Exhibit 10.1
CONSENT AND FIRST AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
This Consent and First Amendment to Third Amended and Restated Credit
Agreement (this "Agreement") is entered into this 19th day of September, 2003
among PORTOLA PACKAGING, INC., a Delaware corporation, as Borrower, and ▇▇▇▇▇▇
FINANCIAL, INC., a Delaware corporation ("▇▇▇▇▇▇"), for itself, as Agent,
Issuing Lender and Lender.
W I T N E S S E T H:
WHEREAS, Borrower and ▇▇▇▇▇▇, as Agent, Issuing Lender and a Lender,
are parties to that certain Third Amended and Restated Credit Agreement dated as
of September 29, 2000 (as heretofore amended, the "Credit Agreement");
WHEREAS, pursuant to those certain Stock Purchase Agreements and
Equity Purchase Agreements dated as of September 1, 2003 among Borrower and the
respective sellers thereunder (collectively, the "Tech Companies Acquisition
Agreements" and, together with the other instruments and agreements executed and
delivered pursuant thereto, but excluding the Loan Documents, the "Tech
Companies Acquisition Documents"), Borrower has agreed to acquire (the "Tech
Companies Acquisition") all of the outstanding capital stock and partnership or
other equity interests of Tech Industries, Inc. ("Tech Industries"), Tech
Industries U.K. Ltd. ("Tech Industries UK"), ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Limited
Partnership ("84 Fairmount Street") and Fairmount Realty Associates ("Fairmount
Realty" and, together with Tech Industries, Tech Industries UK and ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, the "Tech Companies").
WHEREAS, Borrower has requested that ▇▇▇▇▇▇, as Agent and Lender,
consent to the Tech Companies Acquisition and that, in connection therewith, the
Credit Agreement be amended as set forth herein, and ▇▇▇▇▇▇ is willing to grant
such consent and to amend the Credit Agreement upon the terms and subject to the
conditions set forth herein;
NOW THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein and in the Credit Agreement, the parties agree as
follows:
Section 1. DEFINITIONS. Capitalized terms used herein without
definition and defined in the Credit Agreement are used herein as defined
therein.
Section 2. CONSENT. Subject to the satisfaction of the terms and
conditions set forth herein, ▇▇▇▇▇▇, as Agent and Lender, hereby consents to the
consummation of the Tech Companies Acquisition on the date hereof upon the terms
set forth in the Tech Companies Acquisition Agreement as in effect on the date
hereof.
The consent set forth above shall be limited precisely as written and
shall not be deemed or otherwise construed to constitute a waiver of any
provisions of the Credit Agreement in connection with any other transaction.
Section 3. AMENDMENTS TO CREDIT AGREEMENT. Subject to the satisfaction
of the terms and conditions set forth herein, the amendments to the Credit
Agreement set forth in this SECTION 3 shall become effective as of the date
hereof.
3.1 The first sentence of SUBSECTION 1.1(A) of the Credit Agreement is
hereby amended to read as follows:
Each Lender agrees, severally and not jointly, to lend to
Borrower from the Closing Date to August 31, 2004 (the "Commitment
Termination Date"), its Pro Rata Share of the Revolving Loans
requested by Borrower to be made by Lenders under this SUBSECTION
1.1(A), up to an aggregate maximum for all Lenders of Fifty-Four
Million Dollars ($54,000,000) (as the same may be reduced from time to
time hereunder, the "Revolving Loan Commitment").
3.2 The definitions of "Base Rate", "Base Rate Margin" and "LIBOR
Margin" set forth in SUBSECTION 1.2(A) of the Credit Agreement are hereby
amended to read as follows with respect to the calculation of interest accruing
on the Loans from and after the First Amendment Date:
"Base Rate" means, for any day, a floating rate equal to the
higher of (i) the rate publicly quoted from time to time by THE WALL
STREET JOURNAL as the "base rate on corporate loans posted by at least
75% of the nation's 30 largest banks" (or, if THE WALL STREET JOURNAL
ceases quoting a base rate of the type described, the highest per
annum rate of interest published by the Federal Reserve Board in
Federal Reserve statistical release H.15 (519) entitled "Selected
Interest Rates" as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Effective Rate plus 50 basis points per annum.
Each change in any interest rate provided for in the Agreement based
upon the Base Rate shall take effect at the time of such change in the
Base Rate.
"Base Rate Margin" means 1.50% per annum.
"LIBOR Margin" means 2.75% per annum.
3.3 SUBSECTION 1.2(A) of the Credit Agreement is hereby amended by
deleting the two paragraphs immediately following the definition of "LIBOR
Margin" set forth therein.
3.4 The first sentence of SUBSECTION 1.2(B) of the Credit Agreement is
hereby amended to read as follows with respect to the calculation of commitment
fees from and after the First Amendment Date:
From the First Amendment Date, Borrower shall pay Agent, for the
benefit of all Lenders committed to make Revolving Loans (based upon
their respective Pro Rata Shares), a fee payable in US Dollars in an
amount equal to (1)(a) the Revolving Loan Commitment LESS (b) the sum
of (I) the average daily balance of the Revolving Loans PLUS (II) the
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average daily aggregate amount of outstanding Letter of Credit
Liability, in each case during the preceding month, MULTIPLIED BY (2)
one-half of one percent (0.50%) per annum.
3.5 The first sentence of SUBSECTION 1.2(C) of the Credit Agreement is
hereby amended to read as follows with respect to the calculation of Letter of
Credit fees from and after the First Amendment Date:
From the First Amendment Date, Borrower shall pay Agent a fee in
US Dollars for each Letter of Credit from the date of issuance to the
date of termination equal to the average daily aggregate amount of
outstanding Letter of Credit Liability during the preceding month
MULTIPLIED BY two and three-quarters percent (2.75%) per annum.
3.6 SUBSECTION 1.3(A) of the Credit Agreement is hereby amended to
read as follows:
(A) CERTAIN FEES. Borrower shall pay to ▇▇▇▇▇▇, individually, the
fees specified in that certain letter agreement dated the First
Amendment Date (the "Fee Letter"), between Borrower and ▇▇▇▇▇▇ in the
amounts and at the times specified therein.
3.7 SECTION 2 of the Credit Agreement is hereby amended by inserting
the following as SUBSECTIONS 2.7 and 2.8:
2.7 ENVIRONMENTAL MATTERS. Borrower shall and shall cause each of
its Subsidiaries to: (a) conduct its operations and keep and maintain
its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance that could not
reasonably be expected to have a Material Adverse Effect; (b)
implement any and all investigation, remediation, removal and response
actions that are appropriate or necessary to maintain the value and
marketability of the Real Estate or to otherwise comply with
Environmental Laws and Environmental Permits pertaining to the
presence, generation, treatment, storage, use, disposal,
transportation or Release of any Hazardous Material on, at, in, under,
above, to, from or about any of its Real Estate; (c) notify Agent
promptly after Borrower, any of its Subsidiaries or any other Person
within its control becomes aware of any violation of Environmental
Laws or Environmental Permits or any Release on, at, in, under, above,
to, from or about any Real Estate that is reasonably likely to result
in Environmental Liabilities to a Loan Party or its Subsidiaries in
excess of $50,000; and (d) promptly forward to Agent a copy of any
order, notice, request for information or any communication or report
received by Borrower, any of its Subsidiaries or any Person within its
control in connection with any such violation or Release or any other
matter relating to any Environmental Laws or Environmental Permits
that could reasonably be expected to result in Environmental
Liabilities in excess of
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$50,000, in each case whether or not the Environmental Protection
Agency or any governmental authority has taken or threatened any
action in connection with any such violation, Release or other matter.
If Agent at any time has a reasonable basis to believe that there may
be a violation of any Environmental Laws or Environmental Permits by
any Loan Party or any other Person under the control of any Loan Party
or any Environmental Liability arising thereunder, or a Release of
Hazardous Materials on, at, in, under, above, to, from or about any of
its Real Estate, that, in each case, could reasonably be expected to
have a Material Adverse Effect, then each Loan Party and its
Subsidiaries shall, upon Agent's written request (i) cause the
performance of such environmental audits including subsurface sampling
of soil and groundwater, and preparation of such environmental
reports, at Borrower's expense, as Agent may from time to time
reasonably request, which shall be conducted by reputable
environmental consulting firms reasonably acceptable to Agent and
shall be in form and substance reasonably acceptable to Agent, and
(ii) permit Agent or its representatives to have access to all Real
Estate for the purpose of conducting such environmental audits and
testing as Agent deems appropriate, including subsurface sampling of
soil and groundwater. Borrower shall reimburse Agent for the costs of
such audits and tests and the same will constitute a part of the
Obligations secured hereunder. Without limiting the generality of the
foregoing, Borrower will cause Tech Industries to report, in
accordance with the requirements of the Rhode Island Department of
Environmental Management, elevated arsenic and TPH in ground water at
Tech Industries' facilities in Woonsocket, Rhode Island.
2.8 DISSOLUTION OF CERTAIN SUBSIDIARIES. Within sixty (60) days
following the First Amendment Date, Borrower shall cause each of Tech
Industries U.K. Ltd., ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Limited Partnership and
Fairmount Realty Associates to be dissolved and liquidated.
3.8 SUBSECTION 3.1(F) of the Credit Agreement is hereby amended to
read as follows:
(F) Indebtedness outstanding at the First Amendment Date and
shown on SCHEDULE 3.1; and
3.9 CLAUSE (10) of the definition of "Permitted Encumbrances"
contained in SUBSECTION 3.2(A) of the Credit Agreement is hereby amended to read
as follows:
(10) Liens existing on the Closing Date (and, in the case of Tech
Industries, Liens existing on the First Amendment Date) and renewals
and extensions thereof, which Liens are set forth on SCHEDULE
3.2(A)(10) hereto;
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3.10 SUBSECTION 3.3(D) of the Credit Agreement is hereby amended to
read as follows:
(D) Investments existing on the First Amendment Date and set
forth in SUBSCHEDULE 7.4 and extensions and renewals thereof,
including promotional loans of equipment to customers pursuant to the
terms of SUBSECTION 3.7(C);
3.11 SUBSECTION 3.4(E) of the Credit Agreement is hereby amended to
read as follows:
(E) those existing on the First Amendment Date and described in
SCHEDULE 3.4 annexed hereto;
3.12 SECTION 3 of the Credit Agreement is hereby amended by adding the
following new SUBSECTIONS 3.17 and 3.18 at the end thereof:
3.17 PRESS RELEASE; PUBLIC OFFERING MATERIALS. Borrower agrees
that neither it nor its Affiliates will in the future issue any press
releases or other public disclosure, including any prospectus, proxy
statement or other materials filed with any governmental authority
relating to a public offering of the stock of any Loan Party, using
the name of ▇▇▇▇▇▇ or General Electric Capital Corporation ("GE
Capital") or its affiliates or referring to this Agreement, the other
Loan Documents or the Related Transactions Documents without at least
two (2) Business Days' prior notice to ▇▇▇▇▇▇ and without the prior
written consent of ▇▇▇▇▇▇ unless (and only to the extent that) such
Loan Party or Affiliate is required to do so under law and then, in
any event, such Loan Party or Affiliate will consult with ▇▇▇▇▇▇
before issuing such press release or other public disclosure.
3.18 HAZARDOUS MATERIALS. Borrower shall not and shall not cause
or permit its Subsidiaries to cause or permit a Release of any
Hazardous Material on, at, in, under, above, to, from or about any of
the Real Estate where such Release would (a) violate in any respect,
or form the basis for any Environmental Liabilities by the Loan
Parties or any of their Subsidiaries under, any Environmental Laws or
Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral,
other than such violations or Environmental Liabilities that could not
reasonably be expected to have a Material Adverse Effect.
3.13 SUBSECTIONS 4.1, 4.2, 4.3 and 4.4 of the Credit agreement are
hereby amended to read as follows with respect to periods ending after August
31, 2003:
4.1 LEASE LIMITS; CAPITAL EXPENDITURES.
(A) Borrower will not and will not permit any of its Restricted
Subsidiaries directly or indirectly to become or remain liable in any
way,
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whether directly or by assignment or as a guarantor or other surety,
for the obligations of the lessee under any operating lease, synthetic
lease or similar off-balance sheet financing, if the aggregate amount
of all rents (or substantially equivalent payments) paid by Borrower
and its Restricted Subsidiaries under all such leases would exceed
$4,750,000 (or the equivalent thereof in another currency) in any
fiscal year of Borrower.
(B) Borrower and its Subsidiaries on a consolidated basis shall
not make Capital Expenditures during any fiscal year of Borrower that
exceed $17,500,000 in the aggregate for any such fiscal year.
4.2 FIXED CHARGE COVERAGE. Borrower shall not permit the Fixed
Charge Coverage for any twelve (12) month period ending on the last
day of each fiscal quarter set forth below to be less than the ratio
set forth below for such period.
DATE RATIO
November 30, 2003 1.15
February 28, 2004 1.00
May 31, 2004 1.10
August 31, 2004 and each fiscal 1.20
quarter end thereafter
4.3 TOTAL INDEBTEDNESS TO EBITDA RATIO. Borrower shall not permit
the ratio of Total Indebtedness, minus Borrower's total cash and Cash
Equivalents, calculated as of any date set forth below, to EBITDA for
the twelve (12) month period ending on such day to be greater than the
ratio set forth below for such date.
DATE RATIO
November 30, 2003 5.00
February 28, 2004 5.00
May 31, 2004 4.75
August 31, 2004 and the last day 4.25
of each fiscal quarter thereafter
4.4 MAINTENANCE OF MINIMUM AVAILABILITY. Borrower shall maintain
an aggregate Availability of at least (a) $3,000,000 at all times
during the period from the First Amendment Date through February 29,
2004, (b) $1,000,000 at all times during the period from March 1, 2004
through March 31, 2004, (c) $1,500,000 at all times during the period
from April 1, 2004 through ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) $2,000,000 at all times
during the period from May 1, 2004 through May 31, 2004 and (e)
$3,000,000 at all times from and after June 1, 2004.
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3.14 SUBSECTION 6.1(C) of the Credit Agreement is hereby amended to
read as follows:
(C) BREACH OF CERTAIN PROVISIONS. (1) Failure of Borrower to
perform or comply with any term or condition contained in that portion
of SUBSECTION 2.2 relating to Borrower's obligation to maintain
insurance, SUBSECTION 2.3, SECTION 3 or SECTION 4 or (2) failure of
either Borrower or Tech Industries to perform or comply with any term
or condition contained in SECTION 7 of the Security Agreement to which
it is a party or (3) failure of either Canadian Restricted Subsidiary
to perform or comply with any term or condition contained in SECTION 7
of the Security Agreement to which it is a party or (4) failure of the
UK Restricted Subsidiary to perform or comply with any term or
condition contained in CLAUSE 5.1(b) of the debenture forming part of
the UK Security Documents; or
3.15 SUBSECTION 10.1 of the Credit Agreement is hereby amended by
inserting the following new definitions in their proper alphabetical order:
"ENVIRONMENTAL LAWS" means all applicable federal, state, local
and foreign laws, statutes, ordinances, codes, rules, standards and
regulations, now or hereafter in effect, and any applicable judicial
or administrative interpretation thereof, including any applicable
judicial or administrative order, consent decree, order or judgment,
imposing liability or standards of conduct for or relating to the
regulation and protection of human health, safety, the environment and
natural resources (including ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic species
and vegetation). Environmental Laws include CERCLA; the Hazardous
Materials Transportation Authorization Act of 1994 (49
U.S.C.ss.ss.5101 et seq.); the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C.ss.ss.136 et seq.); the Solid Waste Disposal
Act (42 ▇.▇.▇.▇▇.▇▇. 6901 et seq.); the Toxic Substance Control Act
(15 U.S.C.ss.ss.2601 et seq.); the Clean Air Act (42 U.S.C. ss.ss.7401
et seq.); the Federal Water Pollution Control Act (33 U.S.C.ss.ss.1251
et seq.); the Occupational Safety and Health Act (29 U.S.C.ss.ss.651
et seq.); and the Safe Drinking Water Act (42 ▇.▇.▇.▇▇.▇▇. 300(f) et
seq.), and any and all regulations promulgated thereunder, and all
analogous state, local and foreign counterparts or equivalents and any
transfer of ownership notification or approval statutes related in any
manner to environmental, natural resource or human health and safety
matters.
"ENVIRONMENTAL LIABILITY" means, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and
removal costs, investigation and feasibility study costs, capital
costs, operation and maintenance costs, losses, damages, punitive
damages, property damages, natural resource damages, consequential
damages, treble damages, costs
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and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts and consultants), fines, penalties,
sanctions and interest incurred as a result of or related to any
claim, suit, action, investigation, proceeding or demand by any
Person, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute or common law, arising
under or related to any Environmental Laws, Environmental Permits, or
in connection with any Release or threatened Release or presence of a
Hazardous Material whether on, at, in, under, from or about or in the
vicinity of any real or personal property.
"ENVIRONMENTAL PERMITS" means all permits, licenses,
authorizations, certificates, approvals or registrations required by
any governmental authority under any Environmental Laws.
"FIRST AMENDMENT" shall mean that Consent and First Amendment to
Credit Agreement dated as of September __, 2003 among the Borrower,
the Agent and the Lenders.
"FIRST AMENDMENT DATE" shall mean September __, 2003.
"MEXICAN RESTRICTED SUBSIDIARY" means Portola Packaging Inc.
Mexico, S.A. de C.V., a corporation organized under the laws of
Mexico.
"MEXICAN SECURITY DOCUMENTS" means all instruments, documents and
agreements executed by or on behalf of Mexican Restricted Subsidiary
or any other Person to guaranty or provide collateral security with
respect to the Obligations of Borrower including, without limitation,
the Security Agreement, any other security agreement or pledge
agreement, any guaranty of the Obligations, any mortgage or deed of
trust, and all instruments, documents and agreements executed pursuant
to the terms of the foregoing.
"RELEASE" means any release, known threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape,
injection, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Material in the indoor or outdoor
environment, including the movement of Hazardous Material through or
in the air, soil, surface water, ground water or property.
"TECH COMPANIES" means Tech Industries.
"TECH INDUSTRIES" means Tech Industries, Inc., a Rhode Island
corporation.
3.16 The definitions of "Security Agreement" and "Security Documents"
set forth in SUBSECTION 10.1 of the Credit Agreement are hereby amended to read
as follows:
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"SECURITY AGREEMENT" means those separate security agreements,
hypothecs, debentures and floating lien pledges, each dated on or
about the date hereof or the First Amendment Date, as applicable,
executed by Borrower and its Restricted Subsidiaries in favor of
Agent, and securing Borrower's Obligations hereunder and under the
Loan Documents.
"SECURITY DOCUMENTS" means, collectively, the US Security
Documents, the UK Security Documents, the Canadian Security Documents
and the Mexican Security Documents.
3.17 EXHIBIT 4.5(F) (BORROWING BASE CERTIFICATE) to the Credit
Agreement are hereby replaced with EXHIBIT 4.5(F) attached hereto.
3.18 SCHEDULE 1.2 (PRICING TABLE) to the Credit Agreement is hereby
deleted. SCHEDULES 3.1 (EXISTING INDEBTEDNESS), 3.2(A)(10) (LIENS), 3.4
(CONTINGENT OBLIGATIONS), 5.4(A) (JURISDICTIONS OF ORGANIZATION AND
QUALIFICATIONS), 5.4(B) (CAPITALIZATION), 5.6 (TITLE TO PROPERTIES, ETC.), 5.7
(INTELLECTUAL PROPERTY), 5.8 (INVESTIGATIONS AND AUDITS) and 5.9 (EMPLOYEE
MATTERS) to the Credit Agreement are hereby amended pursuant to the Addenda to
SCHEDULES 3.1, 3.2(A)(10), 3.4, 5.4(A), 5.4(B), 5.6, 5.7, 5.8 and 5.9 attached
hereto. SUBSCHEDULES 7.1 (LITIGATION), 7.2 (EMPLOYEE BENEFIT PLANS), 7.4
(DERIVATIVES), 7.6 (BANK ACCOUNTS) and 7.7 (SUBSIDIARIES) to SCHEDULE 7.1 to the
Credit Agreement are hereby amended pursuant to the Addenda to with SUBSCHEDULES
7.1, 7.2, 7.4, 7.6 and 7.7 attached hereto. SCHEDULE 10.1(A) (PRO RATE SHARES
AND COMMITMENT AMOUNTS) to the Credit Agreement is hereby amended pursuant to
SCHEDULE 10.1(A) attached hereto.
3.19 ADDBACK OF CERTAIN NON-RECURRING RESTRUCTURING CHARGES TO EBITDA.
▇▇▇▇▇▇ hereby approves adding back to EBITDA for any period during Borrower's
2004 fiscal year the following non-recurring restructuring charges to be
incurred in connection with (a) relocating operations from Borrower's two
California facilities to its facility in Tolleson, Arizona and (b) relocating
operations from Borrower's South Carolina facility to its facilities in
Kingsport, Tennessee and elsewhere, to the extent such restructuring charges are
deducted in determining Net Income for any such period:
(1) Severance and relocation costs not exceeding $3,500,000 in the
aggregate for all such periods.
Section 4. DESIGNATION OF RESTRICTED SUBSIDIARIES. Borrower hereby
designates each of Tech Industries and Portola Packaging Inc. Mexico, S.A. de
C.V. as a Restricted Subsidiary.
Section 5. CONDITIONS. The effectiveness of this Agreement is subject
to Borrowers' satisfaction of the following conditions on or before the date
hereof in a manner satisfactory to the Agent:
5.1 DELIVERIES. The Agent shall have received, on or prior to the date
hereof, all of the documents set forth on ANNEX A hereto, in form and substance
satisfactory to the Agent, duly executed by all parties thereto.
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5.2 CONTINUATION OF REPRESENTATIONS AND WARRANTIES. After giving
effect to the replacement Schedules delivered herewith, the representations and
warranties made by the Loan Parties contained in the Credit Agreement and the
other Loan Documents shall be true and correct in all material respects on and
as of the date hereto with the same effect as if made on and as of the date
hereof (except to the extent such representations and warranties expressly
relate to an earlier date).
5.3 NO EXISTING DEFAULT. As of the date hereof, no Default or Event of
Default shall have occurred and be continuing or shall result from the
consummation of the transactions contemplated hereunder (including without
limitation the consummation of the Tech Companies Acquisition).
Section 6. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower
represents and warrants that:
(i) the execution, delivery and performance by the Borrower of
this Agreement have been duly authorized by all necessary corporate action and
this Agreement is a legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms;
(ii) each of the representations and warranties contained in the
Credit Agreement is true and correct in all material respects on and as of the
date hereof as if made on the date hereof, except to the extent that such
representations and warranties expressly relate to an earlier date; and
(iii) neither the execution, delivery and performance of this
Agreement nor the consummation of the transactions contemplated hereby
(including without limitation the consummation of the Tech Companies
Acquisition) does or shall contravene, result in a breach of, or violate (i) any
provision of any Loan Party's certificate or articles of incorporation or
bylaws, (ii) any law or regulation, or any order or decree of any court or
government instrumentality, or (iii) any indenture, mortgage, deed of trust,
lease, agreement or other instrument to which any Loan Party or any of its
Subsidiaries is a party or by which any Loan Party or any of its Subsidiaries or
any of their property is bound.
Section 7. REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT.
(i) Except as specifically provided herein, the Credit Agreement
and the other Loan Documents shall remain in full force and effect and are
hereby ratified and confirmed.
(ii) The execution, delivery and effectiveness of this Agreement
shall not operate as a waiver of any right, power or remedy of Agent or any
Lender under the Credit Agreement or any Loan Document, nor constitute a waiver
of any provision of the Credit Agreement or any Loan Document, except as
specifically set forth herein.
Section 8. COSTS AND EXPENSES. Borrower agrees to reimburse Agent for
all fees, costs and expenses, including the fees, costs and expenses of counsel
or other advisors for advice, assistance, or other representation in connection
with this Agreement.
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Section 9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS.
Section 10. HEADINGS. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purposes.
Section 11. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed an original, but
all such counterparts shall constitute one and the same instrument.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto hereupon set their hands as of
the date first written above.
PORTOLA PACKAGING, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: VP and Chief Financial Officer
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▇▇▇▇▇▇ FINANCIAL, INC., as Agent,
Issuing Lender and Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Dually Authorized Signatory
----------------------------------
(Signature Page to Consent Agreement)
S-1
CONSENT AND REAFFIRMATION (SUBSIDIARY GUARANTORS)
Each of the undersigned hereby (i) acknowledges receipt of a copy of
the foregoing Consent and First Amendment to Credit Agreement; (ii) consents to
Borrower's execution and delivery thereof; (iii) affirms that nothing contained
therein shall modify in any respect whatsoever its guaranty of the obligations
of Borrower to Agent and Lenders and reaffirms that such guaranty is and shall
continue to remain in full force and effect and that each Loan Document to which
it is a party or otherwise bound and all Collateral encumbered thereby will
continue to guaranty or secure, as the case may be, to the fullest extent
possible, the payment and performance of all obligations under or in respect of
such guaranty and such other Loan Documents; and (iv) confirms that, as of the
date hereof, it does not have, and hereby waives, remises and releases any
claims or causes of action of any kind against Agent or any of the Lenders or
any of their officers, directors, employees, agents, attorneys, or any of the
Lenders or any of their officers, directors, employees, agents, attorneys or
representatives, or against any of their respective predecessors, successors, or
assigns relating in any way to any event, circumstance, action, or omission
relative to any of the Loan Documents or any transaction contemplated thereby,
from the beginning of time through the date hereof. Although each of the
undersigned has been informed of the matters set forth herein and has
acknowledged and consented to same, each of the undersigned understands that
Agent and Lenders have no obligation to inform it of such matters in the future
or to seek its acknowledgment or consent to future Agreements or waivers, and
nothing herein shall create such a duty.
IN WITNESS WHEREOF, the undersigned have executed this Consent
and Reaffirmation on and as of the date of such Agreement.
PORTOLA PACKAGING LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: VP and Chief Financial Officer
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PORTOLA PACKAGING CANADA LTD./
EMBALLAGES PORTOLA CANADA LTEE
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: VP and Chief Financial Officer
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PORTOLA ALLIED TOOL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: VP and Chief Financial Officer
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PORTOLA PACKAGING LIMITED (U.K.)
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: VP and Chief Financial Officer
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ATLANTIC PACKAGING SALES LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: VP and Chief Financial Officer
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(Signature Page to Affirmation to Consent Agreement by Subsidiary ▇▇▇▇▇▇▇▇▇▇)
▇-▇
ANNEX A
TO
CONSENT AND FIRST AMENDMENT
DELIVERIES
(a) ASSIGNMENT AND ACCEPTANCE AGREEMENT. A duly executed Assignment
and Acceptance Agreement between ▇▇▇▇▇▇ and Bank of America, N.A. pursuant to
which Bank of America, N.A. shall have assigned all of its Revolving Loans and
Commitments to ▇▇▇▇▇▇.
(b) AGREEMENT. This Agreement duly executed by the Loan Parties,
together with all Exhibits and Addenda to Schedules hereto.
(c) REPLACEMENT REVOLVING NOTE. A replacement Revolving Note executed
by Borrower in favor of ▇▇▇▇▇▇.
(d) TECH INDUSTRIES GUARANTY AND SECURITY AGREEMENT. Guaranty executed
by Tech Industries. Security Agreement duly executed by Tech Industries, and
acknowledged by Agent, together with Schedules to the Security Agreement.
(e) BORROWER PLEDGE AMENDMENT. A Pledge Amendment to the Borrower
Pledge Agreement duly executed by Borrower, pledging to Agent all of the capital
stock of Tech Industries, together with share certificates representing all of
the outstanding capital stock of Tech Industries and stock powers for such share
certificates executed in blank.
(f) CODE SEARCH REPORTS. Copies of Code search reports listing all
effective financing statements that name any of the Tech Companies as a debtor
from the following jurisdictions:
Secretary of State of Rhode Island
(g) UCC-1 FINANCING STATEMENTS. Copies of UCC-1 financing statements
executed by Tech Industries as debtor in favor of Agent, together with evidence
that such UCC-1 financing statements have been filed in the following
jurisdictions:
Secretary of State of Rhode Island
(h) PAYOFF LETTER; TERMINATION STATEMENTS. Duly executed pay-off and
release letter from Citizens Bank, evidencing repayment in full of all
Indebtedness of Tech Industries to Citizens Bank and the release of all Liens
granted by Tech Industries in favor of Citizens Bank, together with UCC-3
termination statements signed by Citizens Bank and all other Lien releases
required in order to terminate such Liens.
(i) INTELLECTUAL PROPERTY SECURITY AGREEMENTS. A Trademark Security
Agreement and Patent Security Agreement duly executed by Tech Industries with
respect to all trademarks and patents owned by Tech Industries.
Annex A-1
(j) BANK AGENCY AGREEMENTS. Bank agency agreements for each bank
designated by Agent at which Tech Industries maintains depository accounts.
(k) INSURANCE. Evidence that all insurance policies required by Agent
with respect to Tech Industries are in full force and effect, together with loss
payable and/or additional insured clauses as requested by Agent, in favor of
Agent on behalf of Lenders.
(l) TECH COMPANIES ACQUISITION DOCUMENTS. Executed or conformed copies
of the Tech Companies Acquisition Documents, together with evidence that the
Tech Companies Acquisition has been consummated in accordance therewith, and
including without limitation:
(i) the Tech Companies Acquisition Agreement;
(ii) Employment Agreements with each of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇; and
(iii) documentation evidencing that (1) all partnership
interests of ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and Fairmount Realty
have been assigned to Tech Industries, (2) Tech
Industries has been designated as the general partner of
each of ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and Fairmount Realty and (3)
all Real Estate owned by ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and
Fairmount Realty has been conveyed to Tech Industries;
together with evidence satisfactory to Agent that the aggregate purchase price
(inclusive of fees and closing costs, including those payable to Agent) for the
Tech Companies Acquisition does not exceed $36,750,000.
(m) ASSIGNMENT OF RIGHTS. An Assignment of Rights with respect to
Borrower's rights under the Tech Companies Acquisition Documents duly executed
by Borrower and acknowledged by the Tech Companies Sellers.
(n) MORTGAGES; MORTGAGE MODIFICATIONS. (i) A Mortgage with respect to
Tech Industries' owned Real Estate in Rhode Island, in form and substance
satisfactory to Agent, duly executed by Tech Industries, together with A.L.T.A.
mortgagee policies of title insurance satisfactory to Agent, and current
A.L.T.A. surveys and surveyors' certifications as to such property in form and
substance satisfactory to Agent.
(ii) a Mortgage Modification with respect to each existing Mortgage on
Borrower's owned Real Estate, in form and substance satisfactory to Agent, and
with respect to all existing title policies insuring Agent's Lien on the
Mortgaged Real Property, endorsements issued by the Title Company insuring that
Agent's Lien (and the priority thereof) is not impacted by this Agreement.
(o) AMENDED AND RESTATED SECURITY AGREEMENTS. Amended and Restated
Security Agreements executed by each of Borrower, Portola Allied Tool, Inc. and
Atlantic Packaging Sales LLC< together with Schedules to the Security Agreements
and Powers of Attorney duly executed by each such Persons.
Annex A-2
(p) MEXICAN SECURITY DOCUMENTS. (a) Floating Lien Pledge Agreement
(Contralto de Prenda Sin Transmision de Posesion) duly executed and delivered by
Portola Packaging Inc. Mexico, S.A. de C.V. and Agent in the presence of a
Mexican notary public and recorded in the appropriate public registry of
commerce for perfection purposes, granting to Agent a perfected first priority
security interest in and to all of the movable property of Portola Packaging
Inc. Mexico, S.A. de C.V.; (b) Stock Pledge Agreement duly executed and
delivered by Borrower, Portola Packaging Holding, B.V. and Agent, granting to
Agent a perfected first priority security interest in and to all of the issued
and outstanding capital stock of Portola Packaging Inc. Mexico, S.A. de C.V.,
together with the endorsement and delivery to the Agent of all stock
certificates and entries in the stock registry book of Portola Packaging Inc.
Mexico, S.A. de C.V.; (c) Guaranty duly executed and delivered by Portola
Packaging Inc. Mexico, S.A. de C.V., together with a special irrevocable power
of attorney granted in the presence of a Mexican notary public in favor of an
agent for service of process acceptable to the Agent; and (d) an opinion of
counsel to Portola Packaging Inc. Mexico, S.A. de C.V., addressed to Agent and
Lenders.
(q) THIRD PARTY CONSENTS AND WAIVERS. Copies of all third party or
governmental waivers and consents relating to the Tech Companies Acquisition.
(r) MAXIMUM LEVERAGE RATIO; MAXIMUM TOTAL INDEBTEDNESS. The ratio of
Total Indebtedness to EBITDA (subject to pro forma adjustments approved by
Agent), determined as of July 31, 2003 for the twelve-month period then ended,
shall not exceed 4.80 on a pro forma basis after giving effect to the Tech
Companies Acquisition and the funding of the Revolving Loan in connection
therewith. Total Indebtedness, determined as of the date hereof, shall not
exceed $160,000,000 after giving effect to the Tech Companies Acquisition and
the funding of the Revolving Loans in connection therewith.
(s) OPENING AVAILABILITY; MAXIMUM REVOLVING LOAN. (i) Availability
after giving effect to the Revolving Loan advance made on the date hereof and
the consummation of the Tech Companies Acquisition (on a pro forma basis, with
trade payables being paid currently, and expenses and liabilities being paid in
the ordinary course of business and without acceleration of sales) shall be at
least $3,000,000 and (ii) the aggregate outstanding balance of the Revolving
Loan shall not exceed $48,000,000.
(t) DUE DILIGENCE. Agent shall have completed its business and legal
due diligence (including without limitation Agent's receipt of appraisals with
respect to the Tech Companies' owned Real Estate, Equipment and Inventory) with
results reasonably satisfactory to Agent.
(u) FINANCIAL CONDITION. A pro forma balance sheet of Borrower and its
Subsidiaries and revised Projections for Borrower and its Subsidiaries,
certified by Borrowers Chief Financial Officer, in each case taking into account
the Tech Companies Acquisition, and a certificate of the Chief Financial Officer
of Borrower, based on such pro forma balance sheet and Projections, to the
effect that (a) Borrower and its Subsidiaries will be Solvent upon the
consummation of the transactions contemplated herein; (b) the pro forma balance
sheet fairly presents the financial condition of Borrowers and its Subsidiaries
as of the date thereof after giving effect to the transactions contemplated by
the Loan Documents; (c) the Projections are
Annex A-3
based upon estimates and assumptions stated therein, all of which Borrower
believe to be reasonable and fair in light of conditions and facts known to
Borrower at the time of preparation of such Projections and, as of the date
hereof, reflect Borrower's good faith and reasonable estimates of its future
financial performance and of the other information projected therein for the
period set forth therein, provided that the Projections are not to be viewed as
facts and that actual results during the periods covered by the Projections will
differ from the projected results; and (d) containing such other statements with
respect to the solvency of Borrower and its Subsidiaries and matters related
thereto as Agent shall request.
(v) ENVIRONMENTAL REPORTS. Environmental review and audit reports,
including Phase II reports, with respect to the Real Estate of the Tech
Companies as Agent shall have requested, and Agent shall be satisfied, in its
sole discretion, with the contents of all such environmental reports. Agent
shall have received letters executed by the environmental firms preparing such
environmental reports, in form and substance reasonably satisfactory to Agent,
authorizing Agent and Lenders to rely on such reports.
(w) OFFICER'S CERTIFICATE. A Certificate of Chief Financial Officer of
Borrower.
(x) BORROWING BASE CERTIFICATE. A duly executed Borrowing Base
Certificate from Borrower reflecting its calculation of the Borrowing Base as of
the date hereof, taking into account the Tech Companies Acquisition and the
designation of Tech Industries and Portola Packaging Mexico Inc., S.A. de C.V.
as Restricted Subsidiaries.
(y) LETTER OF DIRECTION. A letter of direction duly executed by
Borrower addressed to Agent with respect to the disbursement of the proceeds of
the Revolving Loan to be made on the date hereof.
(z) SECRETARY'S CERTIFICATES. A certificate of the Secretary or
Assistant Secretary of each Loan Party, certifying copies of resolutions of the
Board of Directors or partners (as applicable) of such Loan Party approving and
authorizing the execution, delivery and performance by such Loan Party of, as
applicable, this Agreement and the other Loan Documents to be delivered by such
Loan Party hereunder and, in the case of Borrower, designating Portola Packaging
Mexico Inc., S.A. de C.V. and each of the Tech Companies as "Restricted
Subsidiaries" under the Credit Agreement and the Senior Notes Indenture; and
(aa) ORGANIZATIONAL DOCUMENTS AND GOOD STANDING CERTIFICATES OF TECH
INDUSTRIES. Each of:
(i) the Articles of Incorporation of Tech Industries as in effect
on the date hereof, certified by the Secretary of State of Rhode
Island;
(ii) the By-Laws of Tech Industries as in effect on the date
hereof, certified by the Secretary or Assistant Secretary of Tech
Industries; and
(iii) a good standing certificate for Tech Industries from the
Secretary of State of Rhode Island and each state where Tech
Industries is required to qualify to do business as a foreign
corporation, each as of a recent date.
Annex A-4
(bb) OPINIONS OF BORROWER'S COUNSEL. An opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP,
counsel to the Credit Parties, together with any local counsel opinions
requested by Agent, addressed to Agent and Lenders.
(cc) SENIOR NOTES INDENTURE. Evidence satisfactory to Agent that (i)
after giving effect to the transactions contemplated hereunder and under the
Tech Companies Acquisition Agreement, no default or event of default exists
under the Senior Notes Indenture and the terms of the Credit Agreement
(including the Borrowing Base), as amended by this Agreement, comply with the
restrictions set forth in the Senior Notes Indenture and (b) the Tech Companies
have been designated as "Restricted Subsidiaries" under the Senior Note
Indenture.
(dd) FEE LETTER. Duly executed originals of that certain fee letter of
even date herewith among Borrower and ▇▇▇▇▇▇, together with payment of all fees
specified therein.
(ee) OTHER DOCUMENTS. Such additional documents as Agent may
reasonably require.
Annex A-5