Exhibit 99.1
CONVERSION AGREEMENT AND
AMENDMENT TO FINANCING AGREEMENTS
THIS CONVERSION AGREEMENT AND AMENDMENT TO FINANCING AGREEMENTS is
made and entered into as of March 1, 2000 (the "Conversion and Amendment"), by
and between EAGLE FOOD CENTERS, INC., as debtor-in-possession ("Debtor") and
CONGRESS FINANCIAL CORPORATION (CENTRAL), as lender ("Congress").
RECITALS
A. Eagle Food Centers, Inc., as pre-petition debtor, and Congress
are the parties to that certain Loan and Security Agreement dated as of May 25,
1995, as previously amended (the "Pre-Petition Credit Agreement"), and the other
Financing Agreements, as defined in the Pre-Petition Credit Agreement (all such
Financing Agreements, together with the Pre-Petition Credit Agreement, in each
case prior to this Amendment or any other amendment executed on or after the
date hereof, collectively, the "Original Financing Agreements"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings set
forth in the Pre-Petition Credit Agreement, as amended hereby.
B. Debtor has filed a petition for relief under chapter 11 of title
11 of the United States Code 11 U.S.C. section 101, et seq. (the "Bankruptcy
Code"), in the United States Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court"), on February 29, 2000 (the "Petition Date"), Case No.
00-1311 (RRM) (the "Case").
C. The commencement of the Case constituted an Event of Default
under the Pre-Petition Credit Agreement
D. In order to continue its operation as a debtor-in-possession
under the Bankruptcy Code pending its reorganization, Debtor has requested that
Congress continue making secured loans in its sole discretion to the Debtor (the
"DIP Financing"). Congress is willing to continue the $50,000,000 line of credit
for the Debtor only if, among other things, the Original Financing Agreements
are amended as hereinafter set forth and the Bankruptcy Court enters an interim
and final order approving this Conversion and Amendment and otherwise in form
and substance satisfactory to Congress (the "Interim Order", and the "Final
Order," respectively).
NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. Amendments. The parties hereby amend the Financing Agreements as
follows:
1
(a) From and after the date hereof, all references in the Financing
Agreements to "Eagle Food Centers, Inc.," "Eagle," "Borrower," "Grantor,"
"Mortgagor," the "Company" and all other references to Eagle Food Centers, Inc.
in any capacity shall be deemed to be references to Eagle Food Centers, Inc.
both before the Petition Date, as pre-petition debtor, and on and after the
Petition Date, as debtor-in-possession in the Case.
(b) Section 1 of the Pre-Petition Credit Agreement is hereby amended
by adding in their proper alphabetical order the definitions of "Conversion and
Amendment," "Bankruptcy Code," "Bankruptcy Court," "Case," "DIP Financing,"
"Original Financing Agreements," "Petition Date," and "Pre-Petition Credit
Agreement," set forth in the recitals of this Amendment.
(c) Section 1 of the Pre-Petition Credit Agreement is hereby further
amended by adding the following definitions in their proper alphabetical order
(to the extent such terms are not already defined in the Pre-Petition Credit
Agreement) and by substituting the following definitions for the existing
definitions of such terms (to the extent such terms are currently defined in the
Pre-Petition Credit Agreement):
"Agreement" shall mean the Loan and Security Agreement, dated
as of May 25, 1995, as previously amended or otherwise modified
including as amended by the Conversion and Amendment and as the
foregoing may hereafter be extended, amended or supplemented,
including pursuant to any order of the Bankruptcy Court.
"Debtor" shall mean Eagle Food Centers, Inc. as debtor and
debtor-in-possession in the Case under the Bankruptcy Code.
"Final Order" shall mean either (i) the Interim Order which
has become final pursuant to the terms of ordering paragraph 27 of
the Interim Order; or (ii) an order of the Bankruptcy Court entered
in the Case after the Final Hearing as defined in the Interim Order,
inter alia, authorizing the Debtor, as debtor-in-possession, to
incur secured indebtedness pursuant to Section 364 of the Bankruptcy
Code, which order shall be in form and substance satisfactory to
Congress in its sole discretion.
"Financing Agreements" shall mean the Loan and Security
Agreement dated as of May 25, 1995, and all amendments thereto, as
extended, amended and supplemented by the Conversion and Amendment,
the Interim Order, the Final Order, and all security agreements,
financing statements, lease assignments, guaranties, lockbox and/or
blocked account agreements, letters of credit and other agreements,
instruments, documents and written indicia of contractual
obligations between Debtor and Lender, any Affiliate of Debtor and
Lender, any Person owning Collateral and Lender, and/or any Person
guaranteeing all or any portion of the Obligations and Lender, in
connection with the transactions contemplated
2
hereby, whether pre-petition or post-petition, as each such document
has been and may from time to time be amended or supplemented.
"Interim Order" shall mean the order of the Bankruptcy Court
entered in the Case pursuant to Sections 363 and 364 of the
Bankruptcy Code, inter alia, authorizing Debtor, as
debtor-in-possession, to enter into that certain Conversion and
Amendment by and among Debtor and Lender, which order shall be in
form and substance satisfactory to Lender.
"Maturity Date" shall mean the date on which the Agreement
ceases to continue in full force and effect pursuant to Section
12.1(a) of the Agreement.
"Revolving Loans" shall mean any loan or extension of credit,
whether made before or after the Petition Date, by Lender pursuant
to the Financing Agreements.
(d) The definition of "Availability Reserves" as contained in
Section 1 of the Pre-Petition Credit Agreement is amended by inserting in the
first line thereof following the phrase "shall mean," the following:
"an amount equal to all outstanding principal under the Pre-Petition
Credit Agreement and all interest, charges, fees, costs and expenses
as of the commencement of the case, including any amounts
attributable to the foregoing that Congress may from time to time
assert and including the amount of the "Carve-Out" as set forth in
Section 10.1(h), plus"
(e) Section 4.2 of the Pre-Petition Credit Agreement is amended by
deleting the "and" at the end of subsection (a), by replacing the final period
at the end of subsection (b) with a semi-colon, and by adding, in their proper
order as subsections (c) and (d) thereto, the following:
"(c) upon the making of any Loans or the provision of any Letter of
Credit Accommodations to Borrower after the Petition Date, which
amounts are not concurrently collected by Lender pursuant to section
6 hereof; the Borrower shall have previously or contemporaneously
delivered to Lender a detailed budget setting forth the projected
requirements for funding the Borrower's continued operations from
the date of the funding through the confirmation of the Case (the
"Budget"); and
(d) if, after giving effect to the making of such Loans or the
provision of such Letter of Credit Accommodations to Borrower, the
aggregate principal amount of the Loans plus the aggregate Letter of
Credit Accommodations would exceed $30,000,000, the Lender shall
have entered into one or more agreements, in a form and substance
satisfactory to Lender in its sole discretion, providing for the
participation by one or
3
more Persons in the Loans and the Letter of Credit Accommodations in
an amount acceptable to Lender in its sole discretion."
(f) Section 5 of the Pre-Petition Credit Agreement is amended by
adding the following language following the phrase "and wherever located" and
immediately prior to the final parenthetical:
",whether arising or acquired before, on or after the Petition Date"
(g) The Pre-Petition Credit Agreement is amended by adding the
following as Section 6.7 thereof:
"Application of Payments. Debtor and Lender agree that, only
if the failure to apply such amounts to the Obligations arising
before the Petition Date would result in such Obligations being
undersecured, Lender may apply all amounts received by Lender after
the Petition Date to payment of the Obligations arising before the
Petition Date before applying any such amounts to Obligations
arising on or after the Petition Date. Otherwise all such amounts
shall be applied to the Obligations arising after the Petition Date
only. Debtor hereby irrevocably agrees that, subject to the
preceding limitations, Lender shall have the continuing exclusive
right to apply and to reverse and reapply any and all payments
received at any time or times hereafter against the Obligations in
such manner as Lender may deem advisable notwithstanding any entry
by Lender upon any of its books and records."
(h) Section 7.1 of the Pre-Petition Credit Agreement is amended by
replacing subsection (c) thereof with the following:
"(c) at all times that the Excess Loan Availability is less than or
equal to $20,000,000, Debtor shall furnish Lender on each Friday of
each week (or if any such Friday is not a Business Day, the next
Business Day) a report setting forth (i) daily cash flow results for
the four week period ending on the immediately preceding Friday and
also a reconciliation comparing actual expenses paid to the Budget
as contemplated by section 4.3(c) hereto, (ii) daily cash flow
projections for the four week period beginning on the immediately
preceding Saturday, (iii) the actual and projected amount of the
Value of Eligible Inventory (i.e., Inventory, Slow Moving Inventory
and Collateral) as of the prior Business Day, (iv) in the case of
each such report required to be delivered on the last Friday of each
month, monthly cash flow projections for each of the next four
months; and (d) such other reports as to Collateral and such other
financial and operating information as Lender may reasonably request
from time to time."
4
(i) The Pre-Petition Credit Agreement is amended by replacing
Xxxxxxx 00.0(x), (x), (x), (x), (x), (x), (x), (x), (x), (x) and (m) thereof
with the following, and by addition new subsections corresponding to new Section
10.1(n), (o), (p) and (q) below:
"(a) Debtor fails to pay when due any of the Obligations in
accordance with the terms of the Financing Agreements or fails to
perform any or all of the terms, covenants, conditions or provisions
contained in the Financing Agreements;
(d) Conversion of the Case to a case under Chapter 7 of the
Bankruptcy Code;
(f) appointment of a trustee or an examiner in the Case or
Debtor's application for, consent to, or acquiescence in, any such
appointment;
(g) failure of Debtor to obtain a Final Order (in form and
substance satisfactory to Lender) within 45 days after the Petition
Date, or such later date as Lender may consent to in writing after
the date hereof;
(h) except as expressly permitted in the Interim Order or the
Final Order, which permission shall include the request for a
$250,000 carve-out for professional fees and disbursements as set
forth in the Interim Order (the "Carve Out"), the filing by Debtor,
as debtor-in-possession, of any application for approval or
allowance of, or the entry of any order approving or allowing, any
administrative expense claim in the Case having any priority over,
or being pari passu with, the administrative priority of the DIP
Indebtedness (as defined in the Interim Order or the Final Order);
(i) the entry of an order in the Case granting relief from the
automatic stay of Section 362 of the Bankruptcy Code to any holder
or holders of a lien or security interest on any material Collateral
and allowing such holder or holders to foreclose or otherwise
realize upon such liens and security interests;
(j) any stay, reversal, modification or other amendment in any
respect (except to the extent acceptable to Lender) of the Interim
Order or the Final Order;
(k) any of the Financing Agreements shall cease to be in full
force and effect, or any liens and security interests granted to
Lender under the Financing Agreements shall cease to be in full
force and effect, or any liens and security interests granted to
Lender under the Financing Agreements shall cease to be valid;
5
(l) Debtor, as debtor-in-possession, voluntarily or
involuntarily dissolves or is dissolved, terminates or is
terminated, liquidates or is liquidated or ceases the operation of
any material portion of its business, other than the 19 store
closings to which Congress has previously consented;
(m) (A) the filing of any motion or proceeding with the
Bankruptcy Court, which is not dismissed, denied with prejudice or
otherwise resolved to the satisfaction of Lender within 45 days of
such filing, challenging or seeking otherwise to modify, limit,
subordinate or avoid the priority of any Obligations or the
perfection or priority of Lender's pre-petition or post-petition
liens on any material portion of the Collateral, or seeking to
impose, surcharge or assess against Lender, its claims or its
Collateral any costs or expenses, whether pursuant to Section 506(c)
of the Bankruptcy Code or otherwise, or (B) the entry of any order
having any such effect;
(n) any violation by Debtor, as debtor-in-possession, of any
material term or provision of the Interim Order or the Final Order;
(o) the filing of any motion or application with the
Bankruptcy Court seeking the entry of, or the entry of, an order
approving any subsequent debtor-in-possession facility for borrowed
money unless such subsequent facility and such court order expressly
provide for the final payment in full to Lender of all Obligations
prior to or simultaneously with any initial borrowings under such
subsequent facility;
(p) any event or circumstance shall occur or exist and such
event or circumstance is likely, in the Lender's reasonable
judgment, to have a Material Adverse Effect; or
(q) there shall be a default or an event of default under any
of the other Financing Agreements."
(j) The Pre-Petition Credit Agreement is amended by replacing
Section 12.1(a) thereof with the following:
"(a) This Agreement and the other Financing Agreements shall
be effective as of the date set forth on the first page hereof and
shall continue in full force and effect until the earliest to occur
of the following, at which time (and except as Lender may otherwise
agree in writing in its sole discretion), this Agreement shall
immediately and automatically terminate and all Obligations shall be
immediately due and payable (such date of termination being the
"Maturity Date"):
(i) April 15, 2002;
6
(ii) the date of final payment and satisfaction in full
of the Obligations and termination of the DIP
Financing pursuant to this Agreement;
(iii) the effective date of any confirmed plan of
reorganization in the Case;
(iv) the dismissal of the Case; or
(v) Lender's election, in its sole discretion, to
terminate this Agreement upon the occurrence of
any Event of Default.
The parties agree that Lender shall have the right in its sole
discretion to determine whether to grant any extensions to the
Maturity Date set forth in subparagraph (i) above. No
termination of this Agreement shall relieve or discharge
Debtor of its duties, obligations and covenants hereunder
until all Obligations have been indefeasibly paid and
satisfied in full in cash, and Lender's continuing security
interest in the Collateral shall remain in effect until such
duties, obligations, and covenants have been fully discharged
and Lender's claim has been fully and finally allowed by order
of the Bankruptcy Court. Upon the effective date of
termination or non-renewal of the Financing Agreements,
Borrower shall pay to Lender, in full, all outstanding and
unpaid Obligations and shall furnish cash collateral to Lender
in such amounts as Lender determines are reasonably necessary
to secure Lender from loss, cost, damage or expense, including
attorneys' fees and legal expenses, in connection with any or
all issued and outstanding Letter of Credit Accommodations and
checks or other payments provisionally credited to the
Obligations and/or as to which Lender has not yet received
final and indefeasible payment. Such cash collateral shall be
remitted by wire transfer in U.S. funds to such bank account
of Lender, as Lender may, in its discretion, designate in
writing to Borrower for such purpose. Interest shall be due
until and including the next Business Day, if the amounts so
paid by Borrower to the bank account designated by Lender are
received in such bank account later than 12:00 noon, Chicago
time."
2. Debtor's Agreement to Assume Certain Obligations and be Bound and
Confirmation of Security Interest. The Debtor as debtor-in-possession in the
Case, hereby (a) agrees to be bound by the terms of the Financing Agreement as
if all references therein to "Eagle Food Centers, Inc.," "Eagle," "Borrower,"
"Debtor," "Grantor," "Mortgagor," the "Company" and all other references to
Debtor in any other capacity included a reference to it as debtor-in-possession,
(b) specifically confirms that the security interests described in the Original
Financing Agreements include a duly authorized grant by it of security interests
in its assets, whether arising or acquired before or after the Petition Date, to
secure payment of the
7
Obligations arising both before and after the Petition Date, and (c) grants
Liens in favor of Congress on the post-petition assets of Debtor of the type in
which Congress was granted a pre-petition security interest under the Original
Financing Agreements; provided, however, that the provisions of clauses (b) and
(c) shall be subject to the provisions of ordering paragraph 6 of the Interim
Order (Limitations on Cross-Collateralization and Liens).
3. Exclusion of Pre-Petition Debt. Other than as provided in
ordering xxxxxxxxxx X,0 and 6 of the Interim Order and as set forth in Paragraph
2(b) and (c) above, this Agreement (a) is not intended nor shall it be
interpreted to effect an assumption of the Debtor's Obligations under the
Pre-Petition Credit Agreement which arise from any pre-petition principal,
interest, charges, fees, costs or expenses, and (b) is not intended nor shall it
be interpreted to prejudice in any way the rights of Congress to assert such
Obligations as pre-petition claims in the Case.
4. Entire Agreement and Acknowledgements of the Parties. Congress
and the Debtor agree that the amendments set forth in this Conversion and
Amendment as modified by the Interim Order constitute the entire agreement of
the parties with respect to the matters set forth herein, shall be limited
precisely as written and shall not be deemed to be a consent to any waiver,
amendment or modification of any other term or condition of any of the Financing
Agreements.
5. Conditions Precedent. The effectiveness of this Conversion and
Amendment shall be subject to satisfaction of the following conditions (any one
or all of which may be waived by Congress in its sole discretion):
(a) Receipt by Congress of counterparts of this Conversion and
Amendment, duly executed by Congress and the Debtor;
(b) Entry by the Bankruptcy Court of the Interim Order in form
and substance satisfactory to Congress; and
(c) Receipt by Congress of any and all further agreements,
certificates or documents as Congress shall reasonably request together
with any consents from third party creditors of Debtor deemed necessary by
Congress.
6. References in Other Documents. All references to any of the
original Financing Agreements shall be deemed to be a reference to such
Financing Agreement as amended.
7. Miscellaneous.
(a) To induce Congress to enter into this Conversion and
Amendment, Debtor hereby represents and warrants to Congress that Debtor
has full corporate power and authority to enter into this Conversion and
Amendment, that this Conversion and Amendment has been duly authorized,
executed and delivered by Debtor, and that this
8
Conversion and Amendment constitutes a legal, valid and binding obligation
of Debtor, enforceable against Debtor in accordance with its terms.
(b) This Conversion and Amendment may be signed in any number
of counterparts, each of which constitutes an original, but all of which,
taken together, shall constitute one and the same instrument.
(c) It is the parties' intention that this Conversion and
Amendment be interpreted in such a way that it is valid and effective
under applicable law; however, if one or more of the provisions of this
Conversion and Amendment shall for any reason be found to be invalid or
unenforceable, the remaining provisions of this Conversion and Amendment
shall be unimpaired.
8. Choice-of-Law. Any dispute between Congress and Debtor arising
out of, connected with, related to, or incidental to the relationship
established between them in connection with this Conversion and Amendment, and
whether arising in contract, tort, equity or otherwise, shall be resolved in
accordance with the internal laws and not the conflicts of law provisions of the
State of Illinois.
[THIS SPACE INTENTIONALLY LEFT BLANK]
9
IN WITNESS WHEREOF, the parties have duly executed and delivered
this Conversion and Amendment as of the day and year first above written.
EAGLE FOOD CENTERS, INC.,
as debtor-in-possession
By: /s/ S. Xxxxxx Xxxxxxx
------------------------------
Name: S. Xxxxxx Xxxxxxx
----------------------------
Title: Sr. VP-CFO
----------------------------
CONGRESS FINANCIAL (CENTRAL)
CORPORATION
By: /s/ Xxxxxx Xxxxxxxxx
------------------------------
Name: Xxxxxx Xxxxxxxxx
----------------------------
Title: First Vice President
----------------------------
[Conversion Agreement and Amendment to Financing Agreements]
10