FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as of
October 2, 1998, is among DARLING INTERNATIONAL INC. ("Borrower"), the banks or
other lending institutions which are a signatory hereto (individually, a "Bank"
and, collectively, the "Banks"), COMERICA BANK, CREDIT LYONNAIS NEW YORK BRANCH
and ▇▇▇▇▇ FARGO BANK (TEXAS), NATIONAL ASSOCIATION, each individually as a Bank
and as a co-agent and BANKBOSTON, N.A., individually as a Bank and as agent for
itself and the other Banks (in its capacity as agent, together with its
successors in such capacity, the "Agent").
RECITALS:
Borrower, the Banks and the Agent have entered into that certain Credit
Agreement dated as of June 5, 1997 (as amended by that certain First Amendment
to Pledge Agreement and Credit Agreement dated November 10, 1997 between the
Borrower and the Agent, as amended by that certain Second Amendment to Pledge
Agreement and Credit Agreement dated March 6, 1998 among the Borrower, the Banks
and the Agent, as amended by that certain Third Amendment to Credit Agreement
dated June 30, 1998 among the Borrower, the Banks and the Agent and as the same
may hereafter be amended or otherwise modified, the "Credit Agreement").
Agent has advised the Borrower that an Event of Default has occurred under
Section 12.1 (c) of the Credit Agreement as a result of the Borrower's failure
to comply with the covenant in Section 11.1 as evidenced by the Borrower's
financial statements dated as of August 27, 1998 (such Event of Default together
with any further violation of Section 11.1 of the Credit Agreement from August
27, 1998 through November 9, 1998, herein the "Net Worth Defaults"). The
Borrower has notified the Agent and the Banks that it anticipates that it will
be unable to comply with Section 11.1 after November 9, 1998, Section 11.2 of
the Credit Agreement as of and after the end of the third Fiscal Quarter of its
1998 Fiscal Year and Section 11.3 of the Credit Agreement as of and after the
end of the fourth Fiscal Quarter of its 1998 Fiscal Year, all of which will
create, or may have created, Defaults under the Credit Agreement (the "Potential
Defaults" and together with the Net Worth Defaults, herein the "Existing
Defaults").
Borrower has requested that the Agent and the Banks forbear from exercising
their rights and remedies arising as a result of the Existing Defaults in order
to allow the Borrower, the Banks and the Agent time possibly to agree to an
amendment to the Credit Agreement satisfactory to all parties to address the
Existing Defaults.
The Agent and the Banks are willing to so forbear subject to the amendment
to the Credit Agreement as contemplated hereby.
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows effective as of the date
hereof and conditioned upon the execution of this Amendment by Borrower, each
Obligated Party and all the Banks on or prior to October 14, 1998:
ARTICLE 1
Definitions
Section 1.1 Definitions. Capitalized terms used in this Amendment, to the
extent not otherwise defined herein, shall have the same meanings as in the
Credit Agreement, as amended hereby.
ARTICLE 2
Amendments
Section 2.1 Amendment to Section 1.1. The definition of the term "Revolving
Commitment" in Section 1.1 of the Credit Agreement is amended in its entirety to
read as follows:
"Revolving Commitment" means, as to each Bank, the obligation of
such Bank to make advances of funds and purchase participation
interests in (or with respect to the Agent as a Bank, hold other
interests in) Letters of Credit and Swingline Loans in an aggregate
principal amount at any one time outstanding up to but not exceeding
the amount set forth opposite the name of such Bank on Schedule 1.1
hereto under the heading "Revolving Commitment", as the same may be
reduced or terminated pursuant to Section 2.6, 12.2 or 14.8 or, if
applicable, in such Bank's most recent Assignment and Acceptance
executed after October 3, 1998. The aggregate amount of the Revolving
Commitments of all Banks equals One Hundred Thirty-Five Million
Dollars ($135,000,000).
Section 2.2 Amendment to Section 2.5. The first sentence of Section 2.5 of
the Credit Agreement is amended in its entirety to read as follows:
The Borrower agrees to pay to the Agent for the account of each Bank a
commitment fee on the daily average unused amount of such Bank's
Revolving Commitment for the period from and including the Closing
Date to the Termination Date, at a rate equal to (i) from and
including the Closing Date to October 3, 1998, one quarter of one
percent (0.25%) per annum and (ii) from and including October 3, 1998
to the Termination Date, three-eighths of one percent (.375%) per
annum.
Section 2.3 Amendment to Section 4.1. Section 4.1 of the Credit Agreement
is amended in its entirety to read as follows:
Section 4.1 Interest Rate. The Borrower shall pay to the Agent
for the account of each Bank interest on the unpaid principal amount
of each Loan made by such Bank for the period commencing on the date
of such Loan to but excluding the date such Loan is due, at a
fluctuating rate per annum equal to (a) with respect to the Revolving
Loans or Term Loans, (i) during the period that such Loans or portions
thereof are subject to a Base Rate Account, the Base Rate plus the
Base Margin and (ii) during the period that such Loans or portions
thereof are subject to a Libor Account, the Adjusted Libor Rate plus
the Libor Rate Margin; and (b) with respect to the Swingline Loans,
the Base Rate plus the Base Margin.
Section 2.4 Amendment to Section 4.2. All of Section 4.2 of the Credit
Agreement is amended in its entirety to read as follows:
Section 4.2 Determinations of Margins. The phrase "Libor Rate
Margin"(i) prior to October 3, 1998, shall have the meaning set forth in
this Section 4.2 prior to giving effect to the amendment thereof set out in
that certain Fourth Amendment to Credit Agreement dated as of October 2,
1998; (ii) during the period commencing on October 3, 1998 and at all times
thereafter until and excluding the date when the Term Loan is paid in cash
in full (the "Term Loan Payment Date"), shall mean three percent (3.00%)
per annum; (iii) during the period commencing on the Term Loan Payment Date
and ending on but excluding the first Adjustment Date (as defined below),
shall mean the percent per annum set forth in the table below under the
heading "Libor Rate Margin" and opposite the Adjusted Funded Debt to EBITDA
Ratio calculated for the completed four (4) Fiscal Quarters which
immediately preceded the Term Loan Payment Date; and (iv) during each
period, from and including one Adjustment Date to but excluding the next
Adjustment Date (herein a "Calculation Period"), shall mean the percent per
annum set forth in the table below under the heading "Libor Rate Margin"
and opposite the Adjusted Funded Debt to EBITDA Ratio calculated for the
completed four (4) Fiscal Quarters which immediately preceded the beginning
of the applicable Calculation Period. The phrase "Base Margin" (i) during
the period commencing on October 3, 1998 and at all times thereafter until
and excluding the Term Loan Payment Date, shall mean one-half of one
percent (0.50%) per annum; (ii) during the period commencing on the Term
Loan Payment Date and ending on but excluding the first Adjustment Date (as
defined below), shall mean the percent per annum set forth in the table
below under the heading "Base Margin" and opposite the Adjusted Funded Debt
to EBITDA Ratio calculated for the completed four (4) Fiscal Quarters which
immediately preceded the Term Loan Payment Date; and (iv) during each
Calculation Period, shall mean the percent per annum set forth in the table
below under the heading "Base Margin" and opposite the Adjusted Funded Debt
to EBITDA Ratio calculated for the completed four (4) Fiscal Quarters which
immediately preceded the beginning of the applicable Calculation Period.
MARGINS
---------------------------------------
Adjusted FUnded Debt
To EBITDA Base Margin Libor Rate Margin
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greater than or equal to 3.50 0.25% 2.75%
less than 3.50 0.00% 2.25%
The Libor Rate Margin (for Interest Periods commencing after the Term Loan
Payment Date) and the Base Margin shall automatically be adjusted on and as
of the Term Loan Payment Date in accordance with the Adjusted Funded Debt
to EBITDA Ratio set forth in the most recent Compliance Certificate
delivered under subsection 9.1 (c) prior to the Term Loan Payment Date and
the table set forth above. In furtherance of the foregoing, Borrower agrees
to add a calculation of the Adjusted Funded Debt to EBITDA Ratio to each
Compliance Certificate. Upon delivery of the Compliance Certificate
pursuant to subsection 9.1(c) in connection with the financial statements
of Borrower and the Subsidiaries required to be delivered pursuant to
subsection 9.1(b) at the end of each Fiscal Quarter commencing with the
first such Compliance Certificate delivered after the Term Loan Payment
Date, the Libor Rate Margin (for Interest Periods commencing after the
applicable Adjustment Date) and the Base Margin shall also be automatically
adjusted in accordance with the Adjusted Funded Debt to EBITDA Ratio set
forth therein and the table set forth above, such automatic adjustment to
take effect as of the first Business Day after the receipt by the Agent of
the related Compliance Certificate pursuant to subsection 9.1(c) (each such
Business Day when such margins change pursuant to this sentence or the next
following sentence, herein an "Adjustment Date"). If Borrower fails to
deliver such Compliance Certificate which so sets forth the Adjusted Funded
Debt to EBITDA Ratio within the period of time required by subsection
9.1(c), the Libor Rate Margin (for Interest Periods commencing after the
applicable Adjustment Date) shall automatically be adjusted to 2.75% per
annum and the Base Margin shall automatically be adjusted to .25% per
annum, such automatic adjustments to take effect as of the first Business
Day after the last day on which Borrower was required to deliver the
applicable Compliance Certificate in accordance with subsection 9.1(c) and
to remain in effect until subsequently adjusted in accordance herewith upon
the delivery of a Compliance Certificate. The phrase "Adjusted Funded Debt
to EBITDA Ratio" means the ratio, calculated as of the end of each Fiscal
Quarter, of Adjusted Funded Debt as of the date of determination to the
EBITDA of the Borrower and the Subsidiaries (determined on a consolidated
basis) for the four (4) Fiscal Quarters then ending. The phrase "Adjusted
Funded Debt" means, as of any Fiscal Quarter end, the sum of the following
calculated without duplication: (i) Funded Debt (as defined in Section
11.2) outstanding as of such Fiscal Quarter end plus (ii) all reimbursement
obligations of the Borrower and the Subsidiaries (whether contingent or
otherwise and determined on a consolidated basis) in respect of letters of
credit, bankers' acceptances, surety or other bonds and similar instruments
outstanding as of such Fiscal Quarter end (but excluding those supporting
Debt otherwise included in this definition) plus (iii) all obligations
outstanding as of such Fiscal Quarter end of the Borrower and the
Subsidiaries (determined on a consolidated basis) arising in connection
with noncompete, consulting and similar agreements which are classified as
liabilities on a balance sheet in accordance with GAAP.
Section 2.5 Amendment to Schedules. The schedules to the Credit Agreement
are amended to add Schedule 1.1 thereto to read in its entirety as set forth on
Schedule 1.1 hereto.
ARTICLE 3
Forbearance
Section 3.1 Forbearance; Obligations to Extend Credit. Subject to the terms
and provisions of this Amendment, Agent and each Bank agrees, until November 9,
1998, (i) to forbear from exercising any of their rights and remedies arising
under the Loan Documents or otherwise as a result of the Existing Defaults (the
"Forbearance") and (ii) to continue to extend credit to the Borrower and allow
Borrower to Continue Libor Accounts and Convert Base Rate Accounts to Libor
Accounts under the terms of the Credit Agreement (as amended hereby)
notwithstanding the fact that pursuant to subsections 7.2 (a) and 4.5 (c) the
Banks have no obligation to do so as a result of the Existing Defaults.
Notwithstanding the Forbearance, as a result of the Existing Defaults neither
Borrower nor any Subsidiary shall be allowed to enter into any of the
transactions permitted by the exceptions set forth in Section 10.3 or 10.4 (i)
of the Credit Agreement which are conditioned on no Default existing. However,
Borrower and the Subsidiaries shall be allowed to enter into the transactions
permitted by the exceptions set forth in Section 10.8 of the Credit Agreement
which are conditioned on no Default existing notwithstanding the Existing
Defaults.
Section 3.2 Termination of Forbearance. This Amendment does not constitute
a waiver or forbearance with respect to any Default other than the Existing
Defaults. In the event that prior to November 9, 1998 any further Defaults occur
under the Credit Agreement (i.e., other than the Existing Defaults), then the
Agent and the Banks shall have the right and option, in their discretion and
without notice to Borrower or any Obligated Party, to (i) terminate the
Forbearance, (ii) refuse to extend additional credit to the Borrower under the
Loan Documents, (iii) prohibit Borrower from Converting and Continuing Accounts
and (iv) exercise any and all of the rights and remedies under the Loan
Documents or otherwise arising as a result of such Existing Defaults (the
earlier of November 9, 1998 or the date of the termination of the Forbearance
under this Section 3.2, herein the "Forbearance Termination Date").
Section 3.3 No Waivers. Borrower and each Obligated Party (by its execution
of this Amendment below) agree that by entering into this Amendment, neither
Agent nor any Bank in any way waives, beyond the Forbearance Termination Date,
any rights and remedies it may have with respect to the Existing Defaults it
being agreed that the Forbearance is only to provide Borrower with an
opportunity to reach an agreement with the Agent and the Banks relating to the
amendment to the Credit Agreement to remedy the Existing Defaults and that the
Existing Defaults may be asserted after the Forbearance Termination Date if an
agreement relating to such amendment is not reached by such date (it being
understood and agreed that such amendment has not been and may not be reached).
After the Forbearance Termination Date, Agent and the Banks may pursue all
rights and remedies arising as a result of the Existing Defaults (including
without limitation the right to stop making additional extensions of credit
available to the Borrower under the Credit Agreement) without notice of any kind
to the Borrower or any Obligated Party.
Section 3.4 Tolling. All periods of limitations specified by statutes and
all defenses of laches or waiver as to the Existing Defaults will be tolled and
otherwise suspended during the period from the date hereof through the date
which is ninety (90) days after the Forbearance Termination Date.
ARTICLE 4
Miscellaneous
Section 4.1 Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Credit Agreement and except as expressly modified and superseded by
this Amendment, the terms and provisions of the Credit Agreement and the other
Loan Documents are ratified and confirmed and shall continue in full force and
effect. Borrower, Agent and each Bank agree that the Credit Agreement, as
amended hereby, and the other Loan Documents shall continue to be legal, valid,
binding and enforceable in accordance with their respective terms.
Section 4.2 Representations and Warranties. Borrower hereby represents and
warrants to Agent and each Bank that (i) the execution, delivery and performance
of this Amendment has been authorized by all requisite action on the part of
Borrower and each Obligated Party, (ii) except for the existence of the Existing
Defaults and any matters disclosed to the Banks and the Agent in that certain
spiral bound booklet entitled "Bank Meeting, Thursday September 17, 1998," the
representations and warranties contained in the Loan Documents are true and
correct in all material respects on and as of the date hereof as though made on
and as of the date hereof (except with respect to any representations or
warranties limited by their terms to a specific date), (iii) except for the
Existing Defaults, no Default has occurred and is continuing and no event or
condition has occurred that with the giving of notice or lapse of time or both
would be a Default, (iv) except for the Existing Defaults, Borrower and each
Obligated Party are in full compliance with all covenants and agreements
contained in the Loan Documents, and (v) as of the date hereof, there are no
claims or offsets against or defenses or counterclaims to the obligations of
Borrower or any Obligated Party under the Loan Documents. TO INDUCE THE AGENT
AND THE BANKS TO ENTER INTO THIS AGREEMENT, THE BORROWER AND EACH OBLIGATED
PARTY (by its execution of this Amendment) WAIVE ANY AND ALL SUCH CLAIMS,
OFFSETS, DEFENSES, OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING PRIOR TO
THE DATE HEREOF AND AGREE TO STRICTLY COMPLY WITH THE TERMS OF THE LOAN
DOCUMENTS.
Section 4.3 Survival of Representations and Warranties. All representations
and warranties made in this Amendment shall survive the execution and delivery
of this Amendment and the other Loan Documents, and no investigation by Agent or
any Bank or any closing shall affect the representations and warranties or the
right of Agent or any Bank to rely upon them.
Section 4.4 Reference to Agreements. Each of the Loan Documents, including
the Credit Agreement, are amended so that any reference in such Loan Documents
to the Credit Agreement shall mean a reference to the Credit Agreement as
amended hereby.
Section 4.5 Severability. Any provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 4.6 Applicable Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Texas.
Section 4.7 Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of Agent, the Banks and Borrower and their respective
successors and assigns, except Borrower may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of the Banks.
Section 4.8 Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
agreement.
Section 4.9 Effect of Waiver. No consent or waiver, express or implied, by
Agent or any Bank to or for any breach of or deviation from any covenant,
condition or duty by Borrower or any Obligated Party shall be deemed a consent
or waiver to or of any other breach of the same or any other covenant, condition
or duty.
Section 4.10 Headings. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 4.11 ENTIRE AGREEMENT. THIS AMENDMENT EMBODIES THE FINAL, ENTIRE
AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Executed as of the date first written above.
Borrower:
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DARLING INTERNATIONAL INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, Treasurer
AGENT:
------
BANKBOSTON, N.A., individually as a Bank
and as the Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Managing Director
CO-AGENTS:
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CREDIT LYONNAIS NEW YORK BRANCH
By:
Name:
Title:
COMERICA BANK
By:
Name:
Title:
▇▇▇▇▇ FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
By:
Name:
Title:
OTHER BANKS:
------------
Each of the undersigned Obligated Parties consents and agrees to this
Amendment (including, without limitation, Sections 3.3 and 4.2) and agrees that
the Guaranty to which it is a party shall remain in full force and effect and
shall continue to be its legal, valid and binding obligation enforceable against
it in accordance with its terms.
Obligated Parties:
International Processing Corporation
International Transportation Service, Inc.
The Standard Tallow Corporation
Darling Restaurant Services Inc.
Esteem Products Inc.
By:
▇▇▇▇ ▇▇▇▇▇▇▇▇, Treasurer of each
Obligated Party
SCHEDULE 1.1
TO
DARLING INTERNATIONAL
FOURTH AMENDMENT TO CREDIT AGREEMENT
Bank
Revolver
Commitment