FIRST MODIFICATION TO
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FIRST MODIFICATION TO FOURTH AMENDMENT TO CREDIT AGREEMENT
("Modification"), dated as of November 2, 1998, is among DARLING INTERNATIONAL
INC. ("Borrower"), the banks or other lending institutions which are a signatory
hereto (individually, a "Bank" and, collectively, the "Banks"), COMERICA BANK,
CREDIT LYONNAIS NEW YORK BRANCH and ▇▇▇▇▇ FARGO BANK (TEXAS), NATIONAL
ASSOCIATION, each individually as a Bank and as a co-agent and BANKBOSTON, N.A.,
individually as a Bank and as agent for itself and the other Banks (in its
capacity as agent, together with its successors in such capacity, the "Agent").
RECITALS:
Borrower, the Banks and the Agent have entered into that certain Credit
Agreement dated as of June 5, 1997 (as amended by that certain First Amendment
to Pledge Agreement and Credit Agreement dated November 10, 1997 between the
Borrower and the Agent, that certain Second Amendment to Pledge Agreement and
Credit Agreement dated March 6, 1998 among the Borrower, the Banks and the
Agent, that certain Third Amendment to Credit Agreement dated June 30, 1998
among the Borrower, the Banks and the Agent, that certain Fourth Amendment to
Credit Agreement dated as of October 2, 1998 among the Borrower, the Banks and
the Agent (the "Fourth Amendment") and as the same may hereafter be amended or
otherwise modified, the "Credit Agreement").
As set forth in the Fourth Amendment, the Agent has advised Borrower of the
Net Worth Default (as defined in the Fourth Amendment) and Borrower has notified
the Agent and the Banks of the Potential Defaults (as defined in the Fourth
Amendment).
Pursuant to the Fourth Amendment, the Agent and the Banks agreed to the
Forbearance (as defined in the Fourth Amendment), until November 9, 1998.
Borrower has requested that the Agent and the Banks extend the Forbearance
Termination Date (as defined in the Fourth Amendment) from November 9, 1998 to
December 14, 1998 in order to allow Borrower, the Banks and the Agent additional
time possibly to agree to an amendment to the Credit Agreement satisfactory to
all parties to address the Existing Defaults (as defined in the Fourth
Amendment).
The Agent and the Banks are willing to extend the Forbearance Termination
Date on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows effective as of the date
hereof and conditioned upon the execution of this Modification by Borrower, each
Obligated Party and all the Banks on or prior to November 2, 1998:
ARTICLE 1
Definitions
Section 1.1 Definitions. Capitalized terms used in this Modification, to
the extent not otherwise defined herein, shall have the same meanings as in the
Fourth Amendment or the Credit Agreement.
ARTICLE 2
Modifications
Section 2.1 Modification to Section 3.1 of the Fourth Amendment. Effective
as of the date hereof, Section 3.1 of the Fourth Amendment is hereby amended in
its entirety to read as follows:
Section 3.1 Forbearance; Obligations to Extend Credit. Subject to the
terms and provisions of this Amendment, Agent and each Bank agrees, until
December 14, 1998, (i) to forbear from exercising any of their rights and
remedies arising under the Loan Documents or otherwise as a result of the
Existing Defaults (the "Forbearance") and (ii) to continue to extend credit
to Borrower and allow Borrower to Continue Libor Accounts and Convert Base
Rate Accounts to Libor Accounts under the terms of the Credit Agreement (as
amended hereby) notwithstanding the fact that pursuant to subsections
7.2(a) and 4.5(c) the Banks have no obligation to do so as a result of the
Existing Defaults. Notwithstanding the Forbearance, as a result of the
Existing Defaults neither Borrower nor any Subsidiary shall be allowed to
enter into any of the transactions permitted by the exceptions set forth in
Sections 10.3 or 10.4(i) of the Credit Agreement which are conditioned on
no Default existing. However, Borrower and the Subsidiaries shall be
allowed to enter into the transactions permitted by the exceptions set
forth in Section 10.8 of the Credit Agreement which are conditioned on no
Default existing notwithstanding the Existing Defaults until December 14,
1998.
Section 2.2 Modification to Section 3.2 of the Fourth Amendment. Effective
as of the date hereof, Section 3.2 of the Fourth Amendment is hereby amended in
its entirety to read as follows:
Section 3.2 Termination of Forbearance. This Amendment does not
constitute a waiver or forbearance with respect to any Default other than
the Existing Defaults. In the event that prior to December 14, 1998 any
further Defaults occur under the Credit Agreement (i.e., other than the
Existing Defaults), then the Agent and the Banks shall have the right and
option, in their discretion and without notice to Borrower or any Obligated
Party, to (i) terminate the Forbearance, (ii) refuse to extend additional
credit to Borrower under the Loan Documents, (iii) prohibit Borrower from
Converting and Continuing Accounts and (iv) exercise any and all of the
rights and remedies under the Loan Documents or otherwise arising as a
result of such Existing Defaults (the earlier of December 14, 1998 or the
date of the termination of the Forbearance under this Section 3.2, herein
the "Forbearance Termination Date").
ARTICLE 3
Asset Dispositions
Section 3.1 Disposition of Russellville, Arkansas Property. Pursuant to
that certain spiral bound booklet entitled "Bank Meeting, Thursday September 17,
1998," prepared by the Borrower and distributed to the Banks, the Borrower
provided the Banks notice that the Borrower anticipated selling its property
located in Russellville, Arkansas (the "Arkansas Property") by September 30,
1998. The anticipated closing date of the sale of the Arkansas Property is now
anticipated to be sometime during the first week of November 1998. Borrower has
requested that the Required Banks consent to the Borrower's departure from
clause (e) (ii) of Section 10.8 of the Credit Agreement (the "Applicable
Covenant") in order to permit the sale of the Arkansas Property because the
Applicable Covenant requires that the Borrower provide certifications
demonstrating compliance with subclauses (iii) and (iv) of clause (e) not less
than ten (10) Business Days prior to the date of the proposed disposition. As of
the date hereof, the disposition of the Arkansas Property is anticipated to
occur prior to the expiration of ten (10) Business Days and the Borrower has not
provided the certifications required by the Applicable Covenant.
Section 3.2 Consent to Disposition of Russellville, Arkansas Property.
Subject to the other terms of this Modification (including, without limitation,
Section 3.3 hereof), each of the undersigned Banks consent to Borrower's
departure from the Applicable Covenant as specifically described above for
purposes of permitting the sale of the Arkansas Property prior to the expiration
of the ten (10) Business Day period required by the Applicable Covenant and
agree that such departure will not result in a Default.
Section 3.3 No Waiver: Application of Proceeds. To induce the Banks to
agree to the terms of Section 3.2 of this Modification, Borrower:
(a) Agrees that the consent set forth in Section 3.2 shall not be
deemed a consent to the departure from or waiver of (i) the Applicable
Covenant for any purpose other than to permit the sale of the Arkansas
Property or (ii) any other covenant or condition in any Loan Document or
(iii) any Default that otherwise may arise as a result of the sale of the
Arkansas Property. The failure to comply with the Applicable Covenant for
any other disposition of assets limited thereby shall constitute an Event
of Default;
(b) Agrees that the Net Proceeds of the sale of the Arkansas Property
and the Net Proceeds of the sale of any other property sold under the
permissions of clauses (d) and (e) of Section 10.8 of the Credit Agreement
shall be applied within two (2) Business Days of the receipt thereof as a
prepayment on the Loans, to be applied first to the installments due under
the Term Loan in the inverse order of maturity and in accordance with
Section 5.4 of the Credit Agreement and after the Term Loan is paid in
full, to the Revolving Loans with a permanent reduction of the Revolving
Commitments in the aggregate amount of each such prepayment made on the
Revolving Loans (the term "Net Proceeds" means the cash proceeds received
by Borrower or any Subsidiary from any disposition of assets (including
payments under notes or other debt securities received in connection with
any disposition of assets) net of (i) the costs of such disposition
(including taxes, brokerage fees, attorneys' fees and other professional
fees attributable thereto) and (ii) amounts applied to repayment of Debt
(other than the Obligations) secured by a lien, security interest, claim or
encumbrance on the asset or property disposed); and
(c) Certifies in accordance with Section 10.8 (e) (ii) of the Credit
Agreement as follows:
(i) the sales price for the Arkansas Property (as determined in
accordance with the applicable sale agreement) does not exceed Seven
Million Five Hundred Thousand Dollars ($7,500,000); and
(ii) the aggregate sales prices for all the assets sold (as
determined in accordance with the applicable sale agreements) in the
current Loan Year under the permissions of clause (e) of Section 10.8
of the Credit Agreement does not exceed the Annual Cap for this Loan
Year.
The Banks agree that the Net Proceeds from the sale of the Arkansas Property or
any other property sold under the permissions of clauses (d) and (e) of Section
10.8 of the Credit Agreement (as applied to installments due under the Term Loan
in the inverse order of maturity) will be credited against any mandatory
prepayment of the Term Loan which may be required in any amendment to the Credit
Agreement in the order in which such mandatory prepayments are established to be
due. The Borrower acknowledges that the Banks have not agreed to, and have no
obligation to agree to, any such amendment to the Credit Agreement.
ARTICLE 4
Miscellaneous
Section 4.1 Ratifications. The terms and provisions set forth in this
Modification shall modify and supersede all inconsistent terms and provisions
set forth in the Fourth Amendment and except as expressly modified and
superseded by this Modification, the terms and provisions of the Fourth
Amendment, the Credit Agreement and the other Loan Documents are ratified and
confirmed and shall continue in full force and effect. Borrower, the Agent and
each Bank agree that the Fourth Amendment, the Credit Agreement and the other
Loan Documents shall continue to be legal, valid, binding and enforceable in
accordance with their respective terms.
Section 4.2 Representations and Warranties. Borrower hereby represents and
warrants to the Agent and each Bank that (i) the execution, delivery and
performance of this Modification has been authorized by all requisite action on
the part of Borrower and each Obligated Party, (ii) except for the existence of
the Existing Defaults and any matters disclosed to the Banks and the Agent in
that certain spiral bound booklet entitled "Bank Meeting, Thursday September 17,
1998," the representations and warranties contained in the Loan Documents are
true and correct in all material respects on and as of the date hereof as though
made on and as of the date hereof (except with respect to any representations or
warranties limited by their terms to a specific date), (iii) except for the
Existing Defaults, no Default has occurred and is continuing and no event or
condition has occurred that with the giving of notice or lapse of time or both
would be a Default, (iv) except for the Existing Defaults, Borrower and each
Obligated Party are in full compliance with all covenants and agreements
contained in the Loan Documents, and (v) as of the date hereof, there are no
claims or offsets against or defenses or counterclaims to the obligations of
Borrower or any Obligated Party under the Loan Documents. TO INDUCE THE AGENT
AND THE BANKS TO ENTER INTO THIS MODIFICATION, THE BORROWER AND EACH OBLIGATED
PARTY (by its execution of this Modification) WAIVE ANY AND ALL SUCH CLAIMS,
OFFSETS, DEFENSES, OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING PRIOR TO
THE DATE HEREOF AND AGREE TO STRICTLY COMPLY WITH THE TERMS OF THE LOAN
DOCUMENTS.
Section 4.3 Survival of Representations and Warranties. All representations
and warranties made in this Modification shall survive the execution and
delivery of this Modification and the other Loan Documents, and no investigation
by the Agent or any Bank or any closing shall affect the representations and
warranties or the right of the Agent or any Bank to rely upon them.
Section 4.4 Severability. Any provision of this Modification held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Modification and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 4.5 Applicable Law. This Modification shall be governed by and
construed in accordance with the laws of the State of Texas.
Section 4.6 Successors and Assigns. This Modification is binding upon and
shall inure to the benefit of the Agent, the Banks and Borrower and their
respective successors and assigns, except Borrower may not assign or transfer
any of its rights or obligations hereunder without the prior written consent of
the Banks.
Section 4.7 Counterparts. This Modification may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
agreement.
Section 4.8 Effect of Waiver. No consent or waiver, express or implied, by
the Agent or any Bank to or for any breach of or deviation from any covenant,
condition or duty by Borrower or any Obligated Party shall be deemed a consent
or waiver to or of any other breach of the same or any other covenant, condition
or duty.
Section 4.9 Headings. The headings, captions, and arrangements used in this
Modification are for convenience only and shall not affect the interpretation of
this Modification.
Section 4.10 ENTIRE AGREEMENT. THIS MODIFICATION EMBODIES THE FINAL, ENTIRE
AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THIS MODIFICATION, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Executed as of the date first written above.
Borrower:
DARLING INTERNATIONAL INC.
By:
▇▇▇▇ ▇▇▇▇▇▇▇▇, Treasurer
AGENT:
BANKBOSTON, N.A., individually as a Bank and as the
Agent
By:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Managing Director
CO-AGENTS:
CREDIT LYONNAIS NEW YORK BRANCH
By:
Name:
Title:
COMERICA BANK
By:
Name:
Title:
▇▇▇▇▇ FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
By:
Name:
Title:
OTHER BANKS:
Each of the undersigned Obligated Parties consents and agrees to this
Modification (including, without limitation, Section 4.2) and agrees that the
Guaranty to which it is a party shall remain in full force and effect and shall
continue to be its legal, valid and binding obligation enforceable against it in
accordance with its terms.
Obligated Parties:
International Processing Corporation
International Transportation Service, Inc.
The Standard Tallow Corporation
Darling Restaurant Services Inc.
Esteem Products Inc.
By:
▇▇▇▇ ▇▇▇▇▇▇▇▇, Treasurer of each
Obligated Party
ARTICLE 5