WAIVER AND THIRD AMENDMENT TO CREDIT AGREEMENT
THIS WAIVER AND THIRD AMENDMENT TO CREDIT AGREEMENT (the "AMENDMENT"),
dated as of March 30, 2001, is among MARKETING SPECIALISTS CORPORATION,
MARKETING SPECIALISTS SALES COMPANY, XXXX XXXXX ASSOCIATES, INC., and THE
SALES FORCE COMPANIES, INC. (the "BORROWERS"), each of the banks or other
lending institutions which is a party hereto (individually a "BANK" and
collectively the "BANKS") and THE CHASE MANHATTAN BANK, individually as a Bank
and as agent for itself and the other Banks (in its capacity as agent, the
"AGENT").
RECITALS:
A. The Borrowers (other than The Sales Force Companies, Inc.),
Bromar, Inc., the Agent, and the Banks have entered into that certain Credit
Agreement dated as of March 30, 2000 (the "ORIGINAL CREDIT AGREEMENT"). The
Original Credit Agreement has been modified pursuant to the following (and the
Original Credit Agreement as modified by the following, herein the
"AGREEMENT"):
1. That certain First Amendment to Credit Agreement dated
April 13, 2000 among the Borrowers (other than The Sales Force Companies,
Inc.), the Agent and the Banks;
2. That certain Joinder Agreement dated April 14, 2000
executed by the Borrowers, the Agent and the Banks to join The Sales Force
Companies, Inc. into the Agreement as a "Borrower" thereunder; and
3. That certain Second Amendment to Credit Agreement
dated November 17, 2000 among the Borrowers, the Agent and the Banks (the
"SECOND AMENDMENT").
B. The Borrowers have advised the Agent and the Banks that Events
of Default have occurred under (i) Section 11.1(d) of the Agreement as a
result of the Borrowers' failure to comply with the covenant set forth in
Section 8.1(a) of the Agreement for the Fiscal Year ended December 31, 2000;
(ii) Section 11.1(e) of the Agreement as a result of the Borrowers' failure to
deliver certain items to the Agent by March 15, 2001 as required by Section
4.6 of the Second Amendment and (iii) Section 11.1(j) of the Agreement as a
result of the events of default that have occurred under the terms of the
First Union Loan Agreement as a result of the Events of Default described
herein (the "EXISTING DEFAULTS").
C. The Agent and the Banks are willing to waive the Existing
Defaults and amend the Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows effective as of
the date hereof unless otherwise indicated:
ARTICLE I.
DEFINITIONS
Section 1.1. DEFINITIONS. Capitalized terms used in this
Amendment, to the extent not otherwise defined herein, shall have the same
meanings as in the Agreement, as amended hereby.
WAIVER AND THIRD AMENDMENT TO CREDIT AGREEMENT-Page 1
ARTICLE II.
AMENDMENTS
Section 2.1. AMENDMENT TO SECTION 1.1. Section 1.1 of the
Agreement is amended as follows:
(a) The last paragraph in the definition of the term "Borrowing
Base" is amended in its entirety to read as follows:
As used in this definition, the term "ADVANCE PERCENT" means
either: (i) as of March 31, 2001 and as of any date of determination
of the Borrowing Base after March 31, 2001, but before June 1, 2001,
seventy-five percent (75%), except as provided in clause (iii) below;
(ii) as of June 1, 2001, and at all times thereafter except as
provided in clause (iii) below, seventy percent (70%); or (iii) at any
time, such lesser percent as the Agent may, at any time hereafter,
determine is necessary to protect its interests, such determination to
be made in the Agent's sole judgment, in good faith and based on
information which, in its judgment, supports such determination. Any
change in the Advance Percent and any establishment of reserves shall
be effective on the date Parent receives Agent's written notice of
such. In calculating the aggregate Borrowing Base of all of the
Borrowers, no more than Four Million Dollars ($4,000,000) of the
Non-System Receivables of all the Borrowers shall be included as
Eligible Accounts.
(b) The definition of the term "Borrowing Availability" is amended
in its entirety to read as follows:
"BORROWING AVAILABILITY" means, at any date of determination,
the amount by which the lesser of the Commitments or the Borrowing
Base exceed the Outstanding Revolving Credit or, when determined with
respect to a Borrower, the amount that such Borrower's Borrowing Base
exceeds the Outstanding Revolving Credit applicable to such Borrower;
provided however, when calculating the Borrowing Availability for the
purposes of Section 11.1(p) herein, the Advance Percent utilized to
determine the amount of the Borrowing Base shall equal the lesser of
seventy percent (70%) or the percentage otherwise established pursuant
to the definition thereof.
(c) The definition of the term "EBITDA" is amended in its entirety
to read as follows:
"EBITDA" means, for any period and any Person, the total of
the following, each calculated without duplication for such Person on
a consolidated basis for such period: (a) Net Income; PLUS (b) any
provision for (or less any benefit from) income or franchise taxes
included in determining Net Income; PLUS (c) interest expense deducted
in determining Net Income; PLUS (d) amortization and depreciation
expense deducted in determining Net Income, including, with respect to
the Parent for any period which includes the Fiscal Quarter ended
December 31, 2001, amortization consisting of the impairment write-off
of approximately $307,000,000 recorded in such Fiscal Quarter.
Section 2.2. AMENDMENT TO SECTION 8.1. Clause (a) of Section 8.1
of the Agreement is amended to read in its entirety as follows:
WAIVER AND THIRD AMENDMENT TO CREDIT AGREEMENT-Page 2
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available, and in any
event within ninety (90) days after the end of each Fiscal Year of
Parent, beginning with the Fiscal Year ending December 31, 1999, a
copy of the annual audit report of Parent and the Subsidiaries for
such Fiscal Year containing, on a consolidated and consolidating
basis, balance sheets and statements of income, retained earnings, and
cash flow as at the end of such Fiscal Year and for the Fiscal Year
then ended, in each case setting forth in comparative form the figures
for the preceding Fiscal Year, all in reasonable detail and audited
and certified by independent certified public accountants of
recognized standing acceptable to the Agent on an unqualified basis
(and without comment as to the accountant's opinion whether the Parent
is a going concern or can in the future continue to be a going
concern), to the effect that such report has been prepared in
accordance with GAAP; provided that the annual audit report delivered
for the Fiscal Year ended December 31, 2000 may contain the
accountant's comment that there is substantial doubt about the
Parent's ability to continue as a going concern;
Section 2.3. AMENDMENT TO SECTION 10.1. Section 10.1 of the
Agreement is amended to add a new sentence immediately after the table
contained therein to read in its entirety as follows:
If the EBITDA of Parent for the two (2) Fiscal Quarters ended
March 31, 2001 is equal to or greater than $14,250,000, then
compliance with this covenant for the Fiscal Quarter ended March 31,
2001 is not required but shall be required with respect to all other
Fiscal Quarters.
Section 2.4. AMENDMENT TO SECTION 10.4. Section 10.4 of the
Agreement is amended to add a new sentence immediately after the table
contained therein to read in its entirety as follows:
If the EBITDA of Parent for the two (2) Fiscal Quarters ended March
31, 2001 is equal to or greater than $14,250,000, then compliance with
this covenant for the Fiscal Quarter ended March 31, 2001 is not
required but shall be required with respect to all other Fiscal
Quarters.
Section 2.5. AMENDMENT TO SECTION 10.5. Section 10.5 of the
Agreement is amended in its entirety to read as follows:
Section 10.5 MINIMUM EBITDA. As of the dates set
forth in the table below, Parent shall cause its EBITDA calculated for
the four (4) Fiscal Quarters then ended (or, if as of such date less
than four (4) Fiscal Quarters have elapsed since September 30, 2000,
then for the Fiscal Quarters that have completely elapsed since
September 30, 2000) to be not less than the amount set forth below
opposite the applicable period:
===================================================
Date Amount
===================================================
December 31, 2000 $ 9,000,000
---------------------------------------------------
March 31, 2001 $14,250,000
---------------------------------------------------
June 30, 2001 $25,400,000
---------------------------------------------------
September 30, 2001 $34,000,000
---------------------------------------------------
December 31, 2001 $39,000,000
===================================================
WAIVER AND THIRD AMENDMENT TO CREDIT AGREEMENT-Page 3
ARTICLE III.
CONDITIONS PRECEDENT
Section 3.1. CONDITIONS. The effectiveness of Article II and
Section 4.1 of this Amendment are subject to the conditions precedent that no
Default (other than the Existing Defaults) and no event or condition that
would have a Material Adverse Effect shall exist as of the effective date
hereof and the Agent shall have received all of the following, all in form and
substance acceptable to the Agent and the Banks and dated (unless other
indicated or not applicable) the date hereof, all on or before April 18, 2001:
(a) ACKNOWLEDGMENT. This Amendment executed by all of the
Borrowers and Richmont Capital Partners I, L.P.;
(b) FIRST UNION CONSENT. A fully executed copy of a
consent to the terms of this Amendment executed by First Union
National Bank;
(c) WAIVER FEE. A non-refundable fee in an amount equal to
$153,750 in consideration for the waivers and amendments provided in
this Amendment, payable to the Agent for the benefit of each Bank that
executes this Amendment, with each such Bank entitled to its pro rata
portion of such $153,750 calculated based on the Commitment of a Bank
as compared to the Commitments of all the Banks that executed this
Amendment; and
(e) COUNSEL REVIEW. Evidence that all proceedings taken in
connection with the transactions contemplated by this Amendment and
all documentation and other legal matters incident thereto are
satisfactory to the Agent and its legal counsel, Jenkens & Xxxxxxxxx,
a Professional Corporation.
Section 3.2. POST-CLOSING COVENANTS. By April 27, 2001, the Borrowers
shall deliver an annual audit report for Marketing Specialists Corporation for
the Fiscal Year ended December 31, 2000 in the form required by Section 8.1(a)
of the Agreement. By May 31, 2001, each Borrower shall deliver to the Agent
the following, all in form and substance acceptable to the Agent: (a) a
landlord or mortgage waiver duly completed and executed for each location
where any of its Collateral is located; (b) lien acknowledgements from each
third-party in possession of Collateral and any other documents or instruments
necessary to create, preserve, protect and perfect the Liens of the Agent for
the benefit of the Banks in the Collateral; (c) a letter executed by the
Borrower and Richmont Capital Partners I, L.P. requesting the Banks' consent
to the issuance of Series C Preferred Stock by Marketing Specialists
Corporation; (d) certificates of the appropriate government officials for the
states of Massachusetts, Oregon and Washington as to the authority of
Marketing Specialists Sales Company to conduct business in such states; and
(e) amendments or other modifications to the promissory notes originally
executed by Richmont Marketing Specialist, Inc. and otherwise described below
changing the subordination provisions thereof to reflect that all the
Obligations and all the Term Loan Obligations (as defined in the First Union
Loan Agreement) are senior debt under the subordination provisions thereof:
=================================================
Payee Original Principal Amount
=================================================
Xxxxx Xxxxxxxx $174,116.02
-------------------------------------------------
Barney Deal $148,061.35
-------------------------------------------------
Xxxxxx Xxxx $ 28,554.82
-------------------------------------------------
Xxxx Xxxxx $ 5,808.29
-------------------------------------------------
Xxxx Xxxxxxx $ 87,057.78
-------------------------------------------------
Xxxx Xxxxxxxxxx $174,116.02
=================================================
WAIVER AND THIRD AMENDMENT TO CREDIT AGREEMENT-Page 4
ARTICLE IV.
WAIVERS, RATIFICATIONS, REPRESENTATIONS AND WARRANTIES
Section 4.1. WAIVER OF THE EXISTING DEFAULTS. Each Bank waives the
Existing Defaults and agrees not to exercise any rights or remedies available
as a result of the occurrence thereof. To induce the Banks to agree to the
waiver of the Existing Defaults, the Borrowers agree that this waiver shall
not constitute and shall not be deemed a waiver of any other Default, further
Events of Default under Sections 11.1(e) and 11.1(j) of the Agreement or
otherwise, or a waiver of any rights or remedies arising as a result of such
other Defaults. The failure to comply with any covenant in any Loan Document
for any date, or any period ending on any date, other than as described above
in the definition of Existing Defaults shall constitute an Event of Default.
Section 4.2. RATIFICATIONS. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and, except as expressly modified and superseded by
this Amendment, the terms and provisions of the Agreement and the other Loan
Documents are ratified and confirmed and shall continue in full force and
effect. The Borrowers, the Agent and the Banks party hereto agree that the
Agreement as amended hereby and the other Loan Documents shall continue to be
legal, valid, binding and enforceable in accordance with their respective
terms.
Section 4.3. REPRESENTATIONS AND WARRANTIES. The Borrowers hereby
represent and warrant to the Agent and the Banks as follows: (a) after giving
effect to this Amendment, no Default has occurred and is continuing; (b) after
giving effect to this Amendment, the representations and warranties set forth
in the Loan Documents are true and correct in all material respects on and as
of the date hereof with the same effect as though made on and as of such date
except with respect to any representations and warranties limited by their
terms to a specific date; (c) the execution, delivery and performance of this
Amendment has been duly authorized by all necessary action on the part of the
Borrowers and does not and will not: (1) violate any provision of law
applicable to any Borrower, the certificate of incorporation, bylaws,
partnership agreement, membership agreement, or other applicable governing
document of any Borrower or any order, judgment, or decree of any court or
agency of government binding upon any Borrower, (2) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any material contractual obligation of any Borrower, including without
limitation, the Indenture, the First Union Loan Agreement and each agreement
evidencing and governing the Debt of any Borrower that is subordinate to the
Obligations; (3) result in or require the creation or imposition of any
material lien upon any asset of any Borrower; or (4) require any approval or
consent of any Person under any material contractual obligation of any
Borrower; (d) the articles of incorporation, bylaws, partnership agreement,
certificate of limited partnership, membership agreement, articles of
organization or other applicable governing document of any Borrower, and the
resolutions of the Borrowers attached as exhibits to the Certificate of
Secretary of Borrowers dated March 30, 2000 delivered to the Agent, have not
been modified or rescinded and remain in full force and effect; and (e) AS OF
THE DATE HEREOF THERE ARE NO CLAIMS OR OFFSETS AGAINST OR DEFENSES OR
COUNTERCLAIMS TO THEIR OBLIGATIONS UNDER THE LOAN DOCUMENTS AND IN ACCORDANCE
THEREWITH THE BORROWERS:
(I) WAIVER. WAIVE ANY AND ALL SUCH CLAIMS, OFFSETS,
DEFENSES OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING PRIOR TO
THE DATE OF THEIR EXECUTION OF THIS AMENDMENT, AND
WAIVER AND THIRD AMENDMENT TO CREDIT AGREEMENT-Page 5
(II) RELEASE. RELEASE AND DISCHARGE THE AGENT AND THE
BANKS, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
SHAREHOLDERS, AFFILIATES AND ATTORNEYS (COLLECTIVELY THE "RELEASED
PARTIES") FROM ANY AND ALL OBLIGATIONS, INDEBTEDNESS, LIABILITIES,
CLAIMS, RIGHTS, CAUSES OF ACTION OR DEMANDS WHATSOEVER, WHETHER KNOWN
OR UNKNOWN, SUSPECTED OR UNSUSPECTED, IN LAW OR EQUITY, WHICH ANY
BORROWER EVER HAD, NOW HAS, CLAIMS TO HAVE OR MAY HAVE AGAINST ANY
RELEASED PARTY ARISING PRIOR TO THE DATE HEREOF AND FROM OR IN
CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY.
ARTICLE V.
MISCELLANEOUS
Section 5.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Amendment or any other Loan
Document including any Loan Document furnished in connection with this
Amendment shall survive the execution and delivery of this Amendment and no
investigation by the Agent or any Bank or any closing shall affect the
representations and warranties or the right of the Agent or any Bank to rely
upon them.
Section 5.2. REFERENCE TO AGREEMENT. Each of the Loan Documents,
including the Agreement and any and all other agreements, documents, or
instruments now or hereafter executed and delivered pursuant to the terms
hereof or pursuant to the terms of the Agreement as amended hereby, are hereby
amended so that any reference in such Loan Documents to the Agreement shall
mean a reference to the Agreement as amended hereby.
Section 5.3. EXPENSES OF BANK. As provided in the Agreement, the
Borrowers agree to pay on demand all costs and expenses incurred by the Agent
or any Bank in connection with the preparation, negotiation, and execution of
this Amendment, including without limitation, the costs and fees of the
Agent's and each Banks' legal counsel.
Section 5.4. SEVERABILITY. Any provision of this Amendment held by
a court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of this Amendment and the effect thereof
shall be confined to the provision so held to be invalid or unenforceable.
Section 5.5. APPLICABLE LAW. This Amendment and all other Loan
Documents executed pursuant hereto shall be governed by and construed in
accordance with the laws of the State of New York and the applicable laws of
the United States of America.
Section 5.6. SUCCESSORS AND ASSIGNS. This Amendment is binding
upon and shall inure to the benefit of the Agent, each Bank and each Borrower
and its respective successors and assigns, except the Borrowers may not assign
or transfer any of their rights or obligations hereunder without the prior
written consent of the Banks.
Section 5.7. SECTION COUNTERPARTS. This Amendment may be executed
in one or more counterparts and on telecopy counterparts, each of which when
so executed shall be deemed to be an original, but all of which when taken
together shall constitute one and the same agreement.
WAIVER AND THIRD AMENDMENT TO CREDIT AGREEMENT-Page 6
Section 5.8. EFFECT OF WAIVER. No consent or waiver, express or
implied, by the Agent or any Bank to or for any breach of or deviation from
any covenant, condition or duty by the Borrowers shall be deemed a consent or
waiver to or of any other breach of the same or any other covenant, condition
or duty.
Section 5.9. HEADINGS. The headings, captions, and arrangements
used in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
Section 5.10. ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER
INSTRUMENTS, DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION
WITH THIS AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES
HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS
AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Section 5.11. REQUIRED BANKS. Pursuant to Section 13.11 of the
Agreement, the Agreement may be modified as provided in this Amendment with
the agreement of the Required Banks which means Banks having (a) sixty-six and
two-thirds percent (66 2/3%) or more of the Commitments or (b) if the
Commitments have been terminated, sixty-six and two-thirds percent (66 2/3%)
or more of the outstanding principal amount of the Loans and participations in
the Letters of Credit (such percentage applicable to a Bank, such Bank's
"REQUIRED BANK PERCENTAGE"). For purposes of determining the effectiveness of
this Amendment, each Bank's Required Bank Percentage is set forth on the
SCHEDULE 5.11 hereto.
Executed as of the date first written above.
BORROWERS:
MARKETING SPECIALISTS CORPORATION
MARKETING SPECIALISTS SALES COMPANY
XXXX XXXXX ASSOCIATES, INC.
THE SALES FORCE COMPANIES, INC.
By: __________________________________________
Name: ____________________________________
Authorized Officer for all Borrowers
AGENT AND BANKS:
THE CHASE MANHATTAN BANK,
individually as a Bank and as the Agent
By: __________________________________________
Xxx X. Xxxxxxxx, Senior Vice President
WAIVER AND THIRD AMENDMENT TO CREDIT AGREEMENT-Page 7
CREDIT SUISSE FIRST BOSTON
By: __________________________________________
Name: ____________________________________
Title: ___________________________________
By: __________________________________________
Name: ____________________________________
Title: ___________________________________
FLEET CAPITAL CORPORATION
By: __________________________________________
Name: ____________________________________
Title: ___________________________________
WAIVER AND THIRD AMENDMENT TO CREDIT AGREEMENT-Page 8
CONSENT AND REAFFIRMATION OF GUARANTY
The undersigned: (i) consents and agrees to this Amendment; (ii)
agrees that the Loan Documents to which it is a party shall remain in full
force and effect and shall continue to be its legal, valid and binding
obligation enforceable against it in accordance with their respective terms
and (iii) reaffirms that it is obligated on the Guaranty Agreement dated March
30, 2000 executed by the undersigned in favor of the Agent and the Banks for
the "Guaranteed Indebtedness" defined therein in an amount up to $10,000,000.
RICHMONT CAPITAL PARTNERS I, L.P.
By: J.R. Investments Corp.,
its Managing General Partner
By: __________________________________________
Name: ____________________________________
Title: ___________________________________
WAIVER AND THIRD AMENDMENT TO CREDIT AGREEMENT-Page 9
Schedule 5.11
to
Waiver and Third Amendment to Credit Agreement
REQUIRED BANK PERCENTAGE
========================================================================================
Banks Agreeing to Amendment
(insert % from prior column if Bank
Required Bank signs this Amendment then total
Bank Percentage Held percentages in this column)
========================================================================================
The Chase Manhattan Bank 33.3333%
----------------------------------------------------------------------------------------
Credit Suisse First Boston 33.3333%
----------------------------------------------------------------------------------------
Fleet Capital Corporation 33.3333%
========================================================================================
TOTAL 100.00%
========================================================================================
Schedule 5.11-Solo Page
