EXHIBIT 2.8
[EXECUTION VERSION]
AMENDMENT NO. 3, WAIVER AND CONSENT
This Amendment No. 3, Waiver and Consent dated as of October 12, 2001
("Agreement") is among IFCO Systems, N.V., a public limited liability company
organized under the laws of the Netherlands ("Holdings"), IFCO Systems North
America, Inc., a Delaware corporation ("Borrower"), the Lenders (as defined
below) executing this Agreement, and Bank One, NA, as administrative agent for
the Lenders ("Administrative Agent").
INTRODUCTION
A. The Borrower is party to the Second Amended and Restated Credit
Agreement dated as of December 31, 2000, as amended by Amendment No. 1 and
Consent dated as of June 12, 2001 and Amendment No. 2 and Waiver (as amended,
modified, or revised from time to time, the "Credit Agreement") with Holdings,
the financial institutions parties thereto ("Lenders"), CIBC World Markets Corp.
and Banc One Capital Markets, Inc., as co-lead arrangers and co-book runners,
CIBC World Markets Corp., as syndication agent, and the Administrative Agent.
B. The Borrower, the Lenders, and the Administrative Agent desire to
amend the Credit Agreement in certain respects as set forth herein and the
Borrower has requested that the Lenders waive compliance with certain covenants
in the Credit Agreement and consent to certain Asset Sales (as defined in the
Credit Agreement).
THEREFORE, the Borrower, the Lenders, and the Administrative Agent hereby
agree as follows:
Section 1. Definitions; References. Unless otherwise defined in this
Agreement, terms used in this Agreement which are defined in the Credit
Agreement shall have the meanings assigned to such terms in the Credit
Agreement.
Section 2. Amendments.
(a) Annex A to the Credit Agreement is amended by replacing it with Annex
A attached hereto.
(b) The definition of "Canadian Pallets" is added to Section 1.1 of the
Credit Agreement as follows:
"Canadian Pallets" means any pallets owned by IFCO Systems Canada,
Inc. and located in any province of Canada.
(c) The definition of "Borrowing Base" in Section 1.1 of the Credit
Agreement is amended by replacing "20%" in subparagraph (c) of the first
sentence of the definition with "25%".
(d) The definition of "Eligible Crates" in Section 1.1 of the Credit
Agreement is amended by replacing the first sentence of the definition in its
entirety with the following:
"Eligible Crates": at any time, an amount equal to the aggregate value
of all crates of (i) IFCO LLC or IFCO Canada which crates are located in
North America or (ii) Holdings or any of its Subsidiaries which crates are
located in Europe, provided that such European crates are in the physical
control of Holdings or its Subsidiaries (crates located at Holdings' or any
Subsidiary's depots shall be deemed to be under the physical control of
Holdings or its Subsidiaries). In determining the amount to be so included,
such crates shall be valued at the standard cost maintained on a basis
consistent with the current and historical accounting practice of Holdings
or its Subsidiaries 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
customers of Holdings or its Subsidiaries as damaged or defective, obsolete
or otherwise non-salable, (iv) for Liens referred to in clause (b) below.
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 Holdings or any of its
Subsidiaries, or Holdings or any of its Subsidiaries does not have good and
valid title thereto; or
(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 Holdings or any of its
Subsidiaries).
(e) The following definition of "IFCO Canada" is added to Section 1.1 of
the Credit Agreement:
"IFCO Canada" means IFCO Systems Canada, Inc.
(f) The definition of "Inventory" in Section 1.1 of the Credit Agreement
is amended by adding ", other than (a) Canadian Pallets and (b) any pallets
constituting finished goods inventory held by Borrower, which pallets described
in clauses (a) and (b) shall be considered Inventory" at the end after
"Subsidiaries".
(g) Section 2.10(d) of the Credit Agreement is amended by replacing "2.11"
in the second sentence of the second paragraph with "2.10" and by replacing the
first sentence in the second paragraph in its entirety with the following:
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Any reduction of the Term Loans pursuant to this subsection 2.10 shall be
applied to the installments of any such Term Loan serially in accordance
with the then outstanding amounts thereof and may not be reborrowed.
(h) Section 2.10(e) of the Credit Agreement is amended in its entirety to
read as follows:
(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 promptly, upon receipt of notice from the Administrative
Agent, first prepay the Revolving Credit 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.
(i) Section 2.2 of the Credit Agreement is amended in its entirety to read
as follows:
2.2 Repayment of Term Loans. The Term Loan of each Lender shall be
payable in equal monthly principal installments in an amount equal to such
Lender's Term Loan Percentage multiplied by $667,000, such installments
being due and payable on the last day of each calendar month, commencing on
September 30, 2001 and continuing thereafter to and including December 31,
2001, and thereafter the Term Loan of each Lender shall be payable in equal
quarterly installments in an amount equal to such Lender's Term Loan
Percentage multiplied by $2,000,000, such installments being due and
payable on the last day of each fiscal quarter, commencing on March 31,
2002 until such time as the Term Loan is repaid in full, but in no event
later than December 31, 2002, whereupon all remaining unpaid principal and
other amounts owing in respect of the Term Loans shall be due and payable.
All Net Cash Proceeds from any Asset Sale occurring after the sale of
Borrower's pallet manufacturing operations shall be applied to the
installments of the Term Loan in inverse order in accordance with the then
outstanding amounts thereof and may not be reborrowed.
(j) Section 6.2(f) of the Credit Agreement is amended by replacing "no
later than the 45th day" with "no later than the 15th Business Day".
(k) The Consolidated Total Leverage Ratio in Section 7.1(a) of the Credit
Agreement is amended in its entirety by replacing the ratio table with the
following:
Fiscal Year Fiscal Quarter Ratio
2000 Fourth 5.05 to 1.00
2001 First 5.70 to 1.00
Second 5.95 to 1.00
Third 5.45 to 1.00
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Fiscal Year Fiscal Quarter Ratio
Fourth 5.90 to 1.00
2002 First 5.60 to 1.00
Second 5.40 to 1.00
Third 5.00 to 1.00
Fourth 4.75 to 1.00
2003 First 3.60 to 1.00
(l) The Consolidated Senior Leverage Ratio in Section 7.1(b) of the Credit
Agreement is amended in its entirety by replacing the ratio table with the
following:
Fiscal Year Fiscal Quarter Ratio
2000 Fourth 2.35 to 1.00
2001 First 2.90 to 1.00
Second 3.20 to 1.00
Third 2.30 to 1.00
Fourth 2.35 to 1.00
2002 First 2.20 to 1.00
Second 2.10 to 1.00
Third 1.95 to 1.00
Fourth 1.80 to 1.00
2003 First 1.80 to 1.00
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(m) The Consolidated Interest Coverage Ratio in Section 7.1(c) of the
Credit Agreement is amended in its entirety by replacing the ratio table with
the following:
Fiscal Year Fiscal Quarter Ratio
2000 Fourth 1.85 to 1.00
2001 First 1.65 to 1.00
Second 1.55 to 1.00
Third 1.50 to 1.00
Fourth 1.50 to 1.00
2002 First 1.60 to 1.00
Second 1.65 to 1.00
Third 1.75 to 1.00
Fourth 1.90 to 1.00
2003 First 2.00 to 1.00
(n) The Minimum Consolidated Net Worth covenant in Section 7.1(e) of the
Credit Agreement is amended in its entirety to read as follows:
(a) Minimum Consolidated Net Worth. Permit Consolidated Net Worth at
any time to be less than the sum of (i) (A) for the fiscal quarter of
Holdings ending September 30, 2001 and any prior fiscal quarter,
$190,000,000, or (B) for the fiscal quarter ending December 31, 2001 and
any fiscal quarter thereafter, $140,000,000, plus (ii) 80% of cumulative
Consolidated Net Income for each fiscal quarter of Holdings (beginning with
the fiscal quarter ending March 31, 2001) for which Consolidated Net Income
is positive, plus (iii) 100% of the Net Cash Proceeds of any offering by
Holdings of common or preferred equity consummated after January 1, 2000
plus (iv) 100% of any capital contribution made to Holdings or any of its
Subsidiaries after January 1, 2000 by any holder of Holding's Capital
Stock.
(o) Section 7.7(d) of the Credit Agreement is amended by replacing
chedule 7.7(d) to the Credit Agreement with Schedule 7.7(d) attached hereto.
Section 3. Waiver. The Administrative Agent and the Lenders hereby,
notwithstanding any provisions in the Credit Agreement and the Loan Documents to
the contrary, waive (a) violations to the mandatory prepayments and commitment
reductions in Section 2.10(e) for the months ending July 31, 2001, August 31,
2001, and September 30, 2001, and (b) compliance with the financial covenants in
Sections 7.1(a) and (b) of the Credit Agreement, for the fiscal quarter ending
September 30, 2001 only. This waiver is limited to the extent described herein
and shall not be construed to be a waiver of any other non-compliance, Defaults
or Events of Default that may have occurred or any other actions prohibited by
the Credit Agreement. The Administrative Agent and the Lenders reserve the right
to exercise any rights and remedies available to them in connection with any
future violations, non-compliance
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or defaults with respect to Sections 2.10 and 7.1 of the Credit Agreement or any
other provision of any Loan Document.
Section 4. Consent. The Administrative Agent and the Lenders consent to:
(a) the Asset Sale of the assets, owned real property and certain
liabilities of the Borrower's pallet manufacturing operations ("Pallet
Manufacturing Operations"), pursuant to an asset purchase agreement, as amended
(as amended, the "Pallet Asset Purchase Agreement"), between the Borrower,
PalletOne, Inc., a Delaware corporation ("PalletOne"), White Oak Capital
Partners, L.P., a Texas limited partnership doing business as The White Oak
Company ("White Oak", together with PalletOne, the "Buyer") reasonably
acceptable to the Administrative Agent, for total consideration not less than
$48,250,000 (before fees and expenses), which shall be payable to the Borrower
by (i) approximately $45,360,000 in cash on the closing date, of which, in
accordance with Section 2.10(e) of the Credit Agreement, approximately
$18,430,000 will be applied to the Revolving Credit Loan (but, notwithstanding
anything to the contrary in the Credit Agreement, with no reduction of the
Revolving Credit Commitment) and approximately $26,930,000 will be applied to
the Term Loan, and (ii) a promissory note for approximately $1,740,000 from the
Buyer; and
(b) the Asset Sale of the assets, owned real property and certain
liabilities of the Borrower's drum reconditioning operations ("Drum
Operations"), pursuant to an asset purchase agreement ("Drum Asset Purchase
Agreement", with the Pallet Asset Purchase Agreement, the "Asset Purchase
Agreements") between Holdings, certain of Holdings' wholly-owned subsidiaries,
and Industrial Container Services, LLC ("Drum Buyer"), reasonably acceptable to
the Administrative Agent, for total consideration not less than $58,000,000
(before fees and expenses), which shall be payable to the Borrower by (i)
approximately $57,000,000 in cash, of which, in accordance with Section 2.10(e)
of the Credit Agreement, approximately $14,400,000 will be applied to the
Revolving Credit Loan, provided that any proceeds from the Asset Sale of the
Drum Operations ("Drum Asset Sale") pursuant to the Drum Asset Purchase
Agreement shall be applied first to the Revolving Credit Loan in an amount equal
to the amount by which the Borrowing Base is reduced as a result of such Drum
Asset Sale (but, notwithstanding anything to the contrary in the Credit
Agreement, with no reduction of the Revolving Credit Commitment) and
approximately $42,560,000 will be applied to the Term Loan, and (ii) in
assumption by the Drum Buyer of certain working capital liabilities on the
closing date.
Section 5. Representations and Warranties. The Borrower represents and
warrants to the Administrative Agent and the Lenders that:
(a) the representations and warranties set forth in the Credit Agreement
are true and correct in all material respects as of the date of this Agreement,
except to the extent any such representation or warranty is stated to relate
solely to an earlier date, in which case such representation or warranty was
true and correct in all material respects as of such earlier date;
(b) (i) the execution, delivery, and performance of this Agreement have
been duly authorized by appropriate proceedings, and (ii) this Agreement
constitutes a legal, valid, and binding obligation of the Borrower, enforceable
in accordance with its terms, except as limited
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by applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting the rights of creditors generally and general principles of
equity; and
(c) as of the effectiveness of this Agreement, no Default or Event of
Default has occurred and is continuing.
Section 6. Effectiveness. The amendments in Section 2 of this Agreement
shall become effective sequentially in the order in which such amendments appear
in this Agreement and such amendments shall only become effective simultaneously
with the sale of the Pallet Manufacturing Operations consented to and described
in Section 4(a) of this Agreement. This Agreement shall become effective and the
Credit Agreement shall be amended as provided in this Agreement upon the
occurrence of the following conditions precedent:
(a) the Borrower, Holdings, the Guarantors, the Administrative Agent, and
the Required Lenders shall have delivered duly and validly executed originals of
this Agreement to the Administrative Agent;
(b) the representations and warranties in this Agreement shall be true and
correct in all material respects;
(c) the Administrative Agent and Lenders executing this Agreement shall
have received the required work fee from the Borrower; and
(d) the Borrower shall have delivered to the Administrative Agent duly and
validly executed copies of the Pallet Asset Purchase Agreement.
Section 7. Effect on Loan Documents.
(a) Except as amended herein, the Credit Agreement and the Loan Documents
remain in full force and effect as originally executed and amended heretofore.
Nothing herein shall act as a waiver of any of the Administrative Agent's or
Lenders' rights under the Loan Documents, as amended, including the waiver of
any Event of Default or Default, however denominated.
(b) This Agreement is a Loan Document for the purposes of the provisions
of the other Loan Documents. Without limiting the foregoing, any breach of
representations, warranties, and covenants under this Agreement may be an Event
of Default or Default under other Loan Documents.
Section 8. Choice of Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York.
Section 9. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original.
[Remainder of page intentionally left blank]
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EXECUTED as of the date first above written.
IFCO SYSTEMS, N.V.
By: /s/ Karl Pohler
------------------------------------------
Karl Pohler
Chief Executive Officer
IFCO SYSTEMS NORTH AMERICA, INC.
By: /s/ Steve Jones
------------------------------------------
Name: Steve Jones
----------------------------------------
Title: VP & CFO
---------------------------------------
BANK ONE, NA, as Administrative Agent and as a
Lender
By: /s/ Frank L. Grossman
------------------------------------------
Name: Frank L. Grossman
----------------------------------------
Title: Director - Capital Markets
---------------------------------------
CIBC INC., as Lender
By: /s/ Katherine Bass
------------------------------------------
Name: Katherine Bass
----------------------------------------
Title: Executive Director
---------------------------------------
CIBC World Markets Corp. As Agent
---------------------------------------
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES, as Lender
By: /s/ Ulrich Kahlow
------------------------------------------
Name: Ulrich Kahlow
----------------------------------------
Title: Vice President
---------------------------------------
By: /s/ Dominik Rowe
------------------------------------------
Name: Dominik Rowe
----------------------------------------
Title: Analyst
---------------------------------------
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COMERICA BANK, as Lender
By: /s/ John R. Grundstad
--------------------------------------
Name: John R. Grundstad
------------------------------------
Title: Vice President
-----------------------------------
BNP PARIBAS, as Lender
By: /s/ Angela Bentley
--------------------------------------
Name: Angela Bentley
------------------------------------
Title: Associate
-----------------------------------
By: /s/ Aurora Abella
--------------------------------------
Name: Aurora Abella
------------------------------------
Title: Vice President
-----------------------------------
NATIONAL CITY BANK, as Lender
By: /s/ Michael J. Durbin
--------------------------------------
Name: Michael J. Durbin
------------------------------------
Title: Vice President
-----------------------------------
THE ROYAL BANK OF SCOTLAND, as Lender
By: /s/ Gerd Bieding
--------------------------------------
Name: Gerd Bieding
------------------------------------
Title: Director
-----------------------------------
THE BANK OF NOVA SCOTIA, as Lender
By: /s/ Olivia L. Braun
--------------------------------------
Name: Olivia L. Braun
------------------------------------
Title: Director
-----------------------------------
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Annex A
PRICING GRID FOR REVOLVING CREDIT LOANS, SWINGLINE
LOANS AND TERM LOANS
Consolidated Applicable Margin Applicable Commitment
Total for Eurocurrency Margin for BAse Fee Rate
Leverage Ratio Loans Rate Loans
x **** $4.50 400 bps 250 bps 100
4.00 ** x * 4.50 375 bps 225 bps 75
3.50 ** x * 4.00 350 bps 200 bps 75
3.00 ** x * 3.50 300 bps 200 bps 50
x * 3.00 275 bps 200 bps 50
Changes in the Applicable Margin and the Commitment Fee Rate resulting from
changes in the Consolidated Total Leverage Ratio shall become effective 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.
The Applicable Margin shall increase by 0.50% on April 1, 2002 and on the first
day of each quarter thereafter until the Credit Facility has been repaid in
full.
**** more than or equal to
** less than or equal to
* less than
SCHEDULE 7.7(d)
In the ordinary course of business and consistent with past practices, Borrower
expects to periodically advance funds to Subsidiaries in Canada to fund
operational requirements of these Subsidiaries. Such advances are reflected as
receivables from the Canadian Subsidiaries. The amount of such advances will not
exceed at any one time the total of such advances on April 30, 2001, plus
$2,000,000.
Holdings or a Subsidiary intend to make an equity investment of up to $2 million
in Savi Technologies, Inc. in connection with the licensing of logistics
management software and obtaining certain software and logistics related
services from Savi. This investment is reflected in the bank budget prepared by
Holdings and provided to the Lenders in accordance with Section 5.1(e).
ACKNOWLEDGMENT AND CONSENT BY GUARANTORS
Each of the undersigned Guarantors (i) acknowledges its receipt of a
copy of and hereby consents to all of the terms and conditions of the foregoing
Agreement and (ii) reaffirms its obligations under the Guarantee and Collateral
Agreement dated as of March 8, 2000 in favor of Bank One, NA, as Administrative
Agent.
Dated as October 12, 2001.
BORROWER:
IFCO SYSTEMS NORTH AMERICA, INC.
By: /s/ Steve Jones
-------------------------------
Name: Steve Jones
-----------------------------
Title: VP & CFO
----------------------------
GRANTORS:
IFCO SYSTEMS, N.V.
By: /s/ Karl Pohler
-------------------------------
Karl Pohler
Chief Executive Officer
IFCO SYSTEMS VIRGINIA, INC.
IFCO SYSTEMS FLORIDA, INC.
NEW LONDON PALLET, INC.
NLD, INC.
IFCO SYSTEMS CALIFORNIA, INC.
SOUTHERN PALLET, INC.
IFCO SYSTEMS PENNSYLVANIA, INC.
SHIPSHEWANA PALLET CO., INC.
VALLEY CRATING AND PACKAGING, INC.
DUCKERT PALLET CO., INC.
ISAACSON LUMBER COMPANY
BLACK RIVER FOREST PRODUCTS, INC.
PALEX-TEXAS, INC.
IFCO SYSTEMS IOWA, INC.
SHEFFIELD LUMBER AND PALLET
COMPANY, INC.
IFCO SYSTEMS LOUISIANA, INC.
IFCO SYSTEMS ARIZONA, INC.
NLP TRANSPORT, INC.
AZ PALLET, INC.
BROMLEY ACQUISITION COMPANY, INC.
IFCO SYSTEMS OHIO, INC.
PALLET MANAGEMENT SERVICES, INC.
By: /s/ Steve Jones
------------------------------
Name: Steve Jones
----------------------------
Title: VP & CFO
---------------------------
IFCO SYSTEMS CANADA, INC.
By:______________________________
Name:____________________________
Title:___________________________
PALEX-TEXAS, L.P.
By: PalEx-Texas, Inc., its General
Partner
By: /s/ Steve Jones
--------------------------------------
Name: Steve Jones
------------------------------------
Title: VP & CFO
-----------------------------------
IFCO ICS-CHICAGO, INC.
IFCO INDUSTRIAL CONTAINER SYSTEMS
HOLDING COMPANY
IFCO ICS-WASHINGTON, INC.
IFCO ICS-CALIFORNIA, INC.
ENVIRONMENTAL RECYCLERS OF
COLORADO, INC.
IFCO ICS-FLORIDA, INC.
IFCO ICS-MINNESOTA, INC.
IFCO ICS-GEORGIA, INC.
IFCO ICS-ILLINOIS, INC.
IFCO ICS-NORTH CAROLINA, INC.
IFCO ICS-MIAMI, INC.
CONTAINER RESOURCES CORPORATION
IFCO ICS-SOUTH CAROLINA, INC.
PALEX-KANSAS, INC.
IFCO ICS-MICHIGAN, INC.
By: /s/ Barry Slavin
--------------------------------------
Barry Slavin
Vice President
IFCO ICS-LLC
By: IFCO ICS-Chicago, Inc., its Manager
By: /s/ Barry Slavin
--------------------------------------
Barry Slavin
Vice President
PALEX TEXAS HOLDINGS, INC.
By: /s/ James B. Griffin
-------------------------------
James B. Griffin
President
IFCO SYSTEMS EUROPE GMBH
By: /s/ Karl Pohler
-------------------------------
Karl Pohler
Chief Executive Officer
By: /s/ Michael Nimtsch
-------------------------------
Michael Nimtsch
Chief Financial Officer
SCHOELLER-U.S., INC.
By: /s/ James B. Griffin
-------------------------------
James B. Griffin
President
IFCO - U.S., L.L.C.
By: /s/ James B. Griffin
-------------------------------
James B. Griffin
President