LOAN AND SECURITY AGREEMENT
Exhibit 10.2
dated as of February 3, 2023
BMO Xxxxxx Bank N.A.,
as Agent,
The Financial Institutions From Time To Time
A Party Hereto,
as Xxxxxxx,
and
LOL FOODS, INC.
and
HF Real Estate, LLC,
as Borrowers
| | |
| | |
Table of Contents
(continued)
Page
| -ii- | |
Table of Contents
(continued)
Page
| -iii- | |
Table of Contents
(continued)
Page
Exhibits and Schedules
EXHIBIT A | Business and Collateral Locations |
EXHIBIT B | Compliance Certificate |
EXHIBIT C | Commercial Tort Claims |
EXHIBIT D | Form of Assignment and Acceptance Agreement |
SCHEDULE 1 | Permitted Liens |
SCHEDULE 11(i) | Affiliate Transactions |
SCHEDULE 11(j) | Names & Trade Names |
| -iv- | |
Table of Contents
(continued)
Page
SCHEDULE 11(n) | Indebtedness |
SCHEDULE 11(p) | Parent, Subsidiaries and Affiliates |
| -v- | |
THIS LOAN AND SECURITY AGREEMENT (as amended, modified or supplemented from time to time, this “Agreement”) made as of February 3, 2022 by and among BMO Xxxxxx Bank N.A., a national banking association (in its individual capacity, “BMO”), as agent (in such capacity as agent, “Agent”) for itself and all other lenders from time to time a party hereto (“Lenders”), 000 X. Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, all other Lenders and each of LOL FOODS, INC., a Nebraska corporation (“LOL”), and HF Real Estate, LLC, a Minnesota limited liability company (“HF” and together with LOL and any other Borrowers joined hereto from time to time, each a “Borrower” and collectively referred to as “Borrowers”).
W I T N E S E T H:
WHEREAS, Borrowers may, from time to time, request Loans from Agent and Lenders, and the parties wish to provide for the terms and conditions upon which such Loans or other financial accommodations, if made by Agent and Lenders, shall be made.
NOW, THEREFORE, in consideration of any Loan (including any Loan by renewal or extension) hereafter made to Borrowers by Agent and/or Lenders, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Borrowers, the parties agree to enter into this Agreement as follows:
“Account”, “Account Debtor”, “Chattel Paper”, “Commercial Tort Claims”, "Commodity Account," “Deposit Accounts”, “Documents”, “Electronic Chattel Paper”, “Equipment”, “Fixtures”, “General Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letter-of-Credit Right”, “Proceeds”, "Securities Account" and “Tangible Chattel Paper” shall have the respective meanings assigned to such terms in the Illinois Uniform Commercial Code, as the same may be in effect from time to time.
“Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of all or substantially all of any business or division of a Person, (b) the acquisition of in excess of 50% of the equity interests of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with another Person (other than a Person that is already a Subsidiary).
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” shall mean any Person (i) which directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, a Borrower, (ii) which beneficially owns or holds five percent (5%) or more of the voting control or equity interests of a Borrower, or (iii) five percent (5%) or more of the voting control or equity interests of which is beneficially owned or held by a Borrower.
“AMCON” means AMCON Distribution Company, a Delaware corporation.
| | |
“Applicable Margin” means, (a) from the Closing Date until the first Adjustment Date thereafter Level II below, and (b) thereafter, for any day, the rate per annum set forth below opposite the level (the “Level”) then in effect, it being understood that the Applicable Margin for Loans shall be the percentage set forth under the column “Applicable Margin” for such Loan based on average Excess Availability determined on a quarterly basis by dividing (i) the total of each day’s Excess Availability for such quarterly period by (ii) the number of days in such quarterly period, as a percentage of the aggregate Revolving Loan Commitments.
Level | Quarterly Excess Availability | Non-FILO Term SOFR Loans | FILO Term SOFR Loans | Non-FILO Base Rate Loans | FILO Base Rate Loans |
I | Greater than or equal to 20% | 1.50% | 2.50% | 0.50% | 1.50% |
II | Less than 20% but greater than or equal to 10% | 1.75% | 2.75% | 0.75% | 1.75% |
III | Less than 10% | 2.00% | 3.00% | 1.00% | 2.00% |
The Applicable Margin shall be determined on or prior to the fifth (5th) Business Day after the Borrowers are required to provide the quarterly financial statements and other information pursuant to Section 9(c) (each an “Adjustment Date”); provided that any change in the Applicable Margin shall be effective on the first day of the month in which such quarterly financial statements are delivered. Notwithstanding anything contained in this paragraph to the contrary, (a) unless otherwise waived in writing by the Lenders, if the Borrowers fail to deliver the financial statements in accordance with the provisions of Section 9(c), the Applicable Margin shall be based upon Level III above beginning on the first day of the month in which such financial statements were required to be delivered until the fifth (5th) Business Day after such financial statements are actually delivered, whereupon the Applicable Margin shall be determined by the then current Level; and (b) no reduction to any Applicable Margin shall become effective at any time when an Event of Default or unmatured Event of Default has occurred and is continuing.
“Approved Prepaid Vendor” means each of Xxxxxxx Xxxxxx (Altria); Xxxx Xxxxxxxxx (Altria); XX Xxxxxxxx (RJR); XX Xxxxxxxx Vapor (RJR); Xxxxxxx; Republic Xxxxxxx, Privateer Tobacco; Xxxx/Xxxxxxx; Xxxxxx; American Snuff (RJR); Santa Fe Tobacco (RJR) and any other vendor approved by the Agent in its sole discretion.
“Asset Purchase Agreement” means the Asset Purchase Agreement dated as of April 7, 2022 among Xxxxx'x Foods, Inc., The Eidsvold Family LLC, Xxxxx Xxxxxxxx, X. Xxxxxx Xxxxxxxx, and LOL, as in effect on the Closing Date.
“Assignment and Acceptance” shall have the meaning in Section 21 hereof.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means, (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European
| 2 | |
Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“BofA Equipment Leasing” means Bank of America Leasing & Capital, LLC, and its successors and assigns.
“BofA Equipment Leasing Indebtedness” means indebtedness for borrowed money, lease obligations or related obligations owing by a Borrower to BofA Equipment Leasing in connection with the financing of equipment or related personal property (including, without limitation, rolling stock, including trucks and trailers, and warehouse equipment).
“BofA Equipment Leasing Liens” means liens on or security interests in equipment or similar assets that secure BofA Equipment Leasing Indebtedness (including, without limitation, rolling stock, including trucks and trailers, and warehouse equipment).
“Base Rate” means, for any day, a fluctuating rate per annum equal to the highest of (a) the rate of interest announced by BMO from time to time as its prime rate for such day (with any change in such rate announced by BMO taking effect at the opening of business on the day specified in the public announcement of such change); (b) the Federal Funds Rate for such day, plus 0.50%, and (c) the sum of (i) Term SOFR in effect on such day plus (ii) 1.10%. Any change in the Base Rate due to a change in the prime rate, the quoted federal funds rates, or Term SOFR, as applicable, shall be effective from and including the effective date of the change in such rate. If the Base Rate is being used as an alternative rate of interest to Term SOFR, then the Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above, provided, that in no event shall Base Rate be less than zero (0).
“Base Rate Loan” means a Loan that bears interest based on the Base Rate.
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Borrower Representative” shall mean LOL.
“Xxxxxx Account” shall mean a deposit or similar account maintained by LOL with Xxxxxx Bank for xxxxx cash or similar purposes.
“Business Day” shall mean any day other than a Saturday, a Sunday or other day on which commercial banks in Chicago, Illinois are required or permitted to close under the laws of, or are in fact closed in, Illinois.
“Capital Expenditures” shall mean with respect to any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities and including expenditures for capitalized lease obligations) by Borrowers and their Subsidiaries during such period that are required by generally accepted accounting principles, consistently applied, to be included in or
| 3 | |
reflected by the property, plant and equipment or similar fixed asset accounts (or intangible accounts subject to amortization) on the balance sheet of Borrowers and their Subsidiaries.
“Cigarette Inventory” shall mean Inventory of Borrowers consisting of cigarettes and cigarette tax stamps.
“Closing Date” shall mean the date on which the conditions precedent set forth in Section 17 are satisfied.
“CME” shall mean CME Group Benchmark Administration Limited.
“Collateral” shall mean all of the property of each Borrower described in Section 5 hereof, together with all other real or personal property of any Obligor or any other Person now or hereafter pledged to Agent, for the benefit of Agent and Lenders to secure, either directly or indirectly, repayment of any of the Liabilities, but excluding, for the avoidance of doubt, any Excluded Assets.
“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. §1, et seq.), as amended from time to time, and any successor statute.
“Compliance Certificate” shall have the meaning set forth in Section 9(c).
“Conforming Changes” shall mean with respect to use, administration of or conventions associated with SOFR, Term SOFR or any proposed Successor Rate, as applicable, any conforming changes to the definitions of SOFR and Term SOFR, timing and frequency of determining rates and making payments of interest and other technical, administrative or operational matters (including, for the avoidance of doubt, the definitions of Business Day or U.S. Government Securities Business Day, timing of borrowing requests or prepayment, conversion or continuation notices, and length of lookback periods) as may be appropriate, in Agent’s discretion, to reflect the adoption and implementation of such applicable rate(s), and to permit the administration thereof by Agent in a manner substantially consistent with market practice (or, if Agent determines that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of such rate exists, in such other manner of administration as Agent determines is reasonably necessary in connection with the administration of any Loan Document).
“Control Agreement” means an agreement, in form and substance satisfactory to Agent, among Agent, the financial institution or other Person at which such account is maintained and the Borrower maintaining such account, effective to grant “control” (as defined under the applicable UCC) over such account to Agent.
“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
| 4 | |
“Daily Simple SOFR” shall mean with respect to any applicable determination date, the secured overnight financing rate published on the FRBNY website (or any successor source satisfactory to Agent).
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“Defaulting Lender” means any Lender that (a) has failed to comply with its funding obligations hereunder, and such failure is not cured within two Business Days; (b) has notified Agent or any Borrower that such Xxxxxx does not intend to comply with its funding obligations hereunder or under any other credit facility, or has made a public statement to that effect; (c) has failed, within three Business Days following request by Agent or any Borrower, to confirm in a manner satisfactory to Agent and Borrowers that such Lender will comply with its funding obligations hereunder; or (d) has, or has a direct or indirect parent company that has, become the subject of an insolvency proceeding (including reorganization, liquidation, or appointment of a receiver, custodian, administrator or similar Person by the Federal Deposit Insurance Corporation or any other regulatory authority) or Bail-In Action; provided, that a Lender shall not be a Defaulting Lender solely by virtue of a Governmental Authority’s ownership of an equity interest in such Lender or parent company unless the ownership provides immunity for such Lender from jurisdiction of courts within the United States or from enforcement of judgments or writs of attachment on its assets, or permits such Lender or governmental authority to repudiate or otherwise to reject such Lender’s agreements.
“Dominion Account” shall have the meaning specified in subsection 8(a) hereof.
“EBITDA” shall mean, with respect to any period, Borrowers’ net income after taxes for such period excluding (i) any after-tax gains or losses on the sale of assets (other than the sale of Inventory in the ordinary course of business), (ii) other after-tax extraordinary gains or losses and (iii) other non-cash impairment charges and cash or non-cash non-recurring charges as determined by Agent in its reasonable discretion) plus interest expense, income tax expense, depreciation and amortization for such period, plus or minus any other non-cash charges or gains which have been subtracted or added in calculating net income after taxes for such period.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
| 5 | |
“Eligible Account” shall mean an Account owing to a Borrower which is acceptable to Agent in its good faith credit judgment for lending purposes. Without limiting Agent’s discretion, Agent shall, in general, consider an Account to be an Eligible Account if it meets, and so long as it continues to meet, all of the following requirements:
(i)it is genuine and in all respects what it purports to be;
(ii)it is owned by such Borrower, such Borrower has the right to subject it to a security interest in favor of Agent or assign it to Agent and it is subject to a first priority perfected security interest in favor of Agent and to no other claim, lien, security interest or encumbrance whatsoever, other than Permitted Liens;
(iii)it arises from (A) the performance of services by such Borrower in the ordinary course of such Borrower’s business, and such services have been fully performed and acknowledged and accepted by the Account Debtor thereunder; or (B) the sale or lease of Goods by such Borrower in the ordinary course of such Borrower’s business, and (x) such Goods have been completed in accordance with the Account Debtor’s specifications (if any) and delivered to the Account Debtor, (y) such Account Debtor has not refused to accept, returned or offered to return, any of the Goods which are the subject of such Account, and (z) such Borrower has possession of, or such Borrower has delivered to Agent (at Agent’s request) shipping and delivery receipts evidencing delivery of such Goods;
(iv)it is evidenced by an invoice rendered to the Account Debtor thereunder, is due and payable within thirty (30) days after the date of the invoice and does not remain unpaid more than thirty (30) days past the invoice date thereof for invoices with seven (7) day terms or less or sixty (60) days past the invoice date thereof for all other invoices; provided, however, that if more than twenty-five percent (25%) of the aggregate dollar amount of invoices owing by a particular Account Debtor remain unpaid more than thirty (30) days past the invoice date thereof for invoices with seven (7) day terms or less or sixty (60) days after the respective invoice dates thereof for all other invoices, then all Accounts owing by that Account Debtor shall be deemed ineligible;
(v)it is a valid, legally enforceable and unconditional obligation of the Account Debtor thereunder, and is not subject to setoff, counterclaim, credit, allowance or adjustment by such Account Debtor, or to any claim by such Account Debtor denying liability thereunder in whole or in part;
(vi)it does not arise out of a contract or order which fails in any material respect to comply with the requirements of applicable law;
(vii)the Account Debtor thereunder is not a director, officer, employee or agent of a Borrower, or a Subsidiary, Parent or Affiliate;
(viii)it is not an Account with respect to which the Account Debtor is the United States of America or any state or local government, or any department, agency or instrumentality thereof, unless such Borrower assigns its right to payment
| 6 | |
of such Account to Agent pursuant to, and in full compliance with, the Assignment of Claims Act of 1940, as amended, or any comparable state or local law, as applicable;
(ix)it is not an Account with respect to which the Account Debtor is located in a state which requires such Borrower, as a precondition to commencing or maintaining an action in the courts of that state, either to (A) receive a certificate of authority to do business and be in good standing in such state; or (B) file a notice of business activities report or similar report with such state’s taxing authority, unless (x) such Borrower has taken one of the actions described in clauses (A) or (B); (y) the failure to take one of the actions described in either clause (A) or (B) may be cured retroactively by such Borrower at its election; or (z) such Borrower has proven, to Agent’s satisfaction, that it is exempt from any such requirements under any such state’s laws;
(x)the Account Debtor is located within the United States of America or is located within a foreign country and, in such case, the Account is payable in U.S. Dollars and with respect to Account Debtors who are located within a foreign country, the Account is supported by a letter of credit which is in form and substance satisfactory to Agent, issued by a financial institution acceptable to Agent and assigned to Agent in a manner acceptable to Agent;
(xi)it is an Account which arises out of a sale made in the ordinary course of each Borrower’s business;
(xii)it is not an Account with respect to which the Account Debtor’s obligation to pay is conditional upon the Account Debtor’s approval of the Goods or services or is otherwise subject to any repurchase obligation or return right (other than a right to return dated Cigarette Inventory which can, in turn, be returned by such Borrower to the manufacturer thereof for a full refund), as with sales made on a bill-and-hold, guaranteed sale, sale on approval, sale or return or consignment basis;
(xiii)it is not an Account (A) with respect to which any representation or warranty contained in this Agreement is untrue; or (B) which violates any of the covenants of such Borrower contained in this Agreement;
(xiv)it is not an Account which, when added to a particular Account Debtor’s other indebtedness to such Xxxxxxxx, exceeds a credit limit determined by Agent in its good faith credit judgment discretion for that Account Debtor (except that Accounts excluded from Eligible Accounts solely by reason of this clause (xiv) shall be Eligible Accounts to the extent of such credit limit); and
(xv)it is not an Account with respect to which the prospect of payment or performance by the Account Debtor is or will be impaired, as determined by Agent in its sole discretion.
| 7 | |
“Eligible Cigarette Inventory” shall mean Inventory of a Borrower consisting of Cigarette Inventory which is acceptable to Agent in its good faith credit judgment discretion for lending purposes. Without limiting Agent’s discretion, Agent shall, in general, consider Cigarette Inventory to be Eligible Inventory if it meets and so long as it continues to meet the following requirements:
(i)it consists of cigarettes without tax stamps or cigarettes which have cigarette tax stamps affixed thereto which have been issued by any State or political subdivisions thereof where Agent determines, in its sole discretion, that the affixing of such jurisdiction’s tax stamps thereto does not render such Inventory ineligible;
(ii)it consists of tax stamps which have been paid in full with good funds by a Borrower to the applicable state or local agency (i.e. no “post-dated” checks) or by virtue of Borrower posting a bond in lieu of payment and no obligations for payment of the cigarette tax stamps remain outstanding with the applicable state or local agency (or are not covered by such bond, as applicable), unless such stamps have been issued by any State or political subdivisions thereof where Agent determines in its sole discretion that Agent would be unable to affix or redeem such cigarette tax stamps or otherwise determines that such Inventory shall be ineligible; and
(iii)such Cigarette Inventory otherwise constitutes Eligible Inventory.
“Eligible Inventory” shall mean Inventory of a Borrower which is acceptable to Agent in its good faith credit judgment discretion for lending purposes. Without limiting Agent’s and the Lenders’ discretion above, such parties shall, in general, consider Inventory to be Eligible Inventory if it meets, and so long as it continues to meet, the following requirements:
(i) it is owned by such Borrower, such Xxxxxxxx has the right to subject it to a security interest in favor of Agent and it is subject to a first priority perfected security interest in favor of Agent and to no other claim, lien, security interest or encumbrance whatsoever, other than Permitted Liens;
(ii) it constitutes Prepaid Inventory or is located on one of the premises listed on Exhibit A (or other locations of which Agent has been advised in writing pursuant to subsection 12(b)(i) hereof), such locations are within the United States and is not in transit except to the extent that it may be in transit to another location listed on Exhibit A on vehicles owned by such Borrower;
(iii) if held for sale or lease or furnishing under contracts of service, it is (except as Agent may otherwise consent in writing) new and unused and free from defects which would, in Agent’s sole determination, affect its market value;
(iv) except for Prepaid Inventory, it is not stored with a bailee, consignee, warehouseman, processor or similar party unless Agent has given its prior written approval and such Borrower has caused any such bailee, consignee, warehouseman, processor or similar party to issue and deliver to Agent, in form and substance
| 8 | |
acceptable to Agent, such Uniform Commercial Code financing statements, warehouse receipts, waivers and other documents as Agent shall require;
(v) it is not Inventory consisting of perishable foods (unless frozen or refrigerated foods);
(vi) Agent has determined, in accordance with Agent’s customary business practices, that it is not unacceptable due to age, type, category or quantity; and
(vii) it is not Inventory (A) with respect to which any of the representations and warranties contained in this Agreement are untrue; or (B) which violates any of the covenants of such Borrower contained in this Agreement.
“Eligible Real Property” shall mean any parcel of Real Property which is acceptable to Agent in its good faith credit judgment discretion for lending purposes. Without limiting Agent’s discretion, for any Real Property to be an Eligible Real Property, it must meet all of the following requirements:
(i) such Real Property is subject to a first priority Mortgage in favor of Agent;
(ii) such Real Property has not been condemned or deemed uninhabitable, unfit for use, or prohibited for use by a governmental authority;
(iii) such Real Property is 100% owned by a Borrower (i.e., a full and undivided fee simple interest), and such Borrower has the right to subject it to a first priority Mortgage in favor of Agent subject to no other claim, lien, security interest or encumbrance whatsoever, other than Permitted Liens;
(iv) Borrower is not delinquent in the payment of any taxes or association dues or fees, or installments thereof, that could reasonably be expected to cause a lien on such property that would be of equal or superior priority to the lien of the Mortgage for such Real Property; and
(v) such Real Property has been appraised by an appraiser reasonably acceptable to the Lenders pursuant to an appraisal reasonably acceptable to the Lenders, upon which Agent is expressly entitled to rely, to determine its fair market value.
Notwithstanding the foregoing, the following property shall be deemed Eligible Real Property hereunder as of the Closing Date: 000 XxXxx Xxxxxx X., Xxxxxxxxxx, Xxxxxxxxx.
“Environmental Laws” shall mean all federal, state, district, local and foreign laws, rules, regulations, ordinances, and consent decrees relating to health, safety, hazardous substances, pollution and environmental matters, as now or at any time hereafter in effect, applicable to a Borrower’s business or facilities owned or operated by a Borrower, including laws relating to emissions, discharges, releases or threatened releases of pollutants, contamination, chemicals, or hazardous, toxic or dangerous substances, materials or wastes into the environment (including,
| 9 | |
without limitation, ambient air, surface water, ground water, land surface or subsurface strata) or otherwise relating to the generation, manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials.
“Equity Cure” means the net amount of cash contributions in exchange for common equity made by AMCON to a Borrower in immediately available funds which AMCON contributes as additional common equity contributions to Borrowers in immediately available funds and which is designated an “Equity Cure” by Borrowers under Section 14(b) at the time it is received.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, modified or restated from time to time.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association, as in effect from time to time.
“Event of Default” shall have the meaning specified in Section 15 hereof.
“Excess Availability” shall mean, as of any date of determination by agent, the excess, if any, of the lesser of (i) the Maximum Revolving Loan Limit less the sum of the outstanding Revolving Loans and Letter of Credit Obligations and (ii) the Revolving Loan Limit less the sum of the outstanding Revolving Loans and Letter of Credit Obligations, in each case as of the close of business on such date and assuming, for purposes of calculation, that all accounts payable which remain unpaid more than thirty (30) days after the due dates thereof as the close of business on such date are treated as additional Revolving Loans outstanding on such date.
“Excluded Assets” means any personal property subject to a lien or security interest permitted pursuant to clause (iv) of the definition of “Permitted Liens” in Section 1 of this Agreement (including, without limitation, BofA Equipment Leasing Liens) to the extent that, and for so long as, any agreement governing such Lien prohibits another Lien on such property.
“Excluded Hedging Obligations” means, with respect to any Borrower, any Rate Hedging Obligation constituting a Swap Obligation if, and to the extent that, all or a portion of the guaranty of any guarantor or such Borrower of, or the grant by such Borrower of a security interest to secure, such Rate Hedging Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Borrower’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guaranty of such Borrower or any guarantor, or the grant of such security interest becomes effective with respect to such Rate Hedging Obligation. If any Rate Hedging Obligation constituting a Swap Obligation arises under a master agreement governing more than one such Rate Hedging Obligation, such exclusion shall apply only to the portion of such Rate Hedging Obligation that is attributable to swaps for which such guaranty or security interest is or becomes illegal.
“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a
| 10 | |
Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to BMO on such day on such transactions as determined by the Agent.
“FILO Advance Rate” means (a) with respect to Eligible Accounts, ten percent (10%), as reduced in equal quarterly increments of 0.834% on the first day of each fiscal quarter beginning April 1, 2023; plus (b) with respect to Eligible Cigarette Inventory, ten percent (10%), as reduced in equal quarterly increments of 0.834% on the first day of each fiscal quarter beginning April 1, 2023; plus (c) with respect to Eligible Inventory (consisting solely of Eligible Inventory other than Eligible Cigarette Inventory set forth in clause (b) above) ten percent (10%), as reduced in equal quarterly increments of 0.834% on the first day of each fiscal quarter beginning April 1, 2023; plus (d) with respect to Eligible Real Property, five percent (5%), as reduced in equal quarterly increments of 0.4167% on the first day of each fiscal quarter beginning April 1, 2023.
“FILO Amortization Amount” means each equal quarterly increment of $208,333,34 which shall be applicable on the first day of each fiscal quarter beginning April 1, 2023; provided such amortization amount shall include periodic increases thereto (resulting in one-time reductions in the FILO Cap Amount) equal to the remaining amortization amount of any Eligible Accounts or Eligible Inventory of the Borrowers that are disposed of, to the extent such assets were included in the calculation of thereof.
“FILO Amount” means, at any time an amount equal to the lesser of (a) the FILO Cap Amount and (b) (i) the applicable FILO Advance Rate times the of the face amount (less maximum discounts, credits and allowances which may be taken by or granted to Account Debtors in connection therewith in the ordinary course of Borrowers’ business) of Borrowers’ Eligible Accounts, plus (ii) the applicable FILO Advance Rate times the lower of cost or market value of Eligible Cigarette Inventory; plus (iii) the applicable FILO Advance Rate times the lower of cost or market value of Eligible Inventory(consisting solely of Eligible Inventory other than Eligible Cigarette Inventory set forth in clause (ii) above); plus (iv) the applicable FILO Advance Rate times the fair market value of all Eligible Real Property.
“FILO Cap Amount” means $2,500,000, as reduced by the aggregate FILO Amortization Amounts.
“FILO Loan” means a Revolving Loan that is borrowed and deemed outstanding as a “FILO Loan” pursuant to Section 2(a).
“Fiscal Year” shall mean each twelve (12) month accounting period of Borrowers, which ends on September 30 of each year.
“Fixed Charge Coverage Ratio” means for any period of determination for the Borrowers, the ratio of EBITDA to Fixed Charges determined in accordance with GAAP.
“Fixed Charges” shall mean for any period, without duplication, (i) scheduled payments of principal and interest during the applicable period with respect to all indebtedness of Borrowers for borrowed money (including scheduled reductions of the Real Property Sublimit as required
| 11 | |
pursuant to Section 2(b)(iii) herein and including all Scheduled FILO Amortization Amounts), plus scheduled payments of principal and interest during the applicable period with respect to all capitalized lease obligations of Borrowers, plus unfinanced Capital Expenditures of Borrowers during the applicable period, plus payments during the applicable period in respect of income or franchise taxes of Borrowers, plus any dividends or distributions made by Borrowers, including, without limitation, any Permitted Tax Distributions, plus any payments made by any Borrower in connection with contingent earn-out payments pursuant to any acquisition.
“Flood Hazard Property” means any parcel of any owned Real Property with improvements located thereon located in the United States that is subject to a Mortgage, which improvements are in an area designated by the Federal Emergency Management Agency as having special flood or mudslide hazards.
“FRBNY” shall mean the Federal Reserve Bank of New York.
“GAAP” means generally accepted accounting principles in the United States of America, applied in accordance with the consistency requirements thereof.
“Hazardous Materials” shall mean any hazardous, toxic or dangerous substance, materials and wastes, including, without limitation, hydrocarbons (including naturally occurring or man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, biological substances, polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type of pollutants or contaminants (including, without limitation, materials which include hazardous constituents), sewage, sludge, industrial slag, solvents and/or any other similar substances, materials, or wastes and including any other substances, materials or wastes that are or become regulated under any Environmental Law (including, without limitation any that are or become classified as hazardous or toxic under any Environmental Law).
“Indemnified Party” shall have the meaning specified in Section 24 hereof.
“Intercompany Loans” means loans under that certain Credit Agreement by and between AMCON, as lender, and LOL, as borrower, dated on or about the date hereof in an aggregate outstanding principal amount not to exceed $20,000,000 at any time.
“ISDA Definitions”: 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
“Letter of Credit” shall mean any Letter of Credit issued on behalf of a Borrower in accordance with this Agreement.
“Letter of Credit Obligations” shall mean, as of any date of determination, the sum of (i) the aggregate undrawn face amount of all Letters of Credit, and (ii) the aggregate unreimbursed amount of all drawn Letters of Credit not already converted to Loans hereunder.
| 12 | |
“Liabilities” shall mean any and all obligations, liabilities and indebtedness, (including, without limitation, Rate Hedging Obligations and Letter of Credit Obligations) of Borrowers to Agent and each Lender or to any parent, affiliate or subsidiary of Agent and each Lender of any and every kind and nature arising under this Agreement, or the Other Agreements, including without limitation, any Letters of Credit, howsoever created, arising or evidenced and howsoever owned, held or acquired, whether now or hereafter existing, whether now due or to become due, whether primary, secondary, direct, indirect, absolute, contingent or otherwise (including, without limitation, obligations of performance), whether several, joint or joint and several, and whether arising or existing under written or oral agreement or by operation of law; provided that Liabilities shall not include Excluded Hedging Obligations.
“Loans” shall mean all loans and advances made by Agent and/or Lenders to or on behalf of Borrowers hereunder.
“Material Adverse Effect” shall mean a material adverse effect on the business, property, assets, prospects, operations or condition, financial or otherwise, of a Person.
“Maximum Revolving Loan Limit” shall have the meaning specified in subsection 2(a) hereof.
“Mortgage” means a mortgage (including, without limitation, a leasehold mortgage), hypothec, deed of trust or deed to secure debt, in form and substance reasonably satisfactory to Agent, made by a Borrower in favor of Agent for the benefit of the Agents and the Lenders, securing the obligations under the Loan Documents and delivered to Agent.
“Notice of Borrowing” shall mean notice by Borrower Agent of a borrowing, in form satisfactory to Agent.
“Notice of Conversion” shall mean notice by Borrower Agent for conversion of a Loan as a Term SOFR Loan or Base Rate Loan, in form satisfactory to Agent.
“Obligor” shall mean Borrowers and each other Person who is or shall become primarily or secondarily liable for any of the Liabilities.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
“Original Term” shall have the meaning specified in Section 10 hereof.
“Other Agreements” shall mean all agreements, instruments and documents, other than this Agreement, including, without limitation, guaranties, mortgages, trust deeds, pledges, powers of attorney, consents, assignments, contracts, notices, security agreements, leases, financing statements and all other writings heretofore, now or from time to time hereafter executed by or on behalf of a Borrower or any other Person and delivered to Agent and/or any Lender in connection with the Loans, the Letters of Credit or the other transactions contemplated hereby, as each of the same may be amended, modified or supplemented from time to time.
| 13 | |
“Parent” shall mean any Person now or at any time or times hereafter owning or controlling (alone or with any other Person) at least a majority of the issued and outstanding equity of a Borrower and, if a Borrower is a partnership, the general partner of such Borrower.
“PBGC” shall have the meaning specified in subsection 12(b)(v) hereof.
“Permitted Liens” shall mean (i) statutory liens of landlords, carriers, warehousemen, processors, mechanics, materialmen or suppliers incurred in the ordinary course of business and securing amounts not yet due or declared to be due by the claimant thereunder or amounts which are being contested in good faith and by appropriate proceedings and for which such Borrower has maintained adequate reserves; (ii) liens or security interests in favor of Agent; (iii) zoning restrictions and easements, licenses, covenants and other restrictions affecting the use of real property that do not individually or in the aggregate have a material adverse effect on a Borrower’s ability to use such real property for its intended purpose in connection with such Borrower’s business; (iv) liens in connection with purchase money indebtedness and capitalized leases otherwise permitted pursuant to this Agreement, provided, that such liens attach only to the assets the purchase of which was financed by such purchase money indebtedness or which is the subject of such capitalized leases (including, for the avoidance of doubt, BofA Equipment Leasing Liens provided that such BofA Equipment Leasing Liens are subject to access and use rights in favor of Agent and, with in thirty (30) days of the Closing Date, or such longer time period deemed acceptable to Agent in their sole discretion, are subject to an intercreditor agreement with Agent acceptable to Agent); (v) liens set forth on Schedule 1 hereto; (vi) liens specifically permitted by Requisite Lenders in writing; (vii) pledges or deposits in connection with worker’s compensation, unemployment insurance and other social security legislation, or to secure the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases or to secure statutory obligations or surety, appeal or stay bonds, or to secure indemnity, performance or other similar bonds in the ordinary course of business; and (viii) liens for taxes not yet due or for taxes which are being contested in good faith and by appropriate proceeding provided that (x) the contesting of any such payment does not give rise to a lien for taxes and (y) such Borrower keeps on deposit with Agent (such deposit to be held without interest) an amount of money which, in the sole judgment of Agent, is sufficient to pay such taxes and any interest or penalties that may accrue thereon; and (ix) liens or security interest securing Intercompany Loans that are subordinated to liens and security interests in favor of Agent pursuant to a subordination agreement acceptable to Agent.
“Permitted Modifications” means (a) such amendments or other modifications to a Borrower’s organizational documents as are required under this Agreement or by applicable Law and fully disclosed to Agent within thirty (30) days after such amendments or modifications have become effective, and (b) such amendments or modifications to a Borrower’s organizational documents (other than those involving a change in the name of a Borrower or involving a reorganization of a Borrower under the Laws of a different jurisdiction) that would not adversely affect the rights and interests of the Agent or Lenders and are fully disclosed to Agent within thirty (30) days after such amendments or modifications have become effective.
“Permitted Tax Distributions” means, for any taxable period in which a Borrower is a member of a consolidated, combined or similar income tax group of which a direct or indirect parent of such Borrower is the common parent (a “Tax Group”), distributions by such Borrower
| 14 | |
to such direct or indirect parent of such Borrower to pay federal, foreign, state and local income Taxes of such Tax Group that are attributable to the taxable income of the Borrower; provided that, for each taxable period, the amount of such payments made in respect of such taxable period in the aggregate shall not exceed the amount that such Borrower would have been required to pay as a stand-alone Tax Group, reduced by any portion of such income Taxes directly paid by such Borrower.
“Person” shall mean any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, entity, party or foreign or United States government (whether federal, state, county, city, municipal or otherwise), including, without limitation, any instrumentality, division, agency, body or department thereof.
“Plan” shall have the meaning specified in subsection 12(b)(v) hereof.
“Prepaid Inventory” shall mean Inventory of a Borrower that has been fully paid for by such Borrower and that is temporarily located on the premises of an Approved Prepaid Vendor pending shipment to such Borrower.
“Pre-Settlement Determination Date” shall have the meaning specified in Section 19 hereof.
“Pro Rata Share” shall mean at any time, with respect to any Lender, a fraction (expressed as a percentage in no more than nine (9) decimal places), the numerator of which shall be the Revolving Loan Commitment of such Lender at such time and the denominator of which shall be the Maximum Revolving Loan Limit at such time.
“Rate Hedging Obligations” shall mean any and all obligations of Borrowers to the Agent and/or the Lenders, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor) under (1) any and all agreements designed to protect Borrowers from the fluctuations of interest rates, exchange rates or forward rates applicable to such party’s assets, liabilities or exchange transactions, including, but not limited to: interest rate swap agreements, dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap, floor or collar agreements, forward rate currency agreements relating to interest options, puts and warrants, and (2) any and all agreements relating to cancellations, buy backs, reversals, terminations or assignments of any of the foregoing. An agreement of the type described in clause (1) and/or clause (2) of the foregoing definition is referred to herein as a “Rate Hedging Agreement”.
“Real Property” means, with respect to any Person, the right, title and interest of such Person (including any leasehold, mineral or other estate) in and to any and all land, improvements and fixtures owned by such Person, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures and equipment, all general intangibles and contract rights and other property and rights incidental to the ownership, lease or operation thereof.
| 15 | |
“Real Property Deliverables” means each of the following agreements, instruments and other documents in respect of any Eligible Real Property of any Borrower, each in form and substance reasonably satisfactory to Agent:
(a)a Mortgage duly executed by the applicable Borrower;
(b)evidence of the recording of each Mortgage in such office or offices as may be necessary to perfect the lien purported to be created thereby or to otherwise protect the rights of Agent and the Lenders thereunder;
(c)a Title Insurance Policy or bring-down of the existing Title Insurance Policy with respect to each Mortgage;
(d)a reasonably current ALTA survey and a surveyor’s certificate, certified to Agent and to the issuer of the Title Insurance Policy with respect thereto by a professional surveyor licensed in the state, province or territory in which such Real Property is located and reasonably satisfactory to Agent (except to the extent the Agent, in its sole discretion, elects to waive some or all of the requirements of this clause (d));
(e)if and to the extent obtainable, a copy of a letter issued by each applicable governmental authority or a zoning report with respect to the property from a reputable zoning review company), evidencing such Real Property’s compliance in all material respects with all applicable building codes, fire codes, other health and safety rules and regulations, parking, density and height requirements and other building and zoning laws together with a copy of all certificates of occupancy issued with respect to such Real Property (except to the extent the Agent, in its sole discretion, elects to waive some or all of the requirements of this clause (e));
(f)an opinion of counsel in the state, province or territory where such Real Property is located with respect to the enforceability of the Mortgage to be recorded and such other matters as Agent may reasonably request;
(g)an ASTM E1527 Phase I Environmental Site Assessment (“Phase I ESA”) (and, if reasonably requested by the Lenders based upon the results of such Phase I ESA an ASTM E1903 Phase II Environmental Site Assessment) of such Real Property by an independent firm reasonably satisfactory to the Lenders, including a reliance provision in favor of Agent (except to the extent the Lenders, in their sole discretion, elect to waive some or all of the requirements of this clause (g));
(h)such other agreements, instruments and other documents (including opinion letters) as Agent may reasonably require; and
(i)evidence as to (i) whether such Real Property is a Flood Hazard Property and (ii) if such Real Property is a Flood Hazard Property, (A) whether the community in which such Real Property is located is participating in the National Flood Insurance Program, and (B) the applicable Borrower’s written acknowledgment of receipt of written notification from Agent (1) as to the fact that such Real Property is a Flood Hazard Property and (2) as to whether the community in which each such Flood Hazard Property is located
| 16 | |
is participating in the National Flood Insurance Program. For each Flood Hazard Property, Borrower shall deliver a flood insurance policy meeting the current guidelines of the Federal Emergency Management Agency is in effect with a generally acceptable insurance carrier, in an amount representing coverage not less than the least of (1) the full insurable value of such Real Property, and (2) the maximum amount of insurance available under the National Flood Insurance Act of 1968, as amended by the Flood Disaster Protection Act of 1974. All such insurance policies (collectively, the “hazard insurance policy”) shall contain a standard mortgagee clause naming Agent, its successors and assigns, as mortgagee, and may not be reduced, terminated or canceled without 30 days’ prior written notice to the mortgagee. All premiums on each such insurance policy have been paid. The hazard insurance policy is the valid and binding obligation of the insurer and is in full force and effect. Borrower shall not engage in any act or omission which would impair the coverage of any such policy, the benefits of the endorsement provided for herein, or the validity and binding effect of either including, without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by Borrower.
“Real Property Loan” means a Loan made in connection with and based upon a Borrower’s ownership or acquisition of specific Eligible Real Property. The original principal amount of a Real Property Loan shall be determined by the Agent and communicated to the Borrowers at the time such Real Property Loan is made and is not to exceed 80% of the fair market value of the related Eligible Real Property at any time.
“Requisite Lenders” shall mean, at any time, Lenders having Pro Rata Shares aggregating at least sixty-six and two-thirds percent (66-2/3rds%) at such time.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Revolving Loan Commitment” shall mean, with respect to any Lender, the maximum amount of Revolving Loans which such Lender has agreed to make to Borrowers, subject to the terms and conditions of this Agreement, as set forth on the signature page hereto or an Assignment and Acceptance Agreement executed by such Lender.
“Revolving Loan Limit” shall have the meaning specified in subsection 2(a) hereof.
“Revolving Loans” shall have the meaning specified in subsection 2(a) hereof.
“Scheduled FILO Amortization Amount” means FILO Amortization Amounts (excluding unscheduled periodic amortization described in the proviso thereto).
“Scheduled Unavailability Date” shall have the meaning as defined in Section 4(g) below.
“Settlement Date” shall have the meaning specified in Section 19 hereof.
| 17 | |
“SOFR” shall mean the secured overnight financing rate as administered by FRBNY (or a successor administrator).
“SOFR Adjustment” shall mean one tenth of one percent (0.10%).
“Subsidiary” shall mean any corporation of which more than fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time stock of any other class of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned by a Borrower, or any partnership, joint venture or limited liability company of which more than fifty percent (50%) of the outstanding equity interests are at the time, directly or indirectly, owned by a Borrower or any partnership of which a Borrower is a general partner.
“Successor Rate” shall mean as defined in Section 4(g) below.
“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Swap Obligations” means, with respect to any Borrower or guarantor hereunder, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.
“Sweep to Loan Arrangement” means a cash management arrangement established by the Borrowers with the Agent, as depositary, pursuant to which the Agent is authorized (a) to make advances of Revolving Loans hereunder, the proceeds of which are deposited by the Agent into a designated account of the Borrowers maintained at the Agent, and (b) to accept as prepayments of Revolving Loans hereunder proceeds of excess targeted balances held in such designated account at the Agent, which cash management arrangement is subject to such agreement(s) and on such terms acceptable to the Agent in its sole discretion.
“Tax” shall mean any tax, levy, impost, duty, deduction, withholding or charges of whatever nature required to be paid by Agent to be withheld or deducted from any payment otherwise required hereby to be made by a Borrower to Agent; provided, that the term “Tax” shall not include any taxes imposed upon the net income of Agent.
| 18 | |
“Term SOFR” shall mean a per annum rate equal to the one month Term SOFR Screen Rate two (2) U.S. Government Securities Business Days prior to (a) in the case of Term SOFR Loans, the first day of each calendar month, or (b) with respect to Base Rate Loans, such day of determination of the Base Rate, (or if such rate is not published prior to 11:00 a.m. on the determination date, the applicable Term SOFR Screen Rate on the U.S. Government Securities Business Day immediately prior thereto), plus the SOFR Adjustment; provided, that in no event shall Term SOFR be less than zero (0).
“Term SOFR Loan” shall mean a Loan that bears interest based on Term SOFR.
“Term SOFR Screen Rate” shall mean the forward-looking SOFR term rate administered by CME (or any successor administrator satisfactory to Agent) and published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by Agent from time to time).
“Title Insurance Policy” means a mortgagee’s loan policy, in form and substance reasonably satisfactory to Agent, together with all endorsements made from time to time thereto to the extent available in the applicable jurisdiction, issued to Agent by or on behalf of a title insurance company selected by or otherwise reasonably satisfactory to Agent, insuring the Lien created by a Mortgage in an amount and on terms and with such endorsements (to the extent available in the applicable jurisdiction) reasonably satisfactory to Agent, delivered to Agent.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“U.S. Government Securities Business Day” shall mean any Business Day, except any day on which the Securities Industry and Financial Markets Association, New York Stock Exchange or FRBNY is not open for business because the day is a legal holiday under New York law or U.S. federal law.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to
| 19 | |
suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
1(A)Accounting Terms. Under the Agreement and the Other Agreements (the “Loan Documents”) (except as otherwise specified therein), all accounting terms shall be interpreted, all accounting determinations shall be made, and all financial statements shall be prepared, in accordance with GAAP applied on a basis consistent with AMCON’s audited financial statements delivered to Agent before the Closing Date and using the same inventory valuation method as used in such financial statements, except for any change required or permitted by GAAP if Borrowers’ certified public accountants concur in such change, the change is disclosed to Agent, and all relevant provisions of the Loan Documents are amended in a manner satisfactory to Requisite Lenders to take into account the effects of the change.
| 20 | |
provided, that the Revolving Loan Limit shall in no event exceed Forty Million and No/100 Dollars ($40,000,000.00) (the “Maximum Revolving Loan Limit”) except as such amount may be increased or, following the occurrence of an Event of Default, decreased by Agent from time to time, in Agent’s sole discretion. The aggregate unpaid principal balance of the Revolving Loans shall not at any time exceed the lesser of the (i) Revolving Loan Limit minus the Letter of Credit Obligations and (ii) the Maximum Revolving Loan Limit minus the Letter of Credit Obligations. If at any time the outstanding Revolving Loans exceeds either the Revolving Loan Limit or the Maximum Revolving Loan Limit (including, as a result of a scheduled reduction in the FILO Amount), in each case minus the Letter of Credit Obligations, or any portion of the Revolving Loans and Letter of Credit Obligations exceeds any applicable sublimit within the Revolving Loan Limit (the “Overadvance”), Borrowers shall immediately, and without the necessity of demand by Agent, pay to Agent such amount as may be necessary to eliminate such Overadvance and Agent shall apply such payment to the Revolving Loans in such order as Agent shall determine in its sole discretion. All Revolving Loans outstanding from time to time up to the FILO Amount shall be deemed to be outstanding FILO Loans for all purposes under this Agreement.
Notwithstanding the foregoing, the Borrower Representative may request an increase in (the “Increase”) the Revolving Loan Commitment by up to $5,000,000 by notice to the Agent and the Lenders in writing that it wishes to request such an Increase. The Increase shall become effective not less than twenty (20) Business Days after the date such notice is received by the Agent and the Lenders, so long as (a) no Event of Default or unmatured Event of Default is in existence on such date and (b) either (i) the then-existing Lenders agree to increase their Revolving Loan Commitments by the aggregate amount of such Increase, (ii) other third party financial institutions reasonably acceptable to the Agent and the Borrowers (“New Lenders”) agree to provide new Revolving Loan Commitments in the aggregate amount of such Increase or (iii) a combination of then-existing Lenders and New Lenders agree to provide the aggregate amount of such Increase by increasing their Revolving Loan Commitments or providing new Revolving Loan Commitments, as applicable. The then-existing Lenders shall have the first right of refusal to provide such Increase for a period of fifteen (15) Business Days after receipt by the Agent and the Lenders of the written notice described above; provided, however, that (i) no Lender shall be obligated to provide an Increase as a result of any such request by the Borrower Representative, and (ii) any additional New Lender shall be subject to the approval of the Agent and the Borrowers (which approval shall not be unreasonably withheld). In the event of over-subscription, the pro rata shares of each such Person in the Increase shall be determined by the Agent. Any Increase shall be effected by an amendment to this Agreement. In each case, the Borrowers will issue to each affected Lender new notes upon request of such Lender. Any Increase in the aggregate Revolving Loan Commitment shall also constitute an increase in the Maximum Revolving Loan Limit by a like amount.
Neither Agent nor any Lender shall be responsible for any failure by any other Lender to perform its obligations to make Revolving Loans hereunder, and the failure of any Lender to make its Pro Rata Share of any Revolving Loan hereunder shall not relieve any other Lender of its obligation, if any, to make its Pro Rata Share of any Revolving Loans hereunder.
| 21 | |
If Borrower Representative, on behalf of any Borrower, makes a request for a Revolving Loan as provided herein Agent, at its option and in its sole discretion, shall do either of the following:
If and to the extent that a Defaulting Lender does not settle with Agent as required under this Agreement Borrowers and Defaulting Lender severally agree to repay to Agent forthwith on demand such amount required to be paid by such Defaulting Lender to Agent, together with interest thereon, for each day from the date such amount is made available to a Borrower until the date such amount is repaid to Agent (x) in the case of a Defaulting Lender at the Federal Funds Rate, and (y) in the case of Borrowers, at the interest rate applicable at such time for such Loans; provided, that Borrowers’ obligation to repay such advance to Agent shall not relieve such Defaulting Lender of its liability to Agent for failure to settle as provided in this Agreement.
Each Borrower hereby authorizes Agent, in its sole discretion, to charge any of such Borrower’s accounts or advance Revolving Loans to make any payments of principal, interest, fees, costs or expenses required to be made under this Agreement or the Other Agreements.
A request for a Revolving Loan shall be made or shall be deemed to be made, each in the following manner: the Borrower Representative, on behalf of the Borrower requesting such Revolving Loan, shall give Agent same day notice, no later than 12:00 p.m. (Chicago time) for such day, of its request for a Revolving Loan, in which notice the Borrower Representative shall specify the amount of the proposed borrowing and the proposed borrowing date; provided, however, that no such request may be made at a time when there exists an Event of Default or an event which, with the passage of time or giving of notice, will become an Event of Default. In the event that a Borrower maintains a controlled disbursement account at BMO, each check presented for payment against such controlled disbursement account and any other charge or request for payment against such controlled disbursement account shall constitute a request for a Revolving Loan as a Base Rate Loan. As an accommodation to Borrowers, Agent may permit telephone
| 22 | |
requests for Revolving Loans and electronic transmittal of instructions, authorizations, agreements or reports to Agent by Borrower Representative, on behalf of Borrowers. Unless Borrower Representative specifically directs Agent in writing not to accept or act upon telephonic or electronic communications from Borrower Representative, Agent shall have no liability to Borrowers for any loss or damage suffered by Borrower Representative or any Borrower as a result of Agent’s honoring of any requests, execution of any instructions, authorizations or agreements or reliance on any reports communicated to it telephonically or electronically and purporting to have been sent to Agent by Borrower Representative and Agent shall have no duty to verify the origin of any such communication or the authority of the Person sending it.
Each Borrower hereby irrevocably authorizes Agent to disburse the proceeds of each Revolving Loan requested by Borrower Representative, or deemed to be requested by Borrower Representative, as follows: the proceeds of each Revolving Loan requested under Section 2(a) shall be disbursed by Agent in lawful money of the United States of America in immediately available funds, in the case of the initial borrowing, in accordance with the terms of the written disbursement letter from Borrower Representative, and in the case of each subsequent borrowing, by wire transfer or Automated Clearing House (ACH) transfer to such bank account as may be agreed upon by Borrower Representative and Agent from time to time, or elsewhere if pursuant to a written direction from Borrower Representative.
| 23 | |
| 24 | |
| 25 | |
| 26 | |
| 27 | |
| 28 | |
then, on a date and time determined by Agent (any such date, “Term SOFR Replacement Date”), which date shall be the relevant interest payment date, as applicable, for interest calculated and, solely with respect to clause (B) above, no later than the Scheduled Unavailability Date, Term SOFR will be replaced hereunder and under any other applicable Loan Document with Daily Simple SOFR plus the SOFR Adjustment for any payment period for interest calculated that can be determined by Agent, in each case, without any amendment to, or further action or consent of any other party to any Loan Document (“Successor Rate”). If the Successor Rate is Daily Simple SOFR plus the SOFR Adjustment, all interest will be payable on a monthly basis.
Notwithstanding anything to the contrary herein, (1) if Agent determines that neither of the alternatives in clauses (I) and (II) above is available on or prior to the Term SOFR Replacement Date or (2) if the events or circumstances of the type described in Section (e)(ii)(A) or (B) above have occurred with respect to the Successor Rate then in effect, then in each case, Agent and Borrower Agent may amend this Agreement solely for the purpose of replacing Term SOFR or any then current Successor Rate in accordance with this Section, relevant interest payment date or payment period for interest calculated, as applicable, with an alternative benchmark rate giving due consideration to any evolving or then existing convention for similar U.S. dollar denominated syndicated credit facilities for such alternative benchmarks and, in each case, including any mathematical or other adjustments to such benchmark giving due consideration to any evolving or then existing convention for similar U.S. dollar denominated syndicated credit facilities for such benchmarks, which adjustment or method for calculating such adjustment shall be published on an information service selected by Agent from time to time in its discretion and may be periodically updated. For the avoidance of doubt, any such proposed rate and adjustments shall constitute a Successor Rate. Any such amendment shall become effective at 5:00 p.m. on the fifth Business Day after Agent posts such proposed amendment to all Lenders and Borrowers unless, prior to such time, Requisite Lenders deliver to Agent written notice that Requisite Lenders object to the amendment.
Agent will promptly (in one or more notices) notify Borrowers and Lenders of implementation of any Successor Rate. A Successor Rate shall be applied in a manner consistent with market practice; provided, that to the extent market practice is not administratively feasible for Agent, the Successor Rate shall be applied in a manner as otherwise reasonably determined by Agent. Notwithstanding anything else herein, if at any time any Successor Rate as so determined would otherwise be less than zero (0), the Successor Rate will be deemed to be zero (0) for all purposes of the Loan Documents.
| 29 | |
| 30 | |
AHYDO Prepayment. Notwithstanding any provision of this Agreement to the contrary, if, at the end of each Accrual Period ending after the fifth (5th) anniversary of the Closing Date, the Borrower determines in its sole discretion that the amount of any accrued but unpaid original issue discount (as determined for U.S. federal income tax purposes and including any discount attributable to any fees, expense reimbursements or other payments to the Lender that may be treated for such purposes as a reduction in the “issue price” of the Loan as determined under Section 1.1273-2(a)(1) of the Treasury Regulations) exceeds the product of (i) the issue price (as defined in Sections 1273(b) and 1274(a) of the Code and the regulations promulgated thereunder) and (ii) the yield to maturity (interpreted in accordance with Section 163(i) of the Code) (the “Maximum Amount”), then an amount not less than the amount required to reduce the accrued but unpaid original issue discount at the end of such period to an amount less than the Maximum Amount (the “AHYDO Catch-Up Payment”) shall be paid in cash at such time; for the avoidance of doubt, the parties agree that such AHYDO Catch-Up Payments, as calculated pursuant to the preceding clause, shall be in an amount necessary so that the Loans will not be classified as “applicable high yield debt obligations” under Section 163(i) of the Code). For the purposes of the immediately preceding sentence, “Accrual Period” shall have the meaning assigned to it in Sections 163(i)(2) and 1272(a)(5) of the Code and Treasury Regulations Section 1.1272-1(b)(1)(ii) and, to the extent permitted under such Sections of the Code, the parties shall select quarterly Accrual Periods with respect to the Loans. It is the intent of the Borrower and the Lenders that Section 163(e)(5) of the Code not apply to the Loans and the provisions of this Agreement shall be applied consistently therewith.
“AHYDO Payment” shall mean any mandatory prepayment or redemption pursuant to the terms of any Indebtedness in an amount that is intended or designed to cause such Indebtedness not to be treated as an “applicable high yield discount obligation” within the meaning of Section 163(i) of the Code.
| 31 | |
| 32 | |
| 33 | |
| 34 | |
| 35 | |
| 36 | |
| 37 | |
| 38 | |
| 39 | |
| 40 | |
| 41 | |
All of the foregoing notices shall be provided by Borrower Representative to Agent in writing.
| 42 | |
| 43 | |
If a Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium relating thereto, then Agent, without waiving or releasing any obligation or default by Borrowers hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Agent deems advisable. Such insurance, if obtained by Agent, may, but need not, protect such Xxxxxxxx’s interests or pay any claim made by or against such Borrower with respect to the Collateral. Such insurance may be more expensive than the cost of insurance such Borrower may be able to obtain on its own and may be cancelled only upon Borrower Representative providing evidence that it has obtained the insurance as required above. All sums disbursed by Agent in connection with any such actions, including, without limitation, court costs, expenses, other charges relating thereto and reasonable attorneys’ fees, shall constitute Loans hereunder, shall be payable on demand by Borrowers to Agent and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder.
| 44 | |
| 45 | |
| 46 | |
In addition to the foregoing, Borrowers may enter into Acquisitions solely to the extent the following conditions are satisfied:
| 47 | |
(i) Borrowers may pay Permitted Tax Distributions on a quarterly basis so long as no Event of Default shall have occurred and be continuing (both before or as a result of the making of such payment; and
(ii)Borrowers may pay other cash dividends so long as (w) no Event of Default shall have occurred and be continuing (both before or as a result of the making of such payment), (x) the Excess Availability for the prior and subsequent thirty (30) days exceeds $5,000,000, (y) the Fixed Charge Coverage Ratio on a trailing twelve (12) month basis shall not be less than 1.00:1.00 (both before or as a result of the making of such payment) and (z) the Intercompany Loans have been repaid in full and the Credit Agreement with respect thereto has been terminated.
| 48 | |
| 49 | |
| 50 | |
| 51 | |
| 52 | |
| 53 | |
| 54 | |
| 55 | |
| 56 | |
Notwithstanding the foregoing, Agent shall not be obligated to transfer to any Defaulting Lender any payment made by Borrowers to Agent, nor shall such Defaulting Lender be entitled to share any interest, fees or other payment hereunder, until payment is made by such Defaulting Lender to Agent as required in this Agreement.
| 57 | |
| 58 | |
| 59 | |
| 60 | |
| 61 | |
| 62 | |
| 63 | |
In the event that any consent, waiver or amendment requiring the agreement of all Lenders as set forth above is agreed to by the Requisite Lenders, but not all Lenders, Agent may, in its sole discretion, cause any non-consenting Lender to assign its rights and obligations under this Agreement and the Other Agreements to one or more new Lenders or existing Lenders in the manner and according to the terms set forth in Section 21 of this Agreement; provided, that (i) no
| 64 | |
Lender may be required to assign its rights and obligations to a new Lender because such lender is unwilling to increase its own loan commitments, (ii) such new Lender must be willing to consent to the proposed amendment, waiver or consent and (iii) in connection with such assignment the new Lender pays the assigning Lender an amount equal to the Liabilities owing to such assigning Lender, including all principal, accrued and unpaid interest and accrued and an unpaid fees to the date of assignment. Such assignment shall occur within thirty (30) days of notice by Agent to such non-consenting Lender of Agent’s intent to cause such non-consenting Lender to assign its interests hereunder.
| 65 | |
To induce Agent and Xxxxxxx to accept this Agreement, each Borrower irrevocably agrees that, subject to Agent’s sole and absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT, THE OTHER AGREEMENTS OR THE COLLATERAL SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. EACH BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS LOCATED WITHIN SAID CITY AND STATE. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH BORROWER BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH BORROWER, AT THE ADDRESS SET FORTH FOR NOTICE IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED. EACH BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST SUCH BORROWER BY AGENT OR LENDERS IN ACCORDANCE WITH THIS SECTION.
| 66 | |
| 67 | |
| 68 | |
| 69 | |
(Signature Page Follows)
| 70 | |
(Signature Page to Loan and Security Agreement)
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first written above.
| BORROWERS: Xxxxx: Secretary |
| HF REAL ESTATE, LLC, a Minnesota limited liability company Xxxxx: Secretary |
| | |
| BMO Xxxxxx Bank N.A., as Agent and a Lender Xxxxx: Director Revolving Loan Commitment: $40,000,000.00 |
| | |
