exv10w1






Exhibit 10.1




FOURTH AMENDMENT TO

FOURTH AMENDED AND RESTATED CREDIT AGREEMENT




     THIS FOURTH AMENDMENT TO FOURTH AMENDED AND RESTATED CREDIT AGREEMENT (this “Fourth
Amendment”), dated as of July 10, 2009, is entered into among SPARTECH CORPORATION, a Delaware
corporation (the “Borrower”), the lenders listed on the signature pages hereof
(collectively, the “Lenders”), and BANK OF AMERICA, N.A., as Administrative Agent and L/C
Issuer.



BACKGROUND




     A. The Borrower, the Lenders, the Administrative Agent, and the L/C Issuer heretofore entered
into that certain Fourth Amended and Restated Credit Agreement, dated as of June 2, 2006, as
amended by that certain First Amendment to Fourth Amended and Restated Credit Agreement, dated as
of March 7, 2008, that certain Waiver and Amendment Agreement to Fourth Amended and Restated Credit
Agreement, dated as of July 30, 2008, and that certain Third Amendment to Fourth Amended and
Restated Credit Agreement, dated as of September 10, 2008 (said Credit Agreement, as so waived or
amended, the “Credit Agreement”; the terms defined in the Credit Agreement and not
otherwise defined herein shall be used herein as defined in the Credit Agreement).



     B. The Borrower, the Lenders, the Administrative Agent, and the L/C Issuer desire to amend the
Credit Agreement.



     NOW, THEREFORE, in consideration of the covenants, conditions and agreements hereafter set
forth, and for other good and valuable consideration, the receipt and adequacy of which are all
hereby acknowledged, the Borrower, the Lenders, the Administrative Agent, and the L/C Issuer
covenant and agree as follows:



     1. AMENDMENTS TO THE CREDIT AGREEMENT.



     (a) The definition of “EBITDA” set forth in Section 1.01 of the Credit
Agreement is hereby amended to read as follows:




     “EBITDA” for any period means Consolidated Net Income for such period plus all
amounts deducted in the computation thereof on account of (a) Consolidated Interest Expense,
(b) depreciation and amortization expenses and other non-cash charges (included but not
limited to expensing of stock options, fixed asset write-offs and impairments of goodwill),
(c) income and profits taxes, and (d) cash restructuring expenses; provided,
however, (i) for the period of four consecutive fiscal quarters ending on
(A) August 1, 2009, the aggregate amount of cash restructuring charges that may be added to
determine EBITDA shall not exceed $8,967,000, (B) on October 31, 2009, the aggregate amount
of cash restructuring charges that may be added to determine EBITDA shall not exceed
$8,515,000, (C) on January 30, 2010, the aggregate amount of cash



1









 






restructuring charges that may be added to determine EBITDA shall not exceed
$7,337,000, and (D) on May 1, 2010 and on the last day of each fiscal quarter ended
thereafter, the aggregate amount of cash restructuring charges that may be added to
determine EBITDA shall not exceed $5,000,000 and (ii) $848,000 of cash restructuring
expenses incurred in the period of four consecutive fiscal quarters ended May 2, 2009 but
not permitted to be added to determine EBITDA for such period due to the restrictions of
such definition in effect at such time shall be included in the determination of EBITDA for
the fiscal quarter ended August 1, 2009. Notwithstanding the foregoing, for purposes of
Section 2.04 only, the aggregate amount of cash restructuring charges that may be
added to determine EBITDA pursuant to clause (d) above shall not exceed $5,000,000 for any
period of four consecutive fiscal quarters.



     (b) Section 2.04(c) of the Credit Agreement is hereby amended to read as follows:




     (c) If the Borrower or any of its Subsidiaries makes an Asset Sale (other than any
Asset Sale permitted by Section 7.02(a), (b) or (c)) which results
in the realization by such Person of Net Cash Proceeds, the Borrower shall immediately
prepay an aggregate principal amount of Loans equal to (x) such Net Cash Proceeds that
exceed an aggregate amount of $1,000,000, regardless of whether such Net Cash Proceeds are
received as a single payment or as a series of payments (such amount of Net Cash Proceeds as
the “Loan Prepayment Basis”) times (y)(i) if the Leverage Ratio as of the last
fiscal quarter preceding such Asset Sale is greater than or equal to 3.50 to 1.00, 75% of
such Loan Prepayment Basis, (ii) if the Leverage Ratio as of the last fiscal quarter
preceding such Asset Sale is less than 3.50 to 1.00 but greater than or equal to 2.50 to
1.00, 50% of such Loan Prepayment Basis, and (iii) if the Leverage Ratio as of the last
fiscal quarter preceding such Asset Sale is less than 2.50 to 1.00, 0% of such Loan
Prepayment Basis, provided that (A) the Required Lenders have approved the release of the
Superpriority Amount and such release is effective and (B) the Asset Sale mandatory
prepayment provisions (or corresponding provisions) in the Note Purchase Agreements and the
Calyon Credit Agreement are similar to this Section 2.04(c) (such prepayments to be
applied as set forth in clause (h) below and to be subject to the Intercreditor Agreement
and to be reduced by any amounts required to be paid to other Creditors pursuant to the
Intercreditor Agreement). Any portion of the Loan Prepayment Basis not used to prepay the
Loans shall be reinvested in Reinvestment Property so long as within 180 days after the
receipt of such Net Cash Proceeds, such purchase shall have been consummated or
contractually committed to be consummated pursuant to a definitive agreement (and, if so
contractually committed, actually reinvested within 270 days of the date of receipt of such
Net Cash Proceeds; and provided, however, that any such Net Cash Proceeds
not subject to such definitive agreement or so reinvested as required above shall be
immediately applied to the prepayment of the Loans as set forth in this
Section 2.04(c)). As used herein, “Reinvestment Property” means property
that is useful in the business of the Borrower and its Subsidiaries.



     (c) Section 7.02 of the Credit Agreement is hereby amended to read as follows:




     7.02 Disposition of Assets. Make any sale, transfer, lease (as lessor), loan or other
disposition of any property or assets (an “Asset Sale”), other than the following:



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     (a) Asset Sales in the ordinary course of business;




     (b) Asset Sales of property or assets by a Subsidiary to the Borrower or a
Wholly-Owned Subsidiary that is a Subsidiary Guarantor;




     (c) the Asset Sale as a result of the Disclosed Transaction; or




     (d) other Asset Sales, provided that in each case




     (i) immediately before and after giving effect thereto, no Default
shall have occurred and be continuing, and




     (ii) the aggregate net book value of the property or assets disposed of
in such Asset Sale and all other Asset Sales by the Borrower and its
Subsidiaries during the immediately preceding twelve months does not exceed
15% of Consolidated Net Worth (as of the last day of the quarterly
accounting period ending on or most recently prior to the last day of such
twelve month period); provided, however, there shall be
excluded for purposes of this Section 7.02(ii) only, the aggregate
net book value of the property and assets of certain Subsidiaries previously
disclosed in the Borrower’s Second Quarter 2009 Update to the Lenders, dated
June 15, 2009, in writing to be disposed of by the Borrower in three
separate Asset Sales so long as all the proceeds and consideration of such
Asset Sales consist of (A) notes not to exceed (x) $10,000,000 in aggregate
principal amount for all such Asset Sales and (y) $5,000,000 in aggregate
principal amount for any one such Asset Sale and/or (B) cash.




     For purposes of this Section 7.02, any Voting Equity Interests of a Subsidiary
that are the subject of an Asset Sale shall be valued at the greater of (x) the fair market
value of such shares as determined in good faith by the Board of Directors of the Borrower
and (y) the aggregate net book value of the assets of such Subsidiary multiplied by a
fraction of which the numerator is the aggregate number of Voting Equity Interests of such
Subsidiary disposed of in such Asset Sale and the denominator is the aggregate number of
Voting Equity Interests of such Subsidiary outstanding immediately prior to such Asset Sale.



     (d) Section 7.04 of the Credit Agreement is hereby amended by (i) deleting “and” after
clause (f) thereof, (ii) deleting “.” after clause (g) thereof and inserting “; and” in lieu
thereof, and (iii) adding a new clause (h) thereto to read as follows:




     (h) notes received as part of the purchase price of the three Asset Sales excluded from
that calculation set forth in Section 7.02(d)(ii) not to exceed the amounts
permitted thereunder.



     (e) The Compliance Certificate is hereby amended to be in the form of Exhibit C
attached to this Fourth Amendment.



3









 





     2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its execution and
delivery hereof, the Borrower represents and warrants that, as of the date hereof and after giving
effect to the amendments contemplated by the foregoing Section 1:



     (a) the representations and warranties contained in the Credit Agreement and the other Loan
Documents are true and correct on and as of the date hereof as if made on and as of such date,
except to the extent that such representations and warranties specifically refer to an earlier
date, in which case they are true and correct as of such earlier date;



     (b) no event has occurred and is continuing which constitutes a Default or an Event of
Default;



     (c) (i) the Borrower has full corporate power and authority to execute, deliver and perform
this Fourth Amendment and (iii) this Fourth Amendment and the Credit Agreement, as amended hereby,
constitute the legal, valid and binding respective obligations of the Borrower, enforceable against
the Borrower, in accordance with their respective terms, except as enforceability may be limited by
applicable Debtor Relief Laws and by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and except as rights to indemnity may be
limited by federal or state securities laws;



     (d) the execution, delivery and performance by the Borrower of this Fourth Amendment and the
Credit Agreement, as amended hereby, do not and will not conflict with, result in a breach of or
constitute a default under, any Organization Document of the Borrower or any Contractual Obligation
to which the Borrower is a party or by which its respective properties may be bound; and



     (e) no authorization, approval, consent, or other action by, notice to, or filing with, any
Governmental Authority or other Person (including the Borrower’s Board of Directors) not previously
obtained is required for the execution, delivery or performance by the Borrower of this Fourth
Amendment.



     3. CONDITIONS TO EFFECTIVENESS. This Fourth Amendment shall be effective as of
July 10, 2009, subject to the following:



     (a) the Administrative Agent shall have received counterparts of this Fourth Amendment
executed by the Required Lenders;



     (b) the Administrative Agent shall have received counterparts of this Fourth Amendment
executed by the Borrower and acknowledged by each Guarantor;



     (c) the representations and warranties set forth in Section 2 of this Fourth Amendment shall
be true and correct;



     (d) the Note Purchase Agreements shall have been amended in form and substance satisfactory to
the Administrative Agent;



4









 





     (e) Bank of America, in its capacity as Collateral Agent under the Intercreditor Agreement,
shall have received the written authorization necessary under Section 5.7 of the Intercreditor
Agreement.



     (f) the Administrative Agent shall have received certificates of resolutions or other similar
action, incumbency certificates and/or certificates of Responsible Officers of the Borrower as the
Administrative Agent may require evidencing the identity, authority and capacity of each
Responsible Officer thereof authorized to act as a Responsible Officer in connection with this
Fourth Amendment;



     (g) the Administrative Agent shall have received an opinion of the Borrower’s counsel, in form
and substance satisfactory to the Administrative Agent, with respect to matters set forth in
Sections 2(c), (d) and (e) of this Fourth Amendment and with respect to such other matters as
requested by the Administrative Agent or its counsel;



     (h) the Administrative Agent shall have received all fees payable to the Administrative Agent
and Arranger and the Lenders executing this Fourth Amendment as agreed to by the Borrower;



     (i) the Borrower shall have paid all Attorney Costs of the Administrative Agent incurred in
connection with this Fourth Amendment to the extent invoiced; and



     (j) the Administrative Agent and the Lenders shall have received in form and substance
satisfactory to the Administrative Agent and the Lenders, such other documents and certificates as
the Lenders shall require.



     4. GUARANTORS ACKNOWLEDGMENT. By signing below, each of the Guarantors
(i) acknowledges, consents and agrees to the execution, delivery and performance by the Borrower of
this Fourth Amendment, (ii) acknowledges and agrees that its obligations in respect of the Guaranty
are not released, diminished, waived, modified, impaired or affected in any manner by this Fourth
Amendment or any of the provisions contemplated herein, (iii) ratifies and confirms its obligations
under the Guaranty, and (iv) acknowledges and agrees that it has no claims or offsets against, or
defenses or counterclaims to, the Guaranty.



     5. NO WAIVER. Nothing provided in Section 1(b) of this Fourth Amendment or otherwise
herein shall waive, or be deemed a waiver of, the mandatory prepayment requirements of
Section 2.04(c) of the Credit Agreement.



     6. REFERENCE TO THE CREDIT AGREEMENT.



     (a) Upon the effectiveness of this Fourth Amendment, each reference in the Credit Agreement to
“this Agreement”, “hereunder”, or words of like import shall mean and be a reference to the Credit
Agreement, as affected and amended by this Fourth Amendment.



     (b) The Credit Agreement, as amended by this Fourth Amendment, and all other Loan Documents
shall remain in full force and effect and are hereby ratified and confirmed.



5









 





     7. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on demand all costs and
expenses of the Administrative Agent in connection with the preparation, reproduction, execution
and delivery of this Fourth Amendment and the other instruments and documents to be delivered
hereunder (including the reasonable fees and out-of-pocket expenses of counsel for the
Administrative Agent with respect thereto and with respect to advising the Administrative Agent as
to its rights and responsibilities under the Credit Agreement, as amended by this Fourth
Amendment).



     8. EXECUTION IN COUNTERPARTS. This Fourth Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which when taken together shall
constitute but one and the same instrument. For purposes of this Fourth Amendment, a counterpart
hereof (or signature page thereto) signed and transmitted by any Person party hereto to the
Administrative Agent (or its counsel) by facsimile machine, telecopier or electronic mail is to be
treated as an original. The signature of such Person thereon, for purposes hereof, is to be
considered as an original signature, and the counterpart (or signature page thereto) so transmitted
is to be considered to have the same binding effect as an original signature on an original
document.



     9. GOVERNING LAW; BINDING EFFECT. This Fourth Amendment shall be governed by and
construed in accordance with the laws of the State of Texas applicable to agreements made and to be
performed entirely in such state; provided that the Administrative Agent and each Lender
shall retain all rights arising under federal law. This Fourth Amendment shall be binding upon all
parties hereto and their respective successors and assigns.



     10. HEADINGS. Section headings in this Fourth Amendment are included herein for
convenience of reference only and shall not constitute a part of this Fourth Amendment for any
other purpose.



     11. RELEASE. THE BORROWER AND EACH GUARANTOR HEREBY ACKNOWLEDGE THAT THE OBLIGATIONS
UNDER THE CREDIT AGREEMENT AND EACH OTHER LOAN DOCUMENT EXECUTED IN CONNECTION THEREWITH ARE
ABSOLUTE AND UNCONDITIONAL WITHOUT ANY RIGHT OF RESCISSION, SETOFF, COUNTERCLAIM, DEFENSE, OFFSET,
CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR
ELIMINATE ALL OR ANY PART OF ITS LIABILITY TO REPAY THE OBLIGATIONS UNDER THE CREDIT AGREEMENT AND
EACH OTHER LOAN DOCUMENT EXECUTED IN CONNECTION THEREWITH OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES
OF ANY KIND OR NATURE FROM ANY RELEASED PARTY (AS DEFINED BELOW). THE BORROWER AND EACH GUARANTOR
HEREBY VOLUNTARILY AND KNOWINGLY RELEASE AND FOREVER DISCHARGE THE ARRANGER, THE ADMINISTRATIVE
AGENT, THE L/C ISSUER, EACH LENDER AND ITS PREDECESSORS, EACH RELATED PARTY TO ANY OF THE ABOVE,
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, AGENTS, ATTORNEYS-IN-FACT, SUCCESSORS, AND
ASSIGNS (COLLECTIVELY, THE “RELEASED PARTIES”), FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS,
CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN,



6









 




ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT
LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS FOURTH AMENDMENT IS
EXECUTED, WHICH THE BORROWER OR ANY GUARANTOR MAY NOW OR HEREAFTER HAVE AGAINST THE RELEASED
PARTIES, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION
OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING OUT OF OR IN CONNECTION WITH OR BY REASON OF THE
CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT EXECUTED IN CONNECTION THEREWITH, INCLUDING, WITHOUT
LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN
EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE
CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT EXECUTED IN CONNECTION THEREWITH, AND NEGOTIATION FOR
AND EXECUTION OF THIS FOURTH AMENDMENT (BUT EXCLUDING IN ALL CASES ANY OF THE FOREGOING ARISING
FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE RELEASED PARTIES).




     12. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS FOURTH AMENDMENT, AND
THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AS TO THE SUBJECT MATTER
THEREIN AND HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS BETWEEN THE PARTIES.








     REMAINDER OF PAGE LEFT INTENTIONALLY BLANK










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     IN WITNESS WHEREOF, this Fourth Amendment is executed as of the date first set forth above.



	 	 	 	 	 
	 	SPARTECH CORPORATION

 	 
	 	By:  	/s/ Randy C. Martin
 	 
	 	 	Randy C. Martin 	 
	 	 	Executive Vice President and Chief


Financial Officer 	 
	 



Signature Page to Fourth Amendment





 









 





	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as

Administrative Agent

 	 
	 	By:  	/s/ Henry Pennell
 	 
	 	 	Name:  	Henry Pennell 	 
	 	 	Title:  	Vice President 	 
	 
	 	BANK OF AMERICA, N.A., as a Lender 

and L/C Issuer

 	 
	 	By:  	/s/ William M. Bulger Jr.
 	 
	 	 	Name:  	William M. Bulger Jr. 	 
	 	 	Title:  	Vice President 	 
	 
	 	THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., 

as a Lender and Syndication Agent

 	 
	 	By:  	/s/ Victor Pierzchalski
 	 
	 	 	Name:  	Victor Pierzchalski 	 
	 	 	Title:  	Authorized Signatory 	 
	 
	 	KEYBANK, NATIONAL ASSOCIATION,

as a Lender and Syndication Agent

 	 
	 	By:  	/s/ Brian P. Fox
 	 
	 	 	Name:  	Brian P. Fox 	 
	 	 	Title:  	Vice President 	 
	 
	 	NATIONAL CITY BANK OF PENNSYLVANIA, 

as a Lender and Documentation Agent

 	 
	 	By:  	/s/ Thomas S. Sherman
 	 
	 	 	Name:  	Thomas S. Sherman 	 
	 	 	Title:  	SVP 	 
	 



Signature Page to Fourth Amendment





 









 





	 	 	 	 	 
	 	CALYON NEW YORK BRANCH, as a 
Lender and
Documentation Agent

 	 
	 	By:  	/s/ Joseph Philbin
 	 
	 	 	Name:  	Joseph Philbin 	 
	 	 	Title:  	Director 	 
	 
	 	 	 
	 	By:  	

/s/ Blake Wright
 	 
	 	 	Name:  	Blake Wright 	 
	 	 	Title:  	Managing Director 	 
	 
	 	SUNTRUST BANK, as a Lender

 	 
	 	By:  	/s/ Brian C. Wille
 	 
	 	 	Name:  	Brian C. Wille 	 
	 	 	Title:  	Vice President 	 
	 
	 	FIFTH THIRD BANK, as a Lender

 	 
	 	By:  	/s/ Robert M. Sander
 	 
	 	 	Name:  	Robert M. Sander 	 
	 	 	Title:  	Vice President 	 
	 
	 	U. S. BANK NATIONAL ASSOCIATION, as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	COMERICA BANK, as a Lender

 	 
	 	By:  	/s/ Mark J. Leveille
 	 
	 	 	Name:  	Mark J. Leveille 	 
	 	 	Title:  	Vice President Comerica Bank 	 
	 



Signature Page to Fourth Amendment





 









 





	 	 	 	 	 
	 	DEUTSCHE BANK TRUST COMPANY 
AMERICAS, as a
Lender


 	 
	 	By:  	/s/ Erin Morrissey
 	 
	 	 	Name:  	Erin Morrissey 	 
	 	 	Title:  	Vice President 	 
	 
	 	 	 
	 	By:  	                                                        /s/ Evelyn Thierry
 	 
	 	 	Name:  	Evelyn Thierry 	 
	 	 	Title:  	Vice President 	 
	 



Signature Page to Fourth Amendment














 









 





ACKNOWLEDGED AND AGREED TO:




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 INDUSTRIES FLORIDA, INC.

SPARTECH POLYCOM, INC.

FRANKLIN-BURLINGTON PLASTICS, INC.

SPARTECH INDUSTRIES, INC.

ANJAC-DORON PLASTICS, INC.

SPARTECH CMD, LLC

           By:   Spartech Corporation, its sole

                    member

SPARTECH FCD, LLC

           By:    Polymer Extruded Products, Inc.,

                    its sole member

SPARTECH SPD, LLC

           By:   Spartech Corporation, its sole

                    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.

SPARTECH POLYCOM (TEXAS), INC.

ALSHIN TIRE CORPORATION

X-CORE, LLC

           By:   Spartech Industries, Inc.,

                    its sole member

PEPAC HOLDINGS, INC.




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



Signature Page to Fourth Amendment





 









 





EXHIBIT C




FORM OF COMPLIANCE CERTIFICATE




Financial Statement Date:                    





			
	To:	 	Bank of America, N.A., as Administrative Agent





Ladies and Gentlemen:




     Reference is made to that certain Credit Agreement, dated as of June 2, 2006 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined), among
Spartech Corporation, a Delaware corporation (the “Borrower”), the Lenders from time to
party thereto and Bank of America, N.A. as Administrative Agent and L/C Issuer.



     The undersigned hereby certifies as of the date hereof that he/she is the                                         of the Borrower and
that, as such, he/she is authorized to execute and deliver this certificate to the Administrative
Agent on the behalf of the Borrower and that:



[Use following for fiscal year-end financial statements]



Attached hereto as Schedule 1 are the year-end audited financial statements required by
Section 6.01(a) of the Agreement for the fiscal year of the Borrower ended as of the above
date, together with the report and opinion of an independent certified public accountant required
by such section.




[Use following for fiscal quarter-end financial statements]




     1. Attached hereto as Schedule 1 are the unaudited financial statements required by
Section 6.01(b) of the Agreement for the fiscal quarter of the Borrower ended as of the
date set forth above as the Financial Statement Date. Such financial statements fairly present in
all material respects the financial condition, results of operations and cash flows of the Borrower
and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to
normal year-end audit adjustments and the absence of footnotes.



     2. The undersigned has reviewed and is familiar with the terms of the Agreement and has made,
or has caused to be made under his/her supervision, a detailed review of the transactions and
condition (financial or otherwise) of the Borrower during the accounting period covered by the
attached financial statements.



     3. A review of the activities of the Borrower during such fiscal period has been made under
the supervision of the undersigned with a view to determining whether during such fiscal period the
Borrower performed and observed all its Obligations under the Loan Documents and



Exhibit C - 1

Form of Compliance Certificate




 









 





[select one:]




     [to the best knowledge of the undersigned during such fiscal period, the Borrower performed
and observed each covenant and condition of the Loan Documents applicable to it and no Default has
occurred and is continuing.]



—or—




     [the following covenants or conditions have not been performed or observed and the following
is a list of each such Default and its nature and status:]



     4. The representations and warranties of the Borrower contained in Article V of the Agreement,
and any representations and warranties of any Loan Party that are contained in any document
furnished at any time under or in connection with the Loan Documents, are true and correct on and
as of the date hereof, except to the extent that such representations and warranties specifically
refer to an earlier date, in which case they are true and correct as of such earlier date, and
except that for purposes of this Compliance Certificate, the representations and warranties
contained in subsections (a) and (b) of Section 5.05 of the Agreement shall be deemed to
refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.01 of the Agreement, including the statements in connection with which this
Compliance Certificate is delivered. The financial covenant analyses and information set forth on
Schedule 2 attached hereto are true and accurate on and as of the date set forth above as
the Financial Statement Date.



     IN WITNESS WHEREOF, the undersigned has executed this Certificate as of                                          ,               
      .



	 	 	 	 	 	 	 
	 	 	SPARTECH CORPORATION, a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Exhibit C - 2

Form of Compliance Certificate





 









 








For the Quarter/Year ended                                         (“Statement Date”)




SCHEDULE 2

to the Compliance Certificate

($ in 000’s)




	 	 	 	 	 	 	 	 	 
	 	I.	 	 	Section 7.02(c) — Limitation on Asset Dispositions.
	 	 	 	 
	 	 	 	 	A. Aggregate net book value of the property or assets disposed of in asset sales (other than
asset sales pursuant to 7.02(a), (b) and 7.02(c) and the three Asset Sales referred to
Section 7.02(d)(ii)):
	 	$	                                        	 
	 	 	 	 	B. All other asset sales by Borrower and its Subsidiaries during the immediately preceding
twelve months:
	 	$	                                        	 
	 	 	 	 	C. Total (Line I.A. + I.B.):
	 	$	                                        	 
	 	 	 	 	D. Maximum (15% x IV.A.(5):
	 	$	                                        	 
	II.	 	Section 7.04(e) — Limitations on Loans and Investment.
	 	 	 	 
	 	 	 	 	A. Aggregate outstanding advances, loans, extensions of credit or investments in the ordinary
course of business:
	 	$	                                        	 
	 	 	 	 	B. Maximum in aggregate amount at any one time outstanding:
	 	$	15,000,000	 
	III.	 	Section 7.05 — Limitation on Indebtedness.
	 	 	 	 
	 	 	 	 	A. Aggregate outstanding amount of Indebtedness of all Subsidiaries (excluding (i) Guarantees
permitted pursuant to clauses (a), (b), (c) and (d) of Section 7.12, (ii) Indebtedness of a
Subsidiary existing on July 30, 2008 and described in Schedule 7.05 but no increase of any
such Indebtedness, (iii) Indebtedness of a Subsidiary owed to the Borrower or any Guarantor,
(iv) Indebtedness under the Loan Documents, and (v) Indebtedness of a Subsidiary secured by
Liens permitted pursuant to clause (h) of Section 7.01):
	 	$	                                        	 
	 	 	 	 	B. Maximum permitted amount of Subsidiary Indebtedness:
	 	$	5,000,000	 
	IV.	 	Section 7.06 — Consolidated Net Worth.
	 	 	 	 
	 	 	 	 	A. Consolidated Net Worth:
	 	 	 	 
	 	 	 	 	(1) Capital stock taken at par or stated value:
	 	$	                                        	 
	 	 	 	 	(2) Capital in excess of par or stated value relating to
capital stock:
	 	$	                                        	 
	 	 	 	 	(3) Retained earnings (or minus any retained earnings
deficit):
	 	$	                                        	 
	 	 	 	 	(4) Sum of treasury stock, capital stock subscribed for
and unissued and other contra-equity accounts, all as
determined in accordance with GAAP:
	 	$	                                        	 
	 	 	 	 	(5) Total (Line IV.A.(1) + (2) + (3) — (4)):
	 	$	                                        	 
	 	 	 	 	B. Minimum Consolidated Net Worth.
	 	 	 	 
	 	 	 	 	(1) $350,000,000:
	 	$	                                        	 






Exhibit C - 1




 









 





	 	 	 	 	 	 	 	 	 
	 	 	 	 	(2) 50% of Consolidated Net Income for each fiscal
quarter beginning with the fiscal quarter ending on
April 30, 2006 (excluding any fiscal quarter in which
Consolidated Net Income is not positive):
	 	$	                                        	 
	 	 	 	 	(3) 85% of the net proceeds of any equity issued by the
Borrower after January 31, 2006:
	 	$	                                        	 
	 	 	 	 	(4) Non-cash impairment charges for goodwill, intangible
and fixed assets:
	 	$	                                        	 
	 	 	 	 	(5) Minimum Consolidated Net Worth (Lines IV.B.(1) + (2)
+ (3) — (4)):
	 	$	                                        	 
	 	V.	 	 	Section 7.07 — Minimum Fixed Charge Coverage Ratio.
	 	 	 	 
	 	 	 	 	A. EBITDA for the Borrower and its Subsidiaries on a consolidated basis for the period of the
four fiscal quarters most recently ended (the “Subject Period”):
	 	 	 	 
	 	 	 	 	1. Consolidated Net Income for the Subject Period:
	 	$	                                        	 
	 	 	 	 	2. Without duplication and to the extent deducted in
determining Net Income, Consolidated Interest
Expense:
	 	$	                                        	 
	 	 	 	 	3. Without duplication and to the extent deducted in
determining Net Income, depreciation and amortization
expenses and other non-cash charges (including but
not limited to expensing of stock options, fixed
asset write-offs and impairment of goodwill):
	 	$	                                        	 
	 	 	 	 	4. Without duplication and to the extent deducted in
determining Net Income, income and profits taxes:
	 	$	                                        	 
	 	 	 	 	5. Without duplication and to the extent deducted in
determining Net Income, cash restructuring expenses
(see definition of EBITDA in Credit Agreement for
maximum permitted amount of cash restructuring
charges for Subject Period):
	 	$	                                        	 
	 	 	 	 	6. EBITDA (Lines VI.A.1. + 2. + 3. + 4 + 5.):
	 	$	                                        	 
	 	 	 	 	B. Capital Expenditures for the Subject Period:
	 	$	                                        	 
	 	 	 	 	C. Income tax expenses for the Subject Period:
	 	$	                                        	 
	 	 	 	 	D. Consolidated Interest Expense for the Subject Period:
	 	$	                                        	 
	 	 	 	 	E. Dividends for the Subject Period:
	 	$	                                        	 
	 	 	 	 	F. Scheduled installment payments of principal of Consolidated Indebtedness for the Subject
Period:
	 	$	                                        	 
	 	 	 	 	G. Fixed Charge Coverage Ratio ((Line V.A.6. — Line V.B — Line V.C.)  ̧ (Line V.D. + Line
V.E. + Line V.F.)):
	 	                           to 1.00
	 	 	 	 	H. Minimum Required Fixed Charge Coverage Ratio — see Section 7.07:
	 	                           to 1.00
	VI.	 	Section 7.08 — Maximum Leverage Ratio
	 	 	 	 
	 	 	 	 	A. Consolidated Indebtedness:
	 	 	 	 
	 	 	 	 	1. Indebtedness (without duplication)
	 	 	 	 






Exhibit C - 2




 









 





	 	 	 	 	 	 	 	 	 
	 	 	 	 	(a) all obligations of such
Person for borrowed
money and all
obligations of such
Person evidenced by
bonds, debentures,
notes, loan agreements
or other similar
instruments:
	 	$	                                        	 
	 	 	 	 	(b) all direct or
contingent obligations
of such Person arising
under letters of credit
(including standby and
commercial), bankers’
acceptances, bank
guaranties, surety
bonds and similar
instruments:
	 	$	                                        	 
	 	 	 	 	(c) net obligations of such
Person under any Swap
Contract:
	 	$	                                        	 
	 	 	 	 	(d) all obligations of such
Person to pay the
deferred purchase price
of property or services
(other than trade
accounts payable in the
ordinary course of
business):
	 	$	                                        	 
	 	 	 	 	(e) accrued obligations in
respect of earnout or
similar payments
payable in cash or
which may be payable in
cash at the seller’s or
obligee’s option:
	 	$	                                        	 
	 	 	 	 	(f) Indebtedness (excluding
prepaid interest
thereon) secured by a
Lien on property owned
or being purchased by
such Person (including
indebtedness arising
under conditional sales
or other title
retention agreements),
whether or not such
Indebtedness shall have
been assumed by such
Person or is limited in
recourse:
	 	$	                                        	 
	 	 	 	 	(g) Capitalized Lease
Obligations and
Synthetic Lease
Obligations:
	 	$	                                        	 
	 	 	 	 	(h) Obligations in respect
of Redeemable Stock of
such Person:
	 	$	                                        	 
	 	 	 	 	(i) any “withdrawal
liability” of such
Person as such term is
defined under Part I of
Subtitle E of Title IV
of ERISA:
	 	$	                                        	 
	 	 	 	 	(j) all Guarantees of such
Person in respect of
any of the foregoing:
	 	$	                                        	 
	 	 	 	 	(k) Consolidated
Indebtedness (Lines
VI.A.1.(a) + (b) + (c)
+ (d) + (e) + (f) + (g)
+ (h) + (i) + (j)):
	 	$	                                        	 






Exhibit C - 3




 









 





	 	 	 	 	 	 	 	 	 
	 	 	 	 	B. EBITDA for the Borrower and its Subsidiaries on a consolidated basis for the period of the
four fiscal quarters most recently ended (the “Subject Period”). For purposes of calculating
the Leverage Ratio as at any date, EBITDA shall be calculated on a pro forma basis assuming
that all Acquisition made, and all divestitures completed, during the four consecutive fiscal
quarters then most recently ended had been made on the first day of such period (but without
adjustment for expected cost savings or other synergies):
	 	 	 	 
	 	 	 	 	1. Consolidated Net Income for the Subject Period:
	 	$	                                        	 
	 	 	 	 	2. Without duplication and to the extent deducted in
determining Net Income, Consolidated Interest
Expense:
	 	$	                                        	 
	 	 	 	 	3. Without duplication and to the extent deducted in
determining Net Income, depreciation and amortization
expenses and other non-cash charges (including but
not limited to expensing of stock options, fixed
asset write-offs and impairment of goodwill):
	 	$	                                        	 
	 	 	 	 	4. Without duplication and to the extent deducted in
determining Net Income, income and profits taxes:
	 	$	                                        	 
	 	 	 	 	5. Without duplication and to the extent deducted in
determining Net Income, cash restructuring expenses
(see definition of EBITDA in Credit Agreement for
maximum permitted amount of cash restructuring
charges for Subject Period):
	 	$	                                        	 
	 	 	 	 	6. EBITDA (Lines VI.B.1. _ 2. + 3. + 4. + 5.):
	 	$	                                        	 
	 	 	 	 	C. Leverage Ratio (Line VI.A.1.(k)  ̧ Line VI.B.6.):
	 	                     to 1.00
	 	 	 	 	D. Maximum Leverage Ratio — see Section 7.08:
	 	                     to 1.00
	VII.	 	Section 7.13 — Limitation on Restricted Payments
	 	 	 	 
	 	 	 	 	A. Aggregate amount of Dividends paid during fiscal quarter
	 	$	                                        	 
	 	 	 	 	B. Aggregate amount of Dividends permitted during fiscal quarter
	 	$	1,650,000	 
	VIII.	 	Section 7.18 — Limitation on Capital Expenditures
	 	 	 	 
	 	 	 	 	A. Aggregate amount of Capital Expenditures made during fiscal year                                         :
	 	$	                                        	 
	 	 	 	 	B. Aggregate amount of Capital Expenditures permitted to be made during fiscal year
                                         (see Section 7.18):
	 	$	                                        	 
	IX	 	Excess Cash Flow Calculation for fiscal year                                         
	 	 	 	 
	 	 	 	 	A. EBITDA (excluding cash restructuring charges):
	 	$	                                        	 
	 	 	 	 	B. Cash interest income:
	 	$	                                        	 
	 	 	 	 	C. Net decreases (if any) in working capital:
	 	$	                                        	 
	 	 	 	 	D. Lines IX.A. + IX.B. + IX.C.:
	 	$	                                        	 
	 	 	 	 	E. Restricted Payments:
	 	$	                                        	 
	 	 	 	 	F. Income taxes paid in cash:
	 	$	                                        	 






Exhibit C - 4




 









 





	 	 	 	 	 	 	 	 	 
	 	 	 	 	G. Unfinanced portion of Capital Expenditures:
	 	$	                                        	 
	 	 	 	 	H. Amounts expended for Permitted Acquisitions:
	 	$	                                        	 
	 	 	 	 	I. Scheduled principal payments of Indebtedness (excluding intercompany Indebtedness):
	 	$	                                        	 
	 	 	 	 	J. Cash interest and fees in respect of any Indebtedness (excluding intercompany Indebtedness):
	 	$	                                        	 
	 	 	 	 	K. Net increases (if any) in working capital:
	 	$	                                        	 
	 	 	 	 	L. Lines IX.E. + IX.F. + IX.G. + IX.H. + IX.I. + IX.J. + IX.K.:
	 	$	                                        	 
	 	 	 	 	M. Excess Cash Flow (Line IX.D. — Line IX.L.):
	 	$	                                        	 






Exhibit C - 5