SEVENTH AMENDMENT TO CREDIT AGREEMENT
Between U.S. BANK NATIONAL ASSOCIATION, as Agent, the Other Lenders
and
PREMIUM STANDARD FARMS, INC.
Dated August 27, 1997
This Seventh Amendment to Credit Agreement (this "Amendment") is made
as of the 28th day of June, 2002 by and among PREMIUM STANDARD FARMS, INC., a
Delaware corporation and a wholly owned subsidiary of the Guarantor ("Premium"),
PREMIUM STANDARD FARMS OF NORTH CAROLINA, INC., a Delaware corporation, and a
wholly-owned subsidiary of Premium ("Asset Sub C"), XXXXX INTERNATIONAL, INC., a
North Carolina corporation and a wholly owned subsidiary of Asset Sub C ("Xxxxx
International"), and LPC TRANSPORT, INC., a Delaware corporation and a
wholly-owned subsidiary of Premium ("Asset Sub D" and collectively with Premium,
Asset Sub C, and Xxxxx International, the "Borrower"), the financial
institutions listed on the signature pages hereof (being all of the "Lenders"),
and U.S. BANK NATIONAL ASSOCIATION, a national banking association (as successor
to U.S. Bancorp Ag Credit, Inc., f/k/a FBS Ag Credit, Inc. a Colorado
corporation) in its capacity as Agent for the Lenders (the "Agent"), under the
Credit Agreement dated as of August 27, 1997 (as the same has been and may be
amended, replaced, restated and/or supplemented from time to time, the "Credit
Agreement").
RECITALS
A. Capitalized terms used and not defined in this Amendment shall have the
meanings given to such terms in the Credit Agreement, as amended by this
Amendment.
B. The Borrower and the Lenders desire to extend the term of Revolving Loan
Commitments, increase the maximum amount of the LC Commitment and to otherwise
amend the Credit Agreement.
NOW THEREFORE, in consideration of the foregoing and of the terms and
conditions contained in the Credit Agreement and this Amendment, and of any
loans or extensions of credit or other financial accommodations heretofore, now
or hereafter made to or for the benefit of Borrower by the Agent and the
Lenders, Borrower, the Agent and the Lenders agree as follows:
1. New and Amended Defined Terms. Section 1.1 of the Credit Agreement,
Defined Terms, is amended to amend the following definitions, which
shall read in full as follows:
"Applicable Margin" shall mean with respect to Revolving Loans or Term
Loans, which are Base Rate Loans or LIBOR Rate Loans, or with respect to
fees for non-use of the Revolving Loan Commitments, the rates per annum set
forth below for the then applicable Financial Performance Level:
Revolving Loans:
---------------------- --------------- ------------------- ------------
Financial
Performance Level Base Rate LIBOR Rate Non-Use Fee
---------------------- --------------- ------------------- ------------
Xxxxx 0 1.50% 3.00% 0.625%
---------------------- --------------- ------------------- ------------
Xxxxx 0 1.25% 2.75% 0.500%
---------------------- --------------- ------------------- ------------
Xxxxx 0 1.00% 2.50% 0.375%
---------------------- --------------- ------------------- ------------
Xxxxx 0 0.75% 2.25% 0.375%
---------------------- --------------- ------------------- ------------
Xxxxx 0 0.50% 2.00% 0.250%
---------------------- --------------- ------------------- ------------
Xxxxx 0 0.25% 1.75% 0.250%
---------------------- --------------- ------------------- ------------
Xxxxx 0 0.00% 1.50% 0.250%
---------------------- --------------- ------------------- ------------
Term Loans:
------------------------------ ----------------- -------------------
Financial
Performance Level Base Rate LIBOR Rate
------------------------------ ----------------- -------------------
Xxxxx 0 1.625% 3.125%
------------------------------ ----------------- -------------------
Xxxxx 0 1.375% 2.875%
------------------------------ ----------------- -------------------
Xxxxx 0 1.125% 2.625%
------------------------------ ----------------- -------------------
Xxxxx 0 0.875% 2.375%
------------------------------ ----------------- -------------------
Xxxxx 0 0.625% 2.125%
------------------------------ ----------------- -------------------
Xxxxx 0 0.375% 1.875%
------------------------------ ----------------- -------------------
Xxxxx 0 0.125% 1.625%
------------------------------ ----------------- -------------------
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The Agent will review the Borrower's financial performance as
of each fiscal quarter end after its receipt of the Borrower's
financial statements and compliance certificate for such fiscal
quarter, and will confirm the Borrower's determination as to whether
the Borrower's Financial Performance Level for such fiscal quarter was
Xxxxx 0, Xxxxx 0, Xxxxx 0, Xxxxx 0, Xxxxx 5, Level 6, or Level 7. As so
confirmed by the Agent, the Borrower's Financial Performance Level will
determine the Applicable Margin effective for Revolving Loans, Term
Loans and the fees for non-use of the Revolving Loan Commitments for
the three month period beginning on the tenth day of the month
following the month in which the Agent receives such quarterly
financial statements if the Agent receives such quarterly financial
statements prior to the last five (5) Business Days of the month
following the end of such fiscal quarter. If the Agent receives such
quarterly financial statements during the last five (5) Business Days
of the month following the end of such fiscal quarter, any reduction in
the Applicable Margin will be delayed until the tenth day of the second
month following the month in which the Agent receives such quarterly
financial statements, but any increase in the Applicable Margin will be
effective retroactively to the tenth day of the month following the
month in which the Agent receives such quarterly financial statements.
If the Agent does not receive such quarterly statements prior to the
end of the month following the end of such fiscal quarter, the
Borrower's Financial Performance Level shall be deemed to be Xxxxx 0
retroactively beginning with the tenth day of the second month
following the end of such fiscal quarter.
"Cash Interest Coverage Ratio" shall mean for any period of
determination, the ratio of: (a) EBITDA for such period; over (b) the
consolidated amount of cash interest paid by Borrower during such
period.
"EBITDA" shall mean the net consolidated income of the
Borrower before provision for income taxes, interest expense (including
without limitation, implicit interest expense on capitalized leases),
depreciation (including, without limitation, depreciation of breeding
stock), amortization and other noncash expenses or charges, excluding
(to the extent included): (a) nonoperating gains (including without
limitation, extraordinary or nonrecurring gains, gains from
discontinuance of operations and gains arising from the sale of assets
other than Inventory) during the applicable period; and (b) similar
nonoperating losses during such period.
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"Financial Performance Level" shall mean the applicable level
of the Borrower's financial performance determined in accordance with
the table set forth below.
Financial Leverage Ratio
Performance
Level
Level 1 Greater than or equal to 4.50 to 1.0
Level 2 Less than 4.50 to 1.0 but greater than or equal to 4.00 to 1.0
Level 3 Less than 4.00 to 1.0 but greater than or equal to 3.50 to 1.0
Level 4 Less than 3.50 to 1.0 but greater than or equal to 3.00 to 1.0
Level 5 Less than 3.00 to 1.0 but greater than or equal to 2.50 to 1.0
Level 6 Less than 2.50 to 1.0 but greater than or equal to 2.00 to 1.0
Level 7 Less than 2.00 to 1.0
"LC Commitment" shall mean as to any Lender, such Lender's Pro
Rata Percentage of $15,000,000 using the percentage set forth opposite
such Lender's name under the heading "Revolving Loan Commitments" on
Exhibit 1H, as such amount may be reduced or terminated from time to
time pursuant to Section 4.4 or 11.1, less such Lender's Pro Rata
Percentage of the LC Obligations, and "LC Commitments" shall mean
collectively, the LC Commitments for all the Lenders.
"Leverage Ratio" shall mean for any period of determination,
the ratio of: (a) the amount of Borrower's consolidated interest
bearing debt outstanding at the end of such period; over (b) EBITDA for
the prior four fiscal quarters.
"Revolving Maturity Date" shall mean the earlier of: (i)
August 21, 2004; or (ii) the date of the termination in whole of the
Commitments pursuant to Section 4.4 or 11.1.
"Tangible Net Worth" shall mean as of any particular date, the
difference between: (a) the Borrower's consolidated total assets as
they would normally be shown on the balance sheet of the Borrower,
adjusted by deducting: (i) all values attributable to General
Intangibles, including without limitation, prepaid expenses, except:
bank deposit accounts; Margin Accounts; government subsidy; set aside;
diversion; deficiency or disaster payments receivable which are
properly assigned to the Agent, and by deducting (ii) Accounts due from
Affiliates with no further adjustment required for Accounts due from
Affiliates
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already eliminated in consolidation except Accounts due from
Affiliates which the Borrower could legally collect by setoff against
Accounts due to Affiliates; and (b) the Borrower's consolidated total
liabilities as they would normally be shown on the balance sheet of
the Borrower.
"Working Capital" shall mean as of any particular date, the
amount of the Borrower's consolidated current assets (including the net
book value of breeding stock), adjusted by deducting prepaid expenses
(excluding deferred income taxes), less the Borrower's combined current
liabilities (including without limitation, the aggregate amount of
Revolving Loans outstanding), treating all amounts currently owing to
Affiliates (except amounts owing to Affiliates eliminated by
consolidation) as current liabilities and giving no value as assets to
any amounts currently owing from Affiliates.
2. Financial Covenants and Ratios. Section 9.6 of the Credit Agreement is
amended to read in full as follows:
9.6 Financial Covenants and Ratios.
The Borrower shall maintain as of the end of each fiscal quarter
of Borrower:
(a) minimum Tangible Net Worth of not less than $220,000,000,
plus 50% of the positive cumulative fiscal year end audited net income
for Fiscal Year 2001 and each Fiscal Year thereafter;
(b) minimum Working Capital of not less than $35,000,000;
(c) minimum average four quarter EBITDA based on rolling eight
quarter periods, as of the end of each of Borrower's fiscal quarters,
of $85,000,000 (calculated by adding prior eight quarters EBITDA and
dividing by 2);
(d) a maximum Leverage Ratio as of the end of each of Borrower's
fiscal quarters as follows: first and second fiscal quarter 2003 / 4.5
to 1.0; third fiscal quarter 2003 / 4.9 to 1.0; and each fiscal
quarter thereafter / 4.5 to 1.0; and
(e) a minimum Cash Interest Coverage Ratio as of the end of each
of Borrower's fiscal quarters of 2.5 to 1.0.
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3. Capital Investment Limitations. Section 10.7 of the Credit Agreement is
amended to read in full as follows:
10.7 Capital Investment Limitations.
The Borrower shall not purchase, invest in or otherwise
acquire additional real estate, equipment or other fixed assets (other
than the replacement of breeding animals in the ordinary course of
business) which would cause its Capital Spending Amount in any one
Fiscal Year, beginning with fiscal year 2003, to exceed $30,000,000.
Provided, however 35% of the unused amount of the limit for Borrower's
2003 Fiscal Year and the Borrower's Fiscal Years thereafter may be
carried forward into the Borrower's 2004 Fiscal Year and into the
following Fiscal Years, respectively.
4. Exhibit 9D to the Credit Agreement, Form of Compliance Certificate, is
replaced with Exhibit 9E to this Amendment.
5. Conditions and Payment of Amendment Fee. Subject to the following
conditions, this Amendment shall be effective as of the date of this Amendment
(June 28, 2002) even though such conditions may not be satisfied until after
said date: (i) the execution and delivery of this Amendment, together with
Secretaries Certificates of Resolutions authorizing the execution of this
Amendment, and (ii) the payment by Borrower to the Agent for distribution to the
Lenders (based on their respective Pro Rata Percentages), of an amendment fee in
the amount of Two Hundred Ninety Two Thousand Nine Hundred Sixty Nine Dollars
($292,969), which fee shall be fully earned as of the date of this Amendment
and, at the option of the Agent, shall be paid by Agent initiated Loans.
6. Incorporation of Credit Agreement. The parties agree that this Amendment
shall be an integral part of the Credit Agreement, that all of the terms set
forth therein are incorporated in this Amendment by reference, and that all
terms of this Amendment are incorporated therein as of the date of this
Amendment. All of the terms and conditions of the Credit Agreement, which are
not modified in this Amendment, shall remain in full force and effect. To the
extent the terms of this Amendment conflict with the terms of the Credit
Agreement, the terms of this Amendment shall control.
7. Counterpart and Facsimile Signatures. This Amendment may be executed in
several counterparts, each of which shall be deemed to be an original (whether
such counterpart is originally executed or an electronic or facsimile copy of an
original) and all of which shall constitute together but one and the same
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document.
[The rest of this page is intentionally left blank - Signature pages follow]
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[Signature page to Seventh Amendment]
IN WITNESS WHEREOF, the parties hereto have executed this Seventh
Amendment to Credit Agreement as of the day and year first above written.
PREMIUM STANDARD FARMS, INC.,
a Delaware corporation
ATTEST:
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------- ------------------------------------
Its: Secretary Its: Executive Vice President and CFO
-------------------------- -----------------------------------
XXXXX INTERNATIONAL, INC., a
North Carolina corporation
ATTEST:
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------- ------------------------------------
Its: Secretary Its: Executive Vice President and CFO
-------------------------- -----------------------------------
PREMIUM STANDARD FARMS OF
NORTH CAROLINA, INC., a Delaware
corporation
ATTEST:
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------- ------------------------------------
Its: Secretary Its: Executive Vice President & CFO
-------------------------- -----------------------------------
LPC TRANSPORT, INC., a Delaware
corporation
ATTEST:
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------- ------------------------------------
Its: Secretary Its: Executive Vice President & CFO
-------------------------- -----------------------------------
U.S. BANK NATIONAL
ASSOCIATION, as Agent and as a
Lender
000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
By: /s/ Xxxxxx Xxxxx
------------------------------------
Its: Vice President
-----------------------------------
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[Signature page to Seventh Amendment]
FARM CREDIT SERVICES OF
WESTERN MISSOURI, PCA
By: /s/ Xxxxx Erdson
------------------------------------
Its: Senior Vice President
-----------------------------------
XXXXXX TRUST AND SAVINGS BANK
By: /s/ Xxx X. Xxxxxx
------------------------------------
Its: Vice President
-----------------------------------
FARM CREDIT SERVICES OF AMERICA, FLCA
By: /s/
------------------------------------
Its: Vice President
-----------------------------------
FIRST NATIONAL BANK OF OMAHA
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Its: Second Vice President
-----------------------------------
LASALLE BANK NATIONAL
ASSOCIATION
By: /s/ Xxx X. Xxxxxx
------------------------------------
Its: /s/ First Vice President
-----------------------------------
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK
INTERNATIONAL", NEW YORK
BRANCH
By: /s/ Xxxxx Xxxxxx
------------------------------------
Its: Vice President
-----------------------------------
By: /s/ Xxx Xxxxx
------------------------------------
Its: Managing Director
-----------------------------------
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[Signature page to Seventh Amendment]
ACKNOWLEDGMENT OF GUARANTOR
The undersigned Guarantor acknowledges the foregoing Seventh Amendment
to Credit Agreement and consents to all of the terms and provisions thereof.
PSF GROUP HOLDINGS, INC., a
Delaware corporation
ATTEST:
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------- ----------------------------------------
Its: Secretary Its: Executive Vice President and CFO
--------------------------- ---------------------------------------
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