may on a single occasion request the issuance of a
Letter of Credit denominated in Pounds Sterling (the "CRODA
LETTER OF CREDIT") subject to all the other conditions in this
Section 2.01(e); provided, however, that the initial Available
Amount of the Croda Letter of Credit shall not exceed 2,500,000
Pounds Sterling."
(iii) Section 2.03(c) of the Credit Agreement is amended to
add the following language to the end of the first sentence of said
Section:
"or, in the case of the Croda Letter of Credit, in the U.S.
Dollar Equivalent of the amount of such draft."
(iv) Section 6.02 of the Credit Agreement is amended to add
the following language to the end of the first sentence of said
Section:
"or, in the case of the Croda Letter of Credit, the U.S. Dollar
Equivalent of the Available Amount thereunder."
(b) Conditions Precedent to Offshore Subsidiary Advances. A new
Section 3.03A shall be added immediately following Section 3.03, as follows:
"SECTION 3.03A. Conditions Precedent to each Offshore
Subsidiary Advance. An advance by the Domestic Borrower or any
Domestic Subsidiary to one of its direct or indirect, wholly-owned
(other than with respect to any de minimis director's qualifying
shares or other de minimus share amounts required to be held by
another shareholder solely for local law compliance purposes)
Offshore Subsidiaries made for the purpose of financing all or a
portion of the purchase price of an Offshore Permitted Acquisition
shall constitute an "OFFSHORE SUBSIDIARY ADVANCE" for purposes of
Section
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5.02(g) of this Agreement subject to the satisfaction of the
following conditions precedent before or concurrently with such
extension of credit:
(a) the Administrative Agent shall have received on or before
the day of such extension of credit the following, each dated such day (unless
otherwise specified), in form and substance satisfactory to the Joint Lead
Arrangers and the Administrative Agent (unless otherwise specified) and in
sufficient copies (other than in respect of each Offshore Subsidiary Advance
Note) for each Lender Party:
(i) the written consent of the Joint Lead Arrangers and the
Administrative Agent approving such Offshore Subsidiary Advance;
(ii) a promissory note payable to the Domestic Borrower or
the applicable Domestic Subsidiary in the principal amount of such
advance (each a "OFFSHORE SUBSIDIARY ADVANCE NOTE"), duly executed by
the Offshore Subsidiary which has received such advance, and the
Domestic Borrower or such Domestic Subsidiary shall have delivered
such Offshore Subsidiary Advance Note to the Administrative Agent in
pledge pursuant to the Domestic Security Agreement, together with an
instrument of assignment duly executed in blank;
(iii) a certificate of each such Offshore Subsidiary,
signed on behalf of such Offshore Subsidiary by a Responsible
Officer, dated the date of such initial extension of credit (the
statements made in which certificate shall be true on and as of the
date of such initial extension of credit), certifying as to
(A) attached, true, complete and correct copies of the
charter and bylaws (or any similar organizational document)
of such Offshore Subsidiary,
(B) an attached, true, complete and correct copy of
the resolutions of the Board of Directors (or similar
managerial body) of such Offshore Subsidiary authorizing
the execution, delivery and performance by such Offshore
Subsidiary of the Offshore Subsidiary Advance Note to which
it is, or is to become, a party,
(C) the due organization and good standing or valid
existence of such Offshore Subsidiary as an entity
organized under the laws of the jurisdiction of its
organization, and the absence of any proceeding for the
dissolution or liquidation of such Offshore Subsidiary,
(D) the names and true signatures of the officers (or
similar managerial personnel) of such Offshore Subsidiary
authorized to sign the Offshore Subsidiary Advance Note to
which it is, or is to become, a party,
(E) the truth in all material respects of the
representations and warranties made by such Offshore
Subsidiary contained in such Offshore
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Subsidiary Note as though made on and as of the date of
such extension of credit, and
(F) the absence of any event occurring and continuing,
or resulting from such extension of credit, that
constitutes a Default under such Offshore Subsidiary Note.
(iv) evidence that the process agent appointed by such
Offshore Subsidiary as its agent for service of process pursuant to
the applicable Offshore Subsidiary Advance Note has accepted such
appointment; and
(b) the Domestic Borrower shall have prepared an Acquisition
Diligence Report in respect of the business to be acquired in the Offshore
Permitted Acquisition to be funded by the proposed Offshore Subsidiary Advance
and the Joint Lead Arrangers shall have accepted such report;
(c) the applicable Offshore Subsidiary shall have entered into
Hedge Agreements (or made arrangements satisfactory to the Administrative Agent
to enter into Hedge Agreements) with respect to the foreign currency risks
related to such Offshore Permitted Acquisition, in such amounts and for such
terms as shall be agreed to by the Administrative Agent and the Domestic
Borrower; and
(d) the Domestic Borrower shall have paid, or caused such
Offshore Subsidiary to pay, all accrued fees of the Agents and the Lender
Parties and all accrued expenses of the Agents (including the accrued fees and
expenses of counsel to the Administrative Agent)."
(c) [Reserved.]
(d) Covenant to Guaranty Obligations and Give Security. Section
5.01(j) to the Credit Agreement is amended by deleting clause (y) in the first
paragraph of said Section and inserting the following clause (y) in lieu
thereof:
"(y) the formation or acquisition of any new direct or
indirect Subsidiary of the Domestic Borrower by any Loan Party;
provided however, that if the Required Lenders shall have waived
compliance with this Section 5.01(j) with respect to any newly
organized or acquired Offshore Subsidiary, then, unless otherwise
specifically agreed by the Required Lenders, at any time after the
date of such waiver the Administrative Agent (at the direction of the
Required Lenders) may nonetheless request that the Domestic
Subsidiary cause any such Subsidiary to comply with this Section
5.01(j) notwithstanding such prior waiver;"
(e) Liens. Subsection (xiii) of Section 5.02(a) of the Credit
Agreement is amended to add the words "including, without limitation, Liens
securing any Offshore Subsidiary Advance Note which has been pledged to the
Administrative Agent pursuant to the Collateral Documents" to the end of said
subsection.
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(f) Debt. Section 5.02(b) of the Credit Agreement is amended as
follows:
(i) to delete subsection (vii) of said Section and to
insert the following new subsection (vii) in lieu thereof:
"(vii) Debt owed to the Domestic Borrower or any Domestic
Subsidiary by a direct or indirect Subsidiary of the Domestic
Borrower (including any Offshore Subsidiary Advance) and Debt
owed by the Domestic Borrower to a wholly-owned Subsidiary of
the Domestic Borrower, which Debt (x) shall constitute Pledged
Debt, and (y) shall be evidenced by promissory notes in
substantially the form attached as Exhibit I or such other form
satisfactory to the Administrative Agent; and Debt owed by a
direct or indirect Offshore Subsidiary of the Domestic Borrower
to another Offshore Subsidiary of the Domestic Borrower, which
Debt shall be evidenced by promissory notes in substantially
the form attached as Exhibit I or such other form satisfactory
to the Administrative Agent;
(ii) to delete the "and" at the end of clause (x) thereof;
(iii) to add the following new clause (xi) following said
clause (x):
"(xi) an overdraft facility of Sovereign-U.K. in an aggregate
amount not to exceed 2,000,000 Pounds Sterling; and"; and
(iv) to reletter clause (xi) thereof as clause (xii).
(g) Investments. Section 5.02(g) of the Credit Agreement is
amended as follows:
(i) Subsection (i)(C) of said Section 5.02(g) is deleted and
replaced in its entirety as follows:
"(C) additional Investments by the Domestic Borrower and its
Domestic Subsidiaries in wholly-owned (other than with respect
to any de minimis director's qualifying shares or other de
minimus share amounts required to be held by other shareholders
solely for local law compliance purposes) Offshore Subsidiaries
of the Domestic Borrower or any of its wholly-owned
Subsidiaries (other than with respect to any de minimis
director's qualifying shares or other de minimus share amounts
required to be held by other shareholders solely for local law
compliance purposes) in an aggregate amount for the Domestic
Borrower and all its Domestic Subsidiaries not to exceed an
amount in any Fiscal Year equal to the difference between (1)
$10,000,000 and (2) the aggregate amount of Investments in such
Offshore Subsidiaries made pursuant to subsection (xiii) of
this Section 5.02(g) during such Fiscal Year (in addition to
any Investments in such Offshore Subsidiary in the form of the
Offshore Guaranty or in the initial principal amount of one or
more Offshore Subsidiary Advances made pursuant to Section
3.03A),"
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(ii) subsection (xiii)(5) of Section 5.02(g) is amended to
delete the word "and" at the end of said subsection; and
(iii) subsection (xiii) of Section 5.02(g) is amended to add a
new clause (7) to the end of such subsection as follows:
"; and (7) if the Domestic Borrower or any of its Domestic
Subsidiaries proposes to make an Investment (other than an
Investment in the form of the Offshore Guaranty or in the form
of an Offshore Subsidiary Advance pursuant to Section 3.03A) in
any of its Offshore Subsidiaries (or in a Person which will
become such an Offshore Subsidiary) in connection with such
acquisition, then the Domestic Borrower and its Subsidiaries
shall be in compliance with subsection (i)(C) of this Section
5.02(g) immediately after giving effect to such Investment."
(h) Definitions. Schedule II to the Credit Agreement is amended
as follows:
(i) The following cross references to the definitions for the
terms shall be added to Schedule II in the appropriate alphabetic order:
""CRODA LETTER OF CREDIT" shall have the meaning provided in
Section 2.01(e)."
""OFFSHORE SUBSIDIARY ADVANCE" shall have the meaning specified
in Section 3.03A."
""OFFSHORE SUBSIDIARY ADVANCE NOTE" shall have the meaning
specified in Section 3.03A(a)(i)."
(ii) The following new definitions shall be added to
Schedule II in the appropriate alphabetic order:
""SOVEREIGN-BRAZIL" means Sovereign Specialty Chemicals do
Brazil Ltda, a company organized under the laws of Brazil."
""SOVEREIGN-BELGIUM" means Sovereign Specialty Chemicals
S.P.R.L./B.V.B.A., a company organized under the laws of
Belgium."
""SOVEREIGN ADHESIVES, INC." means Sovereign Adhesives, Inc., a
Delaware corporation."
""SOVEREIGN HOLDINGS, LLC" means Sovereign Holdings, LLC, a
Delaware limited liability company."
""SOVEREIGN-ITALY" means Sovereign Specialty Chemicals Italiana
S.r.l., a company organized under the laws of Italy."
""SOVEREIGN-U.K." means Sovereign Specialty Chemicals Limited,
a company organized under the laws of England and Wales."
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(iii) The existing definition for the term "OFFSHORE BORROWER"
is amended by adding the following language to the end of such definition:
"or which shall have executed and delivered a Offshore
Subsidiary Advance Note to the Domestic Borrower or Domestic
Subsidiary pursuant to Section 3.03A for so long as such
Offshore Subsidiary Advance Note shall be outstanding."
(iv) The existing definition for the term "RELATED DOCUMENTS"
is amended by adding the following language to the end of such definition:
"and any Offshore Subsidiary Advance Note (and any security
agreement, pledge agreement, mortgage, guarantee or similar
agreement delivered pursuant to Section 5.01(l) to secure the
obligations thereunder)".
(v) The existing definition for the term "SECURED HEDGE
AGREEMENT" is deleted and replaced in its entirely, as follows:
"SECURED HEDGE AGREEMENT" means (i) any Hedge Agreement
required or permitted under Article V that is entered into by
and between the Domestic Borrower or any of its Subsidiaries
and any Hedge Bank and (ii) any agreement in respect of any
foreign exchange transaction which does not constitute a Hedge
Agreement which is entered into by and between the Domestic
Borrower or any of its Subsidiaries and any Lender Party or an
Affiliate of a Lender Party."
SECTION 2. Waivers. Effective as of the Effective Date, the
following requirements of the Credit Agreement are waived:
(a) the condition precedent to each Offshore Acquisition
Advance set forth in Section 3.03(a)(iii) of the Credit Agreement
(except to the extent of any instrument or document specifically set
forth in Section 5 below to be delivered on or prior to the Effective
Date) is waived solely (A) to permit Sovereign-U.K. to borrow an
Offshore Acquisition Advance in connection with the Croda
Acquisition, and (B) to waive the requirement that Sovereign-Belgium,
Sovereign-Italy or Sovereign-Brazil grant any security interest in
any of their assets as collateral for such Offshore Acquisition
Advance;
(b) the requirements of Section 5.01(j) are waived solely as
they relate to Sovereign-Belgium, Sovereign-Italy, Sovereign-Brazil
and Croda Brazil Newco; and
(c) the requirement that Investments made pursuant to Section
5.02(g)(xiii)(3) of the Credit Agreement be in a company or business,
the material assets of which are principally located in one or more
Approved Countries, is waived solely to permit (i) the Domestic
Borrower to organize Sovereign-Brazil, as an indirect, wholly-owned
Subsidiary, (ii) the Domestic Borrower to make Offshore Subsidiary
Advances to Sovereign-Brazil pursuant to new Section 3.03A of the
Credit Agreement, as amended by this Amendment and Waiver (or for
Sovereign-Brazil to borrow Offshore Acquisition Advances directly),
and (iii) to permit Sovereign-Brazil to acquire the Shares
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representing all of the issued and outstanding Equity Interests
(other than a de minimus number of shares required to be held by
another shareholder solely for local law compliance purposes) of
Croda Brazil Newco, which will, following the First Completion Date,
own the Croda Assets located in Brazil.
SECTION 3. Covenants. The Domestic Borrower hereby covenants
and agrees with each Lender, as follows:
(a) Not later than 45 days after the First Completion Date (or
such later date as the Administrative Agent may agree in writing in its sole
reasonable discretion), the Domestic Borrower shall cause Sovereign-U.K. to take
the following actions:
(i) to execute and deliver to the Administrative Agent to
the extent permitted under applicable local law such Offshore
Collateral Documents and to make such filings and take such other
actions, in each case as the Administrative Agent may reasonably
request (such request to be made not later than 30 days after the
First Completion Date), to create a first priority Lien in all the
material assets of Sovereign-U.K. to secure the obligations of
Sovereign-U.K. in respect of the Offshore Acquisition Advance made to
it in connection with the Croda Acquisition; and
(ii) to deliver to the Administrative Agent a favorable
opinion of counsel for Sovereign-U.K. in respect of the Loan
Documents to which Sovereign-U.K. is a party as the Administrative
Agent may reasonably request.
(b) Not later than 30 days after the First Completion Date, the
Domestic Borrower or its applicable Subsidiary shall enter into such Hedge
Agreements in respect of foreign currency risks related to the acquisition of
the Croda Assets, if any, as may be agreed between the Domestic Borrower and the
Administrative Agent on or prior to such 30th day.
(c) Within the time periods specified in Section 5.01(j), the
Domestic Borrower shall cause Sovereign Adhesives, Inc. and Sovereign Holdings,
LLC to execute and deliver each of the documents referred to in Section 5.01(j)
as the Administrative Agent may request and which are not delivered pursuant to
Section 5 of this Amendment and Waiver. For purposes of this Section 3(c),
clause (A) in the proviso to subsection (iv) of Section 5.01(j) of the Credit
Agreement shall not be applicable to excuse Sovereign Adhesives, Inc. and
Sovereign Holdings, LLC from taking any necessary steps to perfect the Lien of
Domestic Security Agreement in Intellectual Property outside the United States.
(d) Within 15 days after the First Completion Date, the
Domestic Borrower shall (i) cause Sovereign U.K. and Sovereign Holdings, LLC to
provide to the Administrative Agent evidence of the establishment of a pledge of
100% of the outstanding Equity Interests of Sovereign-Belgium pursuant to a
pledge agreement entered into with the Administrative Agent, together with
evidence of perfection of such pledge by the recording thereof in the share
register of Sovereign-Belgium, and (ii) cause Sovereign U.K. to provide to the
Administrative Agent evidence of the establishment of a pledge of 100% of the
outstanding Equity Interests of Sovereign-Italy pursuant to a pledge agreement
entered into with the Administrative Agent, together with evidence of perfection
of such pledge by the recording thereof in the share register
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of Sovereign-Italy. On or prior to the Second Completion Date, the Domestic
Borrower shall (i) cause Sovereign Adhesives, Inc. to provide to the
Administrative Agent evidence of the establishment of a pledge of 65% of the
outstanding Equity Interests of Sovereign-Brazil pursuant to a pledge agreement
entered into with the Administrative Agent, together with evidence of perfection
of such pledge by the recording thereof in the share register of
Sovereign-Brazil and (ii) cause Sovereign-Brazil to deliver to the
Administrative Agent an officer's certificate certifying as to those matters set
forth in Section 3.03A(iii).
SECTION 4. Consent. Each of the Joint Lead Arrangers and the
Administrative Agent hereby consent to the proposed Offshore Subsidiary Advance
to be made on the Second Completion Date by the Domestic Borrower to
Sovereign-Brazil in an initial principal amount sufficient to pay the portion of
the purchase price for the Shares payable on the Second Completion Date.
SECTION 5. Effectiveness. This Amendment and Waiver shall
become effective as of the date first above written when, and only when, the
Administrative Agent shall have received the following (the "EFFECTIVE DATE"):
(a) counterparts of this Amendment and Waiver executed by the
undersigned and the Required Lenders or, as to any of the Required Lenders,
advice satisfactory to the Administrative Agent that such Lender has executed
this Amendment and Waiver, and the consent attached hereto executed by each
Domestic Subsidiary Guarantor;
(b) a Domestic Subsidiary Guaranty Supplement, duly executed by
each of Sovereign Adhesives, Inc. and Sovereign Holdings, LLC;
(c) an Offshore Guaranty Supplement duly executed by each of
Sovereign Adhesives, Inc., Sovereign Holdings, LLC and Sovereign-U.K.;
(d) a Domestic Security Agreement Supplement, duly executed by
each of Sovereign Adhesives, Inc. and Sovereign Holdings, LLC;
(e) a Credit Agreement Supplement, duly executed by
Sovereign-U.K.;
(f) a debenture in form and substance satisfactory to the
Administrative Agent, duly executed by Sovereign-U.K.;
(g) a promissory note from each of Sovereign-Belgium and
Sovereign-Italy, together with appropriate instruments of assignment duly
executed in blank by Sovereign-U.K.;
(h) certificates representing 100% of the outstanding Equity
Interests in Sovereign-U.K., together with instruments of assignment duly
executed in blank by Sovereign Holdings, LLC and Sovereign Adhesives, Inc.;
(i) certificates representing 100% of outstanding Equity
Interests in Sovereign Adhesives, Inc. and Sovereign Holdings, LLC, together
with instruments of assignment duly executed in blank by the Domestic Borrower;
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(j) an officer's certificate from a Responsible Officer of each
of Sovereign-Belgium, Sovereign-Italy and Sovereign-U.K., each dated the
Effective Date, each certifying as to the matters set forth in Section
3.03(a)(iv) or as to matters similar to those in Section 3.03A(a)(iii), as the
case may be;
(k) an officer's certificate from a Responsible Officer of each
of Sovereign Adhesives, Inc. and Sovereign Holdings, LLC certifying similar
matters as are referred to in subsection (j) above;
(l) an officer's certificate from a Responsible Officer of the
Domestic Borrower dated the Effective Date, certifying that (i) the
representations and warranties contained in the Loan Documents remain true and
correct as though made on and as of the Effective Date (other than those that
expressly refer to another date), (ii) no event has occurred or is continuing
which constitutes a Default, and attaching a schedule in the form of Schedule
4.01(b) to the Credit Agreement, setting forth a complete and accurate list of
all direct and indirect Subsidiaries of each Loan Party as of such Effective
Date (which shall reflect the ownership of the Equity Interests of
Sovereign-Brazil, Sovereign-U.K., Sovereign-Belgium, Sovereign-Italy, Sovereign
Adhesives, Inc. and Sovereign Holdings, LLC as represented to the Administrative
Agent prior to the date hereof);
(m) a written acceptance from a process agent acceptable to the
Administrative Agent that such agent has accepted its appointment by each of
Sovereign-Brazil, Sovereign-Belgium, Sovereign-Italy and Sovereign-U.K. as its
agent for service of process pursuant to the applicable Offshore Subsidiary
Advance Note or the applicable Loan Documents, as the case may be;
(n) an Acquisition Diligence Report in respect of the Croda
Assets which has been certified by the Chief Financial Officer of the Domestic
Borrower and approved in writing by the Joint Lead Arrangers; and
(o) a copy of each definitive instrument or agreement for the
purchase of any Croda Assets entered into by the Domestic Borrower or any of its
Subsidiaries certified by the Domestic Borrower.
SECTION 6. Miscellaneous. (a) On and after the effectiveness of
this Amendment and Waiver, each reference in the Credit Agreement to "this
Agreement", "hereunder", "hereof" or words of like import referring to the
Credit Agreement, and each reference in the Notes and each of the other Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement, as amended by this Amendment and Waiver. The Credit Agreement,
as specifically amended by this Amendment and Waiver, is and shall continue to
be in full force and effect and is hereby in all respects ratified and
confirmed. The execution, delivery and effectiveness of this Amendment and
Waiver shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender or the Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents.
Amendment No. 1 and Waiver
<PAGE> 13
13
(b) This Amendment and Waiver is one of the Loan Documents
referred to in the Credit Agreement. Any failure by the Domestic Borrower to
perform or observe any term, covenant or agreement contained in Section 3 of
this Amendment and Waiver which remains unremedied beyond the grace period
provided in Section 6.01(d) of the Credit Agreement shall constitute an Event of
Default thereunder.
(c) This Amendment and Waiver may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Amendment and Waiver by telecopier shall
be effective as delivery of a manually executed counterpart of this Amendment
and Waiver.
(d) This Amendment and Waiver shall be governed by, and
construed in accordance with, the laws of the State of New York.
[The remainder of this page intentionally left blank.]
Amendment No. 1 and Waiver
<PAGE> 14
14
IN WITNESS WHEREOF, the undersigned have caused this Amendment and
Waiver to be executed and delivered by their duly authorized officer as of the
date first above written.
SOVEREIGN SPECIALTY CHEMICALS, INC.
By /s/ John R. Mellett
----------------------------------------
Name: John R. Mellett
Title: Vice President
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED, as a Joint Lead Arranger
By /s/ Paul Fox
----------------------------------------
Name: Paul Fox
Title:
MERRILL LYNCH CAPITAL CORPORATION,
as a Lender
By /s/ Paul Fox
----------------------------------------
Name: Paul Fox
Title: Vice President
J.P. MORGAN SECURITIES INC.,
as a Joint Lead Arranger
By /s/ Jose A. Briones
----------------------------------------
Name: Jose A. Briones
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as a Lender
By /s/ John Kowalczuk
----------------------------------------
Name: John Kowalczuk
Title: Vice President
Amendment No. 1 and Waiver
<PAGE> 15
15
THE CHASE MANHATTAN BANK,
as Administrative Agent and as a Lender
By /s/ Lawrence Palumbo, Jr.
----------------------------------------
Name: Lawrence Palumbo, Jr.
Title: Vice President
NATIONAL CITY BANK,
as a Lender
By
----------------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA,
as a Lender
By
----------------------------------------
Name:
Title:
BANK ONE, N.A. (Main Chicago Office),
as a Lender
By /s/ Steven F. Smith
----------------------------------------
Name: Steven F. Smith
Title: First Vice President
ABN AMRO BANK N.V.,
as a Lender
By /s/ Scott J. Albert
----------------------------------------
Name: Scott J. Albert
Title: Group Vice President
By /s/ Steven M. Buehler
----------------------------------------
Name: Steven M. Buehler
Title: Vice President
Amendment No. 1 and Waiver
<PAGE> 16
16
CREDIT AGRICOLE INDOSUEZ,
as a Lender
By
----------------------------------------
Name:
Title:
By
----------------------------------------
Name:
Title:
Amendment No. 1 and Waiver
<PAGE> 17
CONSENT
Dated as of October 30, 2000
The undersigned, as Guarantors under each of the Amended and
Restated Domestic Subsidiary Guaranty dated as of April 6, 2000, and the
Offshore Guaranty dated as of April 6, 2000 (collectively, the "SUBSIDIARY
GUARANTIES"), each in favor of the Secured Parties (as defined in the Credit
Agreement referred to in the foregoing Amendment No. 1 and Waiver dated as of
the date hereof), hereby consent to the foregoing Amendment and Waiver and
hereby confirm and agree that notwithstanding the effectiveness of such
Amendment and Waiver, the Subsidiary Guaranties are, and shall continue to be,
in full force and effect and each is hereby ratified and confirmed in all
respects, except that, on and after the effectiveness of such Amendment and
Waiver, each reference in each Subsidiary Guaranty to the "Credit Agreement",
"thereunder", "thereof" or words of like import shall mean and be a reference to
the Credit Agreement, as amended and waived by such Amendment and Waiver.
MINI CROWN FUNDING CORP. SIA ADHESIVES, INC.
By /s/ Robert B. Covalt By /s/ Robert B. Covalt
----------------------------- --------------------------------
Name: Robert B. Covalt Name: Robert B. Covalt
Title: Chairman Title: Chairman
IMPERIAL ADHESIVES, INC. PIERCE & STEVENS CORP.
By /s/ Robert B. Covalt By /s/ Robert B. Covalt
----------------------------- --------------------------------
Name: Robert B. Covalt Name: Robert B. Covalt
Title: Chairman Title: Chairman
OSI SEALANTS, INC.
By /s/ Robert B. Covalt
--------------------------------
Name: Robert B. Covalt
Title: Chairman
TANNER CHEMICALS, INC.
By /s/ Robert B. Covalt
--------------------------------
Name: Robert B. Covalt
Title: Chairman
Amendment No. 1 and Waiver
