AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT
EXHIBIT 10.4
[Execution]
AMENDMENT NO. 3 TO
LOAN AND
SECURITY AGREEMENT
AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT, dated as of December 9, 2005, by and among Spartan Stores, Inc., a Michigan corporation ("Lead Borrower"), Spartan Stores Distribution, LLC, a Michigan limited liability company ("Stores Distribution"), UWG Company, formerly known as United Wholesale Grocery Company, a Michigan corporation ("United"), Market Development Corporation, a Michigan corporation ("MDC"), Spartan Stores Associates, LLC, a Michigan limited liability company ("Associates"), Family Fare, LLC, a Michigan limited liability company ("Family Fare"), MSFC, LLC, a Michigan limited liability company ("MSFC"), Seaway Food Town, Inc., a Michigan corporation ("Seaway"), The Pharm of Michigan, Inc. ("Pharm"), a Michigan corporation, Valley Farm Distributing Co., an Ohio corporation ("Valley Farm"), Xxxxxx'x Food Town, Inc., a Michigan corporation ("Xxxxxx Food Town"), Xxxxxx'x Real Estate, LLC, a Michigan limited liability company ("Xxxxxx RE"), Xxxxx'x Family Markets, Inc., a Michigan corporation ("Xxxxx"), Xxxxxx Pharmacy, Inc., a Michigan corporation ("Xxxxxx"), Buckeye Real Estate Management Co., an Ohio corporation ("Buckeye"), Spartan Stores Fuel, LLC, a Michigan limited liability company (together with Lead Borrower, Stores Distribution, United, MDC, Associates, Family Fare, MSFC, Seaway, Pharm, Valley Farm, Xxxxxx Food Town, Xxxxxx RE, Xxxxx, Xxxxxx and Buckeye, each individually a "Borrower" and collectively, "Borrowers"), Spartan Stores Holding, Inc., a Michigan corporation ("Holding"), SI Insurance Agency, Inc., a Michigan corporation ("SI"), JFW Distributing Company, a Michigan corporation ("JFW"), LLJ Distributing Company, a Michigan corporation (together with Holding, SI and JFW, each individually a "Guarantor" and collectively, "Guarantors"), the parties to the Loan Agreement (as hereinafter defined) from time to time as lenders (each individually, a "Lender" and collectively, "Lenders") and Wachovia Capital Finance Corporation (Central), formerly known as Congress Financial Corporation (Central), an Illinois corporation, in its capacity as agent for Lenders (in such capacity, "Agent").
W I T N E S S E T H :
WHEREAS, Borrowers and Guarantors have entered into financing arrangements with Agent and Lenders pursuant to which Lenders (or Agent on behalf of Lenders) have made and may make loans and advances and provide other financial accommodations to Borrowers as set forth in the Loan and Security Agreement, dated December 23, 2003, by and among Borrowers, Guarantors, Agent and Lenders, as amended and supplemented by Amendment No. 1 to Loan and Security Agreement, dated as of July 29, 2004 and Amendment No. 2 to Loan and Security Agreement, dated as of December 22, 2004 (as the same now exists and is amended and supplemented pursuant hereto and may hereafter be further amended, modified, supplemented, extended, renewed, restated or replaced, the "Loan Agreement") and the other Financing Agreements (as defined therein); and
WHEREAS, Lead Borrower has requested Agent and Lenders agree to certain amendments to the Loan Agreement, and Agent and Lenders are willing to agree to such amendments, subject to the terms and conditions herein; and
WHEREAS, by this Amendment Xx. 0, Xxxxxxxxx, Xxxxxxxxxx, Agent and Lenders desire and intend to evidence such amendments;
NOW THEREFORE, in consideration of the foregoing, the mutual agreements and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions.
1.1 Additional Definitions.
(a) As used herein, the following terms shall have the meanings given to them below, and the Loan Agreement and the other Financing Agreements are hereby amended to include, in addition and not in limitation, the following definitions:
(i) "Amendment No. 3" shall mean this Amendment No. 3 to Loan and Security Agreement by and among Borrowers, Guarantors, Agent and Lenders, as it now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
(ii) "Amendment No. 3 Effective Date" shall mean the first date on which all of the conditions precedent to the effectiveness of Amendment No. 3 shall have been satisfied or waived in writing.
(iii) "Amendment No. 3 Fee Letter" shall mean the letter agreement, dated of even date herewith, by and among Borrowers and Agent, setting forth certain fees payable by Borrowers to Agent, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
(b) As used herein, the following terms shall have the meanings given to them below, and as of the Term B Loan Funding Date, the Loan Agreement and the other Financing Agreements are hereby amended to include, in addition and not in limitation, the following definitions:
(i) "Enforcement Action" shall mean the exercise by Agent (or its assignee or designee) of any of its material enforcement rights and remedies as a secured creditor hereunder or under the other Financing Agreements, applicable law or otherwise, in respect of any of the Collateral, at any time following the occurrence of an Event of Default (including, without limitation, the demand for the immediate payment of all or any portion of the Obligations, the solicitation of bids from third parties to conduct the liquidation or collection of any of the Collateral, the engagement or retention of sales brokers, marketing agents, investment bankers, accountants, appraisers, auctioneers or other third parties for the purposes of valuing, marketing, promoting and selling any of the Collateral, making a motion seeking to lift the automatic stay in any bankruptcy or insolvency proceeding, or opposing the sale of assets constituting Collateral in any bankruptcy or insolvency proceeding, the commencement of any action to foreclose on the security interests or liens of Agent in all or any material portion of the Collateral or commencement of any legal proceedings or actions against Borrowers or with respect to all or any portion of the Collateral).
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(ii) "Priority Event" shall mean the occurrence of any one or more of the following: (A) the occurrence and continuance of an Event of Default under Section 10.1(a)(i) of the Loan Agreement with respect to any Borrower's failure to pay any of the Obligations arising pursuant to the Revolving Loans (including principal, interest, fees and expenses attributable thereto); (B) the occurrence and continuance of an Event of Default under Sections 10.1(e), 10.1(f) or 10.1(g) of the Loan Agreement; or (C) the occurrence of any other Event of Default and the acceleration of the payment of all or a material portion of the Obligations.
(iii) "Registered Term B Loan" shall have the meaning set forth in Section 2.4 of Amendment No. 3.
(iv) "Registered Term B Loan Note" shall have the meaning set forth in Section 2.4 of Amendment No. 3.
(v) "Required Term B Loan Lenders" shall mean, at any time, those Term B Loan Lenders whose Pro Rata Shares aggregate fifty-one (51%) percent or more of the aggregate of the Term B Loan Commitments of all Term B Loan Lenders.
(vi) "Revolving Loan Commitment" shall mean, at any time, as to each Revolving Loan Lender, the principal amount set forth on Exhibit A to this Amendment No. 3 for such Lender or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to which any person becomes a Revolving Loan Lender after the Amendment No. 3 Effective Date in accordance with the provisions of Section 13.7 of the Loan Agreement, as the same may be adjusted from time to time in accordance with the terms hereof; sometimes being collectively referred to herein as "Revolving Loan Commitments"; provided, that, effective on the first day of each calendar month commencing with the first day of the month immediately following the Term B Loan Funding Date, the Revolving Loan Commitment of each Revolving Loan Lender shall be increased based on its Pro Rata Share so that the aggregate amount of the Revolving Loan Commitments equal the amount of the Revolving Loan Limit as so increased as of such day.
(vii) "Revolving Loan Lender" shall mean a Lender with a Revolving Loan Commitment; sometimes being referred to herein collectively as "Revolving Loan Lenders".
(viii) "Revolving Loan Limit" shall mean, at any time, the amount of $210,000,000; provided, that, effective on the first day of each calendar month commencing with the first day of the month immediately following the Term B Loan Funding Date, the amount of the Revolving Loan Limit shall be increased by the amount of the principal payments in respect of the Term B Loans received during the immediately preceding calendar month.
(ix) "Revolving Loans" shall mean the loans now or hereafter made by or on behalf of any Revolving Loan Lender or by Agent or the account of any Revolving Loan Lender on a revolving basis pursuant to the Credit Facility (involving advances, repayment and readvances) as set forth in Section 2.1 of the Loan Agreement.
(x) "Term B Loans" shall mean the term loans made by or on behalf of any Term B Loan Lender or by Agent for the account of any Term B Loan Lender as set forth in Section 2.1 of this Amendment No. 3.
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(xi) "Term B Loan Action Default" shall mean an Event of Default under Sections 10.1(a)(i), 10.1(d), 10.1(e), 10.1(f), 10.1(i), 10.1(l) or 10.1(m), or 10.1(a)(ii) and 10.1(a)(iii) of the Loan Agreement (to the extent arising as a result of the failure to comply with Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.17 or 9.18 of the Loan Agreement), in each case after giving effect to all applicable cure periods, if any.
(xii) "Term B Loan Commitment" shall mean, at any time, as to each Term B Loan Lender, the principal amount set forth on Exhibit B to this Amendment No. 3 for such Lender or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to which any person becomes a Term B Loan Lender after the Amendment No. 3 Effective Date in accordance with the provisions of Section 13.7 of the Loan Agreement, as the same may be adjusted from time to time in accordance with the terms hereof; sometimes being collectively referred to herein as "Term B Loan Commitments"; provided, that, effective on the first day of each calendar month commencing with the first day of the month immediately following the Term B Loan Funding Date, the Term B Loan Commitment of each Term B Loan Lender shall be decreased based on its Pro Rata Share so that the aggregate amount of the Term B Loan Commitments equal the principal amount of the Term B Loans then outstanding.
(xiii) "Term B Loan Fee Letter" shall mean the letter agreement, dated of even date herewith, by and among Borrowers, Term B Loan Lenders and Agent, setting forth certain fees payable by Borrowers to Agent for the benefit of Term B Loan Lenders, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
(xiv) "Term B Loan Funding Date" shall mean the date on which the Term B Loan Lenders make the Term B Loans to Borrowers.
(xv) "Term B Loan Interest Rate" shall mean a rate equal to three and one-half (3.50%)
percent per annum in excess of the Adjusted Eurodollar Rate (as such rate is determined from time to time in accordance with the Loan Agreement), provided, that, the Term B Loan Interest Rate shall be five and one-half (5.50%) percent
per annum in excess of the Adjusted Eurodollar Rate, at the option of the Required Term B Loan Lenders, after notice to Agent, for the period from and after the date of the occurrence of any Event of Default, and for so long as such Event of Default
is continuing as determined by Agent, notwithstanding anything to the contrary contained herein, if any of the conditions described in Sections 3.3(b)(i), 3.3(b)(ii) or 3.3(b)(iii) of the Loan Agreement exist with respect to Eurodollar Rate Loans,
or if the adoption of or any change in any law, treaty, rule or regulation or final, non-appealable determination of an arbitrator or a court or other Governmental Authority or in the interpretation or application thereof, in each case, occurring
after the Amendment No. 3 Effective Date shall make it unlawful for a Term B Loan Lender to make or maintain loans based on the Adjusted Eurodollar Rate, then such Term B Loan Lender may, at its option, after notice to Agent, convert the interest
rate on the Term B Loan owing to it to one (1%) percent per annum in excess of the Prime Rate (or at the option of such Term B Loan Lender, after notice to Agent, for the period from and after the date of the occurrence of any Event of Default, and
for so long as such Event of Default is continuing as determined by Agent, to three (3%) percent per annum in excess of the Prime Rate), and if at any time Agent does not receive a request from Lead Borrower for the Term B Loans to continue as
Eurodollar Rate Loans for an additional Interest Period in
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accordance with Section 3.1(b) of the Loan Agreement, such request shall be deemed made for an
Interest Period of one (1) month duration.
(xvi) "Term B Loan Lender" shall mean a Lender with a Term B Loan Commitment; sometimes being referred to herein collectively as "Term B Loan Lenders".
(xvii) "Term B Loan Limit" shall mean, at any time, the amount of $15,000,000.
1.2 Amendment to Definitions.
(a) Each of the defined terms in the Loan Agreement or any of the other Financing Agreements set forth below shall be deemed to be amended and restated in their entirety to have the meaning as to such term set forth below:
(i) "Applicable Margin" means, at any time, as to the interest rate for Prime Rate Loans and the interest rate for Eurodollar Rate Loans the applicable percentage (on a per annum basis) set forth below if the Monthly Average Excess Availability for the immediately preceding calendar month is at or within the amounts indicated for such percentage:
|
|
|
Applicable |
Applicable |
||
| 1 |
$75,000,000 or more |
0% |
1 1/4 % |
||
| 2 |
Greater than or equal |
0% |
1 1/2 % |
||
| 3 |
Greater than or equal |
1/4 % |
1 3/4 % |
||
| 4 |
Less than $25,000,000 |
1/2 % |
2 % |
provided, that, (A) notwithstanding the amount of the Monthly Average Excess Availability or anything to the contrary contained herein, the Applicable Margin at all times prior to the last day of the sixth (6th) calendar month after the Amendment No. 3 Effective Date shall be the percentages set forth in Tier 2 of the schedule above for the applicable category of Revolving Loans and (B) on and after the first day of the month, the Applicable Margin shall be calculated and established based on the Monthly Average Excess Availability for such sixth (6th) month and thereafter shall be calculated and established once each calendar month and shall remain in effect until adjusted thereafter as of the first day of the next month.
(ii) "Borrowing Base" shall mean, at any time, the amount equal to:
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(A) the lesser of:
(1) the amount equal to:
(aa) eighty-five (85%) percent of Eligible Accounts, plus
(bb) ninety (90%) percent of Eligible Credit Card Receivables, plus
(cc) the lesser of: sixty-five (65%) percent multiplied by the Value of the Eligible Inventory of the Retail Division or ninety (90%) percent of the Net Recovery Percentage for the Inventory of the Retail Division multiplied by the Value of such Eligible Inventory; plus
(dd) the lesser of: seventy-five (75%) percent multiplied by the Value of the Eligible Inventory of the Distribution Division or ninety (90%) percent of the Net Recovery Percentage for the Inventory of the Distribution Division multiplied by the Value of such Eligible Inventory, plus
(ee) the Prescription File Availability; plus
(ff) the Fixed Asset Availability; or
(2) the Maximum Credit,
minus
(B) Reserves.
The amounts of Eligible Inventory of any Borrower shall, at Agent's option, be determined based on the lesser of the amount of Inventory set forth in the general ledger of such Borrower, as reconciled, or the perpetual inventory record or stock ledger record, as applicable, maintained by such Borrower.
(iii) "Commitment" shall mean, at any time, as to each Lender, the principal amount set forth on Exhibit C to this Amendment No. 3 for each Lender or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to which any person that becomes a Lender hereunder after the date hereof in accordance with the provisions of Section 13.7 of the Loan Agreement, as the same may be adjusted from time to time in accordance with the terms hereof; sometimes being collectively referred to herein as "Commitments".
(iv) "Excess Availability" shall mean the amount, as determined by Agent, calculated at any date, equal to:
(A) the lesser of: the Borrowing Base and the Maximum Credit (in each case under (1) or (2) after giving effect to any Reserves other than any Reserves in respect of Letter of Credit Accommodations), minus
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(B) the sum of: the amount of all then outstanding and unpaid Obligations of such Borrower (but not including for this purpose Obligations of such Borrower arising pursuant to any guarantees in favor of Agent and Lenders of the Obligations of the other Borrowers or on and after the Term B Loan Funding Date, the then outstanding aggregate principal amount of the Term B Loans or any outstanding Letter of Credit Accommodations), plus the amount of all Reserves then established in respect of Letter of Credit Accommodations, plus the aggregate amount of all then outstanding and unpaid trade payables and other obligations of such Borrower which are outstanding more than thirty (30) days past due as of such time (other than trade payables or other obligations being contested or disputed by such Borrower in good faith), plus without duplication, the amount of checks issued by such Borrower to pay trade payables and other obligations which are more than thirty (30) days past due as of such time (other than trade payables or other obligations being contested or disputed by such Borrower in good faith), but not yet sent.
(v) "Fixed Asset Availability" shall mean the amount equal to the Fixed Asset Availability Limit; provided, that, on and after receipt by Agent following the Amendment No. 3 Effective Date of acceptable appraisals (or acceptable updates of existing appraisals) in accordance with Section 7.4 hereof, the Fixed Asset Availability shall be the amount equal to the sum of: seventy (70%) percent of the fair market value of Eligible Real Property as set forth in the then most recent acceptable appraisal (or acceptable updates of existing appraisals) of such Real Property received by Agent in accordance with Section 7.4 hereof after the Amendment No. 3 Effective Date, plus eighty-five (85%) percent of the greater of (aa) the forced liquidation value of the Eligible Equipment or (bb) the net orderly liquidation value of the Eligible Equipment, in each case as set forth in the then most recent acceptable appraisal (or acceptable updates of existing appraisals) of such Equipment received by Agent in accordance with Section 7.4 hereof after the Amendment No. 3 Effective Date, and commencing on January 1, 2006, the Fixed Asset Availability shall be reduced as of the first day of each month, commencing on January 1, 2006, by an amount equal to the Fixed Asset Availability Limit divided by eighty-four (84).
(vi) "Fixed Asset Availability Limit" shall mean $52,000,000.
(vii) "Maximum Credit" shall mean the amount of $225,000,000.
(viii) "Prescription File Availability" shall mean the lesser of: eighty (80%) percent of the "net orderly liquidation value" of the Eligible Prescription Files based on the most recent acceptable appraisal thereof received by Agent using the average of the average recovery under each of the percent of script sales method, the dollars per average number of scripts filled per week method and the percent of past year script margin method (or such other methodology or methodologies as may be acceptable to Agent), net of estimated liquidation expenses, costs and commissions, or $12,500,000.
(b) As of the Term B Loan Funding Date, each of the defined terms in the Loan Agreement or any of the other Financing Agreements set forth below shall be deemed to be amended and restated in their entirety to have the meaning as to such term set forth below:
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(i) "Commitments" shall mean, collectively, the Revolving Loan Commitments and the Term B Loan Commitments.
(ii) "Lenders" shall mean, collectively, the Revolving Loan Lenders and the Term B Loan Lenders, sometimes being referred to individually as a "Lender"; except that for purposes of Sections 1.56, 1.74, 1.101, 2.1, 2.2, 3.1, 3.2, 3.3, 6.10, 12.8 and 13.1(c) of the Loan Agreement, all references to the term "Lenders" in such Sections shall be deemed and each such reference is hereby amended to mean the Revolving Loan Lenders only.
(iii) "Loans" shall mean the Revolving Loans and the Term B Loans, sometimes referred to individually as a "Loan", except that for purposes of Sections 1.29, 1.48, 1.74(c), 1.107, 1.118, 2.1(a), 3.1(a), 3.2, 6.3(b), 6.5, 6.6, 6.9, 6.10 and 12.8 of the Loan Agreement, all references to the term "Loans" in such Sections and each such reference is hereby amended to mean the Revolving Loans.
(iv) "Pro Rata Share" shall mean:
(A) with respect to a Revolving Loan Lender's obligation to make Revolving Loans and to acquire interests in Letter of Credit Accommodations and receive payments of interest and principal with respect thereto and with respect to increases in the Revolving Loan Commitments as provided for herein, the fraction (expressed as a percentage) the numerator of which is such Revolving Loan Lender's Revolving Loan Commitment and the denominator of which is the aggregate amount of all of the Revolving Loan Commitments of Lenders, as adjusted from time to time in accordance with the provisions of Section 13.7 hereof; provided, that, if the Revolving Loan Commitments have been terminated, the numerator shall be the unpaid amount of such Revolving Loan Lender's Revolving Loans and its interest in the Letter of Credit Accommodations and the denominator shall be the aggregate amount of all unpaid Revolving Loans and Letter of Credit Accommodations;
(B) with respect to a Term B Loan Lender's obligation to make Term B Loans and receive payments of interest and principal with respect thereto and with respect to decreases in the Term B Loan Commitments as provided for herein, the fraction (expressed as a percentage) the numerator of which is such Term B Loan Lender's Term B Loan Commitment and the denominator of which is the aggregate amount of all of the Term B Loan Commitments of Term B Loan Lenders, as adjusted from time to time in accordance with the provisions of Section 13.7 hereof; and
(C) with respect to all other matters as to a particular Lender (including the indemnification obligations arising under Section 11.5 of the Loan Agreement and the voting rights set forth in Section 11.3 of the Loan Agreement), the fraction (expressed as a percentage) the numerator of which is the aggregate amount of all of such Lender's Commitments and the denominator of which is the aggregate amount of all of the Commitments of all Lenders; provided, that, if the Revolving Loan Commitments have been terminated, the numerator shall be the unpaid amount of each Lender's Loans (and in the case of Revolving Loan Lenders, its interest in the Letter of Credit Accommodations) and the denominator shall be the aggregate amount of all unpaid Revolving Loans, Letter of Credit Accommodations and Term B Loans.
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(v) The definition of the term "Reserves" in the Loan Agreement is hereby amended by adding the following to the end thereof: "Without limiting the generality of the foregoing, the Revolving Loans and Letter of Credit Accommodations otherwise available to Borrowers shall, at Agent's option, be subject to a special reserve, in an amount up to any accrued and unpaid interest, fees, costs, expenses or other charges due or to become due with respect to the Term B Loans."
1.3 Interpretation. For purposes of this Amendment No. 3, unless otherwise defined herein, all capitalized terms used herein shall have the respective meanings assigned to such terms in the Loan Agreement.
2. Term B Loans.
2.1 Making of Term B Loans.
(a) Subject to and upon the terms and conditions contained herein and in the Loan Agreement, each Term B Loan Lender severally (and not jointly) agrees to make its Pro Rata Share of Term B Loans to Borrowers upon the request of Lead Borrower in accordance with Section 2.1(c)(ii) hereof on any Business Day on or prior to June 1, 2006 (or such later date as Term B Loan Lenders and Lead Borrower may agree in writing), in an aggregate principal amount equal to the Term B Loan Limit. Each Term B Loan made in accordance with Section 2 hereof is (a) to be repaid, together with interest and other amounts, in accordance with the Loan Agreement, Amendment No. 3 and the other Financing Agreements and (b) secured by the Collateral.
(b) The principal amount of the Term B Loans shall be repaid in sixty (60) consecutive monthly installments (or earlier as provided herein) payable on the first day of each month commencing with the first day of the month immediately following the Term B Loan Funding Date; provided, that, the entire unpaid principal amount of the Term B Loans and all accrued and unpaid interest thereon shall be due and payable upon the earlier of (i) the first day of the thirty sixth (36th) month immediately following the Term B Loan Funding Date or (ii) the effective date of termination or non-renewal of the Financing Agreements. The amount of each such monthly installment shall be equal to $250,000. Principal of Term B Loans may be prepaid by Borrowers without premium or penalty. Any repayments of Term B Loans may not be reborrowed.
(c) In addition to the conditions precedent set forth in set forth in Section 4.2 of the Loan Agreement, each of the following is an additional condition precedent to the making of the Term B Loans: the EBITDA of Parent and its Subsidiaries on such Business Day shall be not less than $40,000,000 as of the last day of the four-week fiscal period for the last thirteen (13) consecutive four-week fiscal periods most recently ended for which Agent has received financial statements of Borrower and its Subsidiaries prior to the date of making the Term B Loans, Agent shall have received not less than two (2) Business Days' prior written notice of the request of Lead Borrower for the Term B Loans, such notice shall be irrevocable and on and after giving effect to the making of the Term B Loans, the principal amount of all outstanding Revolving Loans shall not exceed the Revolving Loan Limit.
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2.2 Term B Loan Interest.
(a) Subject to Section 6.4 of the Loan Agreement, Borrowers shall pay to Agent, for the benefit of the Term B Loan Lenders, interest on the outstanding principal amount of the Term B Loans at the Term B Loan Interest Rate. All interest accruing with respect to the Term B Loans hereunder from and after (i) the effective date of termination or non-renewal of the Loan Agreement or (ii) the date of the occurrence of an Event of Default and for so long as such Event of Default is continuing shall be payable on demand in accordance with Section 6.4 of the Loan Agreement.
(b) Lead Borrower may from time to time request that the Adjusted Eurodollar Rate for the Term B Loans continue for an additional Interest Period in accordance with Section 3.1(b) of the Loan Agreement.
(c) All interest charges related to the Term B Loans shall be (i) calculated based upon the applicable Term B Loan Interest Rate, (ii) calculated on the basis of a three hundred sixty (360) day year and actual days elapsed and (iii) paid monthly in arrears to Agent on the first day of each calendar month, or at Agent's option, charged to any Borrower's account(s) maintained by Agent as of the first day of each calendar month subject to Section 6.4 of the Loan Agreement.
(d) In no event shall charges constituting interest payable by Borrowers to Agent, for the benefit of Term B Loan Lenders, exceed the maximum amount or the rate permitted under any applicable law or regulation, and if any such part or provision of this Amendment No. 3 or any of the other Financing Agreements is in contravention of any such law or regulation, such part or provision shall be deemed amended to conform thereto.
2.3 Term B Loan Fees. Borrowers agree to pay Agent for the benefit of the Term B Loan Lenders the fees and other amounts set forth in the Term B Loan Fee Letter in the amounts and at the time specified therein.
2.4 Registered Term B Loan. Agent, on behalf of Borrowers, agrees to record the Term B Loans on the Register referred to in Section 13.7(c) of the Loan Agreement. Any Term B Loans recorded on the Register (the "Registered Term B Loans") may not be evidenced by a promissory note other than a Registered Term B Loan Note (as defined below). Upon the registration of such Term B Loan, any promissory note (other than a Registered Term B Loan Note) evidencing the same shall be null and void and shall be returned to Lead Borrower. Borrowers agree, at the request of Agent, to execute and deliver to Agent a promissory note in registered form reasonably acceptable to Agent to evidence such Term B Loans (that is, containing registered note language) and registered as provided in Section 13.7(c) of the Loan Agreement (a "Registered Term B Loan Note"), payable to the order of Agent, on behalf of the Term B Loan Lenders and otherwise duly completed. Once recorded on the Register, the Obligations evidenced by such Registered Term B Loan Note may not be removed from the Register so long as it remains outstanding and a Registered Term B Loan Note may not be exchanged for a promissory note that is not a Registered Term B Loan Note.
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3. Collection of Accounts.
3.1 Section 6.3(a)(iv)(B) of the Loan Agreement is hereby deleted in its entirety and replaced with the following: "(B) at any time Excess Availability is less than $15,000,000".
3.2 The sixth sentence of Section 6.3(a)(iv) of the Loan Agreement is hereby amended to delete the following: "the Monthly Average Excess Availability for any calendar month commencing after the end of such ninety (90) day period is greater than $20,000,000" and replace it with the following: "the Monthly Average Excess Availability for any calendar month commencing after the end of such ninety (90) day period is greater than $15,000,000".
4. Payments.
4.1 As of the Term B Loan Funding Date, Section 6.4(a) of the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:
"(a) All Obligations shall be payable to the Agent Payment Account as provided in Section 6.3 or such other place as Agent may designate from time to time. Subject to the other terms and conditions contained herein, Agent shall apply payments received or collected from any Borrower or for the account of any Borrower (including the monetary proceeds of collections or of realization upon any Collateral) as follows:
(i) first, to the payment in full of any fees, indemnities or expense reimbursements then due to Agent and Lenders from Borrowers;
(ii) second, to the payment in full of interest then due in respect of any Loans (and including any Special Agent Advances);
(iii) third, to the payment or prepayment in full of principal in respect of Special Agent Advances;
(iv) fourth, to the payment or prepayment in full of principal in respect of the Revolving Loans or to pay or prepay Obligations arising under or pursuant to any Interest Rate Protection Agreement of any Borrower that has been approved in writing by Agent (up to the amount of any then effective Reserve established in respect of such Obligations) on a pro rata basis;
(v) fifth, to the payment in full of principal in respect of the Term B Loan then due;
(vi) sixth, to the payment or prepayment in full of any other Obligations whether or not then due, in such order and manner as Agent reasonably determines or to be held as cash collateral in connection with any Letter of Credit Accommodations or other contingent Obligations (but not including for purposes of this clause "sixth" any Obligations arising under or pursuant to any Interest Rate Protection Agreement);
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(vii) seventh, to the payment or prepayment in full of any Obligations arising under or pursuant to Interest Rate Protection Agreements that have been approved in writing by Agent (other than to the extent provided for above) and any Obligations then due to any Affiliate of Agent arising from or in connection with any Interest Rate Protection Agreement, as to all of such Obligations on a pro rata basis.
Provided, that, in each instance set forth above in Section 6.4(a) above so long as no Priority Event has occurred and is continuing, this Section 6.4(a) shall not be deemed to apply to any payment by a Borrower specified by such Borrower to be for the payment of specific Obligations then due and payable (or prepayable) under and in accordance with any provision of this Agreement."
4.2 As of the Term B Loan Funding Date, Section 6.4 is hereby amended to add new Sections 6.4(c), 6.4(d) and 6.4(e) as follows:
"(c) Notwithstanding anything to the contrary contained in Section 6.4(a) above or otherwise herein, at any time on and after a Priority Event and for so long as the same is continuing, Agent shall apply payments received or collected from any Borrower or for the account of any Borrower (including the monetary proceeds of collections or of realization upon any Collateral) as follows:
(i) first, to the payment in full of any fees (other than the Early Termination Fee), indemnities or expense reimbursements then due to Agent and Lenders from Borrowers;
(ii) second, to the payment in full of interest then due in respect of any Revolving Loans (and including any Special Agent Advances);
(iii) third, to the payment or prepayment in full of principal in respect of Special Agent Advances;
(iv) fourth, to the payment or prepayment in full of principal in respect of the Revolving Loans or to the payment or prepayment in full of Obligations arising under or pursuant to any Interest Rate Protection Agreement of any Borrower that has been approved in writing by Agent (up to the amount of any then effective Reserve established in respect of such Obligations) on a pro rata basis;
(v) fifth, to be held as cash collateral in connection with any Letter of Credit Accommodations or other contingent Obligations (but not including for purposes of this clause "fifth" any Obligations arising under or pursuant to any Interest Rate Protection Agreement and as to Letter of Credit Accommodations only up to the amount provided for in Section 13.1(a) for such Obligations);
(vi) sixth, to the payment in full of interest then due in respect of Term B Loans;
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(vii) seventh, to the payment in full of principal in respect of the Term B Loans then due;
(viii) eighth, to the payment or prepayment in full of any other Obligations whether or not then due (including the Early Termination Fee), in such order and manner as Agent reasonably determines;
(ix) ninth, to the payment or prepayment in full of any Obligations arising under or pursuant to Interest Rate Protection Agreements that have been approved in writing by Agent (other than to the extent provided for above) and any Obligations then due to any Affiliate of Agent arising from or in connection with any Interest Rate Protection Agreement, as to all of such Obligations on a pro rata basis.
(d) All references to "payment in full" or "payment or prepayment in full" in this Section 6.4 means all amounts owing in respect of the Obligations referred to, including any principal, interest, fees, costs, expenses and other amounts owed to Agent or any Lender which would accrue and become due but for the commencement of any case under the Bankruptcy Code or any similar statute, whether or not such amounts are allowed or allowable in whole or in part in such a case, but excluding (i) interest to the extent paid in excess of amounts based on the pre-default rates (but not any other interest) and (ii) fees paid in respect of the waiver of an Event of Default, in each case as to amounts under clause (i) and (ii) only to the extent that such amounts are disallowed in any case with respect to Borrowers under the Bankruptcy Code.
(e) Notwithstanding anything to the contrary contained in this Agreement, (i) unless so directed by Lead Borrower, or unless a Default or an Event of Default shall exist or have occurred and be continuing, Agent shall not apply any payments which it receives to any Eurodollar Rate Loans, except (A) on the expiration date of the Interest Period applicable to any such Eurodollar Rate Loans or (B) in the event that there are no outstanding Prime Rate Loans and (ii) to the extent any Borrower uses any proceeds of the Loans or Letter of Credit Accommodations to acquire rights in or the use of any Collateral or to repay any Indebtedness used to acquire rights in or the use of any Collateral, payments in respect of the Obligations shall be deemed applied first to the Obligations arising from Loans and Letter of Credit Accommodations that were not used for such purposes and second to the Obligations arising from Loans and Letter of Credit Accommodations the proceeds of which were used to acquire rights in or the use of any Collateral in the chronological order in which such Borrower acquired such rights in or the use of such Collateral."
5. Collateral Reporting. Section 7.1(a) of the Loan Agreement is hereby amended to delete each reference to "at any time Excess Availability is less than $30,000,000" contained therein and replace each such reference with the following: "at any time Excess Availability is less than $20,000,000".
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6. Sale of Assets, Consolidation, Merger, Dissolution, Etc.. Section 9.7(c) of the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:
"(c) wind up, liquidate or dissolve, except that United, Xxxxxx, Xxxxxx Food Town and any Guarantor (other than Parent) may wind up, liquidate and dissolve, provided, that, each of the following conditions is satisfied, (i) the winding up, liquidation and dissolution of such Borrower or Guarantor (as the case may be) shall not violate any law or any order or decree of any court or other Governmental Authority in any material respect and shall not conflict with or result in the breach of, or constitute a default under, any indenture, mortgage, deed of trust, or any other agreement or instrument to which any Borrower or Guarantor is a party or may be bound, (ii) such winding up, liquidation or dissolution shall be done in accordance with the requirements of all applicable laws and regulations, (iii) effective upon such winding up, liquidation or dissolution, all of the assets and properties of such Borrower or Guarantor (as the case may be) shall be duly and validly transferred and assigned to any other Borrower, free and clear of any liens, restrictions or encumbrances other than the security interest and liens of Agent (and Agent shall have received such evidence thereof as Agent may require) and Agent shall have received such deeds, assignments or other agreements as Agent may request to evidence and confirm the transfer of such assets of such Borrower or Guarantor (as the case may be) to such other Borrower, (iv) Agent shall have received all documents and agreements that any Borrower or Guarantor has filed with any Governmental Authority or as are otherwise required to effectuate such winding up, liquidation or dissolution, (v) no Borrower or Guarantor shall assume any Indebtedness, obligations or liabilities as a result of such winding up, liquidation or dissolution, or otherwise become liable in respect of any obligations or liabilities of the entity that is winding up, liquidating or dissolving, unless such Indebtedness is otherwise expressly permitted hereunder, except that, upon the effectiveness of each such winding up, liquidation or dissolution of any of United, Xxxxxx or Xxxxxx Food Town, each remaining Borrower hereby expressly (A) assumes and agrees to be directly and primarily liable in all respects for all Obligations of United, Xxxxxx or Xxxxxx Food Town (as the case may be) under, contained in, or arising out of the Loan Agreement and the other Financing Agreements and (B) agrees to perform, comply with and be bound by all terms, conditions and covenants of the Loan Agreement and the other Financing Agreements applicable to all Borrowers and as applied to United, Xxxxxx or Xxxxxx Food Town (as the case may be), (vi) Agent shall have received not less than ten (10) Business Days prior written notice of the intention of such Borrower or Guarantor (as the case may be) to wind up, liquidate or dissolve, (vii) in the case of the winding up, liquidation or dissolution of United, Xxxxxx or Xxxxxx Food Town, after giving effect thereto, Excess Availability shall be not less than $20,000,000 and (viii) as of the date of such winding up, liquidation or dissolution and after giving effect thereto, no Default or Event of Default shall exist or have occurred; or"
7. Loans, Investments, etc. Section 9.10(i)(iii) of the Loan Agreement is hereby deleted in its entirety and replaced with the following: "Intentionally Deleted."
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8. Dividends and Redemptions. Section 9.11 of the Loan Agreement is hereby amended to delete the period at the end of Section 9.11(e) and replace it with the following: "; and
"(f) Parent may pay cash dividends and distributions, from legally available funds therefor, to its stockholders and repurchase any shares of its Capital Stock now or hereafter outstanding; provided, that, at the time of payment of each such dividend, distribution or repurchase and after giving effect to the payment thereof: no Default or Event of Default exists or has occurred and is continuing, or would occur or exist after giving effect to such payment, such dividend, distribution or repurchase is not in violation of applicable law or any other agreement to which Parent is a party or by which Parent is bound, as of the date of any such payment and after giving effect thereto, the aggregate amount of the Excess Availability of Borrowers shall have been not less than $20,000,000 for each of the immediately preceding ten (10) consecutive days and as of the date of any such payment and after giving effect thereto, the aggregate amount of the Excess Availability of Borrowers shall be not less than $20,000,000, and all of such dividends, distributions or repurchases during any fiscal year of Parent shall not exceed in the aggregate $15,000,000."
9. Minimum EBITDA. Section 9.18 of the Loan Agreement is hereby amended to delete the reference to "At any time that Excess Availability is less than $30,000,000" contained therein and replace it with the following: "At any time that Excess Availability is less than $20,000,000".
10. Capital Expenditures. Section 9.19 to the Loan Agreement is hereby amended to delete the reference to "Excess Availability was less than $30,000,000" contained therein and replace it with the following: "Excess Availability was less than $20,000,000".
11. Events of Default.
11.1 Section 10.1(d) to the Loan Agreement is hereby amended to delete the reference to "in excess of $2,500,000 in any one case or in excess of $5,000,000 in the aggregate" contained therein and replace it with the following: "in excess of $10,000,000 in any one case or in the aggregate" and delete the reference to "having a value in excess of $2,500,000" contained therein and replace it with the following: "having a value in excess of $10,000,000".
11.2 Section 10.1(k) to the Loan Agreement is hereby amended to delete the reference to "in excess of $5,000,000" contained therein and replace it with the following: "in excess of $10,000,000 in any one event".
12. Remedies. Section 10.2 of the Loan Agreement is hereby amended to add the following new Section 10.2(i) at the end thereof:
"(i) Notwithstanding anything to the contrary contained herein, except as the Required Term B Loan Lenders shall otherwise agree, Agent shall demand payment of the Obligations and commence and pursue such other Enforcement Actions as Agent in good xxxxx xxxxx appropriate within ninety (90) days (except with respect to Events of
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Default described in Sections 10.1(f) and 10.1(g), Agent shall take such Enforcement Actions as it deems appropriate under the circumstances promptly upon receipt of notice) after the date of the receipt by Agent of written notice executed and delivered by the Required Term B Loan Lenders of a Term B Loan Action Default, and requesting that Agent commence Enforcement Actions, provided, that, (i) such Term B Loan Action Default has not been waived or cured, (ii) in the good faith determination of Agent, taking an Enforcement Action is permitted under the terms of this Agreement and applicable law, (iii) taking an Enforcement Action shall not result in any liability of Agent or Lenders to Borrower or any other person, and (iv) Agent shall be entitled to all of the benefits of Sections 12.2, 12.3 and 12.5 hereof."
13. Amendments and Waivers. Section 11.3 of the Loan Agreement is hereby amended by adding a new Section 11.3(e) at the end thereof as follows:
"(e) Notwithstanding anything to the contrary contained in Section 11.3(a), no such amendment, waiver, discharge or termination shall provide for any such amendment, waiver, discharge or termination of any of the following to the extent provided below without the consent of Agent and Required Term B Loan Lenders:
(i) the terms of Sections 9.18, 9.19 or 9.20 hereof (or any definition with respect to financial terms used in such financial covenant in a manner which has the effect of reducing the amounts which Borrowers are required to maintain pursuant to such financial covenants);
(ii) the definitions of "Adjusted Eurodollar Rate", "Borrowing Base" (but only to the extent such proposed change in the definition would increase the advance rates above those in effect on the date hereof), "Change of Control", "Consolidated Adjusted Net Income", "EBITDA", "Eligible Accounts", "Eligible Inventory", "Eligible Transferee", "Excess Availability", "Material Adverse Effect", "Net Recovery Percentage", "Priority Event", "Pro Rata Share", "Term B Loan", "Term B Loan Action Default", or "Term B Loan Interest Rate";
(iii) the terms of Section 2 of Amendment No. 3;
(iv) any of the following Sections hereof in any material respect: 6.4, 7.7, 9.7, 9.8, 9.9, 9.10, 9.11, 9.12(b), 9.16, 9.21, 10.2, 11.3, 12.8, 12.11, 13.1(a), or 13.7 hereof,
(v) an increase in the Maximum Credit or the Revolving Loan Limit or the outstanding principal amount of the Term B Loan;
(vi) forgiveness, compromise or cancellation of any of the Term B Loans."
14. Term.
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14.1 Section 13.1(a) of the Loan Agreement is hereby amended by deleting the reference therein to "FIVE (5) YEARS" from the first sentence thereof and replacing it with "SEVEN (7) YEARS".
14.2 Section 13.1(c) of the Loan Agreement is hereby amended to delete the table therein and replace it with the following:
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| Amount |
Period |
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| (i) 1% of Maximum Credit |
From the Amendment No. 3 |
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| (ii) 1/2% of Maximum Credit |
From and after the first anniversary |
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| (iii) 1/4% of Maximum Credit |
From and after the second |
15. Assignments; Participations.
15.1 As of the Term B Loan Funding Date, Section 13.7(a) of the Loan Agreement is hereby amended to delete the reference to "a portion equal to at least $5,000,000 in the aggregate for the assigning Lender" contained therein and replace it with the following: "a portion equal to at least $5,000,000 in the aggregate for the assigning Lender (or in the case of any Term B Loan Lender, a portion equal to at least $1,000,000)".
15.2 As of the Term B Loan Funding Date, Section 13.7 of the Loan Agreement is hereby amended to add a new Section 13.7(i) as follows:
"(i) A Registered Term B Loan may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register or comparable register. Any assignment or sale of all or part of such Registered Term B Loan may be effected only by registration of such assignment or sale on the Register (or comparable register). Prior to the registration of assignment or sale of any Registered Term B Loan, Agent and Borrowers shall treat the Person in whose name such Loan is registered as the owner thereof for the purpose of receiving all payments thereon and for all other purposes, notwithstanding notice to the contrary. In the event that any Term B Loan Lender sells participations in a Registered Term B Loan, such Term B Loan Lender shall maintain a register on which it enters the name of all participants in the Registered Term B Loan (the "Participant Register"). A Registered Term B Loan may be participated in whole or in part only by registration of such participation on the Participant Register. Any participation of such Registered Term B Loan may be effected only by the registration of such participation on the Participant Register."
16. Amendment Fees. Borrowers shall pay to Agent, or Agent may, at its option charge to the loan account of Borrowers, the fees provided for in the Amendment No. 3 Fee Letter.
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17. Representations and Warranties. Each Borrower and Guarantor hereby represents and warrants to Agent and Lenders the following (which shall survive the execution and delivery of this Amendment No. 3), the truth and accuracy of which are a continuing condition of the making of Loans and providing Letter of Credit Accommodations to Borrowers:
17.1 This Amendment No. 3 and each other agreement or instrument to be executed and delivered by the Borrowers and Guarantors pursuant hereto have been duly authorized, executed and delivered by all necessary action on the part of each of the Borrowers and Guarantors which is a party hereto and thereto and, if necessary, their respective stockholders and is in full force and effect as of the date hereof, as the case may be, and the agreements and obligations of each of the Borrowers and Guarantors, as the case may be, contained herein and therein, constitute the legal, valid and binding obligations of each of the Borrowers and Guarantors, respectively, enforceable against them in accordance with their terms, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors' rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought.
17.2 The execution, delivery and performance of this Amendment No. 3 are all within each Borrower's and Guarantor's corporate or limited liability company powers and are not in contravention of law or the terms of any Borrower's or Guarantor's certificate or articles of incorporation, by laws, or other organizational documentation, or any indenture, agreement or undertaking to which any Borrower or Guarantor is a party or by which any Borrower or Guarantor or its property are bound.
17.3 No Default or Event of Default exists or has occurred and is continuing.
18. Condition Precedent. The effectiveness of the amendments contained herein shall only be effective upon the following:
18.1 Agent shall have received an executed original or executed original counterparts of this Amendment No. 3 (as the case may be), Term B Loan Fee Letter (as the case may be) and the Amendment No. 3 Fee Letter (as the case may be), in each case duly authorized, executed and delivered by the respective party or parties hereto;
18.2 Agent shall have received an executed original or executed original counterparts of this Amendment No. 3 as executed by all Lenders required for the consent and amendments provided for herein; and
18.3 Agent shall have received a true and correct copy of any consent, waiver or approval (if any) to or of this Amendment No. 3, which any Borrower is required to obtain from any other Person.
19. Effect of this Amendment. Except as expressly amended pursuant hereto, no other changes or modifications to the Financing Agreements are intended or implied, and, in all other respects, the Financing Agreements are
hereby specifically ratified, restated and confirmed by all parties hereto as of the effective date hereof. To the extent that any provision of the Loan
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Agreement or any of the other Financing Agreements are inconsistent with the provisions of this Amendment No. 3, the provisions of this Amendment No. 3 shall control.
20. Further Assurances. Borrowers and Guarantors shall execute and deliver such additional documents and take such additional action as may be reasonably requested by Agent to effectuate the provisions and purposes of this Amendment No. 3.
21. Governing Law. The validity, interpretation and enforcement of this Amendment No. 3 and the other Financing Agreements (except as otherwise provided therein) and any dispute arising out of the relationship between the parties hereto, whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of Illinois but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of Illinois.
22. Binding Effect. This Amendment No. 3 shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.
23. Headings. The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this Amendment No. 3.
24. Counterparts. This Amendment No. 3 may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Amendment No. 3 by telefacsimile shall have the same force and effect as the delivery of an original executed counterpart of this Amendment No. 3. Any party delivering an executed counterpart of this Amendment No. 3 by telefacsimile shall also deliver an original executed counterpart, but the failure to do so shall not affect the validity, enforceability or binding effect of such agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3 to be duly executed and delivered by their authorized officers as of the day and year first above written.
| AGENT Title: |
BORROWERS Title: | |
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SPARTAN STORES DISTRIBUTION, LLC By: Title: |
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GUARANTORS Title: |
| LENDERS Title: |
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| KEY BANK NATIONAL ASSOCIATION Title: |
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| BANK OF AMERICA LEASING & Title: |
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| NATIONAL CITY BUSINESS CREDIT, Title: |
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| GENERAL ELECTRIC CAPITAL Title: |
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| FIFTH THIRD BANK, an Ohio Banking Corporation Title: |
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EXHIBIT A
TO
AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT
List of Revolving Loan Commitments of Lenders
| 1. |
WACHOVIA CAPITAL FINANCE CORPORATION (CENTRAL) |
| 2. |
KEY BANK NATIONAL ASSOCIATION |
| 3. |
FLEET CAPITAL CORPORATION |
| 4. |
NATIONAL CITY BUSINESS CREDIT |
| 5. |
GENERAL ELECTRIC CAPITAL CORPORATION |
| 6. |
FIFTH THIRD BANK |
EXHIBIT B
TO
AMENDMENT
NO. 3 TO LOAN AND SECURITY AGREEMENT
List of Term B Loan Commitments of Term B Loan Lenders
| 1. |
WACHOVIA CAPITAL FINANCE CORPORATION (CENTRAL) |
| 2. |
KEY BANK NATIONAL ASSOCIATION |
| 3. |
FLEET CAPITAL CORPORATION |
| 4. |
NATIONAL CITY BUSINESS CREDIT |
| 5. |
FIFTH THIRD BANK |
EXHIBIT
C
TO
AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT
List of Commitments of Lenders
| 1. |
WACHOVIA CAPITAL FINANCE CORPORATION (CENTRAL) |
| 2. |
KEY BANK NATIONAL ASSOCIATION |
| 3. |
FLEET CAPITAL CORPORATION |
| 4. |
NATIONAL CITY BUSINESS CREDIT |
| 5. |
GENERAL ELECTRIC CAPITAL CORPORATION |
| 6. |
FIFTH THIRD BANK |
