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EXHIBIT 10.3
SECOND AMENDMENT TO AMENDED
AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the
"Amendment"), dated as of February 26, 1999, is entered into by and among
RICHMONT MARKETING SPECIALISTS INC., a corporation duly organized and validly
existing under the laws of the State of Delaware ("Borrower"), each of the banks
or other lending institutions which are signatories hereto (each such bank or
other lending institution individually, a "Bank" and, collectively, the
"Banks"), and THE CHASE MANHATTAN BANK, individually as a Bank and as agent for
itself and the other Banks (in its capacity as agent, together with its
successors in such capacity, the "Agent").
RECITALS:
Borrower, Banks and Agent have entered into that certain Amended and
Restated Credit Agreement dated as of December 18, 1997 (as modified by six
letter agreements, dated March 31, 1998, July 8, 1998, July 17, 1998, July 31,
1998, September 24, 1998, and September 30, 1998, respectively and as amended by
that certain First Amendment to Amended and Restated Credit Agreement dated as
of June 30, 1998, the "Agreement"). Borrower, Banks and Agent now desire to
further amend the Agreement as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree, effective as of the date hereof (unless
otherwise indicated), as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions. Capitalized terms used in this Amendment, to the
extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.
ARTICLE 2
Amendments
Section 2.1 Amendment to Subsection 9.5(g). Subsection 9.5(g) of the
Agreement is amended in its entirty to read as follows:
(g) loans and advances to employees for business expenses
incurred in the ordinary course of business not to exceed Five Hundred
Thousand Dollars ($500,000) in the aggregate at any time outstanding;
excluding from such aggregate limit any advances made to purchase a
primary residence of an employee in connection with the Borrower's or
a Subsdiary's relocation of such employee as
SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT - Page 1
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long as such advances to purchase real estate are not outstanding for
more than sixty (60) days;
Section 2.2 Amendment to Section 9.3. Subclause (iv) of clause (b) of
Section 9.3 is amended in its entirety to read as follows:
(iv) Borrower provides evidence satisfactory to the Agent that (A) the
acquisition and all transactions contemplated thereby are permitted by the
Indenture; (B) the average daily balances of the sum of Borrower's and the
Subsidiaries' cash, cash equivalents and Borrowing Availability for the
thirty (30) day period prior to the date of the delivery of the notice
required by clause (v) below and calculated as if the acquisition occurred
on the first (1st) day of such period, shall equal or exceed Fifteen
Million Dollars ($15,000,000); and (C) Borrower shall be in compliance with
the ratio of Operating Cash Flow to Fixed Charges required by Section 10.1
for the four (4) Fiscal Quarter period then most recently ending (or the
portion thereof since October 1, 1998 and such period, herein the
"Calculation Period") calculated on a proforma basis by treating the Target
(or, as applicable, the portion of such Target's operations attributable to
the assets acquired) as a Subsidiary for the purposes of the definition of
Fixed Charges for the Calculation Period and including in Operating Cash
Flow the sum of the following for the Calculation Period: (1) the
Calculated EBITDA of the Target or, as applicable, the assets acquired,
minus (2) any provision for (or plus any benefit from) income or franchise
taxes included in determining the Net Income included in such Calculated
EBITDA; minus (3) interest expense deducted in determining such Net Income,
minus (4) all net expenditures of the Target or applicable to the assets
being acquired which are classified as capital expenditures in accordance
with GAAP (with the concept of net being defined as the sum of such capital
expenditures minus the proceeds from the sale of assets which are used to
make such capital expenditures) during the period for which such Net Income
is calculated (the sum of the forgoing clauses (1) through (4) calculated
for any period, herein the "Target Operating Cash Flow");
Section 2.3 Amendment to Section 10.1. Section 10.1 of the Agreement is
amended in its entirety to read as follows:
Section 10.1 Fixed Charge Coverage Ratio. Borrower shall not permit
the ratio of the Operating Cash Flow to Fixed Charges calculated as of the
last day of each Fiscal Quarter of the Borrower commencing with the Fiscal
Quarter ended December 31, 1998, during the periods set forth below to be
less than the ratio set forth below for the period during which such Fiscal
Quarter end occurs:
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PERIOD RATIO
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October 1, 1998 through March 31, 1999 0.80 to 1.00
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April 1, 1999 through December 31, 1999 1.00 to 1.00
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January 1, 2000 through Termination Date 1.25 to 1.00
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The phrase "Operating Cash Flow" means, as of any Fiscal Quarter end, the
total of the following for the Borrower and the Subsidiaries calculated on
a consolidated basis without duplication for the four (4) Fiscal Quarter
period (or portion thereof since October 1, 1998) then ending (the "Subject
Period"): (a) EBITDA minus (b) the sum of (i) net Capital Expenditures
(defined as the sum of Capital Expenditures minus the proceeds from the
sale of assets which are used to make Capital Expenditures) minus (ii) the
Capital Expenditures made in the Subject Period in connection with any of
the following matters (the following matters, herein the "Excluded Capital
Expenditures"); provided that the aggregate amount of Excluded Capital
Expenditures subtracted pursuant to this clause (ii) or subtracted pursuant
to clause (ii)(B) of Section 10.2 shall never exceed, in each case, an
amount equal to Seven Million Six Hundred Fifty Thousand Dollars
($7,650,000):
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EXCLUDED CAPITAL EXPENDITURES AMOUNT
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PeopleSoft $1,300,000
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PeopleSoft Installation Costs 1,900,000
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Required Computer Upgrades
(upgrade & install field computers) 1,600,000
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Imaging System 500,000
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Data Warehouse 250,000
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Communications (Local Area Network
& Wide Area Network, and Voice
upgrades) 650,000
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Required Software Upgrades
(compliance costs) 500,000
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Office Move 950,000
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TOTAL $7,650,000
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The phrase "Fixed Charges" means, as of any Fiscal Quarter end, the total
of the following for the Borrower and the Subsidiaries calculated on a
consolidated basis without duplication for the four (4) Fiscal Quarter
period (or portion thereof since October 1, 1998) then ending: (a) net cash
interest plus (b) principal amortization of Debt paid or payable
(excluding, to the extent included, nonpermanent principal repayments under
the Loans) plus (c) current taxes payable plus (d) dividends or other
distribution paid on account of any shares of any class of stock of
Borrower.
Section 2.4 Amendment to Section 10.2. Section 10.2 of the Agreement is
amended in its entirety to read as follows:
Section 10.2 Interest Coverage. Borrower shall not permit the ratio of
(a) the sum of Operating Cash Flow (as defined in Section 10.1) to (b) the
sum of cash interest expense minus cash interest income, all calculated for
the four (4) Fiscal Quarter period (or portion thereof since October 1,
1998) ending on the last day of
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each Fiscal Quarter to be less than (i) 1.50 to 1.00 as of each Fiscal
Quarter end prior to January 1, 2000; (ii) 1.75 to 1.00 as of each Fiscal
Quarter end after January 1, 2000 but prior to January 1, 2001; and (iii)
2.00 to 1.00 as of each Fiscal Quarter end after January 1, 2001.
Section 2.5 Amendment to Exhibit B. Exhibit B to the Agreement is amended
in its entirety to read as set forth on Exhibit B hereto.
ARTICLE 3
Conditions
Section 3.1 Conditions. The effectiveness of this Amendment is subject to
the satisfaction of the following conditions precedent:
(a) Agent shall have received all of the following, each in form and
substance satisfactory to the Agent:
(i) the certificates evidencing the stock of Meatmaster
Brokerage, Inc. together with blank stock powers duly executed;
(ii) duly executed UCC-3 Termination Statements from the
following secured parties:
(A) Xxxxx Food Brokerage, Inc. relating to the financing
statements filed in the following jurisdictions under the
following file numbers: Virginia #1317359; City of Norfolk,
Virginia #94- 210; Hanover County, Virginia #142-94; and Virginia
#1317360;
(B) Xxxxx Xxxxxxxxxxxxx, Sr. relating to the financing
statements filed in the following jurisdictions under the
following file numbers: Virginia #3087213 and City of Xxxxx, xxx
Xxxxxxxx #00-00; and
(C) BankOne relating to the financing statements filed in
the following jurisdictions under the following file numbers:
Arizona #690610 and Arizona #708196:
(iii) the following corporate certifications:
(A) Certificate from the appropriate governmental official
as to Atlas Marketing Company, Inc.'s authority to do business
and good standing in Virginia;
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(B) Certificate from the appropriate governmental official
of Maryland as to Meatmaster Brokerage, Inc.'s authority to do
business and good standing and an amendment to Meatmaster
Brokerage, Inc.'s Articles of Incorporation to correct power of
the corporation;
(iv) An executed copy of a subordination of Landlord's Lien for
the Briargrove Place location;
(b) Evidence of the Borrower's Compliance with Sections 9.1(b)(iii)
and Section 9.2(a) of the Agreement;
(c) The representations and warranties contained herein and in all
other Loan Documents, as amended hereby, shall be true and correct in all
material respects as of the date hereof as if made on the date hereof,
except for such representations and warranties limited by their terms to a
specific date;
(d) No Default shall have occurred and be continuing;
(e) All proceedings taken in connection with the transactions
contemplated by this Amendment and all documentation and other legal
matters incident thereto shall be satisfactory to Agent and its legal
counsel, Jenkens & Xxxxxxxxx, a Professional Corporation; and
(f) Borrower shall have paid to Agent an amendment fee in the amount
of Seven Thousand Dollars ($7,000.00).
ARTICLE 4
Ratifications, Representations and Warranties
Section 4.1 Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement and the other Loan
Documents are ratified and confirmed and shall continue in full force and
effect. Borrowers, Agent and the Banks agree that the Agreement as amended
hereby and the other Loan Documents shall continue to be legal, valid, binding
and enforceable in accordance with their respective terms.
Section 4.2 Representations and Warranties. Borrower represents and
warrants that as of the date hereof there are no claims or offsets against or
defenses or counterclaims to its obligations under any of the Loan Documents. TO
INDUCE THE BANKS AND AGENT TO ENTER INTO THIS AMENDMENT BORROWER WAIVES TO THE
EXTENT PERMITTED BY APPLICABLE LAW ANY AND ALL SUCH CLAIMS, OFFSETS, DEFENSES OR
COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING PRIOR TO THE DATE HEREOF AND
RELATING TO THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. Borrower hereby represents
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and warrants to Agent and the Banks that (a) the execution, delivery and
performance of this Amendment have been authorized by all requisite corporate
action on the part of Borrower and each Obligated Party and will not violate the
articles of incorporation or bylaws of Borrower or any Obligated Party, (b)
after giving effect to this Amendment, the representations and warranties
contained in the Agreement, as amended hereby, and in any other Loan Document
are true and correct on and as of the date hereof as though made on and as of
the date hereof except to the extent those representations and warranties
expressly relate solely to another date, (c) after giving effect to this
Amendment, no Default has occurred and is continuing, (d) after giving effect to
this Amendment, Borrower and each Obligated Party is in full compliance with all
covenants and agreements contained in the Agreement, as amended hereby, and the
other Loan Documents, and (e) the Articles of Incorporation and Bylaws of
Borrower have not been amended or otherwise modified since December 18, 1997.
ARTICLE 5
Miscellaneous
Section 5.1 Survival of Representations and Warranties. All representations
and warranties made in this Amendment shall survive the execution and delivery
of this Amendment and the other Loan Documents, and no investigation by Agent or
any Bank or any closing shall affect the representations and warranties or the
right of Agent or any Bank to rely upon them.
Section 5.2 Reference to Agreement. Each of the Loan Documents, including
the Agreement and any and all other agreements, instruments or documents now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Agreement as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Agreement shall mean a reference to the
Agreement as amended hereby.
Section 5.3 Expenses of Lender. As provided in the Agreement, Borrower
agrees to pay on demand all costs and expenses incurred by Agent and the Banks
in connection with the preparation, negotiation, and execution of this
Amendment, including without limitation the costs and fees of Agent's legal
counsel.
Section 5.4 Severability. Any provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 5.5 Applicable Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York and the
applicable laws of the United States of America.
Section 5.6 Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of Agent, the Banks and Borrower and their respective
successors and assigns, except Borrower may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of the Agent
and the Banks.
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Section 5.7 Counterparts. This Amendment may be executed in one or more
counterparts and on telecopy counterparts, each of which when so executed shall
be deemed to be an original, but all of which when taken together shall
constitute one and the same agreement.
Section 5.8 Effect of Waiver. No consent or waiver, express or implied, by
Agent or the Banks to or for any breach of or deviation from any covenant,
condition or duty by Borrower or any Obligated Party shall be deemed a consent
or waiver to or of any other breach of the same or any other covenant, condition
or duty.
Section 5.9 Headings. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
Section 5.10 ENTIRE AGREEMENT. THIS AMENDMENT EMBODIES THE FINAL, ENTIRE
AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Executed as of the date first written above.
BORROWER:
RICHMONT MARKETING SPECIALISTS INC.
By: /s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
Treasurer
BANKS:
THE CHASE MANHATTAN BANK,
individually as a Bank and as the Agent
By: /s/ XXXXXX XXXXX XXXXXXXX
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Xxxxxx Xxxxx XxXxxxxx
Vice President
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Each Obligated Party hereby consents and agrees to this Amendment and
agrees that each Loan Document to which it is a party shall remain in full force
and effect and shall continue to be its legal, valid and binding obligation
enforceable against it in accordance with its terms. Each Obligated Party hereby
represents and warrants that as of the date of the Amendment there are no claims
or offsets against or defenses or counterclaims to its obligations under any of
the Loan Documents. TO INDUCE THE BANKS AND AGENT TO ENTER INTO THIS AMENDMENT
EACH OBLIGATED PARTY WAIVES ANY AND ALL SUCH CLAIMS, OFFSETS, DEFENSES OR
COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING PRIOR TO THE DATE OF THE
AMENDMENT AND RELATING TO THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
MARKETING SPECIALISTS SALES
COMPANY (individually and as successor
by merger to Ferro & Associates, Tower Marketing,
Inc., T-Bar Brokerage, Inc. and TNT
Convenience Stores, Inc.)
BROMAR, INC. (individually and as successor
in interest by merger to Xxxx Xxxxxxx & Associates, Inc.,
Batestas & Co. and Service Assets Corp.)
BROKERAGE SERVICES, INC.
CUMBERLAND FOOD BROKERS, INC.
CENTURY FOOD BROKERS OF HICKORY, INC.
ULTIMATE FOOD SALES, INC.
MEATMASTER BROKERAGE, INC.
EAST COAST FOOD BROKERAGE, INC.
ATLAS MARKETING COMPANY, INC. (individually and as successor
by merger to MSSC Carolina, Inc.)
By: /s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
Treasurer
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