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Exhibit 10.7
FORBEARANCE AGREEMENT AND FOURTH AMENDMENT TO AMENDED AND
RESTATED CREDIT AGREEMENT
THIS FORBEARANCE AGREEMENT AND FOURTH AMENDMENT TO AMENDED AND RESTATED
CREDIT AGREEMENT (this "Agreement") is entered into as of March 31, 1999 and
amends in certain respects the Amended and Restated Credit Agreement entered
into as of June 24, 1997 as amended by the FIRST AMENDMENT TO AMENDED AND
RESTATED CREDIT AGREEMENT entered into as of July 14.1997, the SECOND AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT entered into as of December 3, 1997,
and the THIRD AMENDMENT TO AMENDED and RESTATED CREDIT AGREEMENT entered into as
of June 30, 1998 (such Amended and Restated Credit Agreement, as so further
amended, being referred to as the "Credit Agreement") by and among CRONOS
CONTAINERS N.V., a Netherlands Antilles corporation, CRONOS CONTAINERS LTD, an
English corporation, CRONOS EQUIPMENT LTD, an English corporation, CRONOS
CONTAINERS INC., a California corporation, CRONOS CAPITAL CORP., a California
corporation, and CRONOS EQUIPMENT (BERMUDA) LIMITED, a Bermuda. corporation, as
joint and several borrowers (the "Borrowers"); each of the banks that is or,
pursuant to the terms of the Credit Agreement, may become a party thereto
(individually, a "Bank" and collectively, the "Banks"), and FLEET BANK N.A., as
agent for the Banks (in such capacity, together with its successors in such
capacity, the "Agent").
WITNESSETH:
WHEREAS the Borrowers, the Banks and the Agent are parties to the Credit
Agreement, and whereas certain Events of Default exist thereunder; and
WHEREAS the Borrowers are pursuing various options to enable the
Borrowers to repay the Borrowers' indebtedness to the Banks and to obtain
alternative sources of cash for their working capital needs, and, to permit the
same to continue, the Borrowers have requested the Banks and the Agent to
forbear from exercising rights and remedies with respect to certain Events of
Default, to waive certain Events of Default and to amend the Credit Agreement in
certain respects, as hereinafter provided; and
WHEREAS, the Banks and the Agent are willing to agree to such
forbearance, waiver and amendments subject to the terms and conditions
hereinafter set forth;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrowers, the Banks and the
Agent hereby agree as follows:
SECTION 1. Defined Terms. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings ascribed to them in
the Credit Agreement.
SECTION 2. Acknowledgement. The Borrowers acknowledge that they
have failed to pay the Loans on January 8, 1999, as required pursuant to the
Credit Agreement (hereinafter the "Maturity Default"), that all indebtedness
incurred under the Loan Documents, including the Loans and all other
indebtedness, obligations and liabilities of the Borrowers to the Banks and the
Agent of every kind and description (all of the foregoing, whether now existing
or hereafter arising being collectively called the "Obligations"), is now due
and payable in full, and that Banks and the Agent are now entitled under the
Credit Agreement, the Notes and the Security Agreement and the other Loan
Documents to exercise their remedies thereunder. The Borrowers acknowledge that
(i) the Banks have no obligation to extend or renew Loans or any other
Obligation and that all demand notices required to be given or made by the Banks
and the Agent have been timely and effectively given or made, and the same have
been timely and effectively received by the Borrowers and (ii) the aggregate
outstanding principal amount of the Loans as of the date hereof is
[$25,830,684.00]. Each of the Borrowers further represents and warrants that it
has no defenses or setoffs to the payment of the Obligations.
SECTION 3. Forbearance. The Banks agree to forbear in the exercise of
their rights and remedies under the Security Agreement and the other Loan
Documents and under applicable law which would otherwise be exercisable by the
Banks by reason of the Maturity Default., provided, that this forbearance (i)
shall not apply to
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exercise of rights and remedies with respect to the Collateral
Assignment-Palatin Loans and (ii) is expressly conditioned upon the Company's
compliance with and satisfaction of each and every one of the covenants, terms
and conditions of this Agreement, including, without limitation, the covenants
and agreements set forth in Section 7 thereof and the covenants, terms and
conditions of the other Loan Documents, as modified by this Agreement.
SECTION 4. Credit Agreement Amendments (a) Effective as of the date
hereof (the "Effective Date"), but subject to satisfaction of all of the
conditions act forth in Section 5 hereof, the Credit Agreement is hereby amended
as follows:
(i) The definition of "Amortization Schedule" set forth in Section 1.01
is amended and restated to read in its entirety as follows:
"Amortization Schedule" - the following schedule for amortization of the
Loans:
Principal Payment Date Principal Amount
---------------------- ----------------
April 15, 1999 $1,500,000.00 (which amount shall not be reduced by
the proceeds from the disposition of any collateral
(other than containers) which secure the Loans or
prepayments pursuant to Section 2.03.)
September 30 1999 The outstanding principal balance of the Loans
(ii) The definition of "Borrowing Base" set forth in Section 1.01 is
hereby amended to add the following additional proviso at the end of the first
sentence thereof:
"and provided further, that the percentages above in this
sentence of eighty percent (80%) shall automatically and without any further
amendment or confirmation reduce to seventy percent (70%) effective upon
receipt by the Agent for the benefit of the Banks. In reduction of the. Loans
of at least $2,600,000 in the aggregate of proceeds from the sale of any of the
Transamerica Shares or any sale of shares of capital stock of the Guarantor
pledged to secure the Palatin Loans and the Borrowers shall immediately
thereupon make (and shall continue to make) any prepayments required as a
result thereof in accordance with Section 2.03 of the Credit Agreement"
(iii) The definition of "Maturity Date" set forth in Section 1.01 is
hereby amended to read in its entirety as follows:
"Maturity Date" - September 30, 1999.
(iv) The definition of "Principal Office" set forth in Section 1.01 is
hereby amended and restated to read in its entirety as follows:
"Principal Office" - the principal office of the Agent, currently
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, Attn: Managed Assets Division.
(v) Section 2.01 is hereby amended and restated in its entirety to read
as follows "The [$25,830,684.00] in outstanding principal mount of the Loans
shall he payable by the Borrowers in accordance with the Amortization Schedule"
subject to earlier prepayment as otherwise provided in this Agreement.
(vi) Section 2.02(b) is hereby amended and restated to read in
its entirety as follows:
"(b) The Borrowers shall pay to the Borrower's Administrative Agent.
and the Borrowers' Administrative Agent shall pay to the Agent for the
respective accounts of each of the Banks which are parties to this Agreement
further extension fees (the "Further Extension Fees") on the following dates and
in the following amounts, all of which Further Extension Fees are deemed fully
earned and non-refundable;
DATE AMOUNT
---- ------
April 3 0, 1999 $83,334
May 31, 1999 $83,333
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June 30, 1999 $83,333,
September 30, 1999 $1,000,000; provided that if the Obligations
are paid in full by April 30, 1999, then such
$1,000,000 fee shall be reduced to $200,000; if
the Obligations are paid in full by May 31.
1999, such fee shall be $300,000; if the
Obligations are paid in full by June 30, 1999,
such. fee shall be $400,000 or if the
Obligations are paid in full by July 31, 1999,
such fee shall be $500,000
(vi) Section 2.12(a)(v) is hereby amended and restated to read in its
entirety as follows:
"(v) by no later than April 15, 1999, in furtherance and
confirmation of the terms and provisions of the Collateral
Assignment, Palatin Loans and the pledge of the Palatin Loans and the
collateral therefor, including shares of capital stock of the
Guarantor, Cronos Bermuda shall deliver to the. Agent certificates
representing 463,636 shares of capital stock of the Guarantor registered
in the name of ▇▇▇▇▇▇▇ Business Inc., registered or duly endorsed for
registration into the name of the Agent. The Borrowers' acknowledgement
that the Palatin Loans are in default, hereby agree to cooperate fully
with the Agent and the Banks in the collection and foreclosure of the
Palatin Loans and the collateral therefor,
(b) Except as specifically. amended or modified above, all of the terms
of the Credit Agreement shall remain unchanged and, as so amended the
Credit Agreement shall continue in full force and effect.
SECTION 5. Effectiveness. The effectiveness of this Agreement shall be
conditioned upon (a) the execution of this Agreement: by the Agent and
the Banks and receipt by the Agent of counterparts of this Agreement
executed by each of the Borrowers and (b) fulfillment to the
satisfaction of the Agent of each of the following conditions:
(i) The Agent and the Banks shall have received the draft audited
consolidated financial statements of the Borrowers and the Guarantor for
the fiscal year ended December 31, 1998 (the "1998 Draft Financial
Statements") and the same shall be satisfactory to the Agent and the
Banks.
(ii) The Guarantor shall have executed and delivered to the Agent with
sufficient original counterparts, for each Bank, a Confirmation of Loan
Documents in form and substance satisfactory to the Agent.
(iii) The Agent and cach Bank shall have received a Compliance
Certificate dated as of the Effective Date certifying inter alia, that,
subject to the Maturity Default and the waivers referred to in Section 8
below, (x) each of the Borrowers shall have complied and shall then be
in compliance with all of the terms, covenants and conditions of this
Agreement and the Credit Agreement, (y) the representations and
warranties contained in, Article 3 of this Agreement and the Credit
Agreement shall be true and correct on the due hereof. and (z) other
than the Maturity Default no Default or Event of Default exists
immediately prior to and after giving effect to the execution and
delivery of this Agreement.
SECTION 6. Representations and Warranties. In order to induce the Banks
to execute this Agreement, the Borrowers hereby represent and warrant to
the Agent and the Banks as follows, which representations and warranties
shall survive the execution and delivery of this Agreement.
(a) Each of the Borrowers and the Guarantor (collectively, the "Loan
Parties") is; a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite power and authority corporate and otherwise to conduct its
business, to own its property, and to execute, deliver and perform all
of its obligations under this Agreement. The Credit Agreement, as
amended hereby and each of the other instruments or documents being
executed and delivered in connection herewith (collectively the
"Agreement Documents"). Each of the Loan Parties is qualified to do
business and is in good standing in every jurisdiction where the nature
of its business and ownership of its properties requires it to be to
qualified and where failure so to qualify might materially and adversely
affect its financial condition and business.
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(b)(i) Each of the Loan Parties has taken. or within thirty (15) days
following the Effective Date will have taken, all necessary action
(corporate and otherwise to authorize and ratify the execution, delivery
and performance of this Agreement, the Credit Agreement as amended
hereby, and the other Agreement Documents to be executed by it: and
(ii) the execution, delivery and performance by each of the Loan Parties
of this Agreement the Credit Agreement, as amended hereby and the other
Agreement Documents are not in contravention of any provision of law or
of any agreement or indenture by which the applicable Loan Party is
bound or of the respective Articles of Incorporation or By-Laws of the
Loan Parties and do not require the consent or approval of any
governmental body, agency, authority, or other Person which has not been
obtained and a copy thereof furnished to the Agent and will not result
in the creation or imposition of any Lien upon any of the property or
assets of the Borrowers, except for the Liens in favor of the Agent and
the Banks created under the Security Agreement and the other Security
Documents.
(c) As of the Effective Date, this Agreement and, as of the date of
execution and delivery thereof, each of the other Agreement Documents
will have been duly and validly executed and delivered by each of the
Loan Parties party thereto and each Agreement Document and the Credit
Agreement, as amended hereby, will be the legal, valid and binding
obligation of such Loan Party, enforceable against it in accordance with
its respective terms, except to the extent that the validity or
enforceability thereof may be limited by bankruptcy, insolvency.
reorganization and other similar laws affecting creditors rights
generally
(d) The 1998 Draft Financial Statements and the certificates, opinions
or any other statement made or furnished in writing to the Agent or any
Bank by or on behalf of "any Loan Party" in connection with this
Agreement or the transactions contemplated hereby, do not contain any
untrue statement of a material fact or to state a material fact
necessary in order to make the statements contained therein or herein
not misleading
(e) As of the Effective Date, after giving effect to the waivers in
Section 7 below, no Defaults or Events of Default exist under the Credit
Agreement other than the Maturity Default
(f) After giving effect to the waivers referred in Section 8 below,
the representations and warranties contained in the Loan Documents are
true and correct in all material respects on the Effective Date with the
same effect as though such representations and warranties had been
restated at and as of the Effective Date and such representations and
warranties are incorporated by reference herein
SECTION 7. Other Covenants. (a) The Borrowers hereby confirm their
continuing obligations to pay all amounts due and payable under Section
11.01 of the Credit Agreement, including, without limitation, under
subsection (iii) thereof, and that such obligations include, and will
continue to include. without limitation, reimbursement of all expenses
of the Agent and each Bank to attend meetings with representatives of
the Borrowers. The Borrowers shall reimburse all such expenses incurred
in connection with the meeting of the Lenders in New York in October
1998 by no later than April 15, 1999.
(b) The Guarantor, by its execution of its consent to this
Agreement below, hereby (i) agrees that it shall not subject or covenant
to subject the Transamerica Shares (as defined in the Credit Agreement)
to any lien in favor of any party other than the Agent on behalf of the
Banks, (ii) confirms its continuing obligation to execute and deliver
the Pledge Agreement (the "Pledge Agreement") referred to in paragraph 2
of the Confirmation of Guaranties, Agreement and Power of Attorney dated
as of June 30, 1998 (the "Confirmation") and (iii) agrees to execute and
deliver the Pledge Agreement and all agreements and documents
contemplated thereby, in accordance with the Confirmation, by no later
than April 15,1999
SECTION 8. Waivers of Defaults. (a) Subject to the
representations and warranties herein contained the Agent and the Banks
hereby waive the Event of Default arising from the Borrowers' failure to
pay the principal amount of the Loans due and payable on September 30,
1998.
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(b) Based upon the 1998 Draft Financial Statements, the Banks and the
Agent hereby waive the defaults in the Borrowers' observance of the
covenants set in Section 6.08 of the Credit Agreement as at and for the
fourth quarter ended December 31, 1998, provided that such waiver shall
only be effective to the extent the Borrowers' and the Guarantor's
audited financial statements as at such date and for such period are
consistent with the draft 1998 Financial Statements.
SECTION 9. Releases. Each of the Borrowers and the Gurantor by
its execution and delivery below hereby unconditionally releases, waives
and forever discharges the Agent and each of the Banks and their
respective parent other affiliates, directors, officers, shareholders,
employees and agents (collectively, the "Release Parties") from any and
all claims, offsets, actions, causes of action, suits, debts, dues, sums
of money, accounts, reckonings, bonds, bills, Specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses,
damages, judgements, extents, executions, claims and demands whatsoever,
whether known or unknown, in law, admiralty or equity, which against the
Release Parties, the Borrowers, the Guarantor and their respective
successors and assigns ever had, now have or hereafter can, shall or may
have, for, upon, or by reason of any matter, cause or thing whatsoever
from the beginning of the world to the day of the date of this
Agreement.
SECTION 10. Reference to and Effect on Loan Documents
(a) On and after the Effective Date, each reference in the Credit
Agreement to "this Agreement "hereunder" "hereof", "herein" or words
of like import, and each reference in the other Loan Documents to the
Credit Agreement, shall mean and be a reference to the Credit Agreement
as amended hereby. This Agreement shall constitute a Loan Document under
the Credit Agreement.
(b) Except as otherwise expressly set forth herein, the
execution, delivery and effectiveness of this Agreement shall not
operate as a waiver of any right, power or remedy of any Bank. or the
Agent under the Credit Agreement or any of the other Loan Documents,
shall not constitute a waiver of any provision of the Credit Agreement
or any of the other Loan Documents, nor shall it affect or diminish any
Bank's or the Agent's rights to hereafter require strict performance of
any provision of the Credit Agreement or any of the other Loan
Documents.
SECTION 11. Reaffirmation of Security Interest. Each of the Borrowers
hereby reaffirms as of the date hereof each and every security interest
and lien granted in favor of the Agent and the Banks under the Loan
Documents, and agrees and acknowledges that such security interests and
liens shall continue from and after the date hereof and shall remain in
full force and effect from and after the date hereof, in each case after
giving effect to the Credit Agreement as amended by this Agreement, and
the obligations secured thereby and thereunder shall include the
Borrowers' obligations under the Credit Agreement as amended by this
Agreement. Each such reaffirmed security interest and lien remains and
shall continue to remain in full force and effect and is hereby in all
respects ratified and confirmed and all references in the Security
Documents to the Credit Agreement shall refer to the Credit Agreement as
amended or modified by this Agreement.
SECTION 12. Further Assurances. Each of the Borrowers hereby agrees to
do such further acts and things and to execute, deliver and acknowledge
such additional agreements, powers and instruments as the Agent or any
Bank may reasonably require to carry into effect the purposes of this
Agreement or any agreement, direct or indirect executed and delivered or
to be executed and delivered pursuant hereto or in connection herewith.
SECTION 13. Conditions Subsequent.
(a) On or prior to April 15, 1999, the Borrowers shall cause each of the
following conditions to be met:
(i) Receipt by the Agent of opinions of counsel to the Borrowers in form
and substance satisfactory to the Agent and the Banks;
(ii) Receipt by the Agent and the Banks of the audited financial
statements of the Borrowers and the Guarantor required pursuant to
Section 5.01 of the Credit Agreement for the fiscal year ended December
31, 1998.
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(iii) Receipt by the Agent of the Pledge Agreement, duly executed by the
Guarantor, and such other documents, including evidence of due
authorization, execution and delivery and appropriate opinions of
counsel, as the Agent shall require in connection therewith, all in form
and substance satisfactory to the Agent:
(iv) Receipt by the Agent of evidence of insurance on the Financed
Containers included in the Borrowing Base and of the Borrowers'
liability insurance policies, naming the Agent, as loss payee, and the
Banks and the Agents as additional insured in form and substance
satisfactory to Agent; and
(v) Receipt by the Agent, with sufficient original counterparts for each
Bank, from the Borrowers and the Guarantor, of (x) Certificates, each of
which shall be in form and substance satisfactory to the Agent,
certifying that there have been no changes to its articles of
incorporation as amended and its by-laws, as amended, subsequent to the
date of the most recent certificates with respect thereto delivered to
the Agent, (y) an incumbency certificate containing specimen
signature(s) of the person(s) authorized to execute this Agreement and
any and all agreements, documents and instruments to be executed and
delivered pursuant hereto, (z) resolutions of its Board of Directors
authorizing (1) the execution, delivery and performance of the Agreement
Documents to which it is a party (2) the consummation of the
transactions contemplated thereby and (3) all other actions to be taken
by it in connection herewith or therewith.
(vi) Receipt by the Agent of good standing certificates for each of the
Borrowers and Guarantor from their respective jurisdictions of
incorporation.
(vii) Receipt by the Agent of copies of all consents, approvals and
waivers required in connection with the execution, delivery and
performance of the Agreement Documents.
(viii) All proceedings in connection with the transactions contemplated
by this Agreement and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Agent and the Agent, and each
Bank, upon request by such Bank, shall have received all information and
such counterpart originals or certified or other copies of such
documents as the Agent may reasonably request prior to the date hereof.
(ix) All legal matters incident to the effectiveness of this Agreement
shall be satisfactory to counsel the Agent. The Agent will advise the
Borrowers of any such matters prior to the date hereof.
(x) The Agent shall have received such other instruments agreements and
documents as it shall reasonably require in connection with this
Agreement and the matters referred to above.
(b) The failure by the Borrowers to fulfill any of the conditions
subsequent set forth in paragraph (a) above shall constitute an Event of
Default.
SECTION 14. Costs and Expenses. Promptly upon the submission of
requests therefor the Borrowers shall pay all costs and expenses of the
Agent (including attorneys' fees and expense) incurred in connection
with the negotiation, preparation execution end delivery of this
Agreement and the Agreement Documents
SECTION 15. Governing Law THE VALIDITY. INTERPRETATION AND ENFORCEMENT
OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
SECTION 16. Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto in seperate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. Execution and delivery of this Agreement by facsimile
transmission shall constitute execution and delivery of this Agreement
for all purposes, with the same force and effect as and delivery of an
originally manually signed copy hereof.
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SECTION 17. Headings. The headings of the several sections of this
Agreement are inserted for convenience only and shall not in any way
affect the meaning or construction of any provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their proper and duly authorized officer as of
the date set forth above.
BORROWERS:
CRONOS CONTAINERS N.V.
By: /s/ ▇ ▇ ▇▇▇▇▇▇▇
---------------------------
Name: ▇ ▇ ▇▇▇▇▇▇▇
Title: Director
CRONOS CONTAINERS LTD
By: /s/ ▇ ▇ ▇▇▇▇▇▇▇
---------------------------
Name: ▇ ▇ ▇▇▇▇▇▇▇
Title: Director
CRONOS EQUIPMENT LTD
By: /s/ ▇ ▇ ▇▇▇▇▇▇▇
---------------------------
Name: ▇ ▇ ▇▇▇▇▇▇▇
Title: Director
CRONOS CONTAINERS INC.
By: /s/ ▇ ▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇
Title: Director
CRONOS CAPITAL CORP.
By: /s/ ▇ ▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇
Title: Director
CRONOS EQUIPMENT (BERMUDA) LTD
By: /s/ ▇ ▇ ▇▇▇▇▇▇▇
---------------------------
Name: ▇ ▇ ▇▇▇▇▇▇▇
Title: Director
CONSENTED AND AGREED TO, INCLUDING, WITHOUT LIMITATION, WITH RESPECT
TO SECTIONS 7 and 9 ABOVE:
THE CRONOS GROUP
By: /s/ ▇ ▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇
Title: Director
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AGENT:
FLEET BANK, N.A.
As Agent
By: /s/ ▇ ▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇
Title: Senior Vice President
BANKS:
FLEET BANK, N.A.
By: /s/ ▇ ▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇
Title: Senior Vice President
BANKBOSTON N.A.
By: /s/ ▇ ▇ ▇▇▇▇▇▇
---------------------------
Name: W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
FIRST NATIONAL UNION BANK
By: /s/ A D Brehony
---------------------------
Name: ▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Title: Vice President
UNION BANK OF CALIFORNIA
By: /s/ ▇ ▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇
Title: Vice President
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