PORTOLA PACKAGING, INC.
Portola U.S.
- and -
PORTOLA PACKAGING CANADA LTD.
as Borrower
- and -
CANADIAN IMPERIAL BANK OF COMMERCE
as Agent
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SUPPORT AGREEMENT
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Dated as of November 26, 1997
SUPPORT AGREEMENT
SUPPORT AGREEMENT made as of the 26th day of November, 1997 made by
PORTOLA PACKAGING, INC. ("Portola U.S."), a corporation existing under the
laws of Delaware, PORTOLA PACKAGING CANADA LTD. (the "Borrower"), a
corporation existing under the laws of Canada and CANADIAN IMPERIAL BANK OF
COMMERCE (the "Agent"), a Canadian chartered bank, as Agent under the Credit
Agreement.
WHEREAS:
A. The Borrower, the financial institutions parties thereto (the "Lenders")
and the Agent on behalf of the Lenders are parties to a credit agreement
dated as of June 16, 1995, (such credit agreement as it may be supplemented,
amended or restated from time to time being referred to as the "Credit
Agreement");
B. The Lenders have requested that in consideration for continuing to
provide financial accommodations under the Credit Agreement to the Borrower
this Agreement be executed and delivered by the parties hereto;
NOW THEREFORE in consideration of the sum of $10 now paid by the Agent to
and for other good and valuable consideration (the receipt and sufficiency of
which are hereby acknowledged), and in consideration of the premises and the
mutual covenants, agreements and conditions herein contained, it is hereby
agreed as follows:
1. DEFINITIONS. For the purpose of this Agreement, all capitalized terms
used but not defined herein shall have the meanings specified in the Credit
Agreement, and the following terms shall have the following meanings:
"DEFICIENCY" means, for any relevant period (as set out in Section
8.03(d) of the Credit Agreement) for which the Fixed Charge Coverage Ratio of
the Borrower was less than 1.10:1, the amount by which Consolidated EBITD was
less than the Consolidated EBITD that would have been required for such
period to satisfy the aforementioned Fixed Charge Coverage Ratio.
"FIXED CHARGE COVERAGE RATIO" means the ratio of Consolidated EBITD to
Consolidated Fixed Charges.
"LENDERS INDEBTEDNESS" means all present and future indebtedness and
other liabilities and obligations, contingent or absolute, matured or
unmatured, at any time due or accruing due, owing by the Borrower (whether
alone or with another or others and whether as principal or surety) to the
Agent and the Lenders pursuant to the Credit Documents.
"NOTICE OF DEFICIENCY" has the meaning specified in paragraph 2 hereof.
"SUBORDINATED INDEBTEDNESS" has the meaning specified in paragraph 5
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hereof.
2. NOTICE OF DEFICIENCY. As soon as possible and in any event not less than
two Business Days before any day on which a Deficiency is anticipated by the
Borrower or Portola U.S. or, in the case of a Deficiency that was not
anticipated, on the Business Day on which such Deficiency occurs, the
Borrower shall give notice in writing (which notice, and any such notice
given pursuant to paragraph 3 hereof, is herein called a "Notice of
Deficiency") to Portola U.S. and the Agent specifying the details and amount
of such Deficiency.
3. RIGHT OF THE AGENT TO GIVE NOTICE OF DEFICIENCY. If a Deficiency shall
occur the Agent may forthwith give a Notice of Deficiency to Portola U.S.
(whether or not a Notice of Deficiency has been given by the Borrower
pursuant to paragraph 2 hereof).
4. DEFICIENCY ACTIONS. (1) Subject to paragraph 4(2), if at any time a
Deficiency shall be anticipated by the Borrower or Portola U.S., or Portola
U.S. shall receive a Notice of Deficiency, Portola U.S. shall provide for
such Deficiency by making payment to the Borrower of an amount in Cdn.
Dollars equal to such Deficiency (any such payment is herein called a
"Deficiency Payment"). Each Deficiency Payment shall be made, in the case of
a Deficiency that is anticipated by the Borrower or Portola U.S., not later
than the day on which such Deficiency is anticipated to occur and, in any
other case, not later than one Business Day after the related Deficiency
Notice is received by Portola U.S.
(2) Portola U.S. shall not be required to make any Deficiency Payment
hereunder if that action would constitute an event of default by Portola U.S.
(i) under that certain Second Amended and Restated Credit and Security
Agreement with Xxxxxx Financial, Inc., a Delaware corporation, dated as of
October 2, 1995, (ii) with respect to its issuance of $110,000,000, 10 3/4%
Senior Notes under an indenture entered into with America Bank National
Association, Firstar Trust Company, successor trustee, dated as of October 2,
1995, (collectively, the "Loan Agreements"); provided that to the extent that
Portola U.S. is entitled or permitted under the Loan Agreements to make
loans, investments or payments of any kind (collectively, the "Permitted
Payments") to any Person, Portola U.S. shall use its best efforts to make
Deficiency Payments when required in priority to Permitted Payments to any
other Person.
(3) Should Portola U.S. fail to make any Deficiency Payment required by
Section 4(1) hereof (and whether or not Portola U.S. is excused from making such
payment by Section 4(2)) then (1) such non payment shall constitute an Event of
Default under the Credit Agreement (without prejudice of any other default or
Event of Default arising thereunder), and (2) Portola U.S. shall forthwith, and
from time to time, take or refrain from taking such actions, exercise such
powers and make such elections or designations under the Loan Agreements as may
be required by the Agent in order to eliminate or mitigate any impediment under
the Loan Agreements to the ability of Portola
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U.S. to address the Deficiency and repay the amounts outstanding under the
Credit Agreement (such actions to include, if required by the Agent, making
the Borrower a "Restricted Subsidiary" under the Loan Agreements on terms
acceptable to the Agent and, simultaneously, repaying, or causing to be
repaid, all amounts outstanding under the Credit Agreement) and Portola U.S.
shall thereafter, to the extent then permitted by the Loan Agreements, and as
required by the Agent, make the Deficiency Payment or pay the amounts
outstanding by the Borrower to the Agent and the Lenders, provided that
Portola U.S. shall not be required to take any action pursuant to this
Section 4(3) which would cause or constitute an Event of Default under either
of the Loan Agreements.
(4) Portola U.S. will not consent to any amendments to the Loan
Agreements which create further or more restrictive limitations upon its
ability to undertake any of the actions referred to in Sections 4(1) and 4(3)
and any such further or more restrictive limitations entered into after the
date hereof shall not be taken into account in determining the obligations of
Portola U.S. pursuant to Sections 4(1) and 4(3).
(5) If it is determined that the consent of a lender or lenders under
either or both of the Loan Agreements is required pursuant to the Loan
Agreements in respect of any matter provided for in Sections 4(1) and 4(3).
Portola U.S. shall, upon request of the Agent, use its best efforts to obtain
such consent and shall advise the Agent of its progress in obtaining the
consent.
5. PAYMENT FOR EQUITY OR SUBORDINATED DEBT. (1) A Deficiency Payment shall
constitute payment by Portola U.S. to the Borrower of the issue price of
shares of capital stock of the Borrower having such terms and conditions as
may be agreed upon by Portola U.S. and the Borrower, and the Borrower agrees
to duly authorize and issue such shares to Portola U.S. concurrently with the
related Deficiency Payment being made hereunder by Portola U.S. For greater
certainty, however, failure by Portola U.S. and the Borrower to agree upon
the terms and conditions of any such shares of failure by the Borrower to
duly authorize or issue any such shares, shall not discharge, impair or
otherwise affect the obligation of Portola U.S. to make any Deficiency
Payment as herein required. Portola U.S. hereby authorizes and directs the
Borrower to deliver certificates evidencing all shares issues as contemplated
by this paragraph directly to the Agent, to be held by the Agent pursuant to
the share pledge agreement dated as of June 16, 1995 entered into between
Portola U.S. and the Agent with respect to the Borrower.
(2) A Deficiency Payment may constitute a loan by Portola U.S. to the
Borrower and Portola U.S. acknowledges that such loan and any interest or
fees thereon (collectively, such loan, interest and fees is hereinafter
inferred to as the "Subordinated Indebtedness") shall for all purposes be,
and at all times remain inferior, junior and subordinated to the Lenders
Indebtedness. Except as expressly agreed to by the Agent in writing, all of
the Lenders Indebtedness shall be paid or repaid in full before any payment
on account of, or, in respect of, the Subordinated Indebtedness (whether as
principal, interest, fees or otherwise) is paid or repaid.
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6. RIGHT TO ENFORCE THIS AGREEMENT. The parties hereto acknowledge and
declare that this Agreement is being entered into for the joint and several
benefit of the Borrower, the Agent and the Lenders, each of which shall be
severally entitled to bring proceedings to enforce the obligations of Portola
U.S. hereunder.
7. OBLIGATIONS UNCONDITIONAL. The obligations of Portola U.S.
hereunder are absolute and unconditional under any and all circumstances and
no such obligation shall, to any extent or in any way, be discharged,
impaired or otherwise affected except by the due performance of such
obligation as herein contemplated. Without limitation of the foregoing, the
obligations of Portola U.S. hereunder shall not be limited or lessened by the
financial condition or solvency of the Borrower at any time.
8. NO SET-OFF, ETC. The obligations of Portola U.S. hereunder and the
rights of the Borrower and the Agent to enforce such obligations, whether by
action at law, suit in equity or otherwise, shall not be subject to any
reductions, limitation, impairment or termination, by reason of any claim of
any character whatsoever including, without limitation, claims of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defence, set-off, counterclaim, recoupment, rescission or termination, and
Portola U.S. hereby expressly and irrevocably waives for all purposes of this
Agreement each and every such claim, waiver, release, surrender, alteration
and compromise and each and every such defence, set-off, counterclaim,
recoupment, rescission or termination in respect of its obligations under
this Agreement.
9. FAILURE TO ACT, ETC. No failure on the part of the Borrower or the
Lenders in exercising any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or remedy
preclude any other or further exercise thereof or the exercise of any other
right or remedy at law or in equity or otherwise.
10. NOTICES, ETC. Any notice, direction or other instrument required or
permitted to be given hereunder shall, except as otherwise permitted hereunder,
be in writing and given by delivering it or sending it by telecopy or other
similar form of communication addressed, if to the Borrower to it at: 00000
Xxxxxxxxx Xxx, Xxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0, Attention: President,
Telephone: (000) 000-0000, Telecopier: (000) 000-0000, with copies to Portola
U.S. at 000 Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxxxxxxxxx 00000, Attention: President,
Telephone: (000) 000-0000, Telecopier: (000) 000-0000, and to Xxxxxxxxx Xxxxx
Morosoli & Maser, 000 Xxxx Xxxx Xxxx, Xxxxxx Xxxxx, Xxxx Xxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxxx Xxxxxxxxx, Esq., Telephone (000) 000-0000, Telecopier:
(000) 000-0000; if to the Agent, to it at: Xxxxxxxx Xxxxx Xxxx, 0xx Xxxxx,
Xxxxxxx, Xxxxxxx X0X 0X0, Attention: Manager, Corporate Finance, Telephone
(000) 000-0000, Telecopier: (000) 000-0000, and, if to the Lender, at the
addresses shown on the signature pages of the Credit Agreement. Any such
notice, direction or other instrument shall be deemed to have been effectively
given, if sent by telecopier or other similar form of telecommunication, on the
next Business Day following such transmission or, if delivered, to have been
received on the date of
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such delivery. Any party may change its address for service from time to
time by notice given in accordance with the foregoing and any subsequent
notice shall be sent to the party at its changed address.
11. AMENDMENT AND WAIVER. This Agreement shall not be amended in any
manner otherwise than by an instrument in writing, executed by duly
authorized representatives of the parties hereto. No obligation of any party
hereto may be waived except with the written consent of the Agent.
12. GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with the laws of the Province of British Columbia and the laws of
Canada applicable therein and shall be treated in all respects as a British
Columbia contract, and the parties hereto attorn to the non-exclusive
jurisdiction of the courts of such Province.
13. FURTHER ASSURANCES. The Borrower and Portola U.S. shall do all such
further acts and execute and deliver all such further documents as may be
reasonably necessary or desirable in order to fully perform and carry out the
purpose and intent of this Agreement.
14. INDEMNITY. The Borrower and Portola U.S. shall be jointly and
severally liable for, and shall jointly and severally indemnify and save the
Agent and the Lenders harmless of and from, all manner of actions, causes of
action, demands, claims, losses, costs, damages and expenses of any and every
nature whatsoever which the Agent and the Lenders may sustain, pay or incur
in respect of or in connection with any default by Portola U.S. or the
Borrower in the payment or performance of their obligations and liabilities
under this Agreement.
15. INVALIDITY OF PROVISIONS. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision hereof, and any such invalid provision shall be deemed
to be severable.
16. HEADINGS. The headings of the various paragraphs of this Agreement
are intended solely for convenience, are not intended to be full or accurate
description of the contents thereof and are not to be considered part of this
Agreement.
17. SUCCESSORS AND ASSIGNS. This Agreement shall enure to the benefit
of the Borrower and the Agent (on behalf of the Lenders) and their respective
successors and assigns. This Agreement shall not be assigned by Portola U.S.
or the Borrower without the prior written consent of the Lenders but shall be
binding upon any successors of Portola U.S. and the Borrower, whether such
succession results by way or a reorganization, amalgamation, merger,
consolidation, sale or otherwise.
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18. COUNTERPARTS. This Agreement maybe executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
PORTOLA PACKAGING, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President and
Chief Financial Officer
PORTOLA PACKAGING CANADA LTD.
By: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
Title: President
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: Senior Manager, Corporate Finance
