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EXHIBIT 10.43
AMENDMENT NO. 4 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 4 TO CREDIT AGREEMENT, dated as of September 23,
1999, (the "AMENDMENT") relating to the Credit Agreement referenced below, by
and among FRESH FOODS, INC., a North Carolina corporation (the "COMPANY"), the
subsidiaries of the Company listed on the signature pages hereto (collectively
referred to as the "SUBSIDIARY BORROWERS" or individually referred to as a
"SUBSIDIARY BORROWER") (hereinafter, the Company and the Subsidiary Borrowers
are collectively referred to as the "BORROWERS" or individually referred to as a
"BORROWER"), each of those financial institutions identified as Lenders on the
signature pages hereto (together with each of their successors and assigns,
referred to individually as a "LENDER" and, collectively, as the "LENDERS"), and
FIRST UNION COMMERCIAL CORPORATION ("FUCC"), acting in the manner and to the
extent described in Article XIII of the Credit Agreement (in such capacity, the
"AGENT"). Terms used herein but not otherwise defined herein shall have the
meanings provided in the Credit Agreement.
W I T N E S S E T H
WHEREAS, a $75,000,000 credit facility was extended to the Borrowers
pursuant to the terms of that certain Credit Agreement dated as of June 9, 1998
(as amended, modified or otherwise supplemented, the "CREDIT AGREEMENT") among
the Borrowers, the Lenders and the Agent;
WHEREAS, the Borrowers have requested that the Credit Agreement be
amended as described herein; and
WHEREAS, the Lenders are willing to make such amendments;
NOW, THEREFORE, IN CONSIDERATION of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
(A) AMENDMENTS.
1. AMENDMENTS TO SECTION 1.1.
(a) The definition of Consolidated EBITDA is hereby
amended by adding the following proviso to the end thereof:
; PROVIDED, HOWEVER, that for purposes of calculating
Consolidated EBITDA, gains and losses incurred in
connection with the sale of (i) the membership
interests in Mom'n' Pop's Country Ham, LLC, (ii) the
Smokehouse, (iii) the Restaurant LLC's and (iv) the
Sale Assets shall be excluded.
(b) The definition of Consolidated Fixed Charges is
hereby amended by adding the words "(LESS interest income)"
following the words "all Consolidated Interest Expense" in
clause (i) thereof.
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(c) The definition of Eligible Real Property is
hereby amended and replaced in its entirety as follows:
"ELIGIBLE REAL PROPERTY" shall mean the Fair
Market Value of the owned properties noted as such on
SCHEDULE 6.19 hereto and which are subject to a
valid, enforceable and first priority Lien in favor
of Agent, together with additional properties
acquired by the Company or any of its Subsidiaries
following the Closing Date which have been approved
by the Agent, which approval shall not be
unreasonably withheld.
(d) The definition entitled "FUNB Claremont
NonRestaurant Cash Collateral Account" is hereby changed to
"FUNB Cash Collateral Account" and all references to FUNB
Claremont NonRestaurant Cash Collateral Account in the Credit
Agreement are hereby changed accordingly.
(e) The following new definitions are added to
Section 1.1 in the alphabetically appropriate place:
"MOM'N' POP'S LOAN" shall mean a revolving
credit loan in the amount of $500,000 made by the
Company to Mom'n' Pop's Country Ham, LLC to provide
working capital with a scheduled maturity date of
December 31, 1999.
"HOGGS LOAN" shall mean the three-year
secured promissory note in the amount of $985,050
from Hoggs LLC made payable to Pierre Foods, LLC to
finance the sale by Pierre Foods, LLC of the
membership interests in Mom'n'Pop's Country Ham, LLC,
including the Smokehouse, to Hoggs, LLC.
"RESTAURANT LLCs" shall mean, collectively,
Claremont Restaurant Group, LLC and Fresh Foods
Sales, LLC.
"SALE ASSETS" shall mean those assets set
forth on Annex I attached to the Consent dated as of
August 5, 1999 by and among the Borrowers, the
Lenders and the Agent.
"SMOKEHOUSE" shall mean the smokehouse
facility and related real property constituting a
portion of the Claremont Office property owned by
Fresh Foods, Inc.
(f) The definition of "Permitted Indebtedness" is
hereby amended by deleting clause (vii) thereof and
renumbering the remaining clauses accordingly.
(g) The definition of "Permitted Investments" is
hereby amended by deleting the word "and" following the words
"Permitted
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Acquisitions", inserting the following new clauses (vi) and
(vii) and renumbering the remaining clauses accordingly:
(vi) the Hoggs Loan;
(vii) the Mom'n' Pop's Loan; and
(h) The definition of Unfinanced Consolidated Capital
Expenditures is amended and replaced in its entirety as
follows:
"UNFINANCED CONSOLIDATED CAPITAL
EXPENDITURES" shall mean, for any period, one hundred
percent (100%) of Consolidated Capital Expenditures
made during such period.
2. DELETIONS FROM SECTION 1.1. The following definitions in
Section 1.1 of the Credit Agreement are hereby deleted in their
entirety:
Approved Restaurants, Cash Collateral Accounts, Consolidated
Restaurant Capital Expenditures, FUNB Claremont Restaurant
Cash Collateral Account, NonRestaurant Business and Restaurant
Business.
3. AMENDMENT TO SECTION 2.1(b)(i)(B). Section 2.1(b)(i)(B) of
the Credit Agreement is hereby amended by adding the following new
paragraph (4) and renumbering the remaining paragraphs accordingly:
(4) until such date as the Mom'n'Pop's Loan shall have been
repaid in full and terminated in accordance with the terms
thereof, a reserve equal to the unfunded portion of the
Mom'n'Pop's Loan; MINUS
4. AMENDMENT TO SECTION 2.1(b)(i)(B)(3). Section
2.1(b)(i)(B)(3) of the Credit Agreement is hereby amended and replaced
in its entirety as follows:
(3) an amount equal to up to 70% of the Eligible Equipment and
Eligible Real Property determined as of its initial inclusion
into the Borrowing Base; PROVIDED, HOWEVER, that on the last
day of each calendar quarter such initial amount shall be
reduced by an amount equal to 1/28th of such initial amount;
MINUS
5. AMENDMENT TO SECTION 2.4(b). Section 2.4(b) of the Credit
Agreement is hereby amended and replaced in its entirety as follows:
(b) (i) The Borrowers, individually or through the Company,
shall have each established and shall maintain lockboxes (the
"LOCKBOXES") with financial institutions, including First
Union, selected by the Company and reasonably acceptable to
the Agent (the "LOCKBOX BANKS") and shall instruct all account
debtors on the Accounts of each Borrower to remit all payments
to its respective Lockboxes. All amounts received by the
Borrowers from any account debtor, in addition to all other
cash received
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from any other source including but not limited to proceeds
from asset sales and judgments, shall be promptly deposited
into the applicable Lockbox Account (as defined below).
(ii) Each Borrower, individually or through the
Company, the Agent and each Lockbox Bank shall enter into
three party agreements in the form of EXHIBIT I hereto (the
"LOCKBOX AGREEMENTS"), providing, among other things, for the
following:
(A) The Borrowers, individually or through
the Company, will open and establish for the benefit
of the Agent on behalf of the Lenders an account at
each Lockbox Bank (each a "LOCKBOX ACCOUNT").
(B) All receipts held in the Lockboxes shall
be remitted daily to the appropriate Lockbox Account.
All funds deposited into the Lockbox Accounts on any
Business Day shall be transferred to the FUNB Cash
Collateral Account. All funds transferred to the FUNB
Cash Collateral Account on any Business Day shall be
immediately credited to the FUNB Leverage Account.
All funds credited on any Business Day to the FUNB
Leverage Account shall be applied by the Agent on
such Business Day to reduce the then outstanding
balance of the Revolving Loans and to pay accrued
interest thereon and to pay any other outstanding
Obligations which are then due and payable. All
amounts received directly by the Borrowers from any
account debtor, in addition to all other cash
received from any other source including but not
limited to proceeds from asset sales and judgments,
shall be held in trust by the Borrowers and promptly
deposited into the applicable Lockbox Account.
(iii) All funds deposited into the FUNB Cash
Collateral Account shall immediately become the property of
the Agent and the Borrowers shall obtain the agreement by the
Lockbox Banks to waive any offset rights against the funds so
deposited. The Agent assumes no responsibility for the Lockbox
arrangements, including, without limitation, any claim of
accord and satisfaction or release with respect to deposits
accepted by the Lockbox Banks thereunder.
(iv) The Borrowers may close Lockboxes and/or open
new lockboxes with the prior written consent of the Agent and
subject to prior execution and delivery to the Agent of
lockbox agreements consistent with the provisions of this
SECTION 2.4(b) and in form and substance satisfactory to the
Agent and its counsel.
6. AMENDMENT TO SECTION 6.34. Section 6.34 of the Credit
Agreement is hereby deleted in its entirety.
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7. AMENDMENT TO SECTION 7.26. Section 7.26 of the Credit
Agreement is hereby amended and restated in its entirety as follows:
7.26 ADDITIONAL ELIGIBLE REAL PROPERTY.
If the Borrowers request that any additional real property be
included within "Eligible Real Property", the Borrowers agree to
provide the Agent with an appraisal regarding such property and
additional items reasonably requested by the Agent (including
environmental audits and the other items described in Section 7 of
SCHEDULE 1.1B hereto).
8. AMENDMENTS TO ARTICLE VIII.
(a) Sections 8.2 and 8.3 of the Credit Agreement are
hereby amended and replaced in their entirety as follows:
8.2 FIXED CHARGE COVERAGE RATIO.
The Borrowers shall maintain a Fixed Charge Coverage Ratio of
not less than (a) 1.0 to 1.0 as of the last day of each such fiscal
quarter for any fiscal quarter ending on or before March 4, 2000 and
(b) thereafter, 1.2 to 1.0 as of the last day of each fiscal quarter.
8.3 CAPITAL EXPENDITURES.
The Borrowers shall not make Consolidated Capital Expenditures
during any fiscal year in excess of the following amounts (on a
non-cumulative basis) for the fiscal year periods set forth below:
AMOUNT PERIOD
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$8,000,000 March 7, 1999 and
all fiscal periods thereafter
(b) Section 8.4 of the Credit Agreement is hereby
deleted in its entirety and Section 8.5 of the Credit
Agreement is hereby renumbered as Section 8.4.
9. AMENDMENT TO SECTION 9.4. Section 9.4 of the Credit
Agreement is hereby amended and replaced as follows:
9.4 NO CORPORATE CHANGES.
Merge, consolidate with any Person or otherwise alter or
modify any Borrower's or any Subsidiary's Articles or Certificate of
Incorporation or any operating agreement or any names or principal
places of business or enter into or engage in any business, operation
or activity other than the food service business;
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PROVIDED, HOWEVER, the Company and its Subsidiaries may consummate the
Reorganization so long as the Company takes any and all steps and
executes any and all documents requested by the Agent in connection
therewith and pay all costs and expenses incurred by the Agent
(including reasonable attorneys' fees) in connection therewith.
10. AMENDMENT TO SECTION 9.8. Section 9.8 of the Credit
Agreement is hereby amended by deleting the word "and" following the
word "Person", adding the following new clause (b) and relettering the
remaining clause as clause (c):
, (b) as set forth on Schedule 9.3 hereto, and
11. AMENDMENT TO SCHEDULE 6.30. Schedule 6.30 is hereby
amended and replaced in its entirety with Amended Schedule 6.30
attached hereto.
12. AMENDMENT TO SCHEDULE 6.34. Schedule 6.34 is hereby
deleted in its entirety.
13. AMENDMENT TO OTHER SCHEDULES. The Schedules to the Credit
Agreement, the Security Agreement and the Pledge Agreement are hereby
amended and replaced in their entirety by the revised Schedules
attached hereto.
(B) CONSENTS.
1. SALE OF RESTAURANT LLCs. Notwithstanding the prohibition
contained in Section 9.3 of the Credit Agreement, the Lenders hereby
consent to the sale of all of the membership interests in Claremont
Restaurant Group, LLC and Fresh Food Sales, LLC (collectively, the
"Restaurant LLCs") by Fresh Foods, Inc. for aggregate Net Cash Proceeds
of not less than $38,000,000, subject to normal and customary
post-closing purchase price adjustments, and subject to the terms and
conditions set forth herein. In connection with the sale of the
Restaurant LLCs, the Lenders hereby authorize the Agent to release any
and all Liens on the personal property, fixtures and real property used
in connection with the business of the Restaurant LLCs.
2. SALE OF RETAINED ASSETS. Notwithstanding the prohibition
contained in Section 9.3 of the Credit Agreement, the Lenders hereby
consent, subject to the terms and conditions set forth herein, to the
sale of Bennetts Restaurant in Conover, NC and the sale of the Xxxxxx
Outparcel in Xxxxxx, NC owned by the Restaurant LLC's and not being
sold in connection with the sale referred to in Section 1 hereof (the
"Retained Assets"), upon terms and conditions satisfactory to the
Agent. In connection with the sale of the Retained Assets, the Lenders
hereby authorize the Agent to release any and all Liens on the personal
property, fixtures and real property comprising the Retained Assets.
3. RELEASE OF BORROWERS. The Lenders hereby consent to the
release of the following Borrowers as parties to the Credit Agreement
and the other Credit Documents, subject to the terms and conditions set
forth herein:
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Claremont Restaurant Group, LLC, Fresh Foods Restaurant Group, LLC,
Spicewood, Inc., Fresh Foods Sales, LLC, Sagebrush of Tennessee, L.P.,
Sagebrush of South Carolina, LLC, Sagebrush of North Carolina, LLC and
Sunshine WSMP, Inc.
4. RELEASE OF COLLATERAL. The Agent hereby agrees to release
its Liens on the Retained Assets and the personal property, fixtures
and real property used in connection with the business of the
Restaurant LLCs and their Subsidiaries, such releases to be held in
escrow pending consummation of the transactions contemplated herein and
the Agent's receipt of the proceeds thereof.
(C) EXCLUSION OF RETAINED ASSETS FROM ELIGIBLE REAL PROPERTY. Any
assets sold by the Borrowers pursuant to paragraph 2 of the Consent dated as of
August 5, 1999 and the Retained Assets shall be excluded from the definition of
Eligible Real Property, and Eligible Real Property shall be reduced by
$20,635,000.
(D) REPRESENTATIONS AND WARRANTIES.
Each Borrower hereby represents and warrants that (i) the
representations and warranties contained in Article VI of the Credit Agreement
are correct on and as of the date hereof as though made on and as of such date
(except for those representations and warranties which by their terms relate
solely to an earlier date) and after giving effect to the amendments contained
herein, (ii) no Default or Event of Default exists under the Credit Agreement on
and as of the date hereof and after giving effect to the amendments contained
herein, (iii) it has the corporate power and authority to execute and deliver
this Amendment and to perform its obligations hereunder and has taken all
necessary corporate action to authorize the execution, delivery and performance
by it of this Amendment, (iv) it has duly executed and delivered this Amendment,
and this Amendment constitutes its legal, valid and binding obligation
enforceable in accordance with its terms except as the enforceability thereof
may be limited by bankruptcy, insolvency or other similar laws affecting the
rights of creditors generally or by general principles of equity and (v) as of
the date hereof, there has been no adverse change with respect to the
information contained in the Borrowing Base Certificate delivered pursuant to
paragraph (D)(5) hereof.
(E) PLEDGE AND GRANT OF SECURITY INTERESTS. Each of Pierre Foods, LLC
and the Company hereby acknowledge that (i) the three-year secured promissory
note evidencing the Hoggs Loan and (ii) the promissory note evidencing the
Mom'n' Pop's Loan (collectively, the "Pledged Notes") have been pledged to the
Agent and, in each case, constitute Collateral under the Security Agreement.
(F) REPLACEMENT OF LETTERS OF CREDIT. The Borrowers hereby agree that
the outstanding Letters of Credit for the account of the Restaurant LLC's shall
be replaced with substitute letters of credit or other credit support acceptable
to the beneficiary thereof and such Letters of Credit shall have been cancelled
and delivered to the Issuing Bank not later than 60 days following the date
hereof. Until the Letters of Credit shall have been cancelled and delivered to
the Agent, the Agent and the Lenders shall maintain a reserve against the
Borrowing Base in an amount equal to the face amount of such Letters of Credit.
In the event such Letters of Credit have not been replaced, cancelled and
returned to the Agent within 60 days of the date
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hereof, the Borrower shall immediately deliver cash collateral to the Agent
equal to the face amount of such Letters of Credit.
(G) CONDITIONS TO EFFECTIVENESS. This Amendment shall be and become
effective when all of the conditions set forth in this paragraph shall have been
satisfied.
1. EXECUTION OF COUNTERPARTS OF AMENDMENT. The Agent shall
have received counterparts of this Amendment, which collectively shall
have been duly executed on behalf of each of the Borrowers, the Agent
and the Lenders.
2. PREPAYMENT OF REVOLVING LOANS. The Borrowers shall prepay
outstanding Revolving Loans under the Credit Agreement in an amount
equal to the lesser of (a) the aggregate outstanding Revolving Loans
under the Credit Agreement as of the date hereof and (b) the aggregate
Net Cash Proceeds of the sale of (i) the Restaurant LLCs and all
personal property, fixtures and real property used in connection with
the business thereof and (ii) the Retained Assets, which prepayment
shall be made from the Net Cash Proceeds of such sales.
3. BORROWING BASE CERTIFICATE. The Agent shall have received a
Borrowing Base Certificate as of August 7, 1999, on a pro forma basis
taking into account the transactions contemplated herein, substantially
in the form of EXHIBIT L to the Credit Agreement, certified by the
Chief Financial Officer of the Company and demonstrating availability
of Loans permitted to be borrowed under the Credit Agreement, after
giving effect to the sale of the Restaurant LLCs and the Retained
Assets of at least $25,000,000.
4. LEGAL OPINION. The Agent shall have received a legal
opinion of special counsel to the Borrowers as to the enforceability of
this Amendment and such other matters as the Agent may reasonably
request, in form and substance reasonably satisfactory to the Agent.
5. FAIRNESS OPINION. The Agent shall have received a copy of a
favorable opinion from Xxxxxx Xxxxxxxxx Xxxxxx endorsing the sale of
Mom'n' Pops Country Ham, LLC.
6. RESOLUTIONS. The Agent shall have received copies of
resolutions of the board of directors of the Borrowers authorizing the
transactions contemplated by this Amendment and certified as true and
correct by an authorized officer of each such Borrower.
(H) Except as expressly amended or modified by the terms hereof, the
Credit Agreement and each other Credit Document shall remain in full force and
effect. This Amendment shall not affect, modify or diminish the obligations of
the Borrowers which have accrued prior to the effectiveness of the provisions
hereof. This Amendment is a Credit Document executed pursuant to the Credit
Agreement and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with the terms and provisions of the
Credit Agreement. At such time as this Amendment becomes effective, all
references in the Credit Agreement to the "Agreement" or the "Credit Agreement"
and all
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references in the other Credit Documents to the "Credit Agreement" shall be
deemed to refer to the Credit Agreement as amended by this Amendment. The
Borrowers affirm the liens and security interests created and granted in the
Credit Agreement and the Credit Documents and agree that this Amendment shall in
no manner adversely affect or impair such liens and security interests.
(I) Notwithstanding anything herein to the contrary, if the Borrower
shall fail to comply with any of the undertakings, covenants and other
obligations contained in this Amendment within the time periods specified
herein, such failure shall constitute an Event of Default under the Credit
Agreement.
(J) No Borrower has any counterclaims, offsets, credits or defenses to
the Credit Documents and the performance of its obligations thereunder, or if
any Borrower has any such claims, counterclaims, offsets, credits or defenses to
the Credit Documents or any transaction related to the Credit Documents, same
are hereby waived, relinquished and released in consideration of the Lenders'
execution and delivery of this Amendment.
(K) The Borrowers agree to pay all reasonable costs and expenses of the
Agent in connection with the preparation, execution and delivery of this
Amendment, including, without limitation, the reasonable fees and expenses of
Xxxxx & Xxx Xxxxx, PLLC.
(L) This Amendment may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original and it shall
not be necessary in making proof of this Amendment to produce or account for
more than one such counterpart.
(M) This Amendment and the Credit Agreement as amended hereby shall be
governed by and construed and interpreted in accordance with the laws of the
State of North Carolina.
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Amendment to be duly executed and delivered as of the date first above
written.
COMPANY: FRESH FOODS, INC.
By: /s/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
Title: Vice President
SUBSIDIARY BORROWERS: CLAREMONT RESTAURANT GROUP, LLC
BY: FRESH FOODS, INC.,
its Sole Member
FRESH FOODS RESTAURANT GROUP, LLC
BY: CLAREMONT RESTAURANT
GROUP, LLC, its Sole Member
BY: FRESH FOODS, INC.,
its Sole Member
FRESH FOODS PROPERTIES, LLC
BY: FRESH FOODS, INC.,
its Sole Member
SPICEWOOD, INC.
SUNSHINE WSMP, INC.
FRESH FOODS SALES, LLC
BY: FRESH FOODS, INC.,
its Sole Member
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PIERRE FOODS, LLC
BY: FRESH FOODS, INC.,
its Sole Member
SAGEBRUSH OF TENNESSEE, L.P.
BY: SAGEBRUSH OF SOUTH
CAROLINA, LLC
General Partner
BY: CLAREMONT RESTAURANT
GROUP, LLC, its Sole
Member
BY: FRESH FOODS,
INC., its
sole member
SAGEBRUSH OF NORTH CAROLINA, LLC
BY: CLAREMONT RESTAURANT
GROUP, LLC its Sole Member
BY: FRESH FOODS, INC.,
its sole member
SAGEBRUSH OF SOUTH CAROLINA, LLC
BY: CLAREMONT RESTAURANT
GROUP, LLC, its Sole Member
BY: FRESH FOODS, INC.,
its sole member
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PIERRE LEASING, LLC
BY: FRESH FOODS, INC.,
its Sole Member
By: /s/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
Title: Vice President
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AGENT AND LENDERS: FIRST UNION COMMERCIAL CORPORATION,
as Agent and a Lender
By: /s/ XXXXX X. XXXX
-------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
BANK OF AMERICA, N.A.
(formerly NationsBank, N.A.),
as a Lender
By: /s/ Xxxxxx Xxxxxxxx Xxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxx Xxxxx
Title: Vice President
NATIONAL CITY COMMERCIAL
FINANCE, INC.,
as a Lender
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: SVP
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO,
as a Lender
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
