EXHIBIT 10.5
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$235,000,0000
AMENDED AND RESTATED CREDIT AGREEMENT
among
IFCO SYSTEMS N.V.,
PALEX, INC.,
as Borrower,
The Several Lenders
from Time to Time Parties Hereto,
CIBC WORLD MARKETS CORP.,
as Syndication Agent,
and
BANK ONE, NA
as Administrative Agent
Dated as of March 31, 2000
--------------------------------------------------------------------------------
CIBC WORLD MARKETS CORP. and BANC ONE CAPITAL MARKETS, INC.
as Co-Lead Arrangers and Co-Book Runners
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS............................................................ 1
1.1 Defined Terms............................................................ 1
1.2 Other Definitional Provisions............................................ 30
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS........................................ 31
2.1 Acquisition Term Loan Commitments........................................ 31
2.2 Procedure for Acquisition Term Loan Borrowing............................ 31
2.3 Repayment of Acquisition Term Loans...................................... 31
2.4 Revolving Credit Commitments; Converted Term Loans....................... 32
2.5 Procedure for Revolving Credit Loan Borrowing............................ 33
2.6 Dollar Swing Line Commitment............................................. 34
2.7 Foreign Currency Swing Line Commitment................................... 36
2.8 Commitment Fees, etc..................................................... 39
2.9 Termination or Reduction of Commitments.................................. 39
2.10 Optional Prepayments.................................................... 40
2.11 Mandatory Prepayments and Commitment Reductions......................... 40
2.12 Conversion and Continuation Options..................................... 41
2.13 Limitations on Eurocurrency Tranches.................................... 42
2.14 Interest Rates and Payment Dates........................................ 42
2.15 Computation of Interest, Fees and Dollar Equivalent..................... 43
2.16 Inability to Determine Interest Rate.................................... 44
2.17 Pro Rata Treatment and Payments......................................... 44
2.18 Requirements of Law..................................................... 46
2.19 Taxes................................................................... 47
2.20 Indemnity............................................................... 49
2.21 Change of Lending Office................................................ 49
2.22 Replacement of Lenders.................................................. 49
2.23 Calculation of Foreign Currency Swing Line Outstandings; Prepayments.... 50
SECTION 3. LETTERS OF CREDIT...................................................... 51
3.1 L/C Commitment........................................................... 51
3.2 Procedure for Issuance of Letter of Credit............................... 51
3.3 Fees and Other Charges................................................... 52
3.4 L/C Participations....................................................... 52
3.5 Reimbursement Obligation of the Borrower................................. 53
3.6 Obligations Absolute..................................................... 54
3.7 Letter of Credit Payments................................................ 55
SECTION 4. REPRESENTATIONS AND WARRANTIES......................................... 55
4.1 Financial Condition...................................................... 55
4.2 No Change................................................................ 56
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4.3 Corporate Existence; Compliance with Law................................. 56
4.4 Corporate Power; Authorization; Enforceable Obligations.................. 57
4.5 No Legal Bar............................................................. 57
4.6 Litigation............................................................... 57
4.7 No Default............................................................... 58
4.8 Ownership of Property; Liens............................................. 58
4.9 Intellectual Property.................................................... 58
4.10 Taxes................................................................... 58
4.11 Federal Regulations..................................................... 58
4.12 Labor Matters........................................................... 58
4.13 ERISA................................................................... 59
4.14 Investment Company Act; Other Regulations............................... 59
4.15 Subsidiaries............................................................ 59
4.16 Use of Proceeds......................................................... 59
4.17 Environmental Matters................................................... 60
4.18 Accuracy of Information, etc............................................ 61
4.19 Security Documents...................................................... 61
4.20 Solvency................................................................ 62
4.21 Senior Indebtedness..................................................... 62
4.22 Regulation H............................................................ 62
4.23 Certain Documents....................................................... 62
4.24 No Burdensome Restrictions.............................................. 63
SECTION 5. CONDITIONS PRECEDENT................................................... 63
5.1 Conditions to Initial Extension of Credit................................ 63
5.2 Conditions to Each Extension of Credit................................... 63
SECTION 6. AFFIRMATIVE COVENANTS.................................................. 64
6.1 Financial Statements..................................................... 64
6.2 Certificates; Other Information.......................................... 65
6.3 Payment of Obligations................................................... 66
6.4 Maintenance of Existence; Compliance..................................... 66
6.5 Maintenance of Property; Insurance....................................... 67
6.6 Inspection of Property; Books and Records; Discussions................... 67
6.7 Notices.................................................................. 67
6.8 Environmental Laws....................................................... 68
6.9 Additional Collateral, etc............................................... 68
6.10 Real Estate Matters..................................................... 70
6.11 Foreign Collateral...................................................... 70
6.12 Certain Collateral Matters............................................... 71
SECTION 7. NEGATIVE COVENANTS..................................................... 71
7.1 Financial Condition Covenants............................................ 71
7.2 Indebtedness............................................................. 75
7.3 Liens.................................................................... 76
7.4 Fundamental Changes...................................................... 78
7.5 Disposition of Property.................................................. 78
7.6 Restricted Payments...................................................... 79
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7.7 Investments.............................................................. 79
7.8 Optional Payments and Modifications of Certain Debt Instruments.......... 80
7.9 Transactions with Affiliates............................................. 80
7.10 Sales and Leasebacks.................................................... 80
7.11 Changes in Fiscal Periods............................................... 81
7.12 Negative Pledge Clauses................................................. 81
7.13 Clauses Restricting Subsidiary Distributions............................ 81
7.14 Lines of Business....................................................... 81
7.15 Amendments to Merger Documentation...................................... 81
SECTION 8. EVENTS OF DEFAULT...................................................... 82
SECTION 9. THE AGENTS............................................................. 85
9.1 Appointment.............................................................. 85
9.2 Delegation of Duties..................................................... 85
9.3 Exculpatory Provisions................................................... 86
9.4 Reliance by Administrative Agent......................................... 86
9.5 Notice of Default........................................................ 86
9.6 Non-Reliance on Agents and Other Lenders................................. 87
9.7 Indemnification.......................................................... 87
9.8 Agent in Its Individual Capacity......................................... 88
9.9 Successor Administrative Agent........................................... 88
9.10 Documentation Agent and Syndication Agent............................... 88
SECTION 10. MISCELLANEOUS......................................................... 89
10.1 Amendments and Waivers.................................................. 89
10.2 Notices................................................................. 90
10.3 No Waiver; Cumulative Remedies.......................................... 92
10.4 Survival of Representations and Warranties.............................. 92
10.5 Payment of Expenses and Taxes........................................... 92
10.6 Successors and Assigns; Participations and Assignments.................. 93
10.7 Adjustments; Set-off.................................................... 96
10.8 Counterparts............................................................ 96
10.9 Severability............................................................ 97
10.10 Integration............................................................ 97
10.11 GOVERNING LAW.......................................................... 97
10.12 Submission To Jurisdiction; Waivers.................................... 97
10.13 Acknowledgements....................................................... 98
10.14 Releases of Guarantees and Liens....................................... 98
10.15 Confidentiality........................................................ 99
10.16 WAIVERS OF JURY TRIAL.................................................. 99
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ANNEX:
A Pricing Grid
SCHEDULES:
1.1A Commitments
1.1B Mortgaged Property
4.4 Consents, Authorizations, Filings and Notices
4.15 Subsidiaries
4.19(a) UCC Filing Jurisdictions
4.19(c) Mortgage Filing Jurisdictions
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
EXHIBITS:
A Form of Assignment and Acceptance
B Form of Borrowing Base Certificate
C Form of Compliance Certificate
D Form of Guarantee and Collateral Agreement
E Form of Mortgage
F Form of Tax Exemption Certificate
G Form of Closing Certificate
H-1 Form of Legal Opinion of Gardere & ▇▇▇▇▇, L.L.P.
H-2 Form of Legal Opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
I Form of Syndicate Assignment and Acceptance
J Form of Consent
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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 31, 2000,
among IFCO SYSTEMS N.V., a public limited liability company organized under the
laws of the Netherlands ("Holdings"), PALEX, INC., a Delaware corporation (the
"Borrower"), the several banks and other financial institutions or entities from
time to time parties to this Agreement (the "Lenders"), CIBC WORLD MARKETS CORP.
and BANC ONE CAPITAL MARKETS, INC. as co-lead arrangers and co-book runners (in
such capacities, the "Arrangers"), CIBC WORLD MARKETS CORP., as syndication
agent (in such capacity, the "Syndication Agent"), and BANK ONE, NA, as
administrative agent (in such capacity, the "Administrative Agent").
W I T N E S S E T H :
WHEREAS, the Borrower is party to the Credit Agreement, dated as of
March 8, 2000 (as amended, supplemented or otherwise modified from time to
time, the "Existing Agreement"), with the several banks and other financial
institutions or entities from time to time parties thereto, the Arrangers, the
Syndication Agent and the Administrative Agent;
WHEREAS, the Borrower has requested that the Existing Agreement be
amended as set forth herein;
WHEREAS, each of the parties to the Existing Agreement is agreeable to
the requested amendments, but only upon the terms and subject to the conditions
set forth herein, and each of the parties to the Existing Agreement, for
convenience of reference, has agreed to restate the Existing Agreement as so
amended; and
WHEREAS, each of the Lenders and the other parties hereto are
agreeable to the terms and provisions of the Existing Agreement as amended and
restated hereby;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties to the Existing Agreement agree that the Existing
Agreement shall be and is hereby amended and restated in its entirety, and the
parties hereto, intending to be legally bound hereby, agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in
this subsection 1.1 shall have the respective meanings set forth in this
subsection 1.1.
"Account": as defined in the Uniform Commercial Code as in effect in
the State of New York; such term shall exclude any security deposits received by
Holdings or any of its Subsidiaries.
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"Account Debtor": as to any Account of any Person, any other Person
who is or may become obligated to such Person under, with respect to, or on
account of, such account.
"Acquisition Term Loan": as defined in subsection 2.1.
"Acquisition Term Loan Commitment": as to any Lender, the obligation
of such Lender, if any, to make an Acquisition Term Loan to the Borrower
hereunder in a principal amount not to exceed the amount set forth under the
heading "Acquisition Term Loan Commitment" opposite such Lender's name on
Schedule 1.1A or in the Assignment and Acceptance pursuant to which such Lender
became a party hereto, as the same may be changed from time to time pursuant to
the term hereof. The original aggregate amount of the Acquisition Term Loan
Commitments is $108,750,000.
"Acquisition Term Loan Commitment Period": the period from and
including the Closing Date to the Acquisition Term Loan Commitment Termination
Date.
"Acquisition Term Loan Commitment Termination Date": the third
anniversary of the Closing Date.
"Acquisition Term Loan Facility": as defined in the definition of
"Facility."
"Acquisition Term Loan Lender": each Lender that has an Acquisition
Term Loan Commitment or is the holder of an Acquisition Term Loan.
"Acquisition Term Loan Percentage": as to any Acquisition Term Loan
Lender at any time, the ratio (expressed as a percentage) derived by dividing
(i) the sum of (a) the then unutilized amount of such Lender's Acquisition Term
Loan Commitment plus (b) the aggregate principal amount of such Lender's
Acquisition Term Loans then outstanding by (ii) the sum of (x) the then
unutilized amount of the aggregate Acquisition Term Loan Commitments and (y) the
aggregate principal amount of the Acquisition Term Loans then outstanding (or,
at any time on or after the Acquisition Term Loan Commitment Termination Date
(or, if earlier, the date upon which the Acquisition Term Loan Commitments shall
be terminated), the ratio (expressed as a percentage) determined by dividing (i)
the aggregate principal amount of such Lender's Acquisition Term Loans then
outstanding by (ii) the aggregate principal amount of the Acquisition Term Loans
then outstanding).
"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agent": as defined in the preamble hereto.
"Affiliate": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person.
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"Agents": the collective reference to the Syndication Agent and the
Administrative Agent.
"Aggregate Exposure": with respect to any Lender at any time, an
amount equal to (a) until the Closing Date, the aggregate amount of such
Lender's Commitments at such time and (b) thereafter, the sum of (i) the
aggregate then unpaid principal amount of such Lender's Acquisition Term Loans,
(ii) until the Acquisition Term Loan Commitments shall have expired or been
terminated, the then unutilized amount of such Lender's Acquisition Term Loan
Commitment and (iii) the amount of such Lender's Revolving Credit Commitment
then in effect or, if the Revolving Credit Commitments shall have expired or
been terminated, the amount of such Lender's Revolving Extensions of Credit then
outstanding.
"Aggregate Exposure Percentage": with respect to any Lender at any
time, the ratio (expressed as a percentage) of such Lender's Aggregate Exposure
at such time to the Aggregate Exposure of all Lenders at such time.
"Aggregate Revolving Credit Outstandings": at any time, an amount
equal to the sum of (a) the aggregate then outstanding principal amount of all
Revolving Credit Loans and Converted Term Loans, (b) the aggregate then
outstanding L/C Obligations and (c) the Dollar Equivalent of the aggregate then
outstanding principal amount of Swing Line Loans.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Applicable Margin": for each Type of Loan, the rate per annum set
forth under the relevant column heading below:
Base Rate Loans Eurocurrency Loans
Revolving Credit Loans,
Swing Line Loans and
Acquisition Term Loans 1.75% 2.75%
provided, that on and after the first Adjustment Date occurring after the date
that is six months after the Closing Date, the Applicable Margin with respect to
Revolving Credit Loans, Swing Line Loans and Acquisition Term Loans will be
determined pursuant to the Pricing Grid.
"Application": an application, in such form as the applicable Issuing
Lender may specify from time to time, requesting such Issuing Lender to open a
Letter of Credit; provided that, in the event of a conflict between an
Application and this Agreement, the terms of this Agreement shall control.
"Approved Fund": with respect to any Lender that is a fund that
invests in commercial loans, any other fund that invests in commercial loans and
is managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
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"Asset Sale": any Disposition of property or series of related
Dispositions of property (excluding any such Disposition permitted by clause
(a), (b), (c), (d), (e), (g) or (i) of subsection 7.5) that yields gross
proceeds to Holdings or any of its Subsidiaries (valued at the initial principal
amount thereof in the case of non-cash proceeds consisting of notes or other
debt securities and valued at fair market value in the case of other non-cash
proceeds) in excess of $500,000.
"Assignee": as defined in subsection 10.6(c).
"Assignment and Acceptance": an Assignment and Acceptance,
substantially in the form of Exhibit A.
"Assignor": as defined in subsection 10.6(c).
"Available Revolving Credit Commitment": as to any Revolving Credit
Lender at any time, an amount equal to the excess, if any, of (a) such Lender's
Revolving Credit Commitment then in effect over (b) such Lender's Revolving
Extensions of Credit then outstanding; provided, that in calculating any
Lender's Revolving Extensions of Credit for the purpose of determining such
Lender's Available Revolving Credit Commitment pursuant to Section 2.8(a), the
aggregate principal amount of Dollar Swing Line Loans then outstanding shall be
deemed to be zero.
"Bank One": Bank One, NA
"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by the Reference Lender
as its prime rate in effect at its principal office in Chicago, Illinois (the
Prime Rate not being intended to be the lowest rate of interest charged by the
Reference Lender in connection with extensions of credit to debtors).
"Base Rate Loans": Loans the rate of interest applicable to which is
based upon the Base Rate.
"Benefitted Lender": as defined in Section 10.7(a).
"Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"Borrower": as defined in the preamble hereto.
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"Borrowing Base": at any date of determination thereof, an amount
equal to the sum of (i) 85% of the Eligible Accounts Receivable at such date,
(ii) 60% of the Eligible Inventory at such date and (iii) 20% of Eligible Crates
of such date. The Borrowing Base shall be determined from time to time by the
Administrative Agent in its reasonable judgment by reference to the Borrowing
Base Certificate then most recently delivered to it; provided that the
information contained in such Borrowing Base Certificate shall not be conclusive
in calculating the Borrowing Base and, after consultation with the Borrower, the
Administrative Agent shall be entitled, upon at least five (5) days prior
written notice to Borrower, to adjust the amounts included within the categories
of Eligible Accounts Receivable, Eligible Inventory and Eligible Crates and
other information contained therein to the extent that it believes in its
reasonable credit judgment that such adjustment is appropriate to cause the
Borrowing Base (as so adjusted) to reflect the standards set forth in the
definitions of the terms "Eligible Accounts Receivable," "Eligible Inventory"
and "Eligible Crates."
"Borrowing Base Certificate": a certificate, substantially in the
form of Exhibit B, (or in such other form as the Administrative Agent shall from
time to time reasonably request), delivered pursuant to Section 6.2(f).
"Borrowing Date": any Business Day specified by the Borrower as a
date on which the Borrower requests the relevant Lenders to make Loans
hereunder.
"Business": as defined in Section 4.17(b).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City or Chicago, Illinois are authorized or
required by law to close, provided, that (a) with respect to any borrowings,
disbursements and payments in respect of and calculations, interest rates and
Interest Periods pertaining to Eurocurrency Loans, such day is also a day on
which dealings are carried on in the London interbank market, (b) with respect
to any borrowings, disbursements and payments in respect of and calculations and
interest rates pertaining to any Foreign Currency Swing Line Loan such day is
also a day on which commercial banks are open for business, and on which
dealings in the relevant Swing Line Foreign Currency are carried on, in the
location the office of the Swing Line Lender from which such Swing Line Loan is
being made and (c) when used in connection with any Loan denominated in euros,
the term "Business Day" shall also exclude any day on which the trans-euro real-
time gross settlement system known as "TARGET" is not open for the settlement of
payments in euros.
"Capital Lease Obligations": as to any Person, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as a capital lease on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
6
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"Cash Equivalents": (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit and
time deposits with maturities of one year or less from the date of acquisition
and overnight bank deposits and demand deposits of any Lender or of any
commercial bank having capital and surplus in excess of $500,000,000, (c)
repurchase obligations of any Lender or of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not more than 30
days with respect to securities issued or fully guaranteed or insured by the
United States Government, (d) commercial paper of a domestic issuer rated at
least A-2 by Standard and Poor's Ratings Services ("S&P") or P-2 by ▇▇▇▇▇'▇
Investors Service, Inc. ("Moody's"), (e) securities with maturities of one year
or less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody's, (f) securities with maturities of one
year or less from the date of acquisition backed by standby letters of credit
issued by any Lender or any commercial bank satisfying the requirements of
clause (b) of this definition, (g) in the case of any Foreign Subsidiary, (i)
direct obligations of the sovereign nation (or any agency thereof) in which such
Foreign Subsidiary is organized or is conducting business or in obligations
fully and unconditionally guaranteed by such sovereign nation (or any agency
thereof), (ii) deposits, obligations or securities of the type and maturity
described in clauses (b) through (f) above of foreign obligors, which deposits,
obligations or securities or obligors (or the parent entities of such obligors)
have ratings described in such clauses or equivalent ratings from comparable
foreign rating agencies or (iii) deposits, obligations or securities of the type
and maturity described in clauses (b) through (f) above of foreign obligors (or
the parent entities of such obligors), which deposits, obligations or securities
or obligors (or the parent entities of such obligors) do not have the ratings
described in such clauses or in clause (g)(ii) but which are comparable in
investment quality to such deposits, obligations or securities or obligors (or
the parent entities of such obligors), as the case may be, or (h) shares of
money market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition.
"CIBC": Canadian Imperial Bank of Commerce.
"Closing Date": the date on which the conditions precedent set forth
in Section 5.1 shall have been satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
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"Collateral": all property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Security
Document.
"Commitment": as to any Lender, the sum of the Acquisition Term Loan
Commitment and the Revolving Credit Commitment of such Lender.
"Commitment Fee Rate": with respect to each Facility at any time, (i)
1.00% per annum, if the then Utilization of such Facility is less than or equal
to 33 1/3%, (ii) 0.75% per annum, if the then Utilization of such Facility is
greater than 33 1/3% but less than or equal to 66 2/3%, or (iii) 0.50% per
annum, if the then Utilization of such Facility is greater than 66 2/3%.
"Commonly Controlled Entity": an entity, whether or not incorporated,
that is under common control with the Borrower within the meaning of Section
4001 of ERISA or is part of a group that includes the Borrower and that is
treated as a single employer under Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit C.
"Conduit Lender": any special purpose corporation organized and
administered by any Lender for the purpose of making Loans hereunder otherwise
required to be made by such Lender and designated by such Lender in a written
instrument, subject to the consent of the Administrative Agent and the Borrower;
provided, that (a) the designation by any Lender of a Conduit Lender shall not
relieve the designating Lender of any of its obligations to fund a Loan under
this Agreement if, for any reason, its Conduit Lender fails to fund any such
Loan, and the designating Lender (and not the Conduit Lender) shall have the
sole right and responsibility to deliver all consents and waivers required or
requested under this Agreement with respect to its Conduit Lender, (b) the
designation of any Conduit Lender shall not result in any greater costs to the
Borrower hereunder than the Borrower would have incurred if such Conduit
Lenders' Loans had been made by a non-Conduit Lender, (c) no Conduit Lender
shall be deemed to have any Commitment hereunder and (d) the designating Lender
shall act as administrative agent for its Conduit Lender and give and receive
notices on its Conduit Lender's behalf, any payments for the account of its
Conduit Lender shall be paid to the designating Lender as administrative agent
for its Conduit Lender and neither the Borrower nor the Administrative Agent
shall be responsible for such designating Lender's application of such payments.
"Confidential Information Memorandum": the Confidential Information
Memorandum dated February 2000 and furnished to the Lenders.
"Consolidated EBITDA": for any period, Consolidated Net Income for
such period plus, without duplication and to the extent reflected as a charge in
the statement of such Consolidated Net Income for such period, the sum of (a)
income tax expense, (b) interest expense, amortization or writeoff of debt
discount and debt issuance costs and commissions, discounts and other fees and
charges associated with Indebtedness (including the Loans),
8
(c) depreciation and amortization expense, (d) amortization of intangibles
(including, but not limited to, goodwill) and organization costs, (e) any
extraordinary or non-recurring non-cash expenses or losses (including, whether
or not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, non-cash losses on sales of assets
outside of the ordinary course of business), provided, that the amounts referred
to in this clause (e) shall not, in the aggregate, exceed $15,000,000 for any
fiscal year of Holdings, and (f) any other non-cash charges, and minus, to the
extent included in the statement of such Consolidated Net Income for such
period, the sum of (a) interest income, (b) any extraordinary or non-recurring
non-cash income or gains (including, whether or not otherwise includable as a
separate item in the statement of such Consolidated Net Income for such period,
gains on the sales of assets outside of the ordinary course of business) and (c)
any other non-cash income, all as determined on a consolidated basis. For the
purposes of calculating Consolidated EBITDA for any period of four consecutive
fiscal quarters (each, a "Reference Period") pursuant to any determination of
the Consolidated Total Leverage Ratio, (i) if at any time during such Reference
Period Holdings or any Subsidiary shall have made any Material Disposition, the
Consolidated EBITDA for such Reference Period shall be reduced by an amount
equal to the Consolidated EBITDA (if positive) attributable to the property that
is the subject of such Material Disposition for such Reference Period or
increased by an amount equal to the Consolidated EBITDA (if negative)
attributable thereto for such Reference Period and (ii) if during such Reference
Period Holdings or any Subsidiary shall have made a Material Acquisition,
Consolidated EBITDA for such Reference Period shall be calculated after giving
pro forma effect thereto as if such Material Acquisition occurred on the first
day of such Reference Period; provided that, Consolidated EBITDA shall not be
adjusted to include projected post-acquisition cost savings, synergies or
similar amounts.
"Consolidated Interest Coverage Ratio": for any period, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
such period.
"Consolidated Interest Expense": for any period, total cash interest
expense (including that attributable to Capital Lease Obligations and Synthetic
Lease Obligations) of Holdings and its Subsidiaries for such period with respect
to all outstanding Indebtedness of Holdings and its Subsidiaries (including all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and net costs under Hedge Agreements
in respect of interest rates to the extent such net costs are allocable to such
period in accordance with GAAP).
"Consolidated Investment CapEx Ratio": for any period, the ratio of
(a) the aggregate amount of Investment Capital Expenditures made by Holdings and
its Subsidiaries during such period to (b) Consolidated Revenue for such period.
"Consolidated Net Income": for any period, the consolidated net
income (or loss) of Holdings and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded (a) the
income (or deficit) of any Person accrued prior to the date it becomes a
Subsidiary of Holdings or is merged into or consolidated with Holdings or any of
its Subsidiaries, (b) the income (or deficit) of any Person (other than a
9
Subsidiary of Holdings) in which Holdings or any of its Subsidiaries has an
ownership interest, except to the extent that any such income is actually
received by Holdings or such Subsidiary in the form of dividends or similar
distributions and (c) the undistributed earnings of any Subsidiary of Holdings
(other than the Borrower) to the extent that both (i) the declaration or payment
of dividends or similar distributions by such Subsidiary and (ii) the making or
repayment of loans by such Subsidiary to its parent company or to the Borrower
are not at the time permitted by the terms of any Contractual Obligation (other
than under any Loan Document) or Requirement of Law applicable to such
Subsidiary.
"Consolidated Net Worth": at any date, all amounts that would, in
conformity with GAAP, be included on a consolidated balance sheet of Holdings
and its Subsidiaries under stockholders' equity at such date.
"Consolidated Revenue": for any period, the consolidated revenue of
Holdings and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Senior Debt": all Consolidated Total Debt other than
the Senior Subordinated Notes and the Subordinated Seller Notes.
"Consolidated Senior Leverage Ratio": as at the last day of any
period, the ratio of (a) Consolidated Senior Debt on such day to (b)
Consolidated EBITDA for such period.
"Consolidated Total Debt": at any date, the aggregate principal
amount of all Indebtedness of Holdings and its Subsidiaries at such date,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Leverage Ratio": as at the last day of any
period, the ratio of (a) Consolidated Total Debt on such day to (b) Consolidated
EBITDA for such period.
"Continuing Directors": the directors of Holdings on the Closing
Date, after giving effect to the Transactions and the other transactions
contemplated hereby, and each other director, if, in each case, such other
director's nomination for election to the board of directors of Holdings is
recommended by at least 66-2/3% of the then Continuing Directors.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Converted Term Loans": as defined in Section 2.4(b).
"Default": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
10
"Defaulted Account": any Account of Holdings or its Subsidiaries
which has been or should have been charged-off as not collectable in conformity
with the accounting policies of Holdings and its Subsidiaries as in effect from
time to time.
"Disposition": with respect to any property, any sale, lease, sale
and leaseback, assignment, conveyance, transfer or other disposition thereof.
The terms "Dispose" and "Disposed of" shall have correlative meanings.
"Documentation Agent": a single Lender selected by the Borrower, with
the consent of the Administrative Agent.
"Dollar Equivalent": with respect to (i) any amount of any currency
other than Dollars on any date, the equivalent amount in Dollars of such amount
of currency as determined by the Administrative Agent in accordance with
subsection 2.15(b) using the applicable Exchange Rate and (ii) any amount in
Dollars, such amount.
"Dollar Refunding Amount": as defined in subsection 2.7(b)(i).
"Dollar Swing Line Commitment": the Dollar Swing Line Lender's
obligation to make Dollar Swing Line Loans pursuant to subsection 2.6(a) in an
aggregate principal amount not to exceed $25,000,000 at any time outstanding.
"Dollar Swing Line Lender": Bank One, in its capacity as provider of
Dollar Swing Line Loans.
"Dollar Swing Line Loans": as such term is defined in subsection
2.6(a).
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Domestic Subsidiary": any Subsidiary of Holdings organized under the
laws of any jurisdiction within the United States.
"Eligible Accounts Receivable": at any time, an amount equal to the
aggregate outstanding balance of all Accounts of Holdings and its Subsidiaries,
as set forth in the aging reports of billed Accounts for Holdings and its
Subsidiaries as of such time, provided that, unless otherwise approved in
writing by the Administrative Agent, no amount owing in respect of any Account
of Holdings or any of its Subsidiaries shall be deemed to be included in any
calculation of Eligible Accounts Receivable if:
(1) such Account is not a bona fide, valid and legally
enforceable obligation of the Obligor thereon arising from the actual
sale and delivery of goods to, lease of goods to or rendition to and
acceptance of services by such Obligor, (ii) the goods giving rise to
such Account have not been shipped and delivered to the Obligor
thereon or the services giving rise to such Account have
11
not been performed or (iii) such Account arises from a progress
billing or percentage of completion invoice, but only to the extent
the amount billed exceeds the value of the goods sold and delivered or
the services performed with respect thereto;
(2) such Account has been adjusted to reflect the return or
rejection of, or any loss of or damage to, any of the Inventory giving
rise to such Account; provided that amounts owing in respect of such
Account shall only be excluded to the extent of such adjustment;
(3) such Account includes any material financing charges or late
or other fees; provided that amounts owing in respect of such Account
shall only be excluded to the extent of such charges or fees;
(4) such Account remains unpaid for more than 90 days after the
date set forth for payment in the invoice originally issued therefor;
(5) greater than 50% of the aggregate amount owing in respect of
all Accounts by the Obligor thereon (together with its Affiliates) to
the Borrower and its Subsidiaries remain unpaid more than 90 days
after the date set forth for payment in the respective invoices
originally issued therefor;
(6) such Account is a Defaulted Account, unless the obligations
of the Obligor under such Account are supported by a letter of credit
issued by a bank or other credit insurance acceptable to the
Administrative Agent;
(7) a proceeding under bankruptcy or similar laws has occurred
and is continuing with respect to the Obligor thereon unless the
payment of Accounts from such Obligor is secured in a manner
satisfactory to the Administrative Agent or, if the Account arises
subsequent to a decree or order for relief with respect to such
Obligor under any applicable bankruptcy laws, as now or hereinafter in
effect, the timely payment and collection of such Account will not be
impaired, as determined by the Administrative Agent in its reasonable
judgment;
(8) it is an Account which may be set off or charged against (i)
any adverse security deposit or other similar deposit made by or for
the benefit of such Obligor or (ii) any trade payable, rebate
obligation or other similar liability owing to such Obligor; provided
that amounts owing in respect of such Account shall only be excluded
to the extent of such set-off or charge against such adverse security
deposit, payable, rebate obligation or other similar liability;
(9) such Account is the result of a re-invoice of a disputed
Account or Defaulted Account;
12
(10) such Account arises from (i) the sale to the Obligor on a
▇▇▇▇-and-hold, guaranteed sale, sale-or-return, sale on approval,
consignment, sample or trial basis, (ii) a sale subject to any
retainages or holdbacks of any type or (iii) any other sale to the
Obligor made pursuant to any other written agreement providing for
repurchase or return; provided that no amount owing in respect of such
Account shall be excluded pursuant to this clause solely as a result
of customary quality warranties or the general right to return goods
provided by Holdings or any of its Subsidiaries;
(11) such Account does not comply in all material respects with
all applicable legal requirements;
(12) such Account is not owned solely by Holdings or any of its
Subsidiaries free and clear of all Liens or other rights or claims of
any other Person (except in favor of the Administrative Agent); or
(13) the Administrative Agent does not have a valid and perfected
first priority security interest for the benefit of the Lenders in
such Account and in any letter of credit, credit insurance or
guarantee, the credit support provided by which would permit such
Account to be an Eligible Account Receivable in accordance with the
foregoing provisions of this definition (except for liens arising by
operation of law, appropriate reserves for which have been reasonably
established for Borrowing Base purposes by Holdings or a Subsidiary)
or such Account does not conform in all material respects to the
representations and warranties contained in this Agreement or any of
the Security Documents.
"Eligible Inventory": at any time, an amount equal to the aggregate
value of all Inventory of Holdings and its Subsidiaries. In determining the
amount to be so included, such Inventory shall be valued at the standard cost
maintained on a basis consistent with the Holding's or such Subsidiary's current
and historical accounting practice less reserves taken and adjustments made, if
any, (i) on account of physical inventory adjustments, for standard cost
variances and shrinkage accruals, (ii) for obsolete or slow moving goods as
determined by Inventory remaining unsold or not placed into service for a period
of 52 weeks, (iii) for goods returned or rejected by Holding's or such
Subsidiary's customers as damaged or defective, obsolete or otherwise non-
salable, (iv) for Liens referred to in clause (b). Unless otherwise approved in
writing by the Administrative Agent, no amount with respect to any Inventory
shall be deemed to be included in any calculation of Eligible Inventory if:
(a) the Inventory is not owned solely by Holdings or such Subsidiary,
or Holdings or such Subsidiary does not have good and valid title thereto;
(b) the Inventory is not subject to a perfected Lien in favor of the
Administrative Agent for the benefit of the Lenders prior to all other
Liens except for Liens for normal and customary warehousing and
transportation charges (appropriate reserves for which
13
have been reasonably established for Borrowing Base purposes by Holdings or
such Subsidiary); or
(c) the Inventory does not conform in all material respects to the
representations and warranties contained in this Agreement or any of the
Security Documents.
"Eligible Crates": at any time, an amount equal to the aggregate
value of all crates of IFCO USA which are located in North America. In
determining the amount to be so included, such crates shall be valued at the
standard cost maintained on a basis consistent with the IFCO USA's current and
historical accounting practice less reserves taken and adjustments made, if any,
(i) on account of physical inventory adjustments, for standard cost variances
and shrinkage accruals, (ii) for obsolete or slow moving goods as determined by
crates remaining unsold or not leased or not placed into service for a period of
52 weeks, (iii) for crates returned or rejected by IFCO USA's customers as
damaged or defective, obsolete or otherwise non-salable, (iv) for Liens referred
to in clause (b). Unless otherwise approved in writing by the Administrative
Agent, no amount with respect to any Crates shall be deemed to be included in
any calculation of Eligible Crates if:
(a) the crate is not owned solely by IFCO USA, or does not have good
and valid title thereto;
(b) the crate is not subject to a perfected Lien in favor of the
Administrative Agent for the benefit of the Lenders prior to all other
Liens except for Liens for normal and customary warehousing and
transportation charges (appropriate reserves for which have been reasonably
established for Borrowing Base purposes by IFCO USA); or
(c) the crate does not conform in all material respects to the
representations and warranties contained in this Agreement or any of the
Security Documents.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Base Rate": with respect to any Eurocurrency Borrowing
for any Interest Period, the rate per annum determined on the basis of the rate
for deposits in the relevant currency for a period equal to such Interest Period
commencing on the first day of such Interest Period appearing on the applicable
page of the Reuters or Bloomberg screen as of 11:00 A.M., London time, two
Business Days prior to the beginning of such Interest Period. In the event that
such rate does not appear on the applicable page of the Reuters or Bloomberg
screen (or
14
otherwise on such screen), the "Eurocurrency Base Rate" shall be determined by
reference to such other comparable publicly available service for displaying
eurocurrency rates as may be selected by the Administrative Agent or, in the
absence of such availability, by reference to the rate at which the
Administrative Agent is offered deposits in the relevant currency at or about
11:00 A.M., London time, two Business Days prior to the beginning of such
Interest Period in the interbank eurocurrency market where its eurodollar and
foreign currency and exchange operations are then being conducted for delivery
on the first day of such Interest Period for the number of days comprised
therein.
"Eurocurrency Loans": Loans the rate of interest applicable to which
is based upon the Eurocurrency Rate.
"Eurocurrency Rate": with respect to each day during each Interest
Period pertaining to a Eurocurrency Loan, a rate per annum determined for such
day in accordance with the following formula (rounded upward to the nearest
1/100th of 1%):
Eurocurrency Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurocurrency Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurocurrency Tranche": the collective reference to Eurocurrency
Loans under a particular Facility the then current Interest Periods with respect
to all of which begin on the same date and end on the same later date (whether
or not such Loans shall originally have been made on the same day).
"European Swing Line Administrator": any single Lender selected by
the Borrower, with the consent of the Administrative Agent.
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Exchange Rate": with respect to (a) any calculation of the Foreign
Currency Equivalent with respect to a currency other than Dollars on any date,
the rate at which Dollars may be exchanged into such currency or (b) any
calculation of the Dollar Equivalent with respect to a currency other than
Dollars on any date, the rate at which such currency may be exchanged into
Dollars, as set forth on such date on the relevant FWDS Series Reuters currency
page at or about 11:00 A.M. Chicago time on such date. In the event that such
rate does not appear on any
15
such Reuters page, the "Exchange Rate" with respect to such currency shall be
determined by reference to such other publicly available service for displaying
exchange rates as may be agreed upon by the Administrative Agent and the
Borrower or, in the absence of such agreement, such "Exchange Rate" shall
instead be the Administrative Agent's spot rate of exchange in the interbank
market where its currency exchange operations in respect of such currency are
then being conducted, at or about 10:00 A.M. local time at such date for the
purchase of such currency with Dollars or the purchase of Dollars with such
currency, as the case may be, for delivery two Business Days later; provided
that if at the time of any such determination no such spot rate can reasonably
be quoted, the Administrative Agent may use any reasonable method (including
obtaining quotes from three or more market makers for such currency) as it deems
appropriate to determine such rate and such determination shall be conclusive
absent manifest error (without prejudice to the determination of the
reasonableness of such method).
"Excluded Foreign Subsidiary": SMG Corporation, a corporation
organized under the laws of Ontario, Canada, until such time as such corporation
executes a Guarantee and Collateral Agreement and any other Foreign Subsidiary
of the Borrower in respect of which either (a) the pledge of all the Capital
Stock of such Subsidiary as Collateral or (b) the guaranteeing by such
Subsidiary of the Obligations, would, in the good faith judgment of the Borrower
(concurred with by the Administrative Agent), result in adverse tax consequences
to the Borrower.
"Existing Credit Facility": the Credit Agreement among Old PalEx, the
banks from time to time parties thereto and Bank One, NA, as administrative
agent thereunder, dated as of March 25, 1997, as amended.
"Existing European Credit Facilities": The collective reference to
the DM 160.5 million Senior Facility Agreement among IFCO Europe Beteiligungs
GmbH and a syndicate of European banks dated as of February 28, 1998 and the DM
35.0 million Senior Subordinated Facility Agreement among IFCO Europe
Beteiligungs GmbH and a syndicate of European banks, dated as of February 28,
1998.
"Facility": each of (a) the Acquisition Term Loan Commitments and the
Acquisition Term Loans made thereunder (the "Acquisition Term Loan Facility"),
and (b) the Revolving Credit Commitments and the extensions of credit made
thereunder, including both Revolving Credit Loans and Converted Term Loans (the
"Revolving Credit Facility").
"Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Reference Lender
from three federal funds brokers of recognized standing selected by it.
16
"Foreign Guarantee": a guarantee, in form and substance satisfactory
to the Arrangers, to be delivered by a Foreign Subsidiary to the Administrative
Agent pursuant to which such Foreign Subsidiary guarantees, in favor of the
Administrative Agent, for the ratable benefit of the Lenders, the prompt and
complete payment when due of the Obligations as amended, supplemented or
otherwise modified from time to time.
"Foreign Collateral Agreement": an agreement, in form and substance
satisfactory to the Arrangers, to be delivered by a Foreign Subsidiary to the
Administrative Agent pursuant to which such Foreign Subsidiary creates a Lien on
its assets described therein in favor of the Administrative Agent, for the
ratable benefit of the Lenders, as amended, supplemented or otherwise modified
from time to time.
"Foreign Currency Equivalent": with respect to an amount of foreign
currency on any date, the amount of Dollars that would be required to purchase
such amount of such foreign currency using the applicable Exchange Rate.
"Foreign Currency Swing Line Commitment": as defined in subsection
2.7(a).
"Foreign Currency Swing Line Lender": the European Swing Line
Administrator (including any branch or affiliate thereof) and any other Lender
(including Bank One and CIBC) that, with the consent of the Borrower and the
Administrative Agent, agrees to make Foreign Currency Swing Line Loans
hereunder, in its capacity as a provider of such Foreign Currency Swing Line
Loans.
"Foreign Currency Swing Line Loan Agreement": as defined in
subsection 2.7(a).
"Foreign Currency Swing Line Loans": as defined in subsection 2.7(a).
"Foreign Currency Swing Line Outstandings": at any time, the sum of
the Dollar Equivalents of the aggregate then outstanding principal amount of
Foreign Currency Swingline Loans.
"Foreign Currency Swing Line Subfacility Amount": $50,000,000.
"Foreign Subsidiary": any Subsidiary of Holdings that is not a
Domestic Subsidiary.
"Funded Debt": as to any Person, all Indebtedness of such Person that
matures more than one year from the date of its creation or matures within one
year from such date but is renewable or extendable, at the option of such
Person, to a date more than one year from such date or arises under a revolving
credit or similar agreement that obligates the lender or lenders to extend
credit during a period of more than one year from such date, including all
current maturities and current sinking fund payments in respect of such
Indebtedness whether or not
17
required to be paid within one year from the date of its creation and, in the
case of the Borrower, Indebtedness in respect of the Loans.
"Funding Office": with respect to Loans in any currency, the office
specified from time to time by the Administrative Agent as its funding office
for such currency by notice to Holdings and the Lenders.
"GAAP": generally accepted accounting principles in the United States
as in effect from time to time, except that for purposes of Section 7.1, GAAP
shall be determined on the basis of such principles in effect on the date hereof
and consistent with those used in the preparation of the most recent audited
financial statements referred to in Section 4.1(c).
"Governmental Authority": any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).
"Guarantee and Collateral Agreement": the Guarantee and Collateral
Agreement to be executed and delivered by Holdings, the Borrower and each
Subsidiary Guarantor, substantially in the form of Exhibit D, as the same may be
amended, supplemented or otherwise modified from time to time; provided that, in
respect of any Foreign Subsidiary that executes a Foreign Guarantee, such term
shall refer to such Foreign Guarantee.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person (including
any bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations"
of any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
18
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.
"Guarantors": the collective reference to Holdings and the Subsidiary
Guarantors.
"Hedge Agreements": all interest rate swaps, caps or collar
agreements or similar arrangements dealing with interest rates or currency
exchange rates or the exchange of nominal interest obligations, either generally
or under specific contingencies.
"Holdings": as defined in the preamble hereto.
"IFCO Companies": IFCO Europe Beteiligungs GmbH, a limited liability
company organized under the laws of the Federal Republic of Germany, MTS
Okologistik Verwaltungs GmbH, a limited liability company organized under the
laws of the Federal Republic of Germany, and IFCO International Network
Beteiligungsgesellschaft mbH, a limited liability company organized under the
laws of the Federal Republic of Germany.
"IFCO USA": IFCO-U.S., L.L.C.
"Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than
current trade payables and accrued expenses incurred in the ordinary course of
such Person's business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), (e) all Capital Lease Obligations and
Synthetic Lease Obligations of such Person, (f) all obligations of such Person,
contingent or otherwise, as an account party or applicant under or in respect of
acceptances, letters of credit, surety bonds or similar arrangements, (g) the
liquidation value of all manditorily redeemable preferred Capital Stock of such
Person, (h) all Guarantee Obligations of such Person in respect of obligations
of the kind referred to in clauses (a) through (g) above, (i) all obligations of
the kind referred to in clauses (a) through (h) above secured by (or for which
the holder of such obligation has an existing right, contingent or otherwise, to
be secured by) any Lien on property (including accounts and contract rights)
owned by such Person, whether or not such Person has assumed or become liable
for the payment of such obligation, and (j) for the purposes of Sections 7.2 and
8(e) only, all obligations of such Person in respect of Hedge Agreements. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness expressly provide that such
19
Person is not liable therefor or that the liability of such Person is limited to
amounts invested by such Person in such entity.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses, technology, know-how and processes, and all rights to ▇▇▇ at law or in
equity for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day
of each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any Eurocurrency
Loan or Foreign Currency Swing Line Loan having an Interest Period of three
months or less, the last day of such Interest Period, (c) as to any Eurocurrency
Loan or Foreign Currency Swing Line Loan having an Interest Period longer than
three months, each day that is three months, or a whole multiple thereof, after
the first day of such Interest Period and the last day of such Interest Period
and (d) as to any Loan (other than any Revolving Credit Loan that is a Base Rate
Loan and any Dollar Swing Line Loan), the date of any repayment or prepayment
made in respect thereof.
"Interest Period": as to any Eurocurrency Loan or Foreign Currency
Swing Line Loan, (a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurocurrency Loan or
Foreign Currency Swing Line Loan and ending one, two, three or six months (or,
in the circumstances provided for in subsection 2.5, 14 days or less)
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurocurrency Loan and ending one, two, three or six months
(or, in the circumstances provided for in subsection 2.5, 14 days or less)
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the last day of
the then current Interest Period with respect thereto; provided that, all of the
foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
20
(ii) the Borrower may not select an Interest Period under a
particular Facility that would extend beyond the date final payment is due
on the Revolving Credit Loans, Foreign Currency Swing Line Loans or the
Acquisition Term Loans, as the case may be;
(iii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month;
(iv) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurocurrency Loan or Foreign
Currency Swing Line Loan during an Interest Period for such Loan; and
(v) in the case of Foreign Currency Swing Line Loans, the
Borrower may select an Interest Period of less than one month's duration to
the extent that the Borrower and the relevant Foreign Currency Swing Line
Lender agree on such an Interest Period.
"Inventory": as defined in the Uniform Commercial Code as in effect
in the State of New York from time to time; such term shall exclude, however,
any crates and pallets owned by Holdings or any of its Subsidiaries.
"Investment Capital Expenditures": for any period, with respect to any
Person, the aggregate of all expenditures by such Person and its Subsidiaries
for the acquisition or leasing (pursuant to a capital lease) for fixed or
capital assets or additions to equipment (excluding replacements, capitalized
repairs and other maintenance expenditures) that should be capitalized under
GAAP on a consolidated balance sheet of such Person and its Subsidiaries. In no
event shall Investment Capital Expenditures include expenditures for (i) any
assets acquired pursuant to a Permitted Acquisition, (ii) assets which are
acquired with proceeds of a sale leaseback transaction permitted by subsection
7.10, or (iii) assets acquired in connection with the delivery of a Reinvestment
Notice. For purposes of this definition Investment Capital Expenditures shall
not include (i) expenditures made with the Net Cash Proceeds of the IPO in
excess of $160,000,000 or (ii) any expenditures by such Person with any cash
savings to such Person resulting from the election by shareholders of Old PalEx
to receive less than 49% of the consideration paid in connection with the Merger
in cash, and any such savings and such excess Net Cash Proceeds shall be deemed
to be applied to pay the first such expenditures to be incurred subsequent to
the Closing Date.
"Investments": as defined in Section 7.7.
"IPO": as defined in the recitals hereto.
"Issuing Lenders": CIBC and Bank One, NA (or an affiliate thereof),
in their capacities as issuers of any Letter of Credit.
21
"L/C Commitment": $25,000,000.
"L/C Fee Payment Date": the last day of each March, June, September
and December to occur when any Letter of Credit shall be outstanding.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate undrawn amount of all outstanding Letters of Credit at such time, plus
(b) the aggregate amount of drawings under Letters of Credit that have not then
been reimbursed pursuant to Section 3.5.
"L/C Participants": the collective reference to all the Revolving
Credit Lenders other than the applicable Issuing Lender.
"Lenders": as defined in the preamble hereto; provided, that unless
the context otherwise requires, each reference herein to the Lenders shall be
deemed to include any Conduit Lender.
"Letters of Credit": as defined in Section 3.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Security Documents and the
Notes.
"Loan Parties": Holdings, the Borrower and each other Subsidiary of
Holdings that is a party to a Loan Document.
"Majority Facility Lenders": with respect to any Facility, the
holders of more than 50% of the aggregate unpaid principal amount of the
Acquisition Term Loans or the Aggregate Revolving Credit Outstandings, as the
case may be, outstanding under such Facility (or, in the case of the Revolving
Credit Facility, prior to any termination of the Revolving Credit Commitments,
the holders of more than 50% of the Total Revolving Credit Commitments).
"Material Acquisition": any acquisition of property or series of
related acquisitions of property that (a) constitutes assets comprising all or
substantially all of an operating unit of a business or constitutes all or
substantially all of the common stock of a Person and (b) involves the payment
of consideration by Holdings and its Subsidiaries in excess of $1,000,000.
22
"Material Adverse Effect": any event, development or circumstance
that has had or could reasonably be expected to have a material adverse effect
on (a) the Transactions, (b) the business, property, operations, condition
(financial or otherwise) or prospects of Holdings and its Subsidiaries taken as
a whole, (c) the business, property, operations, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole or
(d) the validity or enforceability of this Agreement or any of the other Loan
Documents or the rights or remedies of the Agents or the Lenders hereunder or
thereunder.
"Material Disposition": any Disposition of property or series of
related Dispositions of property that (a) constitutes assets comprising all or
substantially all of an operating unit of any Subsidiary or constitutes all or
substantially all of the common stock or a Subsidiary and (b) yields gross
proceeds to Holdings or any of its Subsidiaries in excess of $1,000,000.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including presently friable asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
"Maturity Date": March 7, 2006.
"Merger": as defined in the recitals hereto.
"Merger Agreement": the Amended and Restated Agreement and Plan of
Reorganization by and among IFCO, the Borrower, the IFCO Companies, Schoeller
Packaging Systems GmbH and Silver Oak Acquisition Corp. and dated as of October
6, 1999 and effective as of March 29, 1999, a copy of which is included as an
exhibit to the Registration Statement.
"Merger Documentation": collectively, the Merger Agreement and all
schedules, exhibits and annexes thereto and all side letters and agreements
affecting the terms thereof or entered into in connection therewith, in each
case as amended, supplemented or otherwise modified from time to time in
accordance with Section 7.15.
"Mortgaged Properties": the real properties listed on Schedule 1.1B,
as to which the Administrative Agent for the benefit of the Lenders shall be
granted a Lien pursuant to the Mortgages.
"Mortgages": each of the mortgages and deeds of trust made by any
Loan Party in favor of, or for the benefit of, the Administrative Agent for the
benefit of the Lenders, substantially in the form of Exhibit E (with such
changes thereto as shall be advisable under the law of the jurisdiction in which
such mortgage or deed of trust is to be recorded), as the same may be amended,
supplemented or otherwise modified from time to time; provided that it is
mutually understood and agreed that the Borrower and the Administrative Agent
shall make any such modifications to the Mortgages within 60 days of the Closing
Date as may be required by
23
local counsel in the jurisdictions in which the relevant Mortgaged Properties
are located, to ensure that such Mortgages are legally enforceable in such
jurisdictions.
"Multiemployer Plan": a Plan that is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents
(including any such proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or otherwise, but only as and when received) of such Asset Sale or
Recovery Event, net of attorneys' fees, accountants' fees, investment banking
fees, amounts required to be applied to the repayment of Indebtedness secured by
a Lien expressly permitted hereunder on any asset that is the subject of such
Asset Sale or Recovery Event (other than any Lien pursuant to a Security
Document) and other customary fees and expenses actually incurred in connection
therewith and net of taxes paid or reasonably estimated to be payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements) and (b) in connection with any
issuance or sale of Capital Stock or any incurrence of Indebtedness, the cash
proceeds received from such issuance or incurrence, net of attorneys' fees,
investment banking fees, accountants' fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred in
connection therewith.
"Non-Excluded Taxes": as defined in Section 2.19(a).
"Non-U.S. Lender": as defined in Section 2.19(d).
"Notes": the collective reference to any promissory note evidencing
Loans.
"Notice of Foreign Currency Swing Line Refunding": as defined in
subsection 2.7(b)(i).
"Obligations": the unpaid principal of and interest on (including
interest accruing after the maturity of the Loans and Reimbursement Obligations
and interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and
liabilities of the Borrower to the Administrative Agent or to any Lender (or, in
the case of Hedge Agreements, any affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any Hedge Agreement
entered into with any Lender or any affiliate of any Lender or any other
document made, delivered or given in connection herewith or therewith, whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including all fees, charges
24
and disbursements of counsel to the Administrative Agent or to any Lender that
are required to be paid by the Borrower pursuant hereto) or otherwise.
"Obligor": with respect to an Account, the purchaser of the goods or
services or the lessee of goods giving rise to such Account or any other Person
obligated to make payment in respect of such purchase of such goods or services
or lease of goods.
"Old PalEx": as defined in the recitals hereto.
"Other Taxes": any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document.
"Participant": as defined in Section 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Acquisitions": an acquisition (a) which has been approved
by the board of directors of the acquired company, (b) in which the surviving
entity is a Subsidiary of Holdings, (c) of a company in the same line of
business as the Borrower, (d) which, both before and after giving effect
thereto, does not result in a breach of any financial covenant contained in
Section 7.1 or result in any other Default or Event of Default, (e) in which the
total consideration (including assumed debt) paid by Holdings and its
Subsidiaries does not exceed $25,000,000 and (f) in connection with which the
Agents shall have received reasonably detailed information from the Borrower
pertaining thereto, including, without limitation, pro forma covenant compliance
calculations, historical financial statements and a due diligence summary. The
aggregate amount of consideration (including assumed debt) paid in connection
with Permitted Acquisitions during any twelve-month period shall not exceed
$90,000,000.
"Permitted Investors": the collective reference to Schoeller Logistic
Technologies Holding GmbH and its Affiliates.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan that is
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pricing Grid": the pricing grid attached hereto as Annex A.
25
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
"Projections": as defined in Section 6.2(c).
"Properties": as defined in Section 4.17(a).
"Proxy": the Proxy Statement filed by Holdings in connection with the
Merger pursuant to Section 14(a) of the Securities Exchange Act of 1934.
"Recovery Event": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding relating to
any asset of Holdings, the Borrower or any of Holdings' Subsidiaries.
"Reference Lender": Bank One, NA.
"Refunded Dollar Swing Line Loans": as defined in subsection
2.6(c)(i).
"Register": as defined in Section 10.6(d).
"Registration Statement": the Registration Statement on Form F-4
filed by Holdings with the Securities and Exchange Commission on February 2,
2000.
"Regulation U": Regulation U of the Board as in effect from time to
time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit.
"Reinvestment Deferred Amount": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by Holdings or any of its
Subsidiaries in connection therewith that are not applied to prepay the Term
Loans or reduce the Revolving Credit Commitments pursuant to Section 2.11(c) as
a result of the delivery of a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of
which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
Officer stating that no Event of Default has occurred and is continuing and that
Holdings (directly or indirectly through a Subsidiary) intends and expects to
use all or a specified portion of the Net Cash Proceeds of an Asset Sale or
Recovery Event to acquire or repair assets useful in its business.
"Reinvestment Prepayment Amount": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire or repair
assets useful in Holdings' business.
26
"Reinvestment Prepayment Date": with respect to any Reinvestment
Event, the earlier of (a) the date occurring nine months after such Reinvestment
Event (if such Reinvestment Event occurs on or prior to December 31, 2000) or
the date occurring six months after such Reinvestment Event (if such
Reinvestment Event occurs after December 31, 2000) and (b) the date on which
Holdings shall have determined not to, or shall have otherwise ceased to,
acquire or repair assets useful in Holding's business with all or any portion of
the relevant Reinvestment Deferred Amount.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg.
(S) 4043.
"Required Lenders": at any time, the holders of more than 50% of (a)
until the Closing Date, the Commitments then in effect and (b) thereafter, the
sum of (i) the aggregate unpaid principal amount of the Acquisition Term Loans
then outstanding, (ii) until the Acquisition Term Loan Commitments shall have
expired or been terminated, the aggregate then unutilized amount thereof and
(iii) the Total Revolving Credit Commitments then in effect or, if the Revolving
Credit Commitments have expired or been terminated, the Aggregate Revolving
Credit Outstandings then outstanding.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer": the chief executive officer, president,
executive vice president, chief financial officer or chief accounting officer of
the Borrower or Holdings, as the case may be, but in any event, with respect to
financial matters, the chief financial officer of the Borrower or Holdings, as
the case may be.
"Restricted Payments": as defined in Section 7.6.
"Revolving Credit Commitment": as to any Lender, the obligation of
such Lender, if any, to make Revolving Credit Loans and participate in Swing
Line Loans and Letters of Credit in an aggregate principal and/or face amount
not to exceed the amount set forth under the heading "Revolving Credit
Commitment" opposite such Lender's name on Schedule 1.1A or in the Assignment
and Acceptance pursuant to which such Lender became a party hereto, as the same
may be changed from time to time pursuant to the terms hereof. The original
aggregate amount of the Revolving Credit Commitments is $126,250,000.
27
"Revolving Credit Commitment Period": the period from and including
the Closing Date to the Revolving Credit Termination Date.
"Revolving Credit Facility": as defined in the definition of
Facility.
"Revolving Credit Lender": each Lender that has a Revolving Credit
Commitment or that holds Revolving Credit Loans.
"Revolving Credit Loans": as defined in Section 2.4(a).
"Revolving Credit Percentage": as to any Revolving Credit Lender at
any time, the percentage determined by dividing such Lender's Revolving Credit
Commitment at such time by the Total Revolving Credit Commitments (or, at any
time after the Revolving Credit Commitments shall have expired or terminated,
the percentage determined by dividing the aggregate principal amount of such
Lender's Revolving Credit Loans or Converted Term Loans, as the case may be,
then outstanding by the aggregate principal amount of the Revolving Credit Loans
or Converted Term Loans, as the case may be, then outstanding).
"Revolving Credit Termination Date": the third anniversary of the
Closing Date.
"Revolving Extensions of Credit": as to any Revolving Credit Lender
at any time, an amount equal to the sum of (a) the aggregate principal amount of
all Revolving Credit Loans or Converted Term Loans held by such Lender then
outstanding, (b) such Lender's Revolving Credit Percentage of the L/C
Obligations then outstanding and (c) such Lender's Revolving Credit Percentage
of the aggregate principal amount of Swing Line Loans then outstanding
(calculated, in the case of Foreign Currency Swing Line Loans, on the basis of
the Dollar Equivalent thereof).
"Schoeller": Schoeller Plast Industries GmbH, a corporation organized
under the laws of the Federal Republic of Germany.
"SEC": the Securities and Exchange Commission, any successor thereto
and any analogous Governmental Authority.
"Security Documents": the collective reference to the Guarantee and
Collateral Agreement, the Mortgages, all Foreign Collateral Agreements and all
other security documents hereafter delivered to the Administrative Agent
granting a Lien on any property of any Person to secure the obligations and
liabilities of any Loan Party under any Loan Document.
"Seller Notes": the collective reference to the outstanding
subordinated convertible notes issued by Old PalEx in 1998 to the former owners
of the companies acquired by Old PalEx in such year.
28
"Senior Subordinated Note Indenture": the Indenture, dated on or
about the Closing Date, entered into by Holdings and certain of its Subsidiaries
in connection with the issuance of the Senior Subordinated Notes, together with
all instruments and other agreements entered into by Holdings or such
Subsidiaries in connection therewith, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with Section 7.8.
"Senior Subordinated Notes": the subordinated notes of Holdings
issued on the Closing Date pursuant to the Senior Subordinated Note Indenture.
"Single Employer Plan": any Plan that is covered by Title IV of
ERISA, but that is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of
any date of determination, (a) the amount of the "present fair saleable value"
of the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"Specified Change of Control": a "Change of Control" (or the
comparable concept) as defined in the Senior Subordinated Note Indenture.
"Subordinated Seller Notes": any notes issued by Holdings or any of
its Subsidiaries to the former owners of companies acquired pursuant to
Permitted Acquisitions which are (i) subordinated to at least the same extent as
the obligations of the Borrower in respect of the Senior Subordinated Notes or
(ii) subordinated pursuant to other subordination provisions acceptable to the
Administrative Agent.
"Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more
29
intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of Holdings.
"Subsidiary Guarantor": each Subsidiary of Holdings (other than the
Borrower and any Excluded Foreign Subsidiary).
"Synthetic Lease": a lease of property or assets designed to permit
the lessee (i) to claim depreciation on such property or assets under U.S. tax
law and (ii) to treat such lease as an operating lease or not to reflect the
leased property or assets on the lessee's balance sheet under GAAP.
"Synthetic Lease Obligations": with respect to any Synthetic Lease,
at any time, an amount equal to the higher of (x) the aggregate termination
value or purchase price or similar payments in the nature of principal payable
thereunder and (y) the then aggregate outstanding principal amount of the notes
or other instruments issued by, and the amount of the equity investment, if any,
in, the lessor under such Synthetic Lease.
"Swing Line Foreign Currencies": Canadian dollars, Deutschemarks and
euros.
"Swing Line Lenders": collectively, the Dollar Swing Line Lender and
the Foreign Currency Swing Line Lenders.
"Swing Line Loans": collectively, Dollar Swing Line Loans and Foreign
Currency Swing Line Loans.
"Swing Line Note": as defined in subsection 2.6(b).
"Syndication Agent": as defined in the preamble hereto.
"Term Loans": the collective reference to the Acquisition Term Loans
and the Converted Term Loans.
"Total Revolving Credit Commitments": at any time, the aggregate
amount of the Revolving Credit Commitments then in effect.
"Transactions": as defined in the recitals hereto.
"Transferee": any Assignee or Participant.
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurocurrency Loan.
"United States": the United States of America.
30
"Utilization": at any time, the ratio (expressed as a percentage)
equal to, (i) with respect to the Revolving Credit Facility, the Aggregate
Revolving Credit Outstandings at such time divided by the Total Revolving Credit
Commitments at such time and (ii) with respect to the Acquisition Term Loan
Facility, (x) the aggregate principal amount of all Acquisition Term Loans
outstanding at such time divided by (y) the sum of the total Acquisition Term
Loan Commitments existing at such time plus the aggregate principal amount of
all Acquisition Term Loans outstanding at such time.
"Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares required by
law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that is
a Wholly Owned Subsidiary of Holdings.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto, (i)
accounting terms relating to Holdings and its Subsidiaries not defined in
subsection 1.1 and accounting terms partly defined in subsection 1.1, to the
extent not defined, shall have the respective meanings given to them under GAAP,
(ii) the words "include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation" and (iii) the words "asset" and
"property" shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
Capital Stock, securities, revenues, accounts, leasehold interests and contract
rights.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(e) Where applicable, any amount (including, without limitation,
minimum borrowing, prepayment or repayment amounts) expressed in Dollars shall,
when referring to any currency other than Dollars, be deemed to mean an amount
of such currency having a Dollar Equivalent approximately equal to such amount.
31
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Acquisition Term Loan Commitments. Subject to the terms and
conditions hereof, each Acquisition Term Loan Lender severally agrees to make
one or more term loans to the Borrower in Dollars in an aggregate amount not to
exceed the amount of the Acquisition Term Loan Commitment of such Lender (each,
an "Acquisition Term Loan"). The Acquisition Term Loans may from time to time
be Eurocurrency Loans or Base Rate Loans, as determined by the Borrower and
notified to the Administrative Agent in accordance with subsections 2.2 and
2.12. Acquisition Term Loans may be made on up to 20 dates during the period
from the Closing Date through the Acquisition Term Loan Commitment Termination
Date. The Acquisition Term Loan Commitments shall be permanently reduced on the
date of each borrowing thereunder by the amount of such borrowing, and shall
automatically terminate on the Acquisition Term Loan Commitment Termination
Date.
2.2 Procedure for Acquisition Term Loan Borrowing. The Borrower
shall give the Administrative Agent irrevocable notice (which notice must be
received by the Administrative Agent prior to 10:00 A.M., Chicago time, (a)
three Business Days prior to the requested Borrowing Date, in the case of
Eurocurrency Loans, or (b) one Business Day prior to the requested Borrowing
Date, in the case of Base Rate Loans), specifying (i) the amount and Type of
Acquisition Term Loans to be borrowed, (ii) the requested Borrowing Date and
(iii) in the case of Eurocurrency Loans, the length of the initial Interest
Period therefor. Upon receipt of such notice the Administrative Agent shall
promptly notify each Acquisition Term Loan Lender thereof. Not later than 12:00
Noon, Chicago time, on each Borrowing Date each Acquisition Term Loan Lender
shall make available to the Administrative Agent at the Funding Office an amount
in immediately available funds equal to the Acquisition Term Loan or Acquisition
Term Loans to be made by such Lender. The Administrative Agent shall credit the
account of the Borrower on the books of such office of the Administrative Agent
with the aggregate of the amounts made available to the Administrative Agent by
the Acquisition Term Loan Lenders in immediately available funds. Each
borrowing under the Acquisition Term Loan Commitments shall be in an amount
equal to (x) in the case of Base Rate Loans, $1,000,000 or a whole multiple
thereof (or, if the then aggregate available Acquisition Term Loan Commitments
are less than $1,000,000, such lesser amount) and (y) in the case of
Eurocurrency Loans, $5,000,000 as a whole multiple of $1,000,000 in excess
thereof.
2.3 Repayment of Acquisition Term Loans. The Acquisition Term Loan
of each Lender shall be payable in 12 consecutive quarterly principal
installments, commencing on the date that is three months after the Acquisition
Term Loan Commitment Termination Date, each of which shall be in an amount equal
to such Lender's Acquisition Term Loan Percentage multiplied by the product of
(i) the percentage set forth below opposite such installment and (ii) the
aggregate principal amount of Acquisition Term Loans outstanding on the
Acquisition Term Loan Commitment Termination Date:
32
Installment Percentage
----------- ----------
1 5.00%
2 5.00%
3 5.00%
4 5.00%
5 7.50%
6 7.50%
7 7.50%
8 7.50%
9 12.50%
10 12.50%
11 12.50%
12 12.50%
2.4 Revolving Credit Commitments; Converted Term Loans. (a) Subject
to the terms and conditions hereof, each Revolving Credit Lender severally
agrees to make revolving credit loans ("Revolving Credit Loans") in Dollars to
the Borrower from time to time during the Revolving Credit Commitment Period in
an aggregate principal amount at any one time outstanding which, when added to
such Lender's Revolving Credit Percentage of the sum of (i) the L/C Obligations
then outstanding and (ii) the aggregate principal amount of the Swing Line Loans
then outstanding, does not exceed the lesser of (x) the amount of such Lender's
Revolving Credit Percentage of the Borrowing Base then in effect and (y) such
Revolving Credit Lender's Revolving Credit Commitment then in effect. During
the Revolving Credit Commitment Period the Borrower may use the Revolving Credit
Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in
part, and reborrowing, all in accordance with the terms and conditions hereof.
The Revolving Credit Loans may from time to time be Eurocurrency Loans or Base
Rate Loans, as determined by the Borrower and notified to the Administrative
Agent in accordance with subsections 2.5 and 2.12.
(b) The Revolving Credit Loans of each Lender that are outstanding on
the Revolving Credit Termination Date shall on such date automatically be
converted to term loans ("Converted Term Loans") which shall be payable in 12
consecutive quarterly principal installments, commencing on the date that is
three months after the Revolving Credit Termination Date, each of which shall be
in an amount equal to such Lender's Revolving Credit Percentage multiplied by
the product of (i) the percentage set forth below opposite such installment and
(ii) the aggregate principal amount of the Revolving Credit Loans outstanding on
the Revolving Credit Termination Date:
Installment Percentage
----------- ----------
1 5.00%
2 5.00%
3 5.00%
33
4 5.00%
5 7.50%
6 7.50%
7 7.50%
8 7.50%
9 12.50%
10 12.50%
11 12.50%
12 12.50%
2.5 Procedure for Revolving Credit Loan Borrowing. The Borrower may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 10:00 A.M., Chicago time, (a) three Business Days
prior to the requested Borrowing Date, in the case of Eurocurrency Loans, or (b)
one Business Day prior to the requested Borrowing Date, in the case of Base Rate
Loans), specifying (i) the amount and Type of Revolving Credit Loans to be
borrowed, (ii) the requested Borrowing Date and (iii) in the case of
Eurocurrency Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Periods therefor. Any Revolving
Credit Loans made on the Closing Date shall initially be Base Rate Loans, and,
unless otherwise agreed by the Agents in their sole discretion, no Revolving
Credit Loan may be made as, converted into or continued as a Eurocurrency Loan
having an Interest Period in excess of 14 days prior to the date that is 60 days
after the Closing Date. Each borrowing under the Revolving Credit Commitments
shall be in an amount equal to (x) in the case of Base Rate Loans, $1,000,000 or
a whole multiple thereof (or, if the then aggregate Available Revolving Credit
Commitments are less than $1,000,000, such lesser amount) and (y) in the case of
Eurocurrency Loans, $5,000,000 or a whole multiple of $1,000,000 in excess
thereof; provided, that the Dollar Swing Line Lender may request, on behalf of
the Borrower, borrowings under the Revolving Credit Commitments that are Base
Rate Loans in other amounts pursuant to subsection 2.6. Upon receipt of any
such notice from the Borrower, the Administrative Agent shall promptly notify
each Revolving Credit Lender thereof. Each Revolving Credit Lender will make
the amount of its pro rata share of each borrowing available to the
Administrative Agent for the account of the Borrower at the Funding Office prior
to 12:00 Noon, Chicago time, on the Borrowing Date requested by the Borrower in
funds immediately available to the Administrative Agent. Such borrowing will
then be made available to the Borrower by the Administrative Agent crediting the
account of the Borrower on the books of such office with the aggregate of the
amounts made available to the Administrative Agent by the Revolving Credit
Lenders and in like funds as received by the Administrative Agent. If no
election as to the Type of Borrowing is specified in any such notice, then the
requested Borrowing shall be a Base Rate Loan. If no Interest Period with
respect to any Eurocurrency Borrowing is specified in any such notice, then the
Borrower shall be deemed to have selected an Interest Period of one month's
duration.
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2.6 Dollar Swing Line Commitment. (a) Subject to the terms and
conditions hereof, the Dollar Swing Line Lender agrees to make swing line loans
denominated in Dollars ("Dollar Swing Line Loans") to the Borrower from time to
time during the Revolving Credit Commitment Period in an aggregate principal
amount at any one time outstanding not to exceed the Dollar Swing Line
Commitment, provided that no Dollar Swing Line Loan shall be required to be made
hereunder unless, after giving effect thereto, (i) the Available Revolving
Credit Commitment of each Revolving Credit Lender would not be less than zero,
(ii) the Aggregate Revolving Credit Outstandings would not exceed the aggregate
amount of the Revolving Credit Commitments of all the Revolving Credit Lenders
and (iii) the Aggregate Revolving Credit Outstandings would not exceed the
Borrowing Base at such time. Amounts borrowed by the Borrower under this
subsection 2.6(a) may be repaid and, through but excluding the Revolving Credit
Termination Date, reborrowed. All Dollar Swing Line Loans shall be made as Base
Rate Loans and shall not be entitled to be converted into Eurocurrency Loans.
The Borrower shall give the Dollar Swing Line Lender irrevocable notice (which
notice must be received by the Dollar Swing Line Lender prior to 12:00 Noon,
Chicago time) on the requested Borrowing Date specifying the amount of the
requested Dollar Swing Line Loan which shall be in an amount equal to $500,000
or a whole multiple of $100,000 in excess thereof. The proceeds of each Dollar
Swing Line Loan will be made available on the date requested by the Dollar Swing
Line Lender to the Borrower by crediting the account of the Borrower as
specified in writing by the Borrower to the Administrative Agent with such
proceeds in Dollars.
(b) The Borrower agrees that, upon the request to the Administrative
Agent by the Dollar Swing Line Lender made on or prior to the Closing Date or in
connection with any assignment pursuant to subsection 10.6, to evidence the
Dollar Swing Line Loans the Borrower will execute and deliver to the Dollar
Swing Line Lender a promissory note in a form satisfactory to the Dollar Swing
Line Lender, with appropriate insertions (as the same may be amended,
supplemented, replaced or otherwise modified from time to time, the "Swing Line
Note"), payable to the order of the Dollar Swing Line Lender and representing
the obligation of the Borrower to pay the amount of the Dollar Swing Line
Commitment or, if less, the unpaid principal amount of the Dollar Swing Line
Loans made to the Borrower by the Dollar Swing Line Lender, with interest
thereon as prescribed in subsection 2.14. The Swing Line Note shall (a) be
dated the Closing Date, (b) be stated to mature on the Revolving Credit
Termination Date and (c) provide for the payment of interest in accordance with
subsection 2.14.
(c) (i) The Dollar Swing Line Lender, at any time in its sole and
absolute discretion may, and, at any time as there shall be a Dollar Swing Line
Loan outstanding for more than five Business Days, the Dollar Swing Line Lender
shall, on behalf of the Borrower (which hereby irrevocably directs and
authorizes the Dollar Swing Line Lender to act on its behalf), request each
Revolving Credit Lender, to make a Revolving Credit Loan as a Base Rate Loan in
Dollars in an amount equal to such Revolving Credit Lender's Revolving Credit
Percentage of the principal amount of all of the Dollar Swing Line Loans (the
"Refunded Dollar Swing Line Loans") outstanding on the date such notice is
given. Unless the Revolving Credit Commitments shall have expired or terminated
for any reason, including but not limited to, the occurrence of any of the
events described in paragraph (f) of Section 8 with respect to the
35
Borrower (in which event the procedures set forth in paragraph (c)(ii) of this
subsection 2.6 shall apply), and without regard to whether the conditions
precedent in subsection 5.2 are satisfied, each Revolving Credit Lender will
make the proceeds of its Revolving Credit Loan available to the Administrative
Agent for the account of the Dollar Swing Line Lender at the office of the
Administrative Agent specified by the Administrative Agent prior to 12:00 Noon,
Chicago time, in funds immediately available on the Business Day next succeeding
the date such notice is given. The proceeds of such Revolving Credit Loans shall
be immediately applied to repay the Refunded Dollar Swing Line Loans.
(ii) If the Revolving Credit Commitments shall expire or terminate
(for any reason, including but not limited to the occurrence of any of the
events described in paragraph (f) of Section 8 with respect to the Borrower) at
any time while Dollar Swing Line Loans are outstanding, each Revolving Credit
Lender shall, at the option of the Dollar Swing Line Lender exercised
reasonably, either (i) notwithstanding the expiration or termination of the
Revolving Credit Commitments and without regard to whether the conditions
precedent in subsection 5.2 are satisfied, make a Revolving Credit Loan as a
Base Rate Loan (which Revolving Credit Loan shall be deemed a "Revolving Credit
Loan" for all purposes of this Agreement and the other Loan Documents) or (ii)
purchase an undivided participating interest in such Dollar Swing Line Loans, in
either case, in an amount equal to such Revolving Credit Lender's Revolving
Credit Percentage (determined on the date of, and immediately prior to,
expiration or termination of the Revolving Credit Commitments), of the aggregate
principal amount of such Dollar Swing Line Loans. Each Revolving Credit Lender
will make the proceeds of any Revolving Credit Loan made pursuant to the
immediately preceding sentence available to the Administrative Agent for the
account of the Dollar Swing Line Lender at the office of the Administrative
Agent specified by the Administrative Agent prior to 12:00 Noon, Chicago time,
in funds immediately available on the Business Day next succeeding the date on
which the Revolving Credit Commitments expire or terminate. The proceeds of
such Revolving Credit Loans shall be immediately applied to repay the Dollar
Swing Line Loans outstanding on the date of termination or expiration of the
Revolving Credit Commitments. In the event that the Revolving Credit Lenders
purchase undivided participating interests pursuant to the first sentence of
this paragraph (c)(ii), each Revolving Credit Lender shall immediately transfer
to the Dollar Swing Line Lender, in immediately available funds, the amount of
its participation.
(iii) Whenever, at any time after the Dollar Swing Line Lender has
received from any Revolving Credit Lender such Revolving Credit Lender's
participating interest in a Dollar Swing Line Loan and the Dollar Swing Line
Lender receives any payment on account thereof, the Dollar Swing Line Lender
will distribute to such Revolving Credit Lender its participating interest in
such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Revolving Credit Lender's
participating interest was outstanding and funded); provided that in the event
that such payment received by the Dollar Swing Line Lender is required to be
returned such Revolving Credit Lender will return to the Dollar Swing Line
Lender any portion thereof previously distributed by the Dollar Swing Line
Lender to it.
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(d) Notwithstanding anything herein to the contrary, the Dollar Swing
Line Lender shall not make any Dollar Swing Line Loan if it shall have received,
at least one Business Day prior to the date of such Loan, written notice from
the Borrower or any Lender stating that the conditions set forth in subsection
5.2 have not been satisfied.
2.7 Foreign Currency Swing Line Commitment. (a) (i) The Borrower
may, subject to the terms and conditions of this Agreement, borrow swing line
loans denominated in Swing Line Foreign Currencies ("Foreign Currency Swing Line
Loans") from any Foreign Currency Swing Line Lender from time to time during the
Revolving Credit Commitment Period upon the extension of a Foreign Currency
Swing Line Commitment (as hereafter defined) on such terms and conditions as may
be agreed to (any such agreement, a "Foreign Currency Swing Line Loan
Agreement") by the Borrower and such Foreign Currency Swing Line Lender,
including, but not limited to, the applicable Swing Line Foreign Currency, the
procedures for the Foreign Currency Swing Line Lender to make the proceeds of
such Foreign Currency Swing Line Loans available to the Borrower (including,
without limitation, the lending office from which such Foreign Currency Swing
Line Loan is to be made), the maximum aggregate principal amount of Foreign
Currency Swing Line Loans that such Foreign Currency Swing Line Lender shall
commit to lend to the Borrower in such Swing Line Foreign Currency (such amount,
a "Foreign Currency Swing Line Commitment") and the duration of such Foreign
Currency Swing Line Commitment, provided that such terms and conditions shall
not be inconsistent with the limitations on Foreign Currency Swing Line
Commitments and Foreign Currency Swing Line Loans set forth in this subsection
and elsewhere in this Agreement. No loan made under a Foreign Currency Swing
Line Commitment shall be treated as a Foreign Currency Swing Line Loan for
purposes of this Agreement and the other Loan Documents, including, but not
limited to, for the purposes of entitling such loans to the benefits of
subsection 2.7(b), unless and until (i) the Borrower and the applicable Foreign
Currency Swing Line Lender shall have informed the Administrative Agent and the
European Swing Line Administrator in writing of the Dollar Equivalent of the
Foreign Currency Swing Line Commitment of such Foreign Currency Swing Line
Lender and all other terms and conditions thereof and (ii) the European Swing
Line Administrator shall have confirmed that the Dollar Equivalent of the
Foreign Currency Swing Line Commitment to be extended (when added to the Dollar
Equivalent (calculated in each case on the date such Foreign Currency Swing Line
Commitment is originally extended) of all other Foreign Currency Swing Line
Commitments then in effect) would not exceed the Foreign Currency Swing Line
Subfacility Amount. At any time, and from time to time thereafter, subject to
the terms and conditions of this Agreement, the Borrower may borrow Foreign
Currency Swing Line Loans from such Foreign Currency Swing Line Lender in an
amount equal to the then unused amount of the Foreign Currency Swing Line
Commitment of such Foreign Currency Swing Line Lender.
(ii) Anything in this subsection 2.7 to the contrary notwithstanding,
(x) at no time shall any Foreign Currency Swing Line Loan Commitment be extended
by a Swing Line Lender (other than CIBC or Bank One) or any Foreign Currency
Swing Line Loan be made by any Foreign Currency Swing Line Lender if, after
giving effect thereto, the aggregate Dollar Equivalent of the then outstanding
Foreign Currency Swing Line Commitment or Foreign
37
Currency Swing Line Loans of all the Foreign Currency Swing Line Lenders would
exceed the Foreign Currency Swing Line Subfacility Amount and (y) at no time
shall any Foreign Currency Swing Line Loan Commitment be extended by a Swing
Line Lender, or any Foreign Currency Swing Line Loan be made by any Foreign
Currency Swing Line Lender if, after giving effect thereto, (I) the Available
Revolving Credit Commitment of a Revolving Credit Lender would be less than
zero, (II) the Aggregate Revolving Credit Outstandings would exceed the
aggregate amount of the Revolving Credit Commitments of all the Revolving Credit
Lenders or (III) the Aggregate Revolving Credit Outstandings would exceed the
Borrowing Base at such time.
(b) (i) Subject to the provisions of the second sentence of
subsection 2.7(a)(i), if any Event of Default shall occur and be continuing, any
Foreign Currency Swing Line Lender may, in its sole and absolute discretion,
direct that the Foreign Currency Swing Line Loans owing to it be refunded, by
delivering a notice (with such detail as the Administrative Agent shall request,
a "Notice of Foreign Currency Swing Line Refunding") to the Administrative Agent
and the European Swing Line Administrator. Upon receipt of such notice, the
Administrative Agent shall (i) promptly give notice of the contents thereof to
the Revolving Credit Lenders and, unless an Event of Default described in
paragraph (f) of Section 8 in respect of the Borrower has occurred, to the
Borrower and (ii) calculate, without regard to the first sentence of subsection
2.7(a)(ii), the Foreign Currency Equivalent of the aggregate principal amount of
the Foreign Currency Swing Line Loans of such Foreign Currency Swing Line Lender
outstanding as of the date the Administrative Agent received such Notice of
Foreign Currency Swing Line Refunding (the "Dollar Refunding Amount"). Each
such Notice of Foreign Currency Swing Line Refunding shall be deemed to
constitute delivery by the Borrower of a notice to the Administrative Agent
requesting each Revolving Credit Lender to make a Revolving Credit Loan
denominated in Dollars in an amount equal to such Revolving Credit Lender's
Revolving Credit Percentage of the Dollar Refunding Amount as a Base Rate Loan.
Unless the Revolving Credit Commitments shall have expired or terminated for any
reason, including but not limited to, the occurrence of any of the events
described in paragraph (f) of Section 8 hereto with respect to the Borrower (in
which event the procedures set forth in paragraph (b)(ii) of this subsection 2.7
shall apply), and without regard to whether the conditions precedent in
subsection 5.2 are satisfied, each Revolving Credit Lender will make the
proceeds of its Revolving Credit Loan available to the Administrative Agent for
the account of the applicable Foreign Currency Swing Line Lender at the office
of the Administrative Agent specified by the Administrative Agent prior to 12:00
Noon, Chicago time, in funds immediately available on the Business Day next
succeeding the date such notice is given. The proceeds of such Revolving Credit
Loans shall be immediately applied to repay to the applicable Foreign Currency
Swing Line Lender the Dollar Refunding Amount.
(ii) If the Revolving Credit Commitments shall expire or terminate
(for any reason, including but not limited to the occurrence of any of the
events described in paragraph (f) of Section 8 hereto with respect to the
Borrower) at any time while Foreign Currency Swing Line Loans made by a Foreign
Currency Swing Line Lender are outstanding, each Revolving Credit Lender shall,
at the option of the applicable Foreign Currency Swing Line Lender exercised
reasonably, either (i) notwithstanding the expiration or termination of the
Revolving Credit
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Commitments and without regard to whether the conditions precedent in subsection
5.2 are satisfied, make a Revolving Credit Loan as a Base Rate Loan denominated
in Dollars (which Revolving Credit Loan shall be deemed a "Revolving Credit
Loan" for all purposes of this Agreement and the other Loan Documents) or (ii)
purchase an undivided participating interest in the outstanding Foreign Currency
Swing Line Loans of such Foreign Currency Swing Line Lender, in either case, in
a Foreign Currency Equivalent equal to such Revolving Credit Lender's Revolving
Credit Percentage determined on the date of, and immediately prior to,
expiration or termination of the Revolving Credit Commitments, of the aggregate
principal amount of such Foreign Currency Swing Line Loans (calculated without
regard to the first sentence of subsection 2.7(a)(ii)). Each Revolving Credit
Lender will make the proceeds of any Revolving Credit Loan made pursuant to the
immediately preceding sentence available to the Administrative Agent for the
account of the applicable Foreign Currency Swing Line Lender at the office of
the Administrative Agent prior to 12:00 Noon, Chicago time, in funds immediately
available on the Business Day next succeeding the date on which the Revolving
Credit Commitments expire or terminate. The proceeds of such Revolving Credit
Loans shall be immediately applied to repay the Foreign Currency Swing Line
Loans of such Foreign Currency Swing Line Lender outstanding on the date of
termination or expiration of the Revolving Credit Commitments. In the event that
the Revolving Credit Lenders purchase undivided participating interests pursuant
to the first sentence of this paragraph (e)(ii), each Revolving Credit Lender
shall immediately transfer to the applicable Foreign Currency Swing Line Lender,
in immediately available funds, the amount of its participation.
(iii) Whenever, at any time after a Foreign Currency Swing Line
Lender has received from any Revolving Credit Lender such Revolving Credit
Lender's participating interest in a Foreign Currency Swing Line Loan made by
such Foreign Currency Swing Line Lender and such Foreign Currency Swing Line
Lender receives any payment on account thereof, such Foreign Currency Swing Line
Lender will distribute to such Revolving Credit Lender its participating
interest in such amount (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Revolving Credit
Lender's participating interest was outstanding and funded); provided that in
the event that such payment received by such Foreign Currency Swing Line Lender
is required to be returned such Revolving Credit Lender will return to such
Foreign Currency Swing Line Lender any portion thereof previously distributed by
such Foreign Currency Swing Line Lender to it.
(c) Upon receipt by the Foreign Currency Swing Line Lender of any
payment of interest on any Foreign Currency Swing Line Loan calculated pursuant
to subsection 2.14(c), the Foreign Currency Swing Line Lender shall pay over to
the other Revolving Credit Lenders an amount in Dollars equal to the Dollar
Equivalent of the excess of (a) the amount of such payment over (b) the sum of
(i) the amount which would have been due in respect of such interest payment had
it been calculated solely on the basis of the Eurocurrency Rate in effect during
the applicable Interest Period plus 1/4 of 1% and (ii) the product of (A) the
Revolving Credit Percentage of the Foreign Currency Swing Line Lender and (B)
the amount which would have been due in respect of such interest payment had it
been calculated solely on the basis of the Applicable Margin in effect for such
Foreign Currency Swing Line Loans during the applicable
39
Interest Period. Such payment by the Foreign Currency Swing Line Lender shall be
shared ratably among the relevant Revolving Credit Lenders in accordance with
their respective Revolving Credit Percentages.
(d) Notwithstanding anything herein to the contrary, no Foreign
Currency Swing Line Lender shall not make any Foreign Currency Swing Line Loan
if it shall have received, at least one Business Day prior to the date of such
Loan, written notice from the Borrower or any Lender stating that the conditions
set forth in subsection 5.2 have not been satisfied.
2.8 Commitment Fees, etc. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Revolving Credit Lender a
commitment fee in Dollars for the period from and including the Closing Date to
the last day of the Revolving Credit Commitment Period, computed at the
Commitment Fee Rate on the average daily amount of the Available Revolving
Credit Commitment of such Lender during the period for which payment is made,
payable quarterly in arrears on the last day of each March, June, September and
December and on the Revolving Credit Termination Date, commencing on the first
of such dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent for the
account of each Acquisition Term Loan Lender a commitment fee in Dollars for the
period from and including the Closing Date to the last day of the Acquisition
Term Loan Commitment Period, computed at the Commitment Fee Rate on the average
daily amount of the Acquisition Term Loan Commitment of such Lender during the
period for which payment is made, payable quarterly in arrears on the last day
of each March, June, September and December and on the Acquisition Term Loan
Termination Date, commencing on the first of such dates to occur after the date
hereof.
(c) The Borrower agrees to pay to the Administrative Agent the fees
in the amounts and on the dates previously agreed to in writing by the Borrower
and the Administrative Agent.
(d) For purposes of calculating the commitment fee pursuant to this
subsection, the Dollar Equivalent of any Eurocurrency Loan shall be deemed to be
calculated on the basis of the Exchange Rate utilized in calculating the Dollar
Equivalent thereof on the date such Eurocurrency Loan shall originally have been
made until such Eurocurrency Loan is continued as such in accordance with
subsection 2.12, after which time, until such Eurocurrency Loan shall be
continued again, the Dollar Equivalent of such Eurocurrency Loan shall be deemed
to be calculated on the basis of the Exchange Rate utilized in calculating the
Dollar Equivalent thereof on the date of such continuation.
2.9 Termination or Reduction of Commitments. The Borrower shall have
the right, upon not less than three Business Days' notice to the Administrative
Agent, to terminate the Revolving Credit Commitments or the Acquisition Term
Loan Commitments or, from time to time, to reduce the amount of the Revolving
Credit Commitments or the Acquisition Term
40
Loan Commitments; provided that no such termination or reduction of Revolving
Credit Commitments shall be permitted if, after giving effect thereto and to any
prepayments of the Revolving Credit Loans and Swing Line Loans made on the
effective date thereof, the Aggregate Revolving Credit Outstandings would exceed
the Total Revolving Credit Commitments. Any such reduction shall be in an amount
equal to $1,000,000, or a whole multiple thereof, and shall reduce permanently
the Revolving Credit Commitments or the Acquisition Term Loan Commitments, as
the case may be, then in effect.
2.10 Optional Prepayments. The Borrower may at any time and from
time to time prepay the Loans, in whole or in part, without premium or penalty,
upon irrevocable notice delivered to the Administrative Agent at least three
Business Days prior thereto in the case of Eurocurrency Loans, and at least one
Business Day prior thereto in the case of Base Rate Loans, which notice shall
specify the date and amount of prepayment and whether the prepayment is of
Eurocurrency Loans or Base Rate Loans; provided, that if a Eurocurrency Loan is
prepaid on any day other than the last day of the Interest Period applicable
thereto, the Borrower shall also pay any amounts owing pursuant to subsection
2.20. Upon receipt of any such notice the Administrative Agent shall promptly
notify each relevant Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified therein,
together with (except in the case of Revolving Credit Loans that are Base Rate
Loans) accrued interest to such date on the amount prepaid. Partial prepayments
of Acquisition Term Loans, Converted Term Loans and Revolving Credit Loans shall
be in an aggregate principal amount of $1,000,000 or a whole multiple thereof.
Partial prepayments of Swing Line Loans shall be in an aggregate amount equal to
the Dollar Equivalent of $100,000 or a whole multiple thereof.
2.11 Mandatory Prepayments and Commitment Reductions. (a) If any
Indebtedness shall be incurred by Holdings or any of its Subsidiaries (excluding
any Indebtedness incurred in accordance with subsection 7.2), an amount equal to
100% of the Net Cash Proceeds thereof shall be applied on the date of such
issuance or incurrence toward the prepayment of the Term Loans and the permanent
reduction of the Revolving Credit Commitments as set forth in subsection
2.11(d).
(b) The Borrower shall apply the amount if any, of Net Cash Proceeds
received by Holdings after the Closing Date (on the date such proceeds are
received) in connection with the exercise of the over-allotment option in
respect of the IPO toward the prepayment of the Revolving Credit Loans (with no
reduction of the Revolving Credit Commitments).
(c) If on any date Holdings or any of its Subsidiaries shall receive
Net Cash Proceeds from any Asset Sale or Recovery Event then, unless a
Reinvestment Notice shall be delivered in respect thereof, such Net Cash
Proceeds shall be applied on such date toward the prepayment of the Term Loans
and the reduction of the Revolving Credit Commitments as set forth in subsection
2.11(d); provided, that, notwithstanding the foregoing, (i) the aggregate Net
Cash Proceeds of Asset Sales and Recovery Events that may be excluded from the
foregoing requirement pursuant to a Reinvestment Notice shall not exceed
$20,000,000 (or the Dollar Equivalent thereof) in any fiscal year of the
Borrower and (ii) on each Reinvestment Prepayment
41
Date, an amount equal to the Reinvestment Prepayment Amount with respect to the
relevant Reinvestment Event shall be applied toward the prepayment of the Term
Loans and the permanent reduction of the Revolving Credit Commitments as set
forth in subsection 2.11(d).
(d) Amounts to be applied in connection with prepayments and
Commitment reductions made pursuant to clauses (a) and (c) of subsection 2.11
shall be applied as follows:
(i) if the prepayment giving rise to the application of subsection
2.11 occurs prior to the Revolving Credit Termination Date, such amounts
shall be applied first, to prepay any Acquisition Term Loans outstanding at
such time, second, to the permanent reduction of the unused Acquisition
Term Loan Commitments existing at such time and third, to permanently
reduce the Revolving Credit Commitments; and
(ii) if the prepayment giving rise to the application of subsection
2.11 occurs on or after the Revolving Credit Termination Date, such amounts
shall be applied ratably to the prepayment of the Acquisition Term Loans
and the Converted Term Loans outstanding at such time.
Any reduction of the Acquisition Term Loans or Converted Term Loans pursuant to
this subsection 2.11 shall be applied to the installments of any such
Acquisition Term Loans or Converted Term Loans, as the case may be, ratably in
accordance with the then outstanding amounts thereof and may not be reborrowed.
Any reduction of the Revolving Credit Commitments pursuant to this subsection
2.11 shall be accompanied by prepayment of the Revolving Credit Loans and/or
Swing Line Loans to the extent, if any, that the Aggregate Revolving Credit
Outstandings exceed the amount of the Total Revolving Credit Commitments as so
reduced, provided that if the aggregate Dollar Equivalent principal amount of
Revolving Credit Loans and Swing Line Loans then outstanding is less than the
amount of such excess (because L/C Obligations constitute a portion thereof),
the Borrower shall, to the extent of the balance of such excess, replace
outstanding Letters of Credit and/or deposit an amount in cash in a cash
collateral account established with the Administrative Agent for the benefit of
the Lenders on terms and conditions satisfactory to the Administrative Agent.
The application of any prepayment pursuant to subsection 2.11 shall be made,
first, to Base Rate Loans and, second, to Eurocurrency Loans. Each prepayment
of the Loans under subsection 2.11 (except in the case of Revolving Credit Loans
that are Base Rate Loans and Swing Line Loans) shall be accompanied by accrued
interest to the date of such prepayment on the amount prepaid.
(e) If, at any time for any reason, the Aggregate Revolving Credit
Outstandings exceed an amount equal to the lesser of (i) the Borrowing Base on
such date and (ii) the Total Revolving Credit Commitments on such date, the
Borrower shall first prepay the Revolving Credit Loans, Converted Loans and/or
Swing Line Loans then outstanding, second pay any Reimbursement Obligations then
outstanding and, last, cash collateralize any outstanding L/C Obligation in an
amount equal to such excess.
2.12 Conversion and Continuation Options. (a) The Borrower may
elect from time to time to convert Eurocurrency Loans denominated in Dollars to
Base Rate Loans by
42
giving the Administrative Agent at least two Business Days' prior irrevocable
notice of such election, provided that any such conversion of Eurocurrency Loans
may only be made on the last day of an Interest Period with respect thereto. The
Borrower may elect from time to time to convert Base Rate Loans to Eurocurrency
Loans denominated in Dollars by giving the Administrative Agent at least three
Business Days' prior irrevocable notice of such election (which notice shall
specify the length of the initial Interest Period therefor), provided that no
Base Rate Loan under a particular Facility may be converted into a Eurocurrency
Loan when any Event of Default has occurred and is continuing and the
Administrative Agent or the Majority Facility Lenders in respect of such
Facility have determined in its or their sole discretion not to permit such
conversions. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.
(b) Any Eurocurrency Loan denominated in any currency may be
continued as such in such currency upon the expiration of the then current
Interest Period with respect thereto by the Borrower giving irrevocable notice
to the Administrative Agent, in accordance with the applicable provisions of the
term "Interest Period" set forth in subsection 1.1, of the length of the next
Interest Period to be applicable to such Loans, provided that no Eurocurrency
Loan under a particular Facility may be continued as such when any Event of
Default has occurred and is continuing and the Administrative Agent has or the
Majority Facility Lenders in respect of such Facility have determined in its or
their sole discretion not to permit such continuations, and provided, further,
that if the Borrower shall fail to give any required notice as described above
in this paragraph or if such continuation is not permitted pursuant to the
preceding proviso such Loans shall be automatically converted to Base Rate Loans
on the last day of such then expiring Interest Period. Upon receipt of any such
notice the Administrative Agent shall promptly notify each relevant Lender
thereof.
(c) For the avoidance of doubt, it is understood that the Borrower
may not pursuant to this subsection, (i) elect to convert the currency in which
any Foreign Currency Swing Line Loans are denominated or (ii) elect to convert
Foreign Currency Swing Line Loans from Eurocurrency Loans to Base Rate Loans.
2.13 Limitations on Eurocurrency Tranches. Notwithstanding anything
to the contrary in this Agreement, all borrowings, conversions and continuations
of Eurocurrency Loans hereunder and all selections of Interest Periods hereunder
shall be in such amounts and be made pursuant to such elections so that, (a)
after giving effect thereto, the aggregate Dollar Equivalent of the principal
amount of the Eurocurrency Loans in any Eurocurrency Tranche shall be equal to
$5,000,000 or a whole multiple of $1,000,000 in excess thereof and (b) there
shall be no more than 10 Eurocurrency Tranches outstanding at any time.
2.14 Interest Rates and Payment Dates. (a) Each Eurocurrency Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurocurrency Rate determined for such
day plus the Applicable Margin.
43
(b) Each Base Rate Loan shall bear interest at a rate per annum equal
to the Base Rate plus the Applicable Margin.
(c) Each Foreign Currency Swing Line Loan shall bear interest for
each day during each Interest Period with respect thereto at a rate per annum
equal to the Eurocurrency Rate determined for such day plus the Applicable
Margin plus 1/4 of 1%.
(d) Notwithstanding the foregoing, (i) if all or a portion of the
principal amount of any Loan or Reimbursement Obligation shall not be paid when
due (whether at the stated maturity, by acceleration or otherwise), such amount
shall bear interest at a rate per annum which is equal to the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
subsection 2.14 or the provisions of subsection 3.5, as the case may be, in each
case plus 2%, and (ii) if all or a portion of any interest payable on any Loan
or Reimbursement Obligation or any commitment fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum equal to the rate applicable to Base Rate Loans plus 2% or, in the
case of amounts denominated in a currency other than Dollars at the rate per
annum determined by the Administrative Agent to represent its cost of overnight
or short-term funds in the relevant currency (which determination shall be
conclusive absent manifest error) plus the Applicable Margin then in effect with
respect to Eurocurrency Loans plus 2%, in each case, with respect to clauses (i)
and (ii) above, in each case, from the date of such non-payment until such
amount is paid in full (as well after as before judgment).
(e) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this
subsection shall be payable from time to time on demand.
2.15 Computation of Interest, Fees and Dollar Equivalent. (a)
Interest and fees payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to Base Rate
Loans the rate of interest on which is calculated on the basis of the Prime
Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-,
as the case may be) day year for the actual days elapsed. The Administrative
Agent shall as soon as practicable notify the Borrower and the relevant Lenders
of each determination of a Eurocurrency Rate. Any change in the interest rate
on a Loan resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of the effective date
and the amount of each such change in interest rate.
(b) The Administrative Agent will determine the Dollar Equivalent
with respect to:
(i) any Foreign Currency Swing Line Loans, as of the proposed
Borrowing Date thereof;
44
(ii) all outstanding Foreign Currency Swing Line Loans for the
purposes of calculations under subsection 2.23, as of the last Business Day
of each calendar month or as otherwise provided for in subsection 2.23;
(iii) all outstanding Foreign Currency Swing Line Loans, on
any date on which the Revolving Credit Commitments are reduced pursuant to
subsection 2.11; and
(iv) each Foreign Currency Swing Line Commitment, as of the
date such Foreign Currency Swing Line Commitment is originally extended;
and
(c) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to subsection 2.14(a).
2.16 Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurocurrency Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Facility Lenders in respect of the relevant Facility that the
Eurocurrency Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurocurrency Loans under the relevant Facility requested
to be made on the first day of such Interest Period shall be made as Base Rate
Loans, (y) any Loans under the relevant Facility that were to have been
converted on the first day of such Interest Period to Eurocurrency Loans shall
be continued as Base Rate Loans and (z) any outstanding Eurocurrency Loans under
the relevant Facility shall be converted, on the last day of the then-current
Interest Period, to Base Rate Loans. Until such notice has been withdrawn by
the Administrative Agent, no further Eurocurrency Loans under the relevant
Facility shall be made or continued as such, nor shall the Borrower have the
right to convert Loans under the relevant Facility to Eurocurrency Loans.
2.17 Pro Rata Treatment and Payments. (a) Each payment (including
each prepayment) by the Borrower on account of principal of and interest on the
Acquisition Term
45
Loans shall be made pro rata according to the respective outstanding principal
amounts of the Acquisition Term Loans then held by the Acquisition Term Loan
Lenders. Amounts prepaid on account of the Acquisition Term Loans may not be
reborrowed.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Credit Loans or the
Converted Term Loans shall be made pro rata according to the respective
outstanding principal amounts of the Revolving Credit Loans or the Converted
Term Loans, as the case may be, then held by the Revolving Credit Lenders.
(c) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
Chicago time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Funding Office, in Dollars (other than principal
and interest on Foreign Currency Swing Line Loans, which shall be payable in the
applicable Swing Line Foreign Currency), and in immediately available funds.
The Administrative Agent shall distribute such payments to the Lenders promptly
upon receipt in like funds as received. If any payment hereunder (other than
payments on the Eurocurrency Loans) becomes due and payable on a day other than
a Business Day, such payment shall be extended to the next succeeding Business
Day. If any payment on a Eurocurrency Loan becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day unless the result of such extension would be to extend
such payment into another calendar month, in which event such payment shall be
made on the immediately preceding Business Day. In the case of any extension of
any payment of principal pursuant to the preceding two sentences, interest
thereon shall be payable at the then applicable rate during such extension.
(d) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the
Administrative Agent by the required time on the Borrowing Date therefor, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available to
the Administrative Agent. A certificate of the Administrative Agent submitted
to any Lender with respect to any amounts owing under this paragraph shall be
conclusive in the absence of manifest error. If such Lender's share of such
borrowing is not made available to the Administrative Agent by such Lender
within three Business Days of such Borrowing Date, the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate
per annum applicable to Base Rate Loans under the relevant Facility, upon
written notice to the Borrower.
46
(e) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment being made hereunder
that the Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective pro rata shares
of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days of such required date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal the daily average
Federal Funds Effective Rate. Nothing herein shall be deemed to limit the
rights of the Administrative Agent or any Lender against the Borrower.
2.18 Requirements of Law. (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any Application or
any Eurocurrency Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for Non-Excluded Taxes
covered by subsection 2.19 and changes in the rate of tax on the overall
net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, any
office of such Lender that is not otherwise included in the determination
of the Eurocurrency Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining Eurocurrency Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes
entitled to claim any additional amounts pursuant to this paragraph, it shall
promptly notify the Borrower in writing (with a copy to the Administrative
Agent) of the event by reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any
47
Governmental Authority made subsequent to the date hereof shall have the effect
of reducing the rate of return on such Lender's or such corporation's capital as
a consequence of its obligations hereunder or under or in respect of any Letter
of Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative
Agent) of a written request therefor, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction;
provided that the Borrower shall not be required to compensate a Lender pursuant
to this paragraph for any amounts incurred more than six months prior to the
date that such Lender notifies the Borrower of such Lender's intention to claim
compensation therefor; and provided further that, if the circumstances giving
rise to such claim have a retroactive effect, then such six-month period shall
be extended to include the period of such retroactive effect.
(c) A certificate as to any additional amounts payable pursuant to
this subsection submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrower pursuant to this subsection shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.19 Taxes. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Administrative Agent or any Lender as a result
of a present or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") or Other Taxes are required to be withheld
from any amounts payable to the Administrative Agent or any Lender hereunder,
the amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement, provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are attributable to such Lender's failure to comply with the
requirements of paragraph (d) or (e) of this subsection or (ii) that are United
States withholding taxes imposed on amounts payable to such Lender at the time
the Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was
48
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of the relevant
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure.
(d) Each Lender (or Transferee) that is not a "U.S. Person" as
defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver
to the Borrower and the Administrative Agent (or, in the case of a Participant,
to the Lender from which the related participation shall have been purchased)
two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a statement substantially in the form of
Exhibit F and a Form W-8BEN, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not
legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Borrower
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
legally entitled to complete,
49
execute and deliver such documentation and in such Lender's judgment such
completion, execution or submission would not materially prejudice the legal
position of such Lender.
(f) The agreements in this subsection shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder.
2.20 Indemnity. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense that such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurocurrency Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment of or conversion
from Eurocurrency Loans after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurocurrency Loans on a day that is not the last day of an
Interest Period with respect thereto. Such indemnification may include an
amount equal to the excess, if any, of (i) the amount of interest that would
have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure to
borrow, convert or continue to the last day of such Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate
of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) that would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurocurrency market. A certificate as to any
amounts payable pursuant to this subsection submitted to the Borrower by any
Lender shall be conclusive in the absence of manifest error. This covenant
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
2.21 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of subsections 2.18 or
2.19(a) with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this subsection shall
affect or postpone any of the obligations of any Borrower or the rights of any
Lender pursuant to subsection 2.18 or 2.19(a).
2.22 Replacement of Lenders. The Borrower shall be permitted to
replace any Lender that (a) requests reimbursement for amounts owing pursuant to
subsection 2.18 or 2.19(a) or (b) defaults in its obligation to make Loans
hereunder, with a replacement financial institution; provided that (i) such
replacement does not conflict with any Requirement of Law, (ii) no Event of
Default shall have occurred and be continuing at the time of such replacement,
(iii) prior to any such replacement, such Lender shall have taken no action
under subsection 2.21 so as to
50
eliminate the continued need for payment of amounts owing pursuant to subsection
2.18 or 2.19(a), (iv) the replacement financial institution shall purchase, at
par, all Loans and other amounts owing to such replaced Lender on or prior to
the date of replacement, (v) the Borrower shall be liable to such replaced
Lender under subsection 2.20 if any Eurocurrency Loan owing to such replaced
Lender shall be purchased other than on the last day of the Interest Period
relating thereto, (vi) the replacement financial institution, if not already a
Lender, shall be reasonably satisfactory to the Administrative Agent, (vii) the
replaced Lender shall be obligated to make such replacement in accordance with
the provisions of subsection 10.6 (provided that the Borrower shall be obligated
to pay the registration and processing fee referred to therein), (viii) until
such time as such replacement shall be consummated, the Borrower shall pay all
additional amounts (if any) required pursuant to subsection 2.18 or 2.19(a), as
the case may be, and (ix) any such replacement shall not be deemed to be a
waiver of any rights that the Borrower, the Administrative Agent or any other
Lender shall have against the replaced Lender.
2.23 Calculation of Foreign Currency Swing Line Outstandings;
Prepayments. (a) The Borrower will implement and maintain internal accounting
controls to monitor the borrowings and repayments of Foreign Currency Swing Line
Loans with the object of preventing any request for an extension of credit that
would result in the Borrower failing to comply with this Agreement and of
promptly identifying and remedying, in accordance with clause (c) below, any
circumstance where, by reason of changes in exchange rates, the Borrower fails
to be in compliance with this Agreement.
(b) The Administrative Agent will calculate the aggregate amount of
the Foreign Currency Swing Line Outstandings (i) not more frequently than
monthly as of the last Business Day of each calendar month and (ii) at any time
at the discretion of the Administrative Agent (A) if a Default or Event of
Default shall have occurred and be continuing or (B) if the Foreign Currency
Swing Line Outstandings exceed 90% of the Foreign Currency Swing Line
Subfacility Amount. In making such calculations, the Administrative Agent will
be entitled to rely on the information most recently received by it from the
Foreign Currency Swing Line Lenders. Upon making each such calculation, the
Administrative Agent will inform the Borrower and each of the Foreign Currency
Swing Line Lenders of the result thereof.
(c) In the event that the Borrower (in accordance with paragraph (a)
above) or the Administrative Agent (in accordance with paragraph (b) above)
determines that the Foreign Currency Swing Line Outstandings exceeds the Foreign
Currency Swing Line Subfacility Amount by more than 5%, the Borrower will, as
soon as practicable but in any event within ten Business Days of making such
determination, make or cause to be made such repayments or prepayments of
Foreign Currency Swing Line Loans as shall be necessary to reduce the Foreign
Currency Swing Line Outstandings to be equal or less than the Foreign Currency
Swing Line Subfacility Amount.
(d) Any prepayment required to be made pursuant to this subsection
shall be accompanied by payment of amounts payable, if any, pursuant to
subsection 2.20 in respect of the amount so prepaid.
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SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions
hereof, each Issuing Lender, in reliance on the agreements of the other
Revolving Credit Lenders set forth in subsection 3.4(a), agrees to issue letters
of credit ("Letters of Credit") denominated in Dollars for the account of
Holdings or any of its Subsidiaries on any Business Day during the Revolving
Credit Commitment Period in such form as may be approved from time to time by
such Issuing Lender; provided that no Issuing Lender shall have any obligation
to issue any Letter of Credit if, after giving effect to such issuance, (i) the
L/C Obligations would exceed the L/C Commitment, (ii) the Available Revolving
Credit Commitment of any Revolving Credit Lender would be less than zero, (iii)
the Aggregate Revolving Credit Outstandings would exceed the aggregate amount of
the Revolving Credit Commitments of all the Revolving Credit Lenders or (iv) the
Aggregate Revolving Credit Outstandings would exceed the Borrowing Base then in
effect. All letters of credit issued pursuant to the Existing Credit Facility
shall, at all times on or after the Closing Date, be deemed to be "Letters of
Credit" for all purposes of this Agreement and the other Loan Documents.
(b) Each Letter of Credit shall (i) be either (x) a standby letter of
credit issued to support obligations of Holdings or any of its Subsidiaries,
contingent or otherwise, to finance the working capital and business needs of
Holdings or any of its Subsidiaries in the ordinary course of business or (y) a
commercial letter of credit issued in respect of the purchase of goods or
services by Holdings or any of its Subsidiaries in the ordinary course of
business, (ii) have a face amount of at least $250,000 (unless otherwise agreed
by the applicable Issuing Lender) and (iii) expire no later than the earlier of
(x) the date that is 12 months after the date of its issuance and (y) the fifth
Business Day prior to the Revolving Credit Termination Date; provided that any
Letter of Credit with a one-year term may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date
referred to in (y) above).
(c) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the applicable Issuing Lender or any L/C Participant to exceed any limits
imposed by, any applicable Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrower may
from time to time request that an Issuing Lender issue a Letter of Credit by
delivering to such Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of such Issuing Lender, and
such other certificates, documents and other papers and information as such
Issuing Lender may request. Upon receipt of any Application, such Issuing
Lender will process such Application and the certificates, documents and other
papers and information delivered to it in connection therewith in accordance
with its customary procedures and shall promptly issue the Letter of Credit
requested thereby (but in no event shall such Issuing Lender be required to
issue any Letter of Credit earlier than three Business Days after its receipt of
the Application therefor and all such other certificates, documents and other
papers and information
52
relating thereto) by issuing the original of such Letter of Credit to the
beneficiary thereof or as otherwise may be agreed to by such Issuing Lender and
the Borrower. Such Issuing Lender shall furnish a copy of such Letter of Credit
to the Borrower promptly following the issuance thereof. The applicable Issuing
Lender shall promptly furnish to the Administrative Agent, which shall in turn
promptly furnish to the Lenders, notice of the issuance of each Letter of Credit
(including the amount thereof).
3.3 Fees and Other Charges. (a) The Borrower shall pay to the
Administrative Agent, for the account of the applicable Issuing Lender and the
L/C Participants, a letter of credit fee with respect to each Letter of Credit
payable in Dollars, computed for the period from and including the date of
issuance of such Letter of Credit to the expiration date of such Letter of
Credit at a rate per annum equal to the Applicable Margin in effect during such
period for Eurocurrency Loans that are Revolving Credit Loans (on the basis of
the actual number of days elapsed over a 360-day year) on the aggregate face
amount of Letters of Credit outstanding during such period, payable in arrears
on each L/C Fee Payment Date and on the Revolving Credit Termination Date. Such
fee shall be payable to the Administrative Agent to be shared ratably among the
Revolving Credit Lenders in accordance with their respective Revolving Credit
Percentages. In addition, the Borrower shall pay to the applicable Issuing
Lender, for its own account, a fee equal to 0.25% per annum on the aggregate
face amount of outstanding Letters of Credit, payable in Dollars quarterly in
arrears on each L/C Fee Payment Date and on the Revolving Credit Termination
Date and calculated on the basis of the actual number of days elapsed over a
360-day year.
(b) In addition to the foregoing fees, the Borrower shall pay or
reimburse each Issuing Lender for such normal and customary costs and expenses
as are incurred or charged by such Issuing Lender in issuing, negotiating,
effecting payment under, amending or otherwise administering any Letter of
Credit.
3.4 L/C Participations. (a) Each Issuing Lender irrevocably agrees
to grant and hereby grants to each L/C Participant, and, to induce such Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from such Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Credit Percentage from time to time in effect in such
Issuing Lender's obligations and rights under each Letter of Credit issued
hereunder and the amount of each draft paid by such Issuing Lender thereunder.
Each L/C Participant unconditionally and irrevocably agrees with such Issuing
Lender that, if a draft is paid under any Letter of Credit for which such
Issuing Lender is not reimbursed in full by the Borrower in accordance with the
terms of this Agreement, such L/C Participant shall pay in the currency in which
such Letter of Credit is denominated to such Issuing Lender upon demand at such
Issuing Lender's address for notices specified herein an amount equal to such
L/C Participant's then Revolving Credit Percentage of the amount of such draft,
or any part thereof, which is not so reimbursed; provided that if such demand is
made prior to 12:00 Noon, Chicago time, on a Business Day such L/C Participant
53
shall make such payment to such Issuing Lender prior to the end of such Business
Day and otherwise such L/C Participant shall make such payment on the next
succeeding Business Day.
(b) If any amount required to be paid by any L/C Participant to any
Issuing Lender pursuant to subsection 3.4(a) in respect of any unreimbursed
portion of any payment made by such Issuing Lender under any Letter of Credit is
paid to such Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to such Issuing Lender on demand
an amount equal to the product of (i) such amount, times the daily average
Federal Funds Effective Rate, as quoted by such Issuing Lender, during the
period from and including the date such payment is required to the date on which
such payment is immediately available to such Issuing Lender, times (ii) a
fraction the numerator of which is the number of days that elapse during such
period and the denominator of which is 360. If any such amount required to be
paid by any L/C Participant pursuant to subsection 3.4(a) is not in fact made
available to such Issuing Lender by such L/C Participant within three Business
Days after the date such payment is due, such Issuing Lender shall be entitled
to recover from such L/C Participant, on demand, such amount with interest
thereon calculated from such due date at the rate per annum applicable to Base
Rate Loans hereunder. A certificate of such Issuing Lender submitted to any L/C
Participant with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error.
(c) Whenever, at any time after an Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with subsection 3.4(a), such Issuing
Lender receives any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, including proceeds of collateral applied thereto
by such Issuing Lender), or any payment of interest on account thereof, such
Issuing Lender will, if such payment is received prior to 12:00 Noon, Chicago
time, on a Business Day, distribute to such L/C Participant its pro rata share
thereof prior to the end of such Business Day and otherwise such Issuing Lender
will distribute such payment on the next succeeding Business Day; provided that
in the event that any such payment received by such Issuing Lender shall be
required to be returned by such Issuing Lender, such L/C Participant shall
return to such Issuing Lender the portion thereof previously distributed by such
Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. (a) The Borrower
agrees to reimburse each Issuing Lender on the same Business Day on which a
draft is presented under any Letter of Credit and paid by such Issuing Lender;
provided that such Issuing Lender provides notice to the Borrower prior to 12:00
Noon, Chicago time, on such Business Day and otherwise the Borrower will
reimburse such Issuing Lender on the next succeeding Business Day; provided,
further, that the failure to provide such notice shall not affect the Borrower's
absolute and unconditional obligation to reimburse such Issuing Lender for any
draft paid under any Letter of Credit. Each Issuing Lender shall provide notice
to the Borrower on such Business Day as a draft is presented and paid by such
Issuing Lender indicating the amount of (i) such draft so paid and (ii) any
taxes, fees, charges or other costs or expenses incurred by such Issuing Lender
in connection with such payment. Each such payment shall be made to such
Issuing Lender at its
54
address for notices specified herein in the currency in which the applicable
Letter of Credit is denominated and in immediately available funds.
(b) Interest shall be payable on any and all amounts remaining unpaid
by the Borrower under subsection 3.5(a) from the date such amounts are drawn
until payment in full at the rate which would be payable on any outstanding
Revolving Credit Loans that are Base Rate Loans which were then overdue (unless
such drawing occurs after 11:00 A.M. Chicago time on the date of drawing and the
Borrower would be able to satisfy the conditions to borrowing Revolving Credit
Loans on such date in an amount at least equal to the amount of such drawing, in
which case, interest shall be payable for the first day after such drawing at
the respective rates for the applicable type of Loans that are not overdue).
(c) Each drawing under any Letter of Credit that is not reimbursed on
the due date relating to such drawing shall constitute a request by the Borrower
to the Administrative Agent for a borrowing pursuant to subsection 2.4 of Base
Rate Loans in the amount of such drawing. The Borrowing Date with respect to
such borrowing shall be the date of such drawing. The Reimbursement Obligation
of the Borrower with respect to a particular drawn Letter of Credit shall be
satisfied upon the making of the Revolving Credit Loans pursuant to this
subsection 3.5(c) and payment with the proceeds thereof to the Issuing Lender of
all amounts owing to it with respect to the applicable, drawn Letter of Credit.
3.6 Obligations Absolute. (a) The Borrower's obligations under
this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrower may have or have had against any Issuing Lender, any
L/C Participant or any beneficiary of a Letter of Credit.
(b) The Borrower also agrees with each Issuing Lender and any L/C
Participant that such Issuing Lender and any L/C Participant shall not be
responsible for, and the Borrower's Reimbursement Obligations under subsection
3.5(a) shall not be affected by, among other things, (i) the validity or
genuineness of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged, or (ii) any
dispute between or among the Borrower and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
(iii) any claims whatsoever of the Borrower against any beneficiary of such
Letter of Credit or any such transferee.
(c) No Issuing Lender nor any L/C Participant shall be liable for any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions caused by such Issuing Lender's gross
negligence or willful misconduct.
(d) The Borrower agrees that any action taken or omitted by any
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards of care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the
55
Borrower and shall not result in any liability of such Issuing Lender or any L/C
Participant to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the applicable Issuing Lender shall promptly
notify the Borrower of the date and amount thereof. The responsibility of an
Issuing Lender to the Borrower in connection with any draft presented for
payment under any Letter of Credit shall, in addition to any payment obligation
expressly provided for in such Letter of Credit, be limited to determining that
the documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement and
to make the Loans and issue or participate in the Letters of Credit, Holdings
and the Borrower hereby jointly and severally represent and warrant to the
Administrative Agent and each Lender that:
4.1 Financial Condition. (a) The unaudited pro forma consolidated
balance sheet of Holdings and its consolidated Subsidiaries as of October 31,
1999 (including the notes thereto) (the "Pro Forma Balance Sheet"), copies of
which have heretofore been furnished to each Lender, has been prepared giving
effect (as if such events had occurred on such date) to (i) the consummation of
the Transactions, (ii) the Loans to be made hereunder on the Closing Date and
the use of proceeds thereof and (iii) the payment of fees and expenses in
connection with the foregoing. The Pro Forma Balance Sheet has been prepared
based on the best information available to Holdings and the Borrower as of the
date of delivery thereof, and presents fairly on a pro forma basis the estimated
financial position of Holdings and its consolidated Subsidiaries as at October
31, 1999, assuming that the events specified in the preceding sentence had
actually occurred at such date.
(b) The audited consolidated balance sheets of the IFCO Companies and
its consolidated Subsidiaries as at December 31, 1997, and December 31, 1998,
and the related consolidated statements of income and of cash flows for the
fiscal years ended on such dates, reported on by and accompanied by an
unqualified report from PwC Deutsche Revision AG, present fairly the
consolidated financial condition of the IFCO Companies as at such dates, and the
consolidated results of its operations and its consolidated cash flows for the
respective fiscal years then ended. The unaudited consolidated balance sheet of
the IFCO Companies as at October 31, 1999, and the related unaudited
consolidated statements of income and cash flows for the 10-month period ended
on such date, present fairly the consolidated financial condition of the IFCO
Companies as at such date, and the consolidated results of its operations and
its consolidated cash flows for the 10-month period then ended (subject to
normal year-end audit adjustments). All such financial statements, including
the related schedules and notes thereto, have been prepared in accordance with
GAAP applied consistently throughout the periods involved (except as approved by
the aforementioned firm of accountants and disclosed therein). The IFCO
Companies do not have any material Guarantee Obligations, contingent liabilities
and
56
liabilities for taxes, or any long-term leases or unusual forward or long-term
commitments, including any interest rate or foreign currency swap or exchange
transaction or other obligation in respect of derivatives, that are not
reflected in the most recent financial statements referred to in this paragraph.
During the period from December 31, 1998 to and including the date hereof there
has been no Disposition by the IFCO Companies of any material part of their
business or property.
(c) The audited consolidated balance sheets of Old PalEx and its
consolidated Subsidiaries as at December 28, 1997, December 27, 1998, and
September 26, 1999 and the related consolidated statements of income and of cash
flows for the fiscal years ended on such dates, reported on by and accompanied
by an unqualified report from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, present fairly the
consolidated financial condition of Old PalEx and its consolidated Subsidiaries
as at such dates, and the consolidated results of their operations and its
consolidated cash flows for the respective fiscal years then ended. The
unaudited consolidated balance sheet of the Old PalEx and its Subsidiaries as at
October 24, 1999, and the related unaudited consolidated statements of income
and cash flows for the 10-month fiscal period ended on such date, present fairly
the consolidated financial condition of Old PalEx and its Subsidiaries as at
such date, and the consolidated results of its operations and their consolidated
cash flows for the 10-month fiscal period then ended (subject to normal year-end
audit adjustments). All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein). Old PalEx and its
Subsidiaries do not have any material Guarantee Obligations, contingent
liabilities and liabilities for taxes, or any long-term leases or unusual
forward or long-term commitments, including any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph. During the period from September 26, 1999 to and
including the date hereof there has been no Disposition by Old PalEx and its
consolidated Subsidiaries of any material part of its business or property.
4.2 No Change. Since December 31, 1998, as to Holdings and its
Subsidiaries, and since September 26, 1999, as to the Borrower and its
Subsidiaries, there has been no development or event that has had or could
reasonably be expected to have a Material Adverse Effect.
4.3 Corporate Existence; Compliance with Law. Each of Holdings and
its Subsidiaries (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) has the corporate
power and authority, and the legal right, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
and (d) is in compliance with all Requirements of Law except to the extent that
the failure of any of the statements made in clauses (c) and (d) of this
subsection 4.3 to be correct could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
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4.4 Corporate Power; Authorization; Enforceable Obligations. Each
Loan Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of the Borrower, to obtain extensions of credit hereunder. Each Loan Party has
taken all necessary corporate action to authorize the execution, delivery and
performance of the Loan Documents to which it is a party and, in the case of the
Borrower, to authorize the extensions of credit on the terms and conditions of
this Agreement. No consent or authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or any other Person is
required in connection with the Transactions and the extensions of credit
hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the Loan Documents, except (i)
consents, authorizations, filings and notices described in Schedule 4.4, which
consents, authorizations, filings and notices have been obtained or made and are
in full force and effect (ii) consents, authorizations, filings, notices and
other actions required for any Foreign Subsidiary or any direct or indirect
Subsidiary of a Foreign Subsidiary to execute, deliver or perform any of its
obligations under the Loan Documents to which it is or will be a party; provided
that all such consents, authorizations, filings, notices and actions are
obtained, made, given or taken (as the case may be) within 45 days of the
Closing Date (except for (i) those that are not required pursuant to clauses (i)
(iii) and (iv) of this sentence and (ii) those that are required for Schoeller-
U.S., Inc. and IFCO-U.S., L.L.C., which shall be obtained, made, given or taken
(as the case may be) within 5 Business Days of the Closing Date) (iii) consents,
authorizations, filings, notices and other actions by Persons in jurisdictions
other than the United States, Germany, Italy, Spain and the United Kingdom and
(iv) the filings referred to in subsection 4.19. Each Loan Document has been
duly executed and delivered on behalf of each Loan Party party thereto. This
Agreement constitutes, and each other Loan Document upon execution will
constitute, a legal, valid and binding obligation of each Loan Party party
thereto, enforceable against each such Loan Party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5 No Legal Bar. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law applicable to Holdings or any of its Subsidiaries or any
Contractual Obligation of Holdings or any of its Subsidiaries and will not
result in, or require, the creation or imposition of any Lien on any of their
respective properties or revenues pursuant to any Requirement of Law or any such
Contractual Obligation (other than the Liens created by the Security Documents).
4.6 Litigation. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the knowledge
of Holdings or the Borrower, threatened by or against Holdings or any of its
Subsidiaries or against any of their respective properties or revenues (a) with
respect to any of the Loan Documents or any of the
58
transactions contemplated hereby or thereby, or (b) that could reasonably be
expected to have a Material Adverse Effect.
4.7 No Default. Neither Holdings nor any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect that could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
4.8 Ownership of Property; Liens. Holdings and each of its
Subsidiaries has title in fee simple to, or a valid leasehold interest in, all
its real property, and good title to, or a valid leasehold interest in, all its
other property, and none of such property is subject to any Lien except as
permitted by subsection 7.3.
4.9 Intellectual Property. Holdings and each of its Subsidiaries
owns, or is licensed or otherwise has the right to use, all Intellectual
Property necessary for the conduct of its business as currently conducted. No
material claim has been asserted and is pending by any Person challenging or
questioning the use of any Intellectual Property or the validity or
effectiveness of any Intellectual Property, nor does Holdings or the Borrower
know of any valid basis for any such claim. The use of Intellectual Property by
Holdings and its Subsidiaries does not infringe on the rights of any Person in
any material respect.
4.10 Taxes. Holdings and each of its Subsidiaries has filed or
caused to be filed all Federal, state and other material tax returns that are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all
other material taxes, fees or other charges imposed on it or any of its property
by any Governmental Authority (other than any the amount or validity of which
are currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of Holdings or its Subsidiaries, as the case may be); no tax Lien has been
filed, and, to the knowledge of Holdings and the Borrower, no claim is being
asserted, with respect to any such tax, fee or other charge.
4.11 Federal Regulations. No part of the proceeds of any Loans, and
no other extensions of credit hereunder, will be used for "buying" or "carrying"
any "margin stock" within the respective meanings of each of the quoted terms
under Regulation U as now and from time to time hereafter in effect or for any
purpose that violates the provisions of the Regulations of the Board. If
requested by any Lender or the Administrative Agent, the Borrower will furnish
to the Administrative Agent and each Lender a statement to the foregoing effect
in conformity with the requirements of FR Form G-3 or FR Form U-1, as
applicable, referred to in Regulation U.
4.12 Labor Matters. Except as, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect: (a) there are no
strikes or other labor disputes against Holdings or any of its Subsidiaries
pending or, to the knowledge of Holdings or the Borrower, threatened; (b) hours
worked by and payment made to employees of Holdings and its
59
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Requirement of Law dealing with such matters; and (c) all
payments due from Holdings or any of its Subsidiaries on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of Holdings or the relevant Subsidiary.
4.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no
Lien in favor of the PBGC or a Plan has arisen, during such five-year period.
The present value of all accrued benefits under each Single Employer Plan (based
on those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan that
has resulted or could reasonably be expected to result in a material liability
under ERISA, and neither the Borrower nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent.
4.14 Investment Company Act; Other Regulations. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur Indebtedness.
4.15 Subsidiaries. Except as disclosed to the Administrative Agent
by Holdings in writing from time to time after the Closing Date, (a) Schedule
4.15 sets forth the name and jurisdiction of incorporation of each Subsidiary of
Holdings (other than the Borrower) and, as to each such Subsidiary, the
percentage of each class of Capital Stock owned by any Loan Party and (b) there
are no outstanding subscriptions, options, warrants, calls, rights or other
agreements or commitments (other than stock options granted to employees or
directors and directors' qualifying shares) of any nature relating to any
Capital Stock of Holdings or any of its Subsidiaries, except (i) that certain
former shareholders of SMG Corporation hold Capital Stock convertible into
Merger Consideration (as defined in the Merger Agreement) and (ii) as created by
the Loan Documents.
4.16 Use of Proceeds. (a) The proceeds of the Acquisition Term
Loans shall be used to make Permitted Acquisitions and to pay related fees and
expenses.
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(b) The proceeds of the Revolving Credit Loans and the Swing Line
Loans, and the Letters of Credit, shall be used to make capital expenditures and
to finance the working capital needs of the Borrower and its Subsidiaries in the
ordinary course of business and to pay fees and expenses related to the
Transactions.
4.17 Environmental Matters. Except as, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect:
(a) the facilities and properties owned, leased or operated by
Holdings or any of its Subsidiaries (the "Properties") do not contain any
Materials of Environmental Concern in amounts or concentrations or under
circumstances that constitute or could give rise to liability under, any
applicable Environmental Law;
(b) neither Holdings nor any of its Subsidiaries have received or is
aware of any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any of the Properties or
the business operated by Holdings or any of its Subsidiaries (the
"Business"), nor does Holdings or the Borrower have knowledge or reason to
believe that any such notice will be received or is being threatened;
(c) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a
location that could give rise to liability under, any Environmental Law,
nor have any Materials of Environmental Concern been generated, treated,
stored or disposed of at, on or under any of the Properties in violation
of, or in a manner that could give rise to liability under, any applicable
Environmental Law;
(d) no judicial proceeding or governmental or administrative action
is pending or, to the knowledge of Holdings and the Borrower, threatened,
under any Environmental Law to which Holdings or any of its Subsidiaries is
or will be named as a party with respect to the Properties or the Business,
nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to the
Properties or the Business;
(e) there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related
to the operations of Holdings or any of its Subsidiaries in connection with
the Properties or otherwise in connection with the Business, in violation
of or in amounts and in a manner that could give rise to liability under
applicable Environmental Laws;
(f) the Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, with all
applicable Environmental Laws, and
61
there is no contamination at, under or about the Properties or violation of
any Environmental Law with respect to the Properties or the Business; and
(g) neither Holdings nor any of its Subsidiaries have assumed any
liability of any other Person under Environmental Laws.
4.18 Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other document, certificate or statement furnished
by or on behalf of any Loan Party to the Administrative Agent or the Lenders, or
any of them, for use in connection with the transactions contemplated by this
Agreement or the other Loan Documents, contained as of the date such statement,
information, document or certificate was so furnished (or, in the case of the
Confidential Information Memorandum, as of the date of this Agreement), any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements contained herein or therein not misleading.
The projections and pro forma financial information contained in the materials
referenced above are based upon good faith estimates and assumptions believed by
management of Holdings and the Borrower to be reasonable at the time made, it
being recognized by the Lenders that such financial information as it relates to
future events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount. There is no fact
known to any Loan Party that could reasonably be expected to have a Material
Adverse Effect that has not been expressly disclosed herein, in the other Loan
Documents, in the Confidential Information Memorandum or in any other documents,
certificates and statements furnished to the Administrative Agent and the
Lenders for use in connection with the transactions contemplated hereby and by
the other Loan Documents.
4.19 Security Documents. (a) The Guarantee and Collateral Agreement
is effective to create in favor of the Administrative Agent, for the benefit of
the Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the Pledged Stock
described in the Guarantee and Collateral Agreement, when stock certificates
representing such Pledged Stock are delivered to the Administrative Agent, and
in the case of the other Collateral described in the Guarantee and Collateral
Agreement in which a security interest may be perfected by the filing of a
financing statement under the Uniform Commercial Code as in effect in any
jurisdiction in the United States, when financing statements and other filings
specified on Schedule 4.19(a) in appropriate form are filed in the offices
specified on Schedule 4.19(a), the Guarantee and Collateral Agreement shall to
the extent provided in such agreement constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in such
Collateral and the proceeds thereof, as security for the Obligations (as defined
in the Guarantee and Collateral Agreement), in each case prior and superior in
right to any other Person (except, in the case of Collateral other than Pledged
Stock, Liens permitted by subsection 7.3).
(b) Upon the execution and delivery thereof, each Foreign Collateral
Agreement will be effective to create in favor of the Administrative Agent, for
the benefit of the Lenders, a
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legal, valid and enforceable security interest in the Collateral described
therein and proceeds thereof. When all filings and public recordations described
in each Foreign Collateral Agreement are made in the appropriate jurisdictions
as described in such Foreign Collateral Agreements, each Foreign Collateral
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in such Collateral and the
proceeds thereof, as security for the obligations described therein, in each
case prior and superior in right to any other Person.
(c) Each of the Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on Schedule
4.19(c), each such Mortgage shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in the
Mortgaged Properties and the proceeds thereof, as security for the Obligations
(as defined in the relevant Mortgage), in each case prior and superior in right
to any other Person (other than Liens permitted under subsection 7.3). Schedule
1.1B lists each interest in real property in the United States owned in fee
simple or leased (as lessee) by the Borrower or any of its Subsidiaries as of
the Closing Date which ownership or leasehold interest, as of such date, has a
value, in the reasonable opinion of the Borrower, in excess of $1,000,000.
4.20 Solvency. Each Loan Party is, and after giving effect to the
Transactions and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be and will continue to be,
Solvent.
4.21 Senior Indebtedness. The Obligations, including each extension
of credit made hereunder, constitute, and will constitute, "Senior Debt" (or the
comparable concept) of the Borrower under and as defined in the Senior
Subordinated Note Indenture. The obligations of each Subsidiary Guarantor under
the Guarantee and Collateral Agreement constitute "Senior Debt" (or the
comparable concept) of such Subsidiary Guarantor under and as defined in the
Senior Subordinated Note Indenture.
4.22 Regulation H. No Mortgage encumbers improved real property
(other than real property with respect to which the Borrower has agreed to
provide flood insurance to the Administrative Agent pursuant to this Agreement)
that is located in an area that has been identified by the Secretary of Housing
and Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of
1968.
4.23 Certain Documents. The Borrower has delivered to the Arrangers
complete and correct copy of the Senior Subordinated Note Indenture, the Proxy,
the Merger Documentation and the Registration Statement, including any
amendments, supplements or modifications with respect to any of the foregoing.
63
4.24 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of Holdings or any of its Subsidiaries could reasonably
be expected to have a Material Adverse Effect.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Closing Date (but in any event no later than March
31, 2000), of the following conditions precedent:
(a) Amended and Restated Credit Agreement. The Administrative Agent
shall have received copies of this Agreement, executed and delivered by the
Borrower and each Guarantor, with a counterpart for each Lender, and
executed and delivered by each Lender.
(b) Proceedings of the Borrower. The Administrative Agent shall have
received, with a counterpart for each Lender, a copy of the resolutions, in
form and substance satisfactory to the Administrative Agent, of the
Borrower, in the form of resolutions of the Board of Directors of the
Borrower authorizing (i) the execution, delivery and performance of this
Agreement and (ii) the borrowings contemplated hereunder, certified by the
Secretary or an Assistant Secretary of the Borrower as of the Effective
Date, which certificate shall be in form and substance satisfactory to the
Agent and shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded.
(c) Fees. The Administrative Agent shall have received the fees to
be received on the Effective Date as separately agreed upon with the
Borrower.
(d) Legal Opinion. The Administrative Agent shall have received,
with a counterpart for each Lender, the executed legal opinions of counsel
to the Borrower and Holdings, covering such matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(e) Assignment and Acceptance. An Assignment and Acceptance in
substantially the form attached hereto as Exhibit I shall have been
executed and delivered by all parties thereto, and the Assignors (as
defined therein) shall have received all amounts payable to them by the
Assignees (as defined therein) in consideration for the assignments made
thereunder.
(f) Guarantor Consent. A consent in substantially the form attached
hereto as Exhibit J shall have been executed and delivered by each
Subsidiary Guarantor which then shall have executed and delivered the
Guarantee and Collateral Agreement or a Foreign Guarantee, as the case may
be.
5.2 Conditions to Each Extension of Credit. The agreement of each
Lender to
64
make any extension of credit requested to be made by it on any date (including
its initial extension of credit) is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct on and as of such date as if made on and as of
such date (except to the extent a particular representation and warranty
specifically relates to an earlier date, in which case, such representation
and warranty shall have been true and correct as of such earlier date).
(b) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
(c) Borrowing Base. After giving effect to such extension of credit
the Borrowing Base shall be equal to or greater than the Aggregate
Revolving Credit Outstandings.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
subsection 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or any Agent
hereunder, each of Holdings and the Borrower shall and shall cause each of its
Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent and
each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of Holdings a copy of the audited consolidated and
unaudited consolidating balance sheets of Holdings and its consolidated
Subsidiaries as at the end of such year and the related audited
consolidated and unaudited consolidating statements of income and of cash
flows for such year, setting forth in each case in comparative form the
figures for the previous year, reported on, in the case of such
consolidated financial statements, without a "going concern" or like
qualification or exception, or qualification arising out of the scope of
the audit, by PwC Deutsche Revision AG or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other
independent certified public accountants of nationally recognized standing;
and
(b) as soon as available, but in any event not later than 60 days
after the end of each fiscal quarter ending in March, June and September of
2000 and not later than 45 days after the end of each of the first three
quarterly periods of each subsequent fiscal year of Holdings the unaudited
consolidated and consolidating balance sheets of Holdings
65
and its consolidated Subsidiaries as at the end of such quarter and the
related unaudited consolidated and consolidating statements of income and
of cash flows for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments).
All such financial statements shall be complete and correct in all material
respects, shall be in English and denominated in U.S. dollars and shall be
prepared in reasonable detail and in accordance with GAAP applied consistently
throughout the periods reflected therein and with prior periods (except as
approved by such accountants or officer, as the case may be, and disclosed
therein).
6.2 Certificates; Other Information. Furnish to the Administrative
Agent and each Lender (or, in the case of clause (g), to the relevant Lender):
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements stating
that in making the examination necessary therefor no knowledge was obtained
of any Default or Event of Default under Section 7.1 hereof, except as
specified in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to subsection 6.1, (i) a certificate of a Responsible Officer of
Holdings stating that, to the best of each such Responsible Officer's
knowledge, each Loan Party during such period has observed or performed all
of its covenants and other agreements, and satisfied every condition,
contained in this Agreement and the other Loan Documents to which it is a
party to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate and (ii) (x) a Compliance
Certificate containing all information and calculations necessary for
determining compliance by Holdings and its Subsidiaries with the provisions
of this Agreement referred to therein as of the last day of the fiscal
quarter or fiscal year of Holdings, as the case may be, and (y) to the
extent not previously disclosed to the Administrative Agent, a listing of
any additional state within the United States where any Loan Party keeps
inventory or equipment and any additional county in states in which county
filings are required in order to perfect security interests in inventory
and equipment and of any Intellectual Property acquired by any Loan Party
since the date of the most recent list delivered pursuant to this clause
(y) (or, in the case of the first such list so delivered, since the Closing
Date);
(c) as soon as available, and in any event no later than 60 days
after the end of each fiscal year of Holdings, a detailed consolidated
budget for the following fiscal year (including a projected consolidated
balance sheet of Holdings and its Subsidiaries as of the end of the
following fiscal year, the related consolidated statements of projected
cash
66
flow, projected changes in financial position and projected income and a
description of the underlying assumptions applicable thereto), and, as soon
as available, significant revisions, if any, of such budget and projections
with respect to such fiscal year (collectively, the "Projections"), which
Projections shall in each case be accompanied by a certificate of a
Responsible Officer of Holdings stating that such Projections are based on
reasonable estimates, information and assumptions and that such Responsible
Officer has no reason to believe that such Projections are incorrect or
misleading in any material respect;
(d) no later than 10 Business Days prior to the effectiveness
thereof, copies of substantially final drafts of any proposed amendment,
supplement, waiver or other modification with respect to the Senior
Subordinated Note Indenture or the Merger Documentation;
(e) within five days after the same are sent, copies of all financial
statements and reports that Holdings sends to the holders of any class of
its debt securities or public equity securities and, within five days after
the same are filed, copies of all financial statements and reports that
Holdings or the Borrower may make to, or file with, the SEC;
(f) no later than the 60th day after the end of each (i) fiscal
quarter ending June 2000 and September 2000 and (ii) calendar month
(commencing with the calendar month ending October 2000) (and, with respect
to Eligible Receivables only, within 10 days of any date on which the
Administrative Agent reasonably makes a request therefor), a Borrowing Base
Certificate, certified by a Responsible Officer of Holdings and the
Borrower as being true and accurate in all material respects, setting forth
Holding's calculation of the Borrowing Base as of the date specified in
such certificate (which, with respect to the Borrowing Base Certificate
delivered on the 60th day after the end of each calendar month or fiscal
quarter (as the case may be) shall be the date of the last day of the
fiscal quarter or calendar month, as the case may be, with respect to which
such Borrowing Base Certificate is delivered); and
(g) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of Holdings or any of its Subsidiaries, as the case may be.
6.4 Maintenance of Existence; Compliance. (a)(i) Preserve, renew
and keep in full force and effect its corporate existence and (ii) take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business, except, in each case, as
otherwise permitted by subsection 7.4 and except, in the case of clause
67
(ii) above, to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect; and (b) comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.5 Maintenance of Property; Insurance. (a) Keep all property
useful and necessary in its business in good working order and condition,
ordinary wear and tear excepted and (b) maintain with financially sound and
reputable insurance companies insurance on all its property in at least such
amounts and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually insured
against in the same general area by companies engaged in the same or a similar
business.
6.6 Inspection of Property; Books and Records; Discussions. (a)
Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and (b)
permit representatives of the Administrative Agent or any Lender to visit and
inspect any of its properties and examine and make abstracts from any of its
books and records at any reasonable time and as often as may reasonably be
desired (but, in the absence of a Default or Event of Default, not more than
once per fiscal quarter) and to discuss the business, operations, properties and
financial and other condition of Holdings and its Subsidiaries with officers and
employees of Holdings and its Subsidiaries and, in the presence of
representatives of Holdings or the Borrower, with its independent certified
public accountants.
6.7 Notices. Promptly give notice to the Administrative Agent and
each Lender of:
(a) the occurrence of any (i) Default or (ii) Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of Holdings or any of its Subsidiaries or (ii) litigation,
investigation or proceeding that may exist at any time between Holdings or
any of its Subsidiaries and any Governmental Authority, that in either
case, if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting Holdings or any of its
Subsidiaries (i) in which the amount involved is $5,000,000 or more and not
covered by insurance, (ii) in which injunctive or similar relief is sought
or (iii) which relates to any Loan Document;
(d) the following events, as soon as possible and in any event within
30 days after the Borrower or Holdings knows or has reason to know thereof:
(i) the occurrence of any Reportable Event with respect to any Plan, a
failure to make any required contribution to a Plan, the creation of any
Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or
(ii) the institution of proceedings or the taking of any other action by
the PBGC or the Borrower
68
or any Commonly Controlled Entity or any Multiemployer Plan with respect to
the withdrawal from, or the termination, Reorganization or Insolvency of,
any Plan; and
(e) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this subsection 6.7 shall be accompanied by a statement
of a Responsible Officer of Holdings setting forth details of the occurrence
referred to therein and stating what action Holdings or the relevant Subsidiary
proposes to take with respect thereto.
6.8 Environmental Laws. (a) Comply in all material respects with,
and ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities with jurisdiction
regarding applicable Environmental Laws.
6.9 Additional Collateral, etc. (a) With respect to any property
acquired after the Closing Date by Holdings or any of its Subsidiaries (other
than (w) any property described in paragraph (b), (c) or (d) below, (x) any
property subject to a Lien expressly permitted by subsection 7.3(g) (y) property
acquired by any Excluded Foreign Subsidiary and (z) any property with respect to
which the Administrative Agent determines, in its sole discretion, that the
value of the perfection of a security interest in such property would not
justify the cost of perfecting a security interest therein) as to which the
Administrative Agent, for the benefit of the Lenders, does not have a perfected
Lien, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement or such other documents as
the Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a security interest in
such property and (ii) take all actions necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first priority
security interest in such property, including the filing of Uniform Commercial
Code financing statements in such jurisdictions as may be required by the
Guarantee and Collateral Agreement or by law or as may be requested by the
Administrative Agent.
(b) With respect to any fee interest in any real property having a
value (together with improvements thereof) of at least $1,000,000 acquired after
the Closing Date by Holdings or any of its Subsidiaries (other than (x) any such
real property subject to a Lien expressly permitted by subsection 7.3(g) and (z)
real property acquired by any Excluded Foreign Subsidiary), promptly (i) execute
and deliver a first priority Mortgage, in favor of the Administrative Agent, for
the benefit of the Lenders, covering such real property, (ii) if requested by
the Administrative
69
Agent, provide the Lenders with (x) title and extended coverage insurance
covering such real property in an amount at least equal to the purchase price of
such real property (or such other amount as shall be reasonably specified by the
Administrative Agent) as well as a current ALTA survey thereof, together with a
surveyor's certificate and (y) any consents or estoppels reasonably deemed
necessary or advisable by the Administrative Agent in connection with such
mortgage or deed of trust, each of the foregoing in form and substance
reasonably satisfactory to the Administrative Agent and (iii) if reasonably
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(c) With respect to any new Subsidiary (other than an Excluded
Foreign Subsidiary) created or acquired after the Closing Date by Holdings
(which, for the purposes of this paragraph (c), shall include any existing
Subsidiary that ceases to be an Excluded Foreign Subsidiary), or any of its
Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative Agent
deems necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a perfected first priority security interest in the
Capital Stock of such new Subsidiary that is owned by Holdings or any of its
Subsidiaries, (ii) deliver to the Administrative Agent the certificates
representing such Capital Stock (to the extent such Capital Stock is in
certificated form), together with undated stock powers, in blank, executed and
delivered by a duly authorized officer of Holdings or such Subsidiary, as the
case may be, (iii) cause such new Subsidiary (A) to become a party to the
Guarantee and Collateral Agreement, (B) to take such actions necessary or
advisable to grant to the Administrative Agent for the benefit of the Lenders a
perfected first priority security interest in the Collateral described in the
Guarantee and Collateral Agreement with respect to such new Subsidiary,
including the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Guarantee and Collateral Agreement or by
law or as may be requested by the Administrative Agent and (C) to deliver to the
Administrative Agent a certificate of such Subsidiary, substantially in the form
of Exhibit G, with appropriate insertions and attachments, and (iv) if
reasonably requested by the Administrative Agent, deliver to the Administrative
Agent legal opinions relating to the matters described above, which opinions
shall be in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(d) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by Holdings or any of its Subsidiaries, promptly
(i) execute and deliver to the Administrative Agent such amendments to the
Guarantee and Collateral Agreement as the Administrative Agent deems necessary
or advisable to grant to the Administrative Agent, for the benefit of the
Lenders, a perfected first priority security interest in the Capital Stock of
such new Subsidiary that is owned by Holdings or any of its Subsidiaries
(provided that in no event shall more than 65% of the total outstanding Capital
Stock of any such new Subsidiary be required to be so pledged), (ii) deliver to
the Administrative Agent the certificates representing such Capital Stock,
together with undated stock powers, in blank, executed and delivered by a duly
authorized officer of Holdings or such Subsidiary, as the case may be, and take
such other action as may be
70
necessary or, in the opinion of the Administrative Agent, desirable to perfect
the Administrative Agent's security interest therein, and (iii) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
6.10 Real Estate Matters. (a) Within 60 days of the Closing Date,
if requested by the Administrative Agent, provide to the Administrative Agent,
and the title insurance company issuing the policy referred to in clause (b)
below (the "Title Insurance Company"), maps or plats of the sites of the
Mortgaged Properties certified to the Administrative Agent and the Title
Insurance Company in a manner satisfactory to them, dated a date satisfactory to
the Administrative Agent and the Title Insurance Company by an independent
professional licensed land surveyor satisfactory to the Administrative Agent and
the Title Insurance Company, which maps or plats and the surveys on which they
are based shall be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and adopted by the
American Land Title Association and the American Congress on Surveying and
Mapping in 1992.
(b) Within 60 days of the Closing Date, provide to the Administrative
Agent in respect of each Mortgaged Property a mortgagee's title insurance policy
(or policies) or marked up unconditional binder for such insurance. Each such
policy shall (A) be in an amount satisfactory to the Administrative Agent; (B)
be issued at ordinary rates; (C) insure that the Mortgage insured thereby
creates a valid first Lien on such Mortgaged Property free and clear of all
defects and encumbrances, except as disclosed therein; (D) name the
Administrative Agent for the benefit of the Lenders as the insured thereunder;
(E) be in the form of ALTA Loan Policy - 1970 (Amended 10/17/70 and 10/17/84)
(or equivalent policies); (F) contain such endorsements and affirmative coverage
as the Administrative Agent may reasonably request and (G) be issued by title
companies satisfactory to the Administrative Agent (including any such title
companies acting as co-insurers or reinsurers, at the option of the
Administrative Agent). The Administrative Agent shall have received evidence
satisfactory to it that all premiums in respect of each such policy, all charges
for mortgage recording tax, and all related expenses, if any, have been paid.
(c) Within 60 days of the Closing Date, provide to the Administrative
Agent a copy of all recorded documents referred to, or listed as exceptions to
title in, the title policy or policies referred to in clause (a) above and a
copy of all other material documents affecting the Mortgaged Properties.
6.11 Foreign Collateral. Within 45 days of the Closing Date, (i)
execute all Foreign Collateral Agreements and Foreign Guarantees requested by
the Administrative Agent, (ii) take all actions required by the Foreign
Collateral Agreements to grant to the Administrative Agent, for the benefit of
the Lenders, a perfected, first priority security interest in the Collateral
described in such Foreign Collateral Agreements, including the filing of any
financing statements (or their functional equivalent) and public recordation, in
the jurisdictions and in the manner
71
described in such Foreign Collateral Agreements and (iii) deliver to the
Administrative Agent legal opinions relating to the matters described above with
respect to Collateral located in the United Kingdom, Italy, Spain and Germany,
which opinions shall be in form and substance reasonably acceptable to the
Administrative Agent.
6.12 Certain Collateral Matters. Within 5 Business Days of the
Closing Date, (i) Schoeller-U.S., Inc. and IFCO-U.S., L.L.C. shall have become
parties to the Guarantee and Collateral Agreement and taken all actions required
thereunder and (ii) Schoeller International Logistics Beteiligungsgesellschaft
mbH shall have pledged all of its shares of Schoeller-U.S., Inc. to the
Administrative Agent, for the benefit of the Lenders.
SECTION 7. NEGATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or the
Administrative Agent hereunder, each of Holdings and the Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly:
7.1 Financial Condition Covenants.
(a) Consolidated Total Leverage Ratio. Permit the Consolidated Total
Leverage Ratio as at the last day of any period of four consecutive fiscal
quarters of Holdings (or, if less, the number of full fiscal quarters subsequent
to the Closing Date) ending with any fiscal quarter set forth below to exceed
the ratio set forth below opposite such fiscal quarter:
Fiscal Year Fiscal Quarter Ratio
----------- -------------- -------
2000 Second 3.85 to 1.00
Third 3.85 to 1.00
Fourth 3.85 to 1.00
2001 First 3.65 to 1.00
Second 3.65 to 1.00
Third 3.65 to 1.00
Fourth 3.65 to 1.00
2002 First 3.50 to 1.00
Second 3.50 to 1.00
Third 3.50 to 1.00
Fourth 3.50 to 1.00
2003 First 3.25 to 1.00
Second 3.25 to 1.00
72
Fiscal Year Fiscal Quarter Ratio
----------- -------------- -------
Third 3.25 to 1.00
Fourth 3.25 to 1.00
2004 First 3.00 to 1.00
Second 3.00 to 1.00
Third 3.00 to 1.00
Fourth 3.00 to 1.00
2005 First 3.00 to 1.00
Second 3.00 to 1.00
Third 3.00 to 1.00
Fourth 3.00 to 1.00
2006 First 3.00 to 1.00
provided, that for the purposes of determining the ratio described above for the
fiscal quarters of Holdings ending June 30, 2000, September 30, 2000 and
December 31, 2000, Consolidated EBITDA for the relevant period shall be deemed
to equal Consolidated EBITDA for such fiscal quarter (and, in the case of the
latter two such determinations, each previous fiscal quarter commencing after
the Closing Date) multiplied by 4, 2 and 4/3, respectively.
(b) Consolidated Senior Leverage Ratio. Permit the Consolidated
Senior Leverage Ratio as at the last day of any period of four consecutive
fiscal quarters of Holdings (or, if less, the number of full fiscal quarters
subsequent to the Closing Date) ending with any fiscal quarter set forth below
to exceed the ratio set forth below opposite such fiscal quarter:
Fiscal Year Fiscal Quarter Ratio
----------- -------------- -----
2000 Second 2.35 to 1.00
Third 2.35 to 1.00
Fourth 2.35 to 1.00
2001 First 2.25 to 1.00
Second 2.25 to 1.00
Third 2.25 to 1.00
Fourth 2.25 to 1.00
2002 First 2.25 to 1.00
Second 2.25 to 1.00
Third 2.25 to 1.00
Fourth 2.25 to 1.00
2003 First 2.00 to 1.00
73
Fiscal Year Fiscal Quarter Ratio
----------- -------------- -----
Second 2.00 to 1.00
Third 2.00 to 1.00
Fourth 2.00 to 1.00
2004 First 2.00 to 1.00
Second 2.00 to 1.00
Third 2.00 to 1.00
Fourth 2.00 to 1.00
2005 First 1.75 to 1.00
Second 1.75 to 1.00
Third 1.75 to 1.00
Fourth 1.75 to 1.00
2006 First 1.75 to 1.00
provided, that for the purposes of determining the ratio described above for the
fiscal quarters of Holdings ending June 30, 2000, September 30, 2000 and
December 31, 2000, Consolidated EBITDA for the relevant period shall be deemed
to equal Consolidated EBITDA for such fiscal quarter (and, in the case of the
latter two such determinations, each previous fiscal quarter commencing after
the Closing Date) multiplied by 4, 2 and 4/3, respectively.
(c) Consolidated Interest Coverage Ratio. Permit the Consolidated
Interest Coverage Ratio for any period of four consecutive fiscal quarters of
Holdings (or, if less, the number of full fiscal quarters subsequent to the
Closing Date) ending with any fiscal quarter set forth below to be less than the
ratio set forth below opposite such fiscal quarter:
Fiscal Year Fiscal Quarter Ratio
----------- -------------- -----
2000 Second 2.75 to 1.00
Third 2.75 to 1.00
Fourth 2.75 to 1.00
2001 First 3.00 to 1.00
Second 3.00 to 1.00
Third 3.00 to 1.00
Fourth 3.00 to 1.00
2002 First 3.00 to 1.00
Second 3.00 to 1.00
Third 3.00 to 1.00
Fourth 3.00 to 1.00
74
Fiscal Year Fiscal Quarter Ratio
----------- -------------- -----
2003 First 3.50 to 1.00
Second 3.50 to 1.00
Third 3.50 to 1.00
Fourth 3.50 to 1.00
2004 First 3.50 to 1.00
Second 3.50 to 1.00
Third 3.50 to 1.00
Fourth 3.50 to 1.00
2005 First 3.50 to 1.00
Second 3.50 to 1.00
Third 3.50 to 1.00
Fourth 3.50 to 1.00
2006 First 3.50 to 1.00
(d) Consolidated Investment CapEx Ratio. Permit the Consolidated
Investment CapEx Ratio for any period of four consecutive fiscal quarters of
Holdings ending with any fiscal quarter set forth below to exceed the ratio set
forth below opposite such fiscal quarter:
Fiscal Year Fiscal Quarter Ratio
----------- -------------- -----
2000 Second 0.11 to 1.00
Third 0.11 to 1.00
Fourth 0.11 to 1.00
2001 First 0.11 to 1.00
Second 0.11 to 1.00
Third 0.11 to 1.00
Fourth 0.11 to 1.00
2002 First 0.11 to 1.00
Second 0.11 to 1.00
Third 0.11 to 1.00
Fourth 0.11 to 1.00
2003 First 0.09 to 1.00
Second 0.09 to 1.00
Third 0.09 to 1.00
Fourth 0.09 to 1.00
75
Fiscal Year Fiscal Quarter Ratio
----------- -------------- -----
2004 First 0.07 to 1.00
Second 0.07 to 1.00
Third 0.07 to 1.00
Fourth 0.07 to 1.00
2005 First 0.07 to 1.00
Second 0.07 to 1.00
Third 0.07 to 1.00
Fourth 0.07 to 1.00
2006 First 0.07 to 1.00
(e) Minimum Consolidated Net Worth. Permit Consolidated Net Worth at
any time to be less than the sum of (i) $200,000,000 (ii) 50% of cumulative
Consolidated Net Income for each fiscal quarter of Holdings (beginning with the
fiscal quarter ending June 30, 2000) for which Consolidated Net Income is
positive, (iii) 100% of the Net Cash Proceeds of any offering by Holdings of
common or preferred equity consummated after the Closing Date and (iv) 100% of
any capital contribution made to Holdings or any of its Subsidiaries after the
Closing Date by any holder of Holding's Capital Stock.
7.2 Indebtedness. Create, issue, incur, assume, become liable in
respect of or suffer to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness of Holdings to any Subsidiary and of any Wholly
Owned Subsidiary Guarantor to Holdings or any other Subsidiary;
(c) Guarantee Obligations incurred in the ordinary course of business
by Holdings or any of its Subsidiaries of obligations of any Wholly Owned
Subsidiary Guarantor;
(d) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(d) and any refinancings, refundings, renewals or extensions
thereof (without increasing, or shortening the maturity of, the principal
amount thereof);
(e) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by subsection 7.3(g) in an
aggregate principal amount not to exceed $35,000,000 at any one time
outstanding;
(f) (i) Indebtedness of Holdings in respect of the Senior
Subordinated Notes in an aggregate principal amount not to exceed
(Euro)200,000,000 and (ii) Guarantee Obligations of
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any Subsidiary Guarantor in respect of such Indebtedness, provided that
such Guarantee Obligations are subordinated to the same extent as the
obligations of Holdings in respect of the Senior Subordinated Notes;
(g) Hedge Agreements in respect of Indebtedness otherwise permitted
hereby that bears interest at a floating rate, so long as such agreements
are not entered into for speculative purposes;
(h) (i) Indebtedness of Holdings or any of its Subsidiaries assumed
in connection with Permitted Acquisitions (so long as such Indebtedness was
not incurred in anticipation of such Acquisitions), (ii) Indebtedness of
newly acquired Subsidiaries of Holdings acquired in connection with
Permitted Acquisitions (so long as such Indebtedness was not incurred in
anticipation of such Acquisitions) and (iii) Indebtedness of Holdings or
any of its Subsidiaries in respect of the Subordinated Seller Notes;
provided that in the case of the Indebtedness permitted by this clause
(iii), such Indebtedness shall not exceed in the aggregate at any one time
$30,000,000 outstanding;
(i) Indebtedness of Holdings or any of its Subsidiaries in respect of
letters of credit issued to secure deposits and similar obligations;
provided that (i) the aggregate principal amount of such Indebtedness not
exceed $5,000,000 at any one time outstanding and (ii) such Indebtedness is
incurred in the ordinary course of business; and
(j) additional Indebtedness of Holdings and its Subsidiaries in an
aggregate principal amount (for Holdings and all its Subsidiaries) not to
exceed $25,000,000 at any one time outstanding, including, without
limitation, Indebtedness incurred in connection with factoring agreements
entered into by Holdings or any of its Subsidiaries.
7.3 Liens. Create, incur, assume or suffer to exist any Lien upon
any of its property, whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or that are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of Holdings or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens and Liens for salvage and general average arising in
the ordinary course of business that are not overdue for a period of more
than 30 days or that are being contested in good faith by appropriate
proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
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(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the
aggregate, are not substantial in amount and that do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of Holdings
or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule 7.3(f),
securing Indebtedness permitted by subsection 7.2(d), provided that no such
Lien is spread to cover any additional property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of Holdings or any of its
Subsidiaries incurred pursuant to subsection 7.2(e) to finance the
acquisition of fixed or capital assets, provided that (i) such Liens shall
be created substantially simultaneously with the acquisition of such fixed
or capital assets, (ii) such Liens do not at any time encumber any property
other than the property financed by such Indebtedness and (iii) the amount
of Indebtedness secured thereby is not increased;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered into by
Holdings or any of its Subsidiaries in the ordinary course of its business
and covering only the assets so leased;
(j) Liens on property of Holdings or any of its Subsidiaries
(including newly acquired Subsidiaries) created solely for the purpose of
securing Indebtedness permitted by subsection 7.2(h)(i) and (ii); provided
that (i) such Lien was not incurred in anticipation of the related
acquisition and (ii) no such Lien incurred shall extend to or cover other
property of Holdings or any Subsidiary other than the property acquired
with the proceeds of such Indebtedness, and the principal amount of
Indebtedness secured by any such Lien shall at no time exceed the original
purchase price of such property;
(k) Liens on cash and Cash Equivalents securing Indebtedness
permitted by subsection 7.2(i) and 7.2(j); provided that the amount of
Indebtedness secured thereby is not increased; and
(l) Liens on property of Foreign Subsidiaries and direct and indirect
Subsidiaries thereof; provided that the same shall be discharged (unless
otherwise permitted to exist hereunder) within (i) 45 days of the Closing
Date or (ii) 5 Business Days of the Closing Date, in the case of Liens on
the shares and property of IFCO-U.S., L.L.C. and Schoeller-U.S., Inc.
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7.4 Fundamental Changes. Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of, all or substantially all of its
property or business, except that:
(a) any Subsidiary of Holdings (other than the Borrower) may be
merged or consolidated with or into Holdings (provided that Holdings shall
be the continuing or surviving corporation) or with or into any Wholly
Owned Subsidiary Guarantor (provided that the Wholly Owned Subsidiary
Guarantor shall be the continuing or surviving corporation); and
(b) any Subsidiary of Holdings may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to Holdings or any Wholly
Owned Subsidiary Guarantor.
7.5 Disposition of Property. Dispose of any of its property, whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person, except:
(a) the Disposition of obsolete, worn out, idle, duplicative or
otherwise excess property in the ordinary course of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by subsection 7.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any Wholly Owned Subsidiary Guarantor;
(e) the Disposition of Accounts of Holdings or any of its
Subsidiaries in connection with factoring transactions permitted under
subsection 7.2(j);
(f) the Disposition of business units or operations with negative
operating income; provided that at the time of such Disposition, the
business units or operations subject to such Disposition shall have had
negative operating income for at least the prior six month period;
(g) the Disposition of assets in connection with sale leaseback
transactions which are permitted by subsection 7.10;
(h) the Disposition of other property having a fair market value not
to exceed $20,000,000 in the aggregate for any fiscal year of Holdings; and
(i) the Disposition of accounts and inventory by Container Resources
Corporation to a joint venture to be entered into with Van Leer Containers,
Inc. pursuant to the terms
79
of the Memorandum of Understanding between such parties dated March 3,
2000, a copy of which has been provided to the Administrative Agent.
7.6 Restricted Payments. Declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any Capital Stock of Holdings or any of its Subsidiaries,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of Holdings or any of its Subsidiaries (collectively, "Restricted
Payments"), except that:
(a) any Subsidiary of Holdings may make Restricted Payments to
Holdings or any Wholly Owned Subsidiary Guarantor;
(b) so long as no Default or Event of Default shall have occurred and
be continuing, the Borrower may pay dividends to Holdings to permit
Holdings to (i) purchase Holdings' common stock or common stock options
from present or former officers or employees of Holdings or any of its
Subsidiary upon the death, disability or termination of employment of such
officer or employee, provided, that the aggregate amount of payments under
this clause after the date hereof (net of any proceeds received by Holdings
after the date hereof in connection with resales of any common stock or
common stock options so purchased) shall not exceed $5,000,000 during the
term of this Agreement and (ii) make interest payments on the Senior
Subordinated Notes.
7.7 Investments. Make any advance, loan, extension of credit (by way
of guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other debt securities of, or any assets
constituting a business unit of, or make any other investment in, any Person
(all of the foregoing, "Investments"), except:
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in Cash Equivalents;
(c) Guarantee Obligations permitted by subsection 7.2;
(d) loans and advances to employees of Holdings or any of its
Subsidiaries in the ordinary course of business (including for travel,
entertainment and relocation expenses) in an aggregate amount for Holdings
and any of its Subsidiaries not to exceed $1,500,000 at any one time
outstanding;
(e) Investments in connection with Permitted Acquisitions;
80
(f) Investments in assets useful in the business of Holdings and its
Subsidiaries made by Holdings or any of its Subsidiaries with the proceeds
of any Reinvestment Deferred Amount;
(g) intercompany Investments by Holdings or any of its Subsidiaries
in Holdings or any Person that, prior to such investment, is a Wholly Owned
Subsidiary Guarantor;
(h) in addition to Investments otherwise expressly permitted by this
subsection, Investments by Holdings or any of its Subsidiaries in an
aggregate amount (valued at cost) not to exceed $10,000,000 during the term
of this Agreement; and
(i) the Investment by Container Resources Corporation in the common
shares of a joint venture company to be formed with Van Leer Containers,
Inc. pursuant to the terms of the Memorandum of Understanding between such
parties dated March 3, 2000, a copy of which has been provided to the
Administrative Agent.
7.8 Optional Payments and Modifications of Certain Debt Instruments.
(a) Make or offer to make any optional or voluntary payment, prepayment,
repurchase or redemption of or otherwise optionally or voluntarily defease or
segregate funds with respect to the Senior Subordinated Notes, (b) amend,
modify, waive or otherwise change, or consent or agree to any amendment,
modification, waiver or other change to, any of the terms of the Senior
Subordinated Notes (other than any such amendment, modification, waiver or other
change that (i) would extend the maturity or reduce the amount of any payment of
principal thereof or reduce the rate or extend any date for payment of interest
thereon and (ii) does not involve the payment of a consent fee), or (c)
designate any Indebtedness (other than obligations of the Loan Parties pursuant
to the Loan Documents) as "Designated Senior Indebtedness" (or the comparable
concept) for the purposes of the Senior Subordinated Note Indenture.
7.9 Transactions with Affiliates. Enter into any transaction,
including any purchase, sale, lease or exchange of property, the rendering of
any service or the payment of any management, advisory or similar fees, with any
Affiliate (other than Holdings, the Borrower or any Wholly Owned Subsidiary
Guarantor) unless such transaction is (a) otherwise permitted under this
Agreement, (b) in the ordinary course of business of Holdings, the Borrower or
such Subsidiary, as the case may be, and (c) upon fair and reasonable terms no
less favorable to Holdings, the Borrower or such Subsidiary, as the case may be,
than it would obtain in a comparable arm's length transaction with a Person that
is not an Affiliate.
7.10 Sales and Leasebacks. Enter into any arrangement with any
Person providing for the leasing by Holdings or any of its Subsidiaries of real
or personal property that has been or is to be sold or transferred by Holdings
or such Subsidiary to such Person or to any other Person to whom funds have been
or are to be advanced by such Person on the security of such property or rental
obligations of Holdings or such Subsidiary; provided that, with the consent of
the Administrative Agent (not to be unreasonably withheld), Holdings or any of
its Subsidiaries may enter into such sale/leaseback transactions if the net
proceeds thereof are
81
reinvested in fixed or capital assets of Holdings and its Subsidiaries within
(i) six months of the receipt of such net proceeds (if such sale/leaseback
transaction occurs on or prior to December 31, 2000) or (ii) three months of the
receipt at such net proceeds (if such sale/leaseback transaction occurs after
December 31, 2000.
7.11 Changes in Fiscal Periods. Permit the fiscal year of Holdings
to end on a day other than December 31 (or on the last Sunday in December) or
change Holdings' method of determining fiscal quarters.
7.12 Negative Pledge Clauses. Enter into or suffer to exist or
become effective any agreement that prohibits or limits the ability of Holdings
or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien
upon any of its property or revenues to secure the Obligations, whether now
owned or hereafter acquired, other than (a) this Agreement and the other Loan
Documents and (b) any agreements governing any purchase money Liens, Capital
Lease Obligations or Synthetic Lease Obligations otherwise permitted hereby (in
which case, any prohibition or limitation shall only be effective against the
assets financed thereby).
7.13 Clauses Restricting Subsidiary Distributions. Enter into or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary of Holdings to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness
owed to, Holdings or any other Subsidiary of Holdings, (b) make loans or
advances to, or other Investments in, Holdings or any other Subsidiary of
Holdings or (c) transfer any of its assets to Holdings or any other Subsidiary
of Holdings, except for such encumbrances or restrictions existing under or by
reason of (i) any restrictions existing under the Loan Documents and (ii) any
restrictions with respect to a Subsidiary imposed pursuant to an agreement that
has been entered into in connection with the Disposition of all or substantially
all of the Capital Stock or assets of such Subsidiary.
7.14 Lines of Business. Enter into any business, either directly or
through any Subsidiary, except for those businesses in which Holdings and its
Subsidiaries will be engaged immediately after giving effect to the Merger or
that are reasonably related thereto.
7.15 Amendments to Merger Documentation. (a) Amend, supplement or
otherwise modify (pursuant to a waiver or otherwise) the terms and conditions of
the indemnities and licenses furnished to the Borrower or any of its
Subsidiaries pursuant to the Merger Documentation such that after giving effect
thereto such indemnities or licenses shall be materially less favorable to the
interests of the Borrower or any of its Subsidiaries or the Lenders with respect
thereto or (b) otherwise amend, supplement or otherwise modify the terms and
conditions of the Merger Documentation or any such other documents except for
any such amendment, supplement or modification that (i) becomes effective after
the Closing Date and (ii) could not reasonably be expected to have a Material
Adverse Effect.
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SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or
the Borrower shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder or under any other Loan
Document, within five (5) days after any such interest or other amount
becomes due in accordance with the terms hereof; or
(b) any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made; or
(c) (i) any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of subsection
6.4(a)(i) (with respect to Holdings and the Borrower only), subsection
6.7(a)(ii) or Section 7 of this Agreement or subsections 5.6 and 5.8(b) of
the Guarantee and Collateral Agreement or (ii) an "Event of Default" under
and as defined in any Mortgage shall have occurred and be continuing; or
(d) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this subsection),
and such default shall continue unremedied for a period of thirty (30) days
after notice to the Borrower from the Administrative Agent or any Lender;
or
(e) Holdings or any of its Subsidiaries shall (i) default in making
any payment of any principal of any Indebtedness (including any Guarantee
Obligation, but excluding the Loans) on the scheduled or original due date
with respect thereto; or (ii) default in making any payment of any interest
on any such Indebtedness beyond the period of grace, if any, provided in
the instrument or agreement under which such Indebtedness was created; or
(iii) default in the observance or performance of any other agreement or
condition relating to any such Indebtedness or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or (in the case of
any such Indebtedness constituting a Guarantee Obligation) to become
payable; provided, that a default, event or condition described in clause
(i), (ii) or (iii) of this paragraph (e) shall not at any time constitute
an Event of Default unless, at such time, one or more defaults, events or
conditions of the type described in clauses (i), (ii) and (iii) of this
paragraph (e) shall have occurred and be continuing with respect to
Indebtedness the outstanding principal amount of which exceeds in the
aggregate $10,000,000; or
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(f) (i) Holdings or any of its Subsidiaries shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or Holdings or any of its Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against Holdings or any of its Subsidiaries any case, proceeding
or other action of a nature referred to in clause (i) above that (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or (iii) there shall be commenced against Holdings or
any of its Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets that results in
the entry of an order for any such relief that shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) Holdings or any of its Subsidiaries shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) Holdings or any of its Subsidiaries shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(g) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any,
could, in the sole judgment of the Required Lenders, reasonably be expected
to have a Material Adverse Effect; or
84
(h) one or more judgments or decrees shall be entered against
Holdings or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance as to which the relevant insurance
company has acknowledged coverage) of $5,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 30 days from the entry thereof; or
(i) any of the Security Documents shall cease, for any reason, to be
in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any Lien created by any of the Security Documents
shall cease to be enforceable and of the same effect and priority purported
to be created thereby; or
(j) the guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason, to be in full force and
effect or any Loan Party or any Affiliate of any Loan Party shall so
assert; or
(k) (i) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), excluding the Permitted Investors, shall become, or
obtain rights (whether by means or warrants, options or otherwise) to
become, the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5
under the Exchange Act), directly or indirectly, of more than 30% of the
outstanding common stock of Holdings; (ii) the board of directors of
Holdings shall cease to consist of a majority of Continuing Directors;
(iii) Holdings shall cease to own and control, of record and beneficially,
directly, 100% of each class of outstanding Capital Stock of the Borrower
free and clear of all Liens (except Liens created by the Guarantee and
Collateral Agreement); or (iv) a Specified Change of Control shall occur;
or
(l) the Senior Subordinated Notes or the guarantees thereof shall
cease, for any reason, to be validly subordinated to the Obligations or the
obligations of the Subsidiary Guarantors under the Guarantee and Collateral
Agreement, as the case may be, as provided in the Senior Subordinated Note
Indenture, or any Loan Party, any Affiliate of any Loan Party, the trustee
in respect of the Senior Subordinated Notes or the holders of at least 25%
in aggregate principal amount of the Senior Subordinated Notes shall so
assert;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) shall immediately
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower
85
declare the Revolving Credit Commitments to be terminated forthwith, whereupon
the Revolving Credit Commitments shall immediately terminate; and (ii) with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan Documents
(including all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to this paragraph, the Borrower shall at such time deposit
in a cash collateral account opened by the Administrative Agent an amount equal
to the aggregate then undrawn and unexpired amount of such Letters of Credit.
Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned
to the Borrower (or such other Person as may be lawfully entitled thereto).
Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived by the Borrower.
SECTION 9. THE AGENTS
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
9.2 Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys in-fact selected by it with reasonable care.
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9.3 Exculpatory Provisions. Neither any Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agents under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. The Agents shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.
9.4 Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to Holdings or the Borrower),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if so specified
by this Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders (or, if so
specified by this Agreement, all Lenders), and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.
9.5 Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder (other than any Default or Event of Default resulting from the failure
of the Borrower to pay to the Administrative Agent any principal, interest,
commitment fee or letter of credit fee due) unless the Administrative Agent has
received notice from a Lender, Holdings or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a
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"notice of default". In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or, if
so specified by this Agreement, all Lenders); provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereafter
taken, including any review of the affairs of a Loan Party or any affiliate of a
Loan Party, shall be deemed to constitute any representation or warranty by any
Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
9.7 Indemnification. The Lenders agree to indemnify each Agent in
its capacity as such (to the extent not reimbursed by Holdings or the Borrower
and without limiting the obligation of Holdings or the Borrower to do so),
ratably according to their respective Aggregate Exposure Percentages in effect
on the date on which indemnification is sought under this subsection (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with such Aggregate Exposure Percentages immediately prior to such date), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that may at any time (whether before or after the payment of the
Loans) be imposed on, incurred by or asserted against such Agent in any way
relating to or arising out of, the Commitments, this Agreement, any of the other
Loan Documents or any
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documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
under or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements that are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from such Agent's gross negligence or
willful misconduct. The agreements in this subsection shall survive the payment
of the Loans and all other amounts payable hereunder.
9.8 Agent in Its Individual Capacity. Each Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with any Loan Party as though such Agent were not an Agent. With
respect to its Loans made or renewed by it and with respect to any Letter of
Credit issued or participated in by it, each Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Agent, and the terms "Lender" and
"Lenders" shall include each Agent in its individual capacity.
9.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent
under this Agreement and the other Loan Documents, then the Required Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 8(a) or Section
8(f) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor
agent has accepted appointment as Administrative Agent by the date that is 10
days following a retiring Administrative Agent's notice of resignation, the
retiring Administrative Agent's resignation shall nevertheless thereupon become
effective and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.
9.10 Documentation Agent and Syndication Agent. Neither the
Documentation Agent nor the Syndication Agent shall have any duties or
responsibilities hereunder in its capacity as such.
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SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may,
or, with the written consent of the Required Lenders, the Administrative Agent
and each Loan Party party to the relevant Loan Document may, from time to time,
(a) enter into written amendments, supplements or modifications hereto and to
the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such
terms and conditions as the Required Lenders or the Administrative Agent, as the
case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) forgive the principal amount or extend the
final scheduled date of maturity of any Loan, extend the scheduled date of any
amortization payment in respect of any Loan, reduce the stated rate of any
interest or fee payable hereunder (except (x) in connection with the waiver of
applicability of any post-default increase in interest rates, which waiver shall
be effective with the consent of the Majority Facility Lenders of each adversely
affected Facility, and (y) that any amendment or modification of defined terms
used in the financial covenants in this Agreement shall not constitute a
reduction in the rate of interest or fees for purposes of this clause (i)) or
extend the scheduled date of any payment thereof, or increase the amount or
extend the expiration date of any Lender's Revolving Credit Commitment, in each
case without the written consent of each Lender directly affected thereby; (ii)
eliminate or reduce the voting rights of any Lender under this Section 10.1
without the written consent of such Lender; (iii) reduce any percentage
specified in the definition of Required Lenders, consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement and the other Loan Documents, release all or substantially all of the
Collateral or release all or substantially all of the Subsidiary Guarantors from
their obligations under the Guarantee and Collateral Agreement, in each case
without the written consent of all Lenders (iv) amend, modify or waive any
provision of Section 2.17 without the written consent of the Majority Facility
Lenders in respect of each Facility adversely affected thereby; (v) reduce the
amount of Net Cash Proceeds required to be applied to prepay Loans under this
Agreement without the written consent of the Majority Facility Lenders with
respect to each Facility; (vi) reduce the percentage specified in the definition
of Majority Facility Lenders with respect to any Facility without the written
consent of all Lenders under such Facility; (vii) amend, modify or waive any
provision of Section 9 without the written consent of the Administrative Agent;
or (viii) amend, modify or waive any provision of Section 3 without the written
consent of the Issuing Lender. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Loan Parties, the Lenders, the Administrative Agent and all
future holders of the Loans. In the case of any waiver, the Loan Parties, the
Lenders and the Administrative Agent shall be restored to their former position
and rights hereunder and under the other Loan Documents, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon.
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For the avoidance of doubt, this Agreement may be amended (or amended
and restated) with the written consent of the Required Lenders, the
Administrative Agent and the Borrower (a) to add one or more additional credit
facilities to this Agreement and to permit the extensions of credit from time to
time outstanding thereunder and the accrued interest and fees in respect thereof
(collectively, the "Additional Extensions of Credit") to share ratably in the
benefits of this Agreement and the other Loan Documents with the Term Loans and
Revolving Extensions of Credit and the accrued interest and fees in respect
thereof and (b) to include appropriately the Lenders holding such credit
facilities in any determination of the Required Lenders and Majority Facility
Lenders; provided that (i) the aggregate size of the Facilities may be increased
to $300,000,000 without the consent of the Required Lenders (including by the
increase in the Commitment of any Lender) and in such event the Administrative
Agent shall, by notice to all Lenders, stipulate the adjusted Aggregate Exposure
Percentage of all Lenders, (ii) in the case of any Additional Extensions of
Credit that increase the aggregate size of the Acquisition Term Loan Facility
and the Revolving Credit Facility above $200,000,000, such Additional Extensions
of Credit shall be allocated 25% to increase the Acquisition Term Loan Facility
and 75% to increase the Revolving Credit Facility and (iii) in the case of any
Additional Extensions of Credit that increase the aggregate size of the
Acquisition Term Loan Facility and the Revolving Credit Facility above
$300,000,000, that no such amendment shall permit such Additional Extensions of
Credit to share ratably with or with preference to the Acquisition Term Loans in
the application of mandatory prepayments without the consent of the Majority
Facility Lenders with respect to the Acquisition Term Loan Facility or otherwise
to share ratably with or with preference to the Revolving Extensions of Credit
without the consent of the Majority Facility Lenders with respect to the
Revolving Credit Facility.
Within 90 days of the Closing Date, at the Borrower's option and with
the written consent of the Borrower, Holdings, the Administrative Agent and any
Lenders participating in the European Tranche (as defined below), the terms of
this Agreement may be modified to divide each of the Revolving Facility and the
Acquisition Term Loan Facility into a Dollar tranche and a foreign currency
tranche (the Dollar tranches of such Facilities being referred to collectively
as the "U.S. Tranche" and the foreign currency tranches of such Facilities
being referred to collectively as the "European Tranche"). Such modification
would include, without limitation, (i) the addition of the European Tranche in
an aggregate principal amount to be determined (not to exceed the Dollar
Equivalent of $75,000,000) which would be available to the Borrower or Holdings
in certain foreign currencies to be specified in such modification, and (ii)
modifications to this Agreement to require that all borrowings and payments
under the Revolving Facility and the Acquisition Term Loan Facility shall be
made pro rata as between the respective portions thereof attributable to the
European Tranche and the U.S. Tranche; provided that (i) the Applicable Margin
shall remain unchanged and apply equally to the European Tranche and the U.S.
Tranche and (ii) the aggregate amount of the Facilities shall remain unchanged.
No Lender shall be required to participate in the European Tranche.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly
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provided herein, shall be deemed to have been duly given or made when delivered,
or three Business Days after being deposited in the mail, postage prepaid, or,
in the case of telecopy notice, when received, addressed as follows in the case
of Holdings, the Borrower and the Administrative Agent, and as set forth in an
administrative questionnaire delivered to the Administrative Agent in the case
of the Lenders, or to such other address as may be hereafter notified by the
respective parties hereto:
Holdings: IFCO Systems N.V.
Strawinskylaan 2001
NL-1077 ZZ
Amsterdam, The Netherlands
Attention: Chief Executive Officer
Telecopy:
Telephone: ▇▇-▇▇-▇▇▇-▇▇▇▇
with a copy to: PalEx, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
The Borrower: PalEx, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy:
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: PalEx, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: 941-555-1148 ext. 1521
The Administrative
Agent: Bank One, NA
1 Bank ▇▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ Both
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
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with a copy to: Bank One, NA
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans and other extensions of credit hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay
or reimburse the Administrative Agent for all its reasonable out-of-pocket costs
and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Loan Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including the reasonable fees and
disbursements of counsel to the Administrative Agent and filing and recording
fees and expenses, with statements with respect to the foregoing to be submitted
to the Borrower prior to the Closing Date (in the case of amounts to be paid on
the Closing Date) and from time to time thereafter on a quarterly basis or such
other periodic basis as the Administrative Agent shall deem appropriate, (b) to
pay or reimburse each Lender and the Administrative Agent for all its out-of-
pocket costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and of counsel to the Administrative Agent, (c) to pay, indemnify, and hold each
Lender and the Administrative Agent harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other taxes, if any, that may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents,
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and (d) to pay, indemnify, and hold each Lender and the Administrative Agent and
their respective officers, directors, employees, affiliates, agents and
controlling persons (each, an "Indemnitee") harmless from and against any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents and any such other
documents, including any of the foregoing relating to the use of proceeds of the
Loans or the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of Holdings, the Borrower, any of
its Subsidiaries or any of the Properties and the reasonable fees and expenses
of legal counsel in connection with claims, actions or proceedings by any
Indemnitee against any Loan Party under any Loan Document (all the foregoing in
this clause (d), collectively, the "Indemnified Liabilities"), provided, that
the Borrower shall have no obligation hereunder to any Indemnitee with respect
to Indemnified Liabilities to the extent such Indemnified Liabilities are found
by a final decision of a court of competent jurisdiction to have resulted from
the gross negligence or willful misconduct of such Indemnitee. Without limiting
the foregoing, and to the extent permitted by applicable law, the Borrower
agrees not to assert and to cause its Subsidiaries not to assert, and hereby
waives and agrees to cause its Subsidiaries to waive, all rights for
contribution or any other rights of recovery with respect to all claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature, under or related to Environmental Laws, that any of
them might have by statute or otherwise against any Indemnitee. All amounts due
under this subsection 10.5 shall be payable not later than 10 days after written
demand therefor. Statements payable by the Borrower pursuant to this subsection
10.5 shall be submitted to the General Counsel of the Borrower, at the address
of the Borrower set forth in subsection 10.2, or to such other Person or address
as may be hereafter designated by the Borrower in a written notice to the
Administrative Agent. The agreements in this subsection 10.5 shall survive
repayment of the Loans and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments. (a)
This Agreement shall be binding upon and inure to the benefit of Holdings, the
Borrower, the Lenders, the Administrative Agent, all future holders of the Loans
and their respective successors and assigns, except that the Borrower may not
assign or transfer any of its rights or obligations under this Agreement without
the prior written consent of each Lender.
(b) Any Lender other than any Conduit Lender may, without the consent
of the Borrower, in accordance with applicable law, at any time sell to one or
more banks, financial institutions or other entities (each, a "Participant")
participating interests in any Loan owing to such Lender, any Commitment of such
Lender or any other interest of such Lender hereunder and under the other Loan
Documents. In the event of any such sale by a Lender of a participating
interest to a Participant, such Lender's obligations under this Agreement to the
other parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Loan for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection
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with such Lender's rights and obligations under this Agreement and the other
Loan Documents. In no event shall any Participant under any such participation
have any right to approve any amendment or waiver of any provision of any Loan
Document, or any consent to any departure by any Loan Party therefrom, except to
the extent that such amendment, waiver or consent would reduce the principal of,
or interest on, the Loans or any fees payable hereunder, or postpone the date of
the final maturity of the Loans, in each case to the extent subject to such
participation. The Borrower agrees that if amounts outstanding under this
Agreement and the Loans are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in subsection 10.7(a) as fully as if it were a
Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of subsections 2.18, 2.19 and 2.20 with respect to its
participation in the Commitments and the Loans outstanding from time to time as
if it was a Lender; provided that, in the case of subsection 2.19, such
Participant shall have complied with the requirements of said subsection and
provided, further, that no Participant shall be entitled to receive any greater
amount pursuant to any such subsection than the transferor Lender would have
been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Participant had no such transfer
occurred.
(c) Any Lender other than any Conduit Lender (an "Assignor") may, in
accordance with applicable law, at any time and from time to time assign to any
Lender, any affiliate of any Lender or any Approved Fund or, with the consent of
the Borrower (so long as no Default or Event of Default shall have occurred and
be continuing), the Syndication Agent and the Administrative Agent (which, in
each case, shall not be unreasonably withheld or delayed), to an additional
bank, financial institution or other entity (an "Assignee") all or any part of
its rights and obligations under this Agreement and the other Loan Documents
pursuant to an Assignment and Acceptance, executed by such Assignee, such
Assignor and any other Person whose consent is required pursuant to this
paragraph, and delivered to the Administrative Agent for its acceptance and
recording in the Register; provided that no such assignment to an Assignee
(other than any Lender, any affiliate of any Lender or any Approved Fund) shall
be in an aggregate principal amount of less than $2,500,000 (other than in the
case of an assignment of all of a Lender's interests under this Agreement), and,
after giving effect thereto, the Assignor shall have Commitments and Loans
aggregating at least $2,500,000, in each case unless otherwise agreed by the
Borrower, the Syndication Agent, and the Administrative Agent. For purposes of
the proviso contained in the preceding sentence, the amount described therein
shall be aggregated in respect of each Lender and its related Approved Funds, if
any. Any such assignment need not be ratable as among the Facilities. Upon
such execution, delivery, acceptance and recording, from and after the effective
date determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Commitment and/or Loans as set forth therein, and (y) the Assignor
thereunder shall, to the extent provided in
95
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of an
Assignor's rights and obligations under this Agreement, such Assignor shall
cease to be a party hereto). Notwithstanding the foregoing, any Conduit Lender
may assign at any time to its designating Lender hereunder without the consent
of the Borrower or the Administrative Agent any or all of the Loans it may have
funded hereunder and pursuant to its designation agreement and without regard to
the limitations set forth in the first sentence of this subsection 10.6(c).
(d) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in subsection 10.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitment of, and
the principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, each other Loan Party, the Administrative Agent and the
Lenders shall treat each Person whose name is recorded in the Register as the
owner of the Loans and any Notes evidencing the Loans recorded therein for all
purposes of this Agreement. Any assignment of any Loan, whether or not
evidenced by a Note, shall be effective only upon appropriate entries with
respect thereto being made in the Register (and each Note shall expressly so
provide). Any assignment or transfer of all or part of a Loan evidenced by a
Note shall be registered on the Register only upon surrender for registration of
assignment or transfer of the Note evidencing such Loan, accompanied by a duly
executed Assignment and Acceptance, and thereupon one or more new Notes shall be
issued to the designated Assignee.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assignor, an Assignee and any other Person whose consent is required by
subsection 10.6(c), together with payment by the Assignor and/or Assignee to the
Administrative Agent of a registration and processing fee of $3,500, the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) record the information contained therein in the Register on the
effective date determined pursuant thereto.
(f) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this subsection 10.6 concerning assignments of Loans and
Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including any pledge or
assignment by a Lender of any Loan or Note to any Federal Reserve Bank in
accordance with applicable law.
(g) The Borrower, upon receipt of written notice from the relevant
Lender, agrees to issue Notes to any Lender requiring Notes to facilitate
transactions of the type described in paragraph (f) above.
(h) Each of Holdings, the Borrower, each Lender and the
Administrative Agent hereby confirms that it will not institute against a
Conduit Lender or join any other Person in instituting against a Conduit Lender
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding under any state bankruptcy or similar law, for one year and one day
after
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the payment in full of the latest maturing commercial paper note issued by such
Conduit Lender; provided, however, that each Lender designating any Conduit
Lender hereby agrees to indemnify, save and hold harmless each other party
hereto for any loss, cost, damage or expense arising out of its inability to
institute such a proceeding against such Conduit Lender during such period of
forbearance.
10.7 Adjustments; Set-off-. (a) Except to the extent that this
Agreement expressly provides for payments to be allocated to a particular Lender
or to the Lenders under a particular Facility, if any Lender (a " Benefitted
Lender") shall receive any payment of all or part of the Obligations owing to
it, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 8(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of the Obligations owing to such other Lender, such Benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of the Obligations owing to each such other Lender, or shall provide
such other Lenders with the benefits of any such collateral, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral ratably with each of the Lenders; provided, however,
that if all or any portion of such excess payment or benefits is thereafter
recovered from such Benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest unless the Benefitted Lender is required to pay interest on the
amount recovered, in which case each Lender returning funds to the Benefitted
Lender shall pay its pro rata share of such interest to such Benefitted Lender.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to Holdings or the
Borrower, any such notice being expressly waived by Holdings and the Borrower to
the extent permitted by applicable law, upon any amount becoming due and payable
by Holdings or the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise), to set off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Lender or any branch or
agency thereof to or for the credit or the account of Holdings or the Borrower,
as the case may be. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such setoff and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of
such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
97
10.9 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents
represent the entire agreement of Holdings, the Borrower, the Administrative
Agent and the Lenders with respect to the subject matter hereof and thereof, and
there are no promises, undertakings, representations or warranties by the
Administrative Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. Each of Holdings and the
Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to Holdings
or the Borrower, as the case may be at its address set forth in subsection
10.2 or at such other address of which the Administrative Agent shall have
been notified pursuant thereto;
(d) Holdings hereby irrevocably and unconditionally appoints CT
Corporation System (the "New York Process Agent"), with an office on the
date hereof at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as its agent to
receive on behalf of Holdings and the Borrower and its property, service of
copies of the summons and complaint and any other process which may be
served in any such action or proceeding in any such New York State or
Federal court and agrees promptly to appoint a successor New York Process
Agent in New York City (which successor New York Process Agent shall accept
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such appointment in writing prior to the termination, for any reason, of
the appointment of the initial New York Process Agent) and promptly to
provide written notice to the Administrative Agent and each Lender of the
appointment of such successor New York Process Agent. In any such action
or proceeding in such New York State or Federal court sitting in New York
City, such service may be made on the Holdings by delivering a copy of such
process to the Holdings in care of the appropriate New York Process Agent
at such New York Process Agent's address. Holdings hereby irrevocably and
unconditionally authorizes and directs such New York Process Agent to
accept such service on its behalf.
(e) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to ▇▇▇ in any other jurisdiction; and
(f) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this subsection any special, exemplary, punitive or consequential
damages.
10.13 Acknowledgements. Each of Holdings and the Borrower hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to Holdings or the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and
Holdings and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among Holdings, the Borrower and the Lenders.
10.14 Releases of Guarantees and Liens. (a) Notwithstanding
anything to the contrary contained herein or in any other Loan Document, the
Administrative Agent is hereby irrevocably authorized by each Lender (without
requirement of notice to or consent of any Lender except as expressly required
by subsection 10.1) to take any action requested by the Borrower having the
effect of releasing any Collateral or guarantee obligations (i) to the extent
necessary to permit consummation of any transaction not prohibited by any Loan
Document or that has been consented to in accordance with subsection 10.1 or
(ii) under the circumstances described in paragraph (b) below.
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(b) At such time as the Loans, the Reimbursement Obligations and the
other obligations under the Loan Documents (other than obligations under or in
respect of Hedge Agreements) shall have been paid in full, the Commitments have
been terminated and no Letters of Credit shall be outstanding, the Collateral
shall be released from the Liens created by the Security Documents, and the
Security Documents and all obligations (other than those expressly stated to
survive such termination) of the Administrative Agent and each Loan Party under
the Security Documents shall terminate, all without delivery of any instrument
or performance of any act by any Person.
10.15 Confidentiality. Each of the Administrative Agent and each
Lender agrees to keep confidential all non-public information provided to it by
any Loan Party pursuant to this Agreement that is designated by such Loan Party
as confidential; provided that nothing herein shall prevent the Administrative
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender, any affiliate of any Lender or any
Approved Fund, (b) to any actual or prospective Transferee or Hedge Agreement
counterparty that agrees to comply with the provisions of this subsection, (c)
to its employees, directors, agents, attorneys, accountants and other
professional advisors or those of any of its affiliates that agrees to comply
with the provisions of this subsection, (d) upon the request or demand of any
Governmental Authority, (e) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (f) if requested or required to do so in connection with any
litigation or similar proceeding, (g) that has been publicly disclosed, (h) to
the National Association of Insurance Commissioners or any similar organization
or any nationally recognized rating agency that requires access to information
about a Lender's investment portfolio in connection with ratings issued with
respect to such Lender, or (i) in connection with the exercise of any remedy
hereunder or under any other Loan Document.
10.16 WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
[Remainder of Page Intentionally Blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
IFCO SYSTEMS, N.V.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Executive Vice President
PALEX, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
BANK ONE, NA, as Administrative Agent and as a
Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
CIBC WORLD MARKETS CORP., as Syndication Agent,
Co-Lead Arranger and Co-Book Runner
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Executive Director
BANC ONE CAPITAL MARKETS, INC., as Co-Lead
Arranger and Co-Book Runner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Officer
CANADIAN IMPERIAL BANK OF COMMERCE, as Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Executive Director
PRICING GRID FOR REVOLVING CREDIT LOANS, SWINGLINE
LOANS AND ACQUISITION TERM LOANS
=============================================================================================================
Consolidated Total Applicable Margin Applicable Margin for Base
Leverage Ratio for Eurocurrency Loans Rate Loans
------------------------------------------------------------------------------------------------------------
greater than or equal to 3.25 300 bps 200 bps
-------------------------------------------------------------------------------------------------------------
less than 3.25 greater than or equal to 2.75 275 bps 175 bps
-------------------------------------------------------------------------------------------------------------
less than 2.75 greater than or equal to 2.25 250 bps 150 bps
-------------------------------------------------------------------------------------------------------------
less than 2.25 greater than or equal to 1.75 225 bps 125 bps
-------------------------------------------------------------------------------------------------------------
less than 1.75 200 bps 100 bps
=============================================================================================================
Changes in the Applicable Margin resulting from changes in the Consolidated
Total Leverage Ratio shall become effective, initially, on the date that is six
months after the Closing Date and thereafter, on each date that is three
Business Days after the date on which financial statements are delivered to the
Lenders pursuant to subsection 6.1 (each such date an "Adjustment Date") and
shall remain in effect until the next change to be effected pursuant to this
paragraph. If any financial statements referred to above are not delivered
within the time periods specified in subsection 6.1, then, until the date that
is three Business Days after the date on which such financial statements are
delivered, the highest rate set forth in each column of the Pricing Grid shall
apply. In addition, at all times while an Event of Default shall have occurred
and be continuing, the highest rate set forth in each column of the Pricing Grid
shall apply. Each determination of the Consolidated Total Leverage Ratio
pursuant to the Pricing Grid shall be made in a manner consistent with the
determination thereof pursuant to subsection 7.1.