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EXHIBIT 10.1
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
This FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment")
is made and entered into on July 31, 2001, by and among TOM'S FOODS INC., a
Delaware corporation (hereinafter referred to as "Borrower") with its chief
executive office and principal place of business at 000 0xx Xxxxxx, Xxxxxxxx,
Xxxxxxx 00000; the various financial institutions parties from time to time to
the Loan Agreement (as hereinafter defined) as lenders ("Lenders"); and FLEET
CAPITAL CORPORATION, a Rhode Island corporation with an office at 000 Xxxxxxxx
Xxxxxxx, X.X., Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, in its capacity as collateral
and administrative agent for the Lenders pursuant to the Loan Agreement
(together with its successors in such capacity, "Agent").
RECITALS:
Borrower, Lenders and Agent are parties to a certain Loan and Security
Agreement dated January 31, 2000 (the "Loan Agreement") pursuant to which Agent
and Lenders have made certain revolving credit loans to Borrower.
The parties desire to amend the Loan Agreement as hereinafter set
forth.
NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good
and valuable consideration, the receipt and sufficiency of which are hereby
severally acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. DEFINITIONS. All capitalized terms used in this Amendment,
unless otherwise defined herein, shall have the meaning ascribed to such terms
in the Loan Agreement.
2. AMENDMENT TO LOAN AGREEMENT. The Loan Agreement is hereby
amended as follows:
a. By deleting Section 6.1 of the Loan Agreement in its
entirety and inserting the following in lieu thereof:
6.1 GRANT OF SECURITY INTEREST. To secure the
prompt payment and performance of all of the Obligations,
Borrower hereby grants to Agent, for the benefit of itself as
Agent and for the Pro Rata benefit of Lenders, a continuing
security interest in and Lien upon all of the following
Property and interests in Property of Borrower, whether now
owned or existing or hereafter created, acquired or arising
and wheresoever located:
i. all Accounts;
ii. all Supporting Obligations;
iii. all present and future contract
rights, chattel paper, documents, instruments, letters of
credit, bankers' acceptances, guaranties and
Letter-of-Credit-Rights to the extent relating to Accounts or
other
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Collateral, all present and future Distributor/Franchisee
Receivables and all present and future General Intangibles for
the payment of money (including claims and choses in action)
to the extent relating to Accounts, Inventory or other
Collateral;
iv. all present and future monies,
securities, credit balances, deposits, deposit accounts and
other property of Borrower now or hereafter held or received
by or in transit to Agent, any Lender or their respective
Affiliates, or, to the extent relating to Accounts, Inventory
or other Collateral, held at or received by or in transit to
any other depository or other institution from or for the
account of Borrower, in each case whether for safekeeping,
pledge, custody, transmission, collection or otherwise, and
all present and future liens, security interests, rights,
remedies, title and interest in, to and in respect of
Accounts, Inventory and other Collateral, including (a) rights
and remedies under or relating to guaranties, contracts of
suretyship, letters of credit and credit and other insurance
related to Accounts, Inventory or other Collateral; (b) rights
of stoppage in transit, replevin, repossession, reclamation
and other rights and remedies of an unpaid vendor, lienor or
secured party relating to Accounts, Inventory or other
Collateral; (c) goods described in invoices, documents,
contracts or instruments with respect to, or otherwise
representing or evidencing, Accounts, Inventory or other
Collateral, including returned, repossessed and reclaimed
goods; and (iv) deposits by and property of Account Debtors or
other Persons securing the obligations of Account Debtors;
v. all Inventory;
vi. all present and future trademarks
and tradenames, service marks (together with the goodwill of
the business symbolized thereby), patents, copyrights,
Software and other Intellectual Property affixed to or
appearing on or relating to any Inventory or the products
thereof or other Collateral or otherwise used in the
manufacturing, processing, marketing, preparation for sale,
distribution or sale of Inventory or the products thereof or
other Collateral; provided, that the security interests hereby
granted in the property described in this SECTION 6.1(VI)
shall be limited to such right, title and interest as may be
required in order for Agent to exercise its rights and
remedies hereunder with respect to the fulfillment of orders,
the manufacturing and processing of Inventory and the products
thereof, and the marketing, preparation for sale,
distribution, sale or other disposition of Inventory and the
products thereof, including the receipt and retention by Agent
of the proceeds thereof;
vii. all Records; and
viii. all products and proceeds of the
foregoing, in any form, including insurance proceeds and all
claims against third parties for loss or damage to or
destruction of any or all of the foregoing property described
in Section 6.1(i) through (vii), and also including all
proceeds of
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business interruption insurance and, to the extent relating to
Accounts, Inventory or other Collateral, all other insurance
proceeds, whether or not constituting proceeds of any
Collateral.
b. By deleting Section 7.4 of the Loan Agreement in its
entirety and inserting the following in lieu thereof:
7.4. BORROWING BASE CERTIFICATES. On or before
the third Business Day of each week (or less frequently as may
be requested by Agent), Borrower shall deliver to Agent a
Borrowing Base Certificate prepared as of the close of
business of the previous week (provided, unless the Agent
otherwise requests, reports as to Eligible Inventory and
ineligible Accounts may be prepared as of the close of the
previous Fiscal Month), and at such other times as Agent may
request. All calculations of Availability in connection with
any Borrowing Base Certificate shall originally be made by
Borrower and certified by a Senior Officer to Agent, provided
that Agent shall have the right to review and adjust, in the
exercise of its reasonable credit judgment, any such
calculation (i) to reflect its reasonable estimate of declines
in value of any of the Collateral described therein and (ii)
to the extent that such calculation is not in accordance with
this Agreement or does not accurately reflect the amount of
the Availability Reserve.
c. By adding the following new Section 8.1.28 to the
Loan Agreement immediately after the existing Section 8.1.27:
8.1.28. Commercial Transaction. All of the Loans and
other transactions contemplated by this Agreement and the
other Loan Documents arise out of a commercial transaction and
not a consumer transaction or a consumer goods transaction.
d. By deleting Sections 9.3.1 and 9.3.2. of the Loan
Agreement in their entirety and inserting the following in lieu thereof:
9.3.1. Working Capital. Borrower shall at all times
maintain Working Capital in an amount greater than $7,000,000.
9.3.2. Availability. Borrower shall maintain
Availability in an amount greater than $1,000,000 until the
later of (i) June 30, 2002 or (ii) such time as the Fleet LC
ceases to be outstanding.
e. By adding the following new Section 9.3.3. to the
Loan Agreement immediately following Section 9.3.2:
9.3.3. Fixed Charge Coverage Ratio. Maintain a Fixed
Charge Coverage Ratio of not less than 1.0 to 1.0, calculated
on a quarterly basis at the end of each Fiscal Quarter for the
immediately preceding 4 Fiscal Quarters, commencing with the
Fiscal Quarter ending on September 8, 2001.
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f. By adding the following new Section 10.1.13 to the
Loan Agreement immediately following Section 10.1.12:
10.1.13. Nestle Agreement. Promptly deliver to Agent,
for application to the Obligations, all portions of the Escrow
Deposit returned to Borrower by Nestle or Escrow Agent
pursuant to the Nestle Agreement, after deducting therefrom
the Transaction Costs incurred by the Borrower in connection
with the repayment of the Bond-Related Debt.
g. By deleting the definitions of "Availability
Reserve," "Borrowing Base," "Direct Payment Event" and "General Intangible" from
Appendix A to the Loan Agreement and inserting the following in lieu thereof:
Availability Reserve - on any date of determination
thereof, an amount equal to the sum of the following (without
duplication): (i) a reserve for general inventory shrinkage,
whether as a result of theft or otherwise, that is determined
by Agent from time to time in its reasonable credit judgment
based upon Borrower's historical losses due to such shrinkage;
(ii) any amounts that any Obligor is obligated to pay pursuant
to the provision of any of the Loan Documents that Agent or
any Lender elects to pay for the account of such Obligor in
accordance with authority contained in any of the Loan
Documents; (iii) the LC Reserve; (iv) aggregate amount of
reserves established by Agent in its reasonable discretion in
respect of ACH (automated clearinghouse) transfers or
obligations of Borrower under any Interest Rate Contract; (v)
reserves imposed by Agent for unpaid payables incurred in
connection with the purchase of goods as to which a statutory
trust under PACA may arise in the event of non-payment and
reserves imposed by Agent pursuant to SECTION 1.1.5 of the
Agreement; (vi) a liquidity reserve of $2,000,000; and (vii)
such additional reserves as Agent, in the exercise of its
reasonable credit judgment, may elect to impose from time to
time to protect Agent and Lenders from diminution in the
quantity, quality or value of any of the Collateral.
Borrowing Base - on any date of determination
thereof, an amount equal to the lesser of: (a) the aggregate
amount of the Revolver Commitments on such date, minus the LC
Outstanding on such date, or (b) an amount equal to (i) the
sum of the Accounts Formula Amount, plus the Inventory Formula
Amount on such date, plus the LC Formula Amount, minus (ii)
the Availability Reserve on such date.
Direct Payment Event - either of the following events
or conditions: (i) Availability is on any date less than
$1,000,000 or (ii) the occurrence or existence of an Event of
Default, including such an Event of Default arising from a
breach of Section 9.3.2 of the Agreement whether or not Agent
or Lenders exercise any remedies on account thereof or waive
such Event of Default.
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General Intangible - shall have the meaning ascribed
to "general intangible" in the UCC and shall include tax
refund claims, Payment Intangibles, Software and Intellectual
Property.
h. By adding the following new definitions to Appendix A
in the proper alphabetical sequence.
Escrow Agent - shall have the meaning ascribed to
such term in the Nestle Agreements.
Escrow Deposit - shall have the meaning ascribed to
such term in the Nestle Agreements.
Fixed Charge Coverage Ratio - for any period, for
Borrower and its Subsidiaries on a Consolidated basis, the
ratio of (i) EBITDA for such period (excluding from the
calculation of EBITDA up to $419,000 of extraordinary
acquisition expenses incurred by Borrower for the Fiscal
Quarter ending December 30, 2000 and up to $579,000 of
non-recurring restructuring costs incurred by Borrower for the
Fiscal Quarter ending March 24, 2001), minus Capital
Expenditures other than Financed Capital Expenditures for such
period to the extent the aggregate amount of such Capital
Expenditures exceeds $1,500,000, minus federal, state and
local income taxes for such period, to (ii) Fixed Charges for
such period.
Fixed Charges - for any period, the sum of Borrower's
and its Subsidiaries' (i) total cash interest expense
(excluding any non-cash interest payments made by Borrower on
account of the Class A Preferred Stock), plus (ii) regularly
scheduled payments of principal on Funded Debt due during such
period (but excluding (a) up to $1,000,000 of principal and
interest payments made by Borrower with respect to
Bond-Related Debt during the Fiscal Quarter ending September
9, 2000 and the Fiscal Quarter ending September 8, 2001 and
(b) any prepayments of the Bond-Related Debt and Public
Notes), plus (iii) cash Distributions permitted by the
Agreement.
Fleet LC - shall mean one or more irrevocable standby
letters of credit to be procured by certain of Borrower's
parent's shareholders from one or more issuers at all times
acceptable to Agent, for the benefit of Agent, which shall (i)
have an expiry date of not earlier than July 31, 2002, (ii)
provide, among other things, that (A) Agent shall be entitled
to draw upon such letters of credit in any amount not to
exceed the amount of the Obligations at any time that an Event
of Default exists and (B) that Agent may make partial and
multiple draws under such letters of credit, (iii) be
otherwise in form and substance satisfactory to Agent, in its
sole discretion, (iv) the face amount of which shall be
reduced by the aggregate amount of money transferred by Escrow
Agent or Nestle to Borrower and used by Borrower to reduce the
Obligations, and (v) be in the aggregate initial face amount
of not less than $3,000,000.
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LC Formula Amount - on any date of determination
thereof, an amount equal to the lesser of (i) 100% of the
undrawn amount of the Fleet LC or (ii) $3,000,000 minus the
remainder of (a) the aggregate amount of money transferred by
Escrow Agent or Nestle to Borrower from the Escrow Deposit,
minus (b) the Transaction Costs; provided, that the LC Formula
Amount shall equal zero on the earlier of (i) June 30, 2002 or
(ii) any date the Fleet LC ceases to be in full force and
effect or Agent is stayed or enjoined by any action, suit or
proceeding from submitting any draw request with respect
thereto or the issuer thereof is stayed or enjoined from
honoring any draw request; provided, further, that the LC
Formula Amount shall not exceed $1,750,000 at any time after
the earlier to occur of (i) January 2, 2002 or (ii) the of
date the initial transfer of money from the Escrow Agent to
Borrower by Nestle or Escrow Agent pursuant to the Nestle
Agreement.
Letter-of-Credit Right - a right of Borrower to
payment or performance under a letter of credit (whether the
letter of credit is written or electronic), whether or not a
Borrower has demanded or is at the time entitled to demand
payment or performance.
Nestle - Nestle UK Ltd.
Nestle Agreements - shall mean, collectively, the IRB
Escrow Agreement dated June 27, 1988, among Borrower, Nestle
UK Ltd. and United States Trust Company and that certain
letter agreement between Borrower and Nestle UK Ltd. dated
July 16, 2001 relating thereto.
Payment Intangible - shall have the meaning ascribed
to "payment intangible" in the UCC.
Software - shall have the meaning ascribed to
"software" in the UCC.
Supporting Obligations - shall have the meaning
ascribed to "supporting obligation" in the UCC.
Transaction Costs - shall mean the lesser of (i) the
transaction costs incurred by the Borrower in connection with
the repayment of the Bond-Related Debt or (ii) $200,000.
3. RATIFICATION AND REAFFIRMATION. Borrower hereby ratifies and
reaffirms the Obligations, each of the Loan Documents and all of Borrower's
covenants, duties, indebtedness and liabilities under the Loan Documents.
4. ACKNOWLEDGMENTS AND STIPULATIONS. Borrower acknowledges and
stipulates that the Loan Agreement and the other Loan Documents executed by
Borrower are legal, valid and binding obligations of Borrower that are
enforceable against Borrower in accordance with the terms thereof; all of the
Obligations are owing and payable without defense, offset or counterclaim (and
to the extent there exists any such defense, offset or counterclaim on the date
hereof, the same is hereby waived by Borrower); and the security interests and
Liens granted by
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Borrower in favor of Agent, for the benefit of itself as Agent and the Pro Rata
benefit of Lenders, are duly perfected , first priority security interest as
Agent and the Pro Rata benefit of Lenders, are duly perfected, first priority
security interests and Liens.
5. REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Agent and Lenders, to induce Agent and Lenders to enter into this
Amendment, that no Default or Event of Default exists on the date hereof other
than the Stipulated Defaults (as defined in the Letter Agreement), which have
not been and are not hereby waived by Agent and Lenders; the execution, delivery
and performance of this Amendment have been duly authorized by all requisite
corporate action on the part of Borrower and this Amendment has been duly
executed and delivered by Borrower; and except as may have been disclosed in
writing by Borrower to Lender prior to the date hereof, all of the
representations and warranties made by Borrower in the Loan Agreement are true
and correct on and as of the date hereof.
6. REFERENCE TO LOAN AGREEMENT. Upon the effectiveness of this
Amendment, each reference in the Loan Agreement to "this Agreement,"
"hereunder," or words of like import shall mean and be a reference to the Loan
Agreement, as amended by this Amendment.
7. BREACH OF AMENDMENT. This Amendment shall be part of the Loan
Agreement and a breach of any representation, warranty or covenant herein shall
constitute an Event of Default.
8. CONDITION PRECEDENT. The effectiveness of the amendments
contained in Section 2 hereof, are subject to Agent's receipt of the Fleet LC,
in form and substance satisfactory to Agent.
9. EXPENSES OF AGENT AND LENDERS. Borrower agrees to pay, on
demand, all costs and expenses incurred by Agent and Lenders in connection with
the preparation, negotiation and execution of this Amendment and any other Loan
Documents executed pursuant hereto and any and all amendments, modifications,
and supplements thereto, including, without limited the costs and fees of
Agent's and Lenders' legal counsel and any taxes or expenses associated with or
incurred in connection with any instrument or agreement referred to herein or
contemplated hereby.
10. EFFECTIVENESS GOVERNING LAW. This Amendment shall be effective
upon acceptance by Agent in Atlanta, Georgia (notice of which acceptance is
hereby waived), whereupon the same shall be covered by and construed in
accordance with the internal laws of the State of Georgia.
11. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
12. NO NOVATION, ETC. Except as otherwise expressly provided in
this Amendment, nothing herein shall be deemed to amend or modify any provision
of the Loan Agreement or any of the other Loan Documents, each of which shall
remain in full force and effect. This Amendment is not intended to be, nor shall
it be construed to create, a novation or accord and satisfaction, and the Loan
Agreement as herein modified shall continue in full force and effect.
13. COUNTERPARTS; TELECOPIED SIGNATURES. This Amendment may be
executed in any number of counterparts and by different parties to this
Amendment on separate counterparts, each of which, when so executed, shall be
deemed an original, but all such counterparts shall
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constitute one and the same agreement. Any signature delivered by a party by
facsimile transmission shall be deemed to be an original signature thereto.
14. FURTHER ASSURANCES. Borrower agrees to take such further
actions as Agent shall reasonably request from time to time in connection
herewith to evidence or give effect to the amendments set forth herein or any of
the transactions contemplated hereby.
15. SECTION TITLES. Section titles and references used in this
Amendment shall be without substantive meaning or content of any kind whatsoever
and are not part of the agreements among the parties hereto.
16. RELEASE OF CLAIMS. To induce Agent and Lenders to enter into
this Amendment, Borrower hereby releases, acquits and forever discharges Agent
and each Lender, and all officers, directors, agents, employees, successors and
assigns of Agent and each Lender, from any and all liabilities, claims, demands,
actions or causes of action of any kind or nature (if there be any), whether
absolute or contingent, disputed or undisputed, at law or in equity, or known or
unknown, that Borrower now has or ever had against Agent and each Lender arising
under or in connection with any of the Loan Documents or otherwise. Borrower
represents and warrants to Agent and Lenders that Borrower has not transferred
or assigned to any Person any claim that Borrower ever had or claimed to have
against Agent or any Lender.
17. WAIVER OF JURY TRIAL. To the fullest extent permitted by
Applicable Law, the parties hereto each hereby waives the right to atrial by
jury in any action, suit, counterclaim or proceeding arising out of or related
to this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal and delivered by their respective duly authorized
officers on the date first written above.
ATTEST: TOM'S FOODS INC.
("Borrower")
/s/ Xxxxxx X. Xxxxxxx By: /s/ S. Xxxxxx Xxxxxx
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Secretary Name: S. Xxxxxx Xxxxxx
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[CORPORATE SEAL] Title: Sr. Vice President/CFO
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Accepted and agreed to in Atlanta, Georgia, this 31st day of July,
2001.
FLEET CAPITAL
CORPORATION, as Agent and as the
sole Lender
By: /s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxx
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Title: Assistant Vice President
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