exv10w23






Exhibit 10.23




SECOND AMENDMENT TO AMENDED

AND RESTATED CREDIT AGREEMENT



     THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the “Amendment”) is dated as
of January 12, 2011, and is made by and among SPARTECH CORPORATION, a Delaware corporation (the
“Borrower”), each of the GUARANTORS (as hereinafter defined), the LENDERS (as hereinafter defined),
and PNC BANK, NATIONAL ASSOCIATION, in its capacity as administrative agent for the Lenders
(hereinafter referred to in such capacity as the “Administrative Agent”).



WITNESSETH:




     WHEREAS, reference is made to that certain Amended and Restated Credit Agreement dated as of
June 9, 2010, as amended by a First Amendment thereto dated as of July 2, 2010 (collectively, the
“Credit Agreement”), by and among the Borrower, the Guarantors from time to time party thereto (the
“Guarantors”), the Lenders from time to time party thereto (the “Lenders”), and the Administrative
Agent; and



     WHEREAS, the Borrower and the Guarantors have requested the Lenders to amend the financial
covenants applicable to the Loan Parties and modify certain definitions used in the calculation of
the Fixed Charge Coverage Ratio applicable to the Loan Parties, and the Lenders have agreed to such
amendments and modifications, subject to the terms hereof.



     NOW, THEREFORE, the parties hereto, in consideration of their mutual covenants and agreements
hereinafter set forth and intending to be legally bound hereby, covenant and agree as follows:



     1. Definitions. Capitalized terms used in this Amendment unless otherwise defined
herein shall have the meanings ascribed to them in the Credit Agreement.



     2. Amendments to Credit Agreement.



     (a) The following definition in Section 1.1 of the Credit Agreement is hereby amended and
restated as follows:



          “Permitted Acquisition means an Acquisition (a) which is non-hostile, (b) which occurs
when no Potential Default or Event of Default exists or will result therefrom, (c) after giving
effect to which, (i) the Leverage Ratio determined on a Pro Forma Basis as of the date of such
Acquisition is not greater than the lesser of (x) 3.00 to 1.00, or (y) the Leverage Ratio
requirement at the time of such Acquisition (as set forth in Section 8.2.8), and (ii) no Potential
Default or Event of Default will exist, including as a result of any breach of any financial
covenant set forth in this Agreement (in each case determined as of the date of such Acquisition on
a Pro Forma Basis, and (d) after giving effect to all consideration paid and costs and





 









 







expenses incurred in connection with such Acquisition, the Borrower has the ability to borrow
at least an additional $25,000,000 of Revolving Credit Loans.”




     (b) The following new definition is hereby inserted in Section 1.1 of the Credit Agreement in
alphabetical order:



          “Testing Date has the meaning specified in Section 8.2.18(b).”




     (c) Subsections (e) and (f) Section 8.2.4 [Loans and Investments] of the Credit Agreement are
hereby amended and restated as follows:



          “(e) advances, loans, extensions of credit or investments in the ordinary course of business
which either existed on January 3, 2011 or are entered into after the end of the 2011 fiscal year
of the Borrower; provided that the aggregate amount of all such investments shall not
exceed $15,000,000;




          (f) investments incurred in order to consummate Permitted Acquisitions which were either
effected prior to January 3, 2011 or are entered into after the end of the 2011 fiscal year of the
Borrower;”




     (d) Section 8.2.8 of the Credit Agreement is hereby amended and restated as follows:




“8.2.8 Leverage Ratio. Permit the Leverage Ratio to exceed the following amounts
during the following periods, which Leverage Ratio shall be calculated in the Compliance
Certificates delivered pursuant to Section 8.3.3:



	 	 	 
	Fiscal Quarter(s)	 	Maximum Leverage Ratio
	January 12, 2011 through end of the first fiscal
quarter of the Borrower’s 2011 fiscal year

	 	4.25 to 1.00
	 
	 	 
	second fiscal quarter of the Borrower’s 2011 fiscal
year

	 	4.50 to 1.00
	 
	 	 
	third fiscal quarter of the Borrower’s 2011 fiscal
year

	 	3.75 to 1.00
	 
	 	 
	fourth fiscal quarter of the Borrower’s 2011 fiscal
year

	 	3.50 to 1.00
	 
	 	 
	first fiscal quarter of the Borrower’s 2012 fiscal
year through the third fiscal quarter of the
Borrower’s 2012 fiscal year

	 	3.25 to 1.00
	 
	 	 
	fourth fiscal quarter of the Borrower’s 2012 fiscal
year through the third fiscal quarter of the
Borrower’s 2013 fiscal year

	 	3.00 to 1.00
	 
	 	 
	fourth fiscal quarter of the Borrower’s 2013 fiscal
year and thereafter

	 	2.75 to 1.00”






     (e) Section 8.2.13 of the Credit Agreement is hereby amended and restated as follows:



-2-









 






“8.2.13 Restricted Payments. Declare or make any Restricted Payment except that (a)
any Subsidiary may declare and pay Dividends to (i) the Borrower, (ii) a Guarantor, and
(iii) the parent of such Guarantor; and (b) the Borrower may declare and pay Dividends and
Stock Redemptions made after the end of the Borrower’s 2011 fiscal year, provided
that (i) no Potential Default or Event of Default exists or would result therefrom, (ii)
the Fixed Charge Coverage Ratio determined on a Pro Forma Basis as of the date of such
Restricted Payment is not less than (x) 2.25 to 1.00 from the first fiscal quarter of the
Borrower’s fiscal year 2012 through the third fiscal quarter of the Borrower’s fiscal year
2012, and (y) 1.40 to 1.00 if such date is after the third fiscal quarter of the Borrower’s
fiscal year 2012, and (iii) the Leverage Ratio determined on a Pro Forma Basis as of the
date of such Restricted Payment is not greater than the lesser of (x) 3.00 to 1.00, or (y)
the Leverage Ratio requirement at the time of such Restricted Payment (as set forth in
Section 8.2.8).”



     (f) Section 8.2.18 of the Credit Agreement is hereby amended and restated as follows:




“8.2.18 Capital Expenditures.




     (a) Permit Capital Expenditures of the Borrower and its Subsidiaries unless the Fixed
Charge Coverage Ratio, determined on a Pro Forma Basis as of the date of such Capital
Expenditure, is not less than (i) 2.25 to 1.00 if such date is before the last day of the
fourth fiscal quarter of fiscal year 2012, or (ii) 1.40 to 1.00 if such date is on or after
the last day of the fourth fiscal quarter of fiscal year 2012.




     (b) Notwithstanding the provisions of Section 8.2.18(a), as of the end of any fiscal
quarter (as used in this Section 8.2.18, each, a “Testing Date”), the Loan Parties shall not
allow the aggregate amount of Capital Expenditures for the preceding period of three (3)
consecutive fiscal quarters, plus the amount of Capital Expenditures for the immediately
following fiscal quarter, to exceed $30,000,000 unless the Leverage Ratio as of such Testing
Date shall be less than 3.00 to 1.00. Solely for purposes of this Section 8.2.18(b), the
aggregate amount of Capital Expenditures for each fiscal quarter of the Borrower in fiscal
year 2010 shall be deemed to be $5,400,000.”



     (g) The following new Section 8.3.5 is hereby inserted in the Credit Agreement immediately
following Section 8.3.4:




“8.3.5 Capital Expenditure Reporting. Within thirty (30) days after the end of each
fiscal quarter of the Borrower, a detailed report on the Capital Expenditures of the
Borrower and its Subsidiaries made during such prior fiscal quarter, together with a budget
for Capital Expenditures projected for the current fiscal quarter, together with
management’s commentary and analysis of each project undertaken during such prior fiscal
quarter.”



     3. Conditions to Effectiveness. This Amendment shall become effective as of the date
hereof on the first date when the Loan Parties have satisfied all of the following conditions to
the satisfaction of the Administrative Agent (the “Effective Date”):



-3-









 





     (a) Legal Details; Counterparts. All legal details and proceedings in connection with
the transactions contemplated by this Amendment shall be in form and substance satisfactory to the
Administrative Agent, and the Administrative Agent shall have received (i) from the Borrower, the
Guarantors and the Required Lenders an executed counterpart original of this Amendment; and (ii)
all such other counterpart originals or certified or other copies of such documents and proceedings
in connection with such transactions as may be reasonably requested by the Administrative Agent, in
form and substance reasonably satisfactory to the Administrative Agent.



     (b) Each Loan Party shall have delivered to the Administrative Agent for the benefit of each
Lender a certificate dated the Effective Date and signed by the Secretary or an Assistant Secretary
of each of the Loan Parties, certifying as appropriate as to:




     (i) all action taken by each Loan Party in connection with this Amendment and the other
Loan Documents;




     (ii) the names of the officer or officers authorized to sign this Amendment and the
other Loan Documents and the true signatures of such officer or officers and specifying the
Authorized Officers permitted to act on behalf of each Loan Party for purposes of this
Amendment and the true signatures of such officers, on which the Administrative Agent and
each Lender may conclusively rely; and




     (iii) copies of its organizational documents, including its certificate of
incorporation, bylaws, certificate of limited partnership, partnership agreement,
certificate of formation, and limited liability company agreement as in effect on the date
of this Amendment certified by the appropriate state official where such documents are filed
in a state office (or, in the event that no change has been made to such organizational
documents previously delivered to the Administrative Agent since June 9, 2010, so certified
by the Secretary or Assistant Secretary of such Loan Party).



     (c) The Noteholders under the Note Purchase Agreement for the Borrower’s 6.58% Senior Notes
due 2016 shall have executed and delivered an amendment to the Note Purchase Agreement between such
Noteholders and the Borrower pursuant to which the financial covenants and related definitions in
such Note Purchase Agreement are amended to be consistent with the corresponding definitions and
financial covenant ratios and levels set forth in this Amendment. In the event that the fees paid
to such Noteholders at closing in connection with the Third Amendment to the Note Purchase
Agreement of even date herewith as a percentage of the principal amount outstanding by the Borrower
to such Noteholders is greater than the fees paid the Lenders in connection with this Amendment as
a percentage of the Lenders’ Revolving Credit Commitments, then the fees to be paid to the Lenders
shall be increased such that the percentage amount of fees paid to the Lenders is equal to the
percentage amount of fees paid to the Noteholders. The Lenders hereby consent to the payment of
such fees to the Noteholders and agree that the payment of such fees shall not constitute a
violation of Section 8.2.19(a) of the Credit Agreement. To the extent that the Noteholders and the
Loan Parties modify the Note Purchase Agreement to incorporate the restrictions on permitted
investments, Permitted Acquisitions, Dividends and Stock Redemptions as set forth in this
Amendment, the Lenders consent to such modifications notwithstanding Section 2.8(e) of the
Intercreditor Agreement,



-4-









 




subject to the agreement of the Noteholders to consent to the corresponding modifications set
forth in this Amendment.




     (d) Officer’s Certifications. By execution and delivery of this Amendment to the
Administrative Agent, each of the Loan Parties certifies that, as of the date hereof, after giving
effect to this Amendment: (i) the representations and warranties of each of the Loan Parties
contained in Section 6 of the Credit Agreement and in each of the other Loan Documents are true and
correct in all material respects on and as of the Effective Date and as of the date hereof with the
same effect as though such representations and warranties had been made on and as of such dates
(except representations and warranties which relate solely to an earlier date or time, which
representations and warranties were true and correct on and as of the specific dates or times
referred to therein), and (ii) no Event of Default or Potential Default has occurred and is
continuing or exists.



     (e) Compliance. Each Loan Party represents and warrants that no default or event of
default shall have occurred or will occur under the terms of any other agreement involving borrowed
money or the extension of credit or any other Indebtedness under which any Loan Party or Subsidiary
of any Loan Party may be obligated as a borrower or guarantor as a result of and after giving
effect to the transactions contemplated by this Amendment.



     (f) Payment of Fees. The Borrower shall have paid or caused to be paid to the
Administrative Agent for itself and for the account of the Lenders all fees accrued through the
Effective Date and the date hereof to the extent not previously paid, and the Borrower
unconditionally agrees to pay and reimburse the Administrative Agent and hold the Administrative
Agent harmless against liability for the payment of all reasonable out-of-pocket costs, expenses
and disbursements, including, without limitation, reasonable expenses of counsel, incurred by the
Administrative Agent in connection with the development, preparation, execution, administration,
interpretation or performance of this Amendment and all other documents or instruments to be
delivered in connection herewith.



     4. Miscellaneous.



     (a) Force and Effect. The Credit Agreement and each of the other Loan Documents are
hereby ratified and confirmed and are in full force and effect. No novation to any Loan Document
is intended or shall occur by or as a result of this Amendment.



     (b) Governing Law. This Amendment shall be deemed to be a contract under the Laws of
the State of New York.



     (c) Counterparts. This Amendment may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original, and all such counterparts
shall together constitute one and the same instrument. Delivery by telecopy or electronic portable
document format (i.e., “pdf”) transmission of executed signature pages hereof from one
party hereto to another party hereto shall be deemed to constitute due execution and delivery by
such party; provided, however that any Person making delivery by telecopy or electronic portable
document format shall promptly deliver an executed original of the same to the Administrative
Agent.



-5-









 





     (d) Construction. From and after the Effective Date, each reference to “hereof”,
“hereunder”, “herein” and “hereby” and each other similar reference, and each reference to “this
Agreement” and each other similar reference contained in the Credit Agreement shall refer to the
Credit Agreement as amended hereby.



[SIGNATURES BEGIN ON NEXT PAGE]




-6-









 





[SIGNATURE PAGE TO SECOND AMENDMENT TO

AMENDED AND RESTATED CREDIT AGREEMENT]




     IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have
executed this Amendment as of the day and year first above written.



	 	 	 	 	 
	 	SPARTECH CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE TO SECOND AMENDMENT TO

AMENDED AND RESTATED CREDIT AGREEMENT]




ATLAS ALCHEM PLASTICS, INC.

ALCHEM PLASTICS CORPORATION

ALCHEM PLASTICS, INC.

SPARTECH PLASTICS, LLC

By: Spartech Corporation, its sole member

POLYMER EXTRUDED PRODUCTS, INC.

SPARTECH POLYCAST, INC.

SPARTECH TOWNSEND, INC.

SPARTECH POLYCOM, INC.

FRANKLIN-BURLINGTON PLASTICS, INC.

SPARTECH CMD, LLC

By: Spartech Plastics LLC, its managing member

SPARTECH FCD, LLC

By: Polymer Extruded Products, Inc., its managing

member

SPARTECH SPD, LLC

By: Spartech Plastics, LLC, its managing member

SPARTECH MEXICO HOLDING COMPANY

SPARTECH MEXICO HOLDING COMPANY TWO

SPARTECH MEXICO HOLDINGS, LLC

By: Spartech Mexico Holding Company, its sole member

CREATIVE FORMING, INC.

PEPAC HOLDINGS, INC.

SPARTECH RESEARCH AND DEVELOPMENT, LLC

By: Spartech Corporation, its sole member

SPARTECH FRANCE HOLDINGS, L.P.

By: Spartech Polycom, Inc., its General Partner




	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Randy C. Martin 	 
	 	 	Vice President for all of the above 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE TO SECOND AMENDMENT TO

AMENDED AND RESTATED CREDIT AGREEMENT]




	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION,

Individually and as Administrative Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE TO SECOND AMENDMENT TO

AMENDED AND RESTATED CREDIT AGREEMENT]




	 	 	 	 	 
	 	BANK OF AMERICA, N.A.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE TO SECOND AMENDMENT TO

AMENDED AND RESTATED CREDIT AGREEMENT]




	 	 	 	 	 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE TO SECOND AMENDMENT TO

AMENDED AND RESTATED CREDIT AGREEMENT]




	 	 	 	 	 
	 	THE HUNTINGTON NATIONAL BANK

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE TO SECOND AMENDMENT TO

AMENDED AND RESTATED CREDIT AGREEMENT]




	 	 	 	 	 
	 	COMERICA BANK

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE TO SECOND AMENDMENT TO

AMENDED AND RESTATED CREDIT AGREEMENT]




	 	 	 	 	 
	 	COMPASS BANK

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 



[SIGNATURE PAGE TO SECOND AMENDMENT TO

AMENDED AND RESTATED CREDIT AGREEMENT]




	 	 	 	 	 
	 	FIRSTMERIT BANK, N.A.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title: