EXHIBIT 10.6
AMENDMENT NO. 1
          AMENDMENT NO. 1, dated as of May 12, 2008 (this “Amendment”), by and
among Tekni-Plex, Inc. (the “Borrower”), each of the Subsidiaries of the
Borrower listed on the signature pages hereof (collectively, the “Guarantors”
and, together with the Borrower, the “Loan Parties”), Citicorp USA, Inc., as
Administrative Agent (in such capacity, the “Administrative Agent”), General
Electric Capital Corporation, as Syndication Agent (in such capacity, the
“Syndication Agent”), and the lenders party hereto (such lenders referred to
collectively herein as the “Lenders”).
WITNESSETH:
          WHEREAS, the Borrower, the Administrative Agent, the Syndication Agent
and the Lenders have entered into that certain Amended and Restated Credit
Agreement, dated as of February 14, 2008 (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”); and
          WHEREAS, the Borrower has requested that the Administrative Agent and
the Lenders enter into this Amendment to amend the Credit Agreement as set forth
herein;
          NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
     1. Defined Terms. Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Credit Agreement.
     2. Amendments. Effective as of the First Amendment Effective Date (as
defined below) and subject to the terms and conditions set forth herein, the
Credit Agreement is hereby amended as follows:
          (a) Section 1.1 (Defined Terms) of the Credit Agreement is hereby
amended by deleting the definitions of “Agreement”, “Consolidated EBITDA” and
“Debt Swap” and replacing them in their entirety with the following:
“Agreement” means this Amended and Restated Credit Agreement.
“Consolidated EBITDA” means, for any period, Consolidated Net Income (excluding
any non-cash write-up of the value of assets) for such period (a) plus, to the
extent deducted in determining Consolidated Net Income for such period, the
aggregate amount of (i) Consolidated Interest Expense, (ii) income tax expense,
(iii) depreciation, amortization and other similar non-cash charges (including,
without limitation, non-cash fixed asset impairment charges and non-cash
impairment charges in respect of goodwill and other intangible assets),
(iv) fees, expenses and restructuring charges incurred in connection with the
negotiation and entry into of this Agreement, the Debt Swap and any amendment or
forbearance in respect of the Existing Subordinated Notes, the New Senior
Secured Notes or the Existing Senior Secured Notes, (v) costs, fees (including
professional fees) and expenses incurred in connection with restructuring the
business operations of the Borrower and its Subsidiaries in accordance with the
business plan provided to the Administrative Agent under Section 3.1(i),
(vi) any non-cash loss arising from any sale of assets outside of the ordinary
course of business, (vii) fees and expenses of AP Services LLC for the period
beginning on the First Amendment Effective Date through and including the date
that is four months after the First Amendment Effective Date and (viii) any
extraordinary loss; provided, however, that for purposes of determining
Consolidated EBITDA for any Test Period during which a Permitted Acquisition has
been made, Consolidated EBITDA shall be increased for any Fiscal Quarter which
began prior to such Permitted Acquisition and which is included in such Test
Period by the amount of Consolidated EBITDA which the Borrower (with the consent
of the Agents, such consent not to be unreasonably withheld or delayed) shall
determine would have been attributable to the acquired assets for the Fiscal
Quarter most recently ended on or prior to

 

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the date of such Permitted Acquisition, it being agreed that for the Fiscal
Quarter in which the Permitted Acquisition has occurred, such increase shall be
prorated to reflect only the days during such Fiscal Quarter prior to the
consummation of such Permitted Acquisition and (b) minus the amount of any
non-cash gains not otherwise excluded from Consolidated Net Income.
“Debt Swap” means a debt-for-equity swap with certain holders of the Existing
Subordinated Notes on terms and conditions specified in Exhibit A to the
Restructuring Agreement, as in effect on the First Amendment Effective Date.
          (b) Section 1.1 (Defined Terms) of the Credit Agreement is hereby
amended by inserting the following definitions in the appropriate alphabetical
order:
     “First Amendment” means that certain Amendment No. 1 to this Agreement,
dated as of the First Amendment Effective Date, among the Borrower, the
Administrative Agent, the Syndication Agent, each other Lender party hereto, and
the Guarantors.
     “First Amendment Effective Date” means May 12, 2008, the date on which the
First Amendment to this Agreement shall, by its terms, have become effective.
     “Pre-Debt Swap Common Shareholders” means the holders of record of the
Borrower’s existing and issued common stock immediately prior to the
consummation of the Debt Swap.
     “Pre-Debt Swap Preferred Shareholders” means the holders of record of the
Borrower’s existing and issued Series A Preferred Stock immediately prior to the
consummation of the Debt Swap.
     “Restructuring Agreement” means that certain Restructuring Agreement, dated
as of April 11, 2008, among the Borrower and the other parties signatory
thereto, as such agreement was filed with the SEC on April 14, 2008 as
Exhibit 10.1 to the Current Report on Form 8-K and without any amendment or
other modification thereto (other than to permit the extension of the “Effective
Date” thereunder to a date on or prior to June 2, 2008).
     “Restructuring Warrants” means the Series A Warrants, Series B Warrants and
Series C Warrants to be issued on the terms described in Exhibit A to the
Restructuring Agreement, as in effect on the First Amendment Effective Date.
     “Restructuring Warrant Documents” means the documentation to be entered
into by the Borrower and the Pre-Debt Swap Preferred Shareholders in connection
with the issuance of the Restructuring Warrants.
          (c) Section 5.1(b) (Quarterly and Monthly Reports) of the Credit
Agreement is hereby amended by inserting, in clause (ii) thereof, after the
expression “first two fiscal months in each Fiscal Quarter” on the eleventh line
thereof, the expression “(or, in the case of the financials due for the fiscal
month of May 2008, the period beginning on the first day of such fiscal month
and ending on the date upon which the Debt Swap is consummated)”:
          (d) Article 5 (Affirmative Covenants) of the Credit Agreement is
hereby amended by adding a new Section 5.15 (Retention of Advisors) as follows:
          “Section 5.15 Retention of Advisors
     The Borrower shall, until the date that is four months after the First
Amendment Effective Date, continue to retain the services of AP Services LLC as
its restructuring advisor.”
          (e) Section 6.5 (Restricted Payments) of the Credit Agreement is
hereby amended by (i) deleting the word “and” at the end of clause (c) thereto,
(ii) deleting the period at the end of clause (d) thereto and replacing it with
a semi-colon, and (iii) adding the following as new clauses (e), (f) and (g)
immediately after existing clause (d) thereof:
“(e) simultaneously with or promptly after the consummation of the Debt Swap, a
distribution not to exceed $250,000 in the aggregate, consistent with the terms
of the Restructuring Agreement, to the Pre-Debt Swap Common Shareholders in
exchange for the cancellation,

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redemption or purchase of the common Stock held by such Pre-Debt Swap Common
Shareholders;
(f) simultaneously with or promptly after the consummation of the Debt Swap, a
distribution not to exceed $10,000 in the aggregate, consistent with the terms
of the Restructuring Agreement, to certain Pre-Debt Swap Preferred Shareholders
for the redemption of the Series A Preferred Stock held by such Pre-Debt Swap
Preferred Shareholders; and
(g) simultaneously with or promptly after the consummation of the Debt Swap, a
distribution of Restructuring Warrants, consistent with the terms of the
Restructuring Agreement, to the Pre-Debt Swap Preferred Shareholders.”
          (f) Section 6.10 (Limitation on Voluntary Payments and Modifications
of Indebtedness and Preferred Stock Documents) of the Credit Agreement is hereby
amended by (i) changing the title of such Section 6.10 to “Limitation on
Voluntary Payments Under and Modifications to Certain Documents”, (ii) deleting
the word “and” at the end of clause (b) thereof, (iii) deleting the period at
the end of clause (c) thereof and replacing it with a semi-colon, and
(iv) adding the following new clauses (d and (e) immediately after existing
clause (c) thereof:
“(d) amend or modify, or permit the amendment or modification of, any
Restructuring Warrant Documents if such change or amendment or the effect of
such change or amendment would materially increase the obligations of the
Borrower or confer additional rights to the holder of such Restructuring Warrant
in a manner materially adverse to the Borrower, any of its Subsidiaries, the
Administrative Agent or any Lender; and
(e) amend or modify, or permit the amendment or modification of, the
Restructuring Agreement, without the consent of each Lender (other than to
permit the extension of the “Effective Date” thereunder to a date on or prior to
June 2, 2008).”
          (g) Article 6 (Negative Covenants) of the Credit Agreement is hereby
amended by adding a new Section 6.18 (Minimum Collateral Availability) as
follows:
          “Section6.18 Minimum Collateral Availability
     At all times after December 1, 2008, the Borrower shall maintain a minimum
Collateral Availability amount of $5,000,000.”
          (h) Section 7.01(o) (Events of Default) of the Credit Agreement is
hereby amended by replacing the date “May 13, 2008” therein with the date
“June 2, 2008”.
          3. Consent to Terms of Debt Swap. The terms of the Debt Swap, as set
forth in Exhibit A to that certain Restructuring Agreement, dated as of
April 11, 2008 (the “Restructuring Agreement”), among the Borrower, the
Guarantors and the parties signatory thereto, a copy of which is attached hereto
as Annex A, are hereby consented to by each Lender as of the First Amendment
Effective Date.
          4. Conditions to Effectiveness of this Amendment. This Amendment shall
become effective as of the date (the “First Amendment Effective Date”) the
Administrative Agent shall have received counterparts of this Amendment duly
executed and delivered by each of the Borrower, the Guarantors, the
Administrative Agent, the Syndication Agent and the other Lenders.
          5. Representations and Warranties. Each Loan Party hereby represents
and warrants to the Administrative Agent and the Lenders, on and as of the date
hereof, that (a) such Loan Party has taken all necessary action to authorize the
execution, delivery and performance of this Amendment; (b) this Amendment has
been duly

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executed and delivered by such Loan Party,; (c) this Amendment is the legal,
valid and binding obligation of such Loan Party, enforceable against it in
accordance with its terms, except (i) as may be limited by bankruptcy,
insolvency or similar laws affecting creditors’ rights generally, (ii) as rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability, and (iii) as limited by legal or
equitable principles of reasonableness, good faith and fair dealing; (d) the
copy of the Restructuring Agreement (including, without limitation, Exhibit A
thereto) attached hereto as Annex A is true and complete in all respects, and
such agreement has not been amended or modified in any respect as of the First
Amendment Effective Date (other than to permit the extension of the “Effective
Date” thereunder to a date on or prior to June 2, 2008); (e) on the First
Amendment Effective Date prior to and after giving effect to this Amendment,
each of the representations and warranties made by any Loan Party in or pursuant
to the Loan Documents shall be true and correct in all material respects (except
that any representation and warranty that is qualified as to “materiality” or
“Material Adverse Effect” shall be, as so qualified, true and correct in all
respects) on and as of the date hereof, as if made on and as of such date,
except to the extent such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties shall be true
and correct in all material respects (except that any representation and
warranty that is qualified as to “materiality” or “Material Adverse Effect”
shall be, as so qualified, true and correct in all respects) as of such earlier
date; and (f) on the First Amendment Effective Date prior to and after giving
effect to this Amendment, no Default or Event of Default shall have occurred and
be continuing.
          6. Reaffirmation.
          (a) Each Loan Party hereby consents to the execution, delivery and
performance of this Amendment and agrees that each reference to the Credit
Agreement in the Loan Documents shall, on and after the First Amendment
Effective Date, be deemed to be a reference to the Credit Agreement as amended
by this Amendment.
          (b) Each Loan Party hereby acknowledges and agrees that, after giving
effect to this Amendment, all of its respective obligations and liabilities
under the Loan Documents to which it is a party are reaffirmed, and remain in
full force and effect.
          (c) After giving effect to this Amendment, each Loan Party reaffirms
each Lien granted by it to the Administrative Agent for the benefit of the
Secured Parties under each of the Loan Documents to which it is a party, which
Liens shall continue in full force and effect during the term of the Credit
Agreement as amended by this Amendment, and shall continue to secure the Secured
Obligations, in each case, on and subject to the terms and conditions set forth
in the Credit Agreement as amended by this Amendment.
          7. Release. Each Loan Party hereby acknowledges and agrees that:
(a) neither it nor any of its Affiliates has any claim or cause of action
against any Agent or any Lender (or any of their respective Affiliates,
officers, directors, employees, attorneys, consultants or agents) and (b) each
Agent and each Lender has heretofore properly performed and satisfied in a
timely manner all of its obligations to the Loan Parties and their Affiliates
under the Credit Agreement and the other Loan Documents. Notwithstanding the
foregoing, each Agent and each Lender wish (and the Loan Parties agree) to
eliminate any possibility that any past conditions, acts, omissions, events or
circumstances would impair or otherwise adversely affect any of the Agents’ or
the Lenders’ rights, interests, security and/or remedies under the Credit
Agreement and the other Loan Documents. Accordingly, for and in consideration of
the agreements contained in this Amendment and other good and valuable
consideration, each Loan Party (for itself and its Affiliates and the
successors, assigns, heirs and representatives of each of the foregoing)
(collectively, the “Releasors”) does hereby fully, finally, unconditionally and
irrevocably release and forever discharge each Agent, each Lender and each of
their respective Affiliates, officers, directors, employees, attorneys,
consultants and agents (collectively, the “Released Parties”) from any and all
debts, claims, obligations, damages, costs, attorneys’ fees, suits, demands,
liabilities, actions, proceedings and causes of action, in each case, whether
known or unknown, contingent or fixed, direct or indirect, and of whatever
nature or description, and whether in law or in equity, under contract, tort,
statute or otherwise, which any Releasor has heretofore had or now or hereafter
can, shall or may have against any Released Party by reason of any act, omission
or thing whatsoever done or omitted to be done on or prior to the First
Amendment Effective Date arising out of, connected with or related in any way to
this Amendment, the Credit Agreement or any other Loan Document, or any act,
event or transaction related or attendant thereto, or the agreements of any
Agent or any Lender contained therein, or the

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possession, use, operation or control of any of the assets of any Loan Party, or
the making of any Loans or other advances, or the management of such Loans or
advances or the Collateral on or prior to the First Amendment Effective Date.
          8. Continuing Effect. Except as expressly set forth in this Amendment,
all of the terms and provisions of the Credit Agreement are and shall remain in
full force and effect and the Borrower shall continue to be bound by all of such
terms and provisions. The amendments provided for herein are limited to the
specific provisions of the Credit Agreement specified herein and shall not
constitute an amendment of, or an indication of the Administrative Agent’s or
the Lenders’ willingness to amend or waive, any other provisions of the Credit
Agreement or the same sections for any other date or purpose.
          9. Expenses. The Borrower agrees to pay and reimburse the
Administrative Agent for all its reasonable out-of-pocket costs and expenses
incurred in connection with the negotiation, preparation, execution and delivery
of this Amendment, and other documents prepared in connection herewith, and the
transactions contemplated hereby, including, without limitation, reasonable fees
and disbursements and other charges of counsel to the Administrative Agent and
the charges of IntraLinks™ relating to the Amendment.
          10. Choice of Law. This Amendment and the rights and obligations of
the parties hereto shall be governed by, and construed and interpreted in
accordance with the law of the State of New York.
          11. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties and separate counterparts, each of which
when so executed and delivered, shall be deemed an original, and all of which,
when taken together, shall constitute one and the same instrument. Delivery of
an executed counterpart of a signature page to this Amendment by facsimile or
e-mail shall be effective as delivery of a manually executed counterpart of this
Amendment.
          12. Integration. This Amendment, together with the other Loan
Documents, incorporates all negotiations of the parties hereto with respect to
the subject matter hereof and is the final expression and agreement of the
parties hereto with respect to the subject matter hereof.
          13. Severability. In case any provision in this Amendment shall be
invalid, illegal or unenforceable, such provision shall be severable from the
remainder of this Amendment and the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
          14. Loan Document. This Amendment is a Loan Document.
          15. Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AMENDMENT
AND ANY OTHER LOAN DOCUMENT.
[Signature Pages Follow]

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     IN WITNESS WHEREOF, the parties have entered into this Amendment as of the
date first above written.

                  TEKNI-PLEX, INC.,         as Borrower  
 
                      By:   /s/ James E. Condon         Name:   James E. Condon
      Title:   Chief Financial Officer        PURETEC CORPORATION         NATVAR
HOLDINGS, INC.         TRI-SEAL HOLDINGS, INC.         PLASTIC SPECIALTIES AND
TECHNOLOGIES, INC.         BURLINGTON RESINS, INC.         PLASTIC SPECIALTIES
AND TECHNOLOGIES         INVESTMENTS, INC.         DISTRIBUTORS RECYCLING, INC.
        TPI ACQUISITION SUBSIDIARY, INC.         TP/ELM ACQUISITION SUBSIDIARY,
INC.,    
 
  as Guarantors    
 
                      By:   /s/ James E. Condon         Name:   James E. Condon
      Title:   Chief Financial Officer   

[ Signature Page to Amendment No. 1 to Amended and Restated Credit Agreement]

 

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            CITICORP USA, INC.,
as Administrative Agent and Lender
            By:   /s/ Miles D. McManus       Name:   Miles D. McManus     
Title:   Vice President and Director     

[Signature Page to Amendment No. 1 to Amended and Restated Credit Agreement]

 

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            GENERAL ELECTRIC CAPITAL CORPORATION,
as Syndication Agent and Lender
      By:   /s/ Annie Schorr       Name:   Annie Schorr      Title:   Authorized
Signatory     

[Signature Page to Amendment No. 1 to Amended and Restated Credit Agreement]

 

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            WELLS FARGO FOOTHILL, LLC,
as Lender
      By:   /s/ Juan Barrera      Name:   Juan Barrera      Title:   Vice
President     

[Signature Page to Amendment No. 1 to Amended and Restated Credit Agreement]