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EXHIBIT 10.19
FOURTH AMENDMENT, DATED FEBRUARY 7, 1997, TO THAT CERTAIN REVOLVING LOAN
AGREEMENT BETWEEN FIRST AMERICAN NATIONAL BANK AND UNITED FOODS, INC., DATED
APRIL 7, 1993.
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EXHIBIT 10.19
FOURTH AMENDMENT TO REVOLVING LOAN AGREEMENT
THIS FOURTH AMENDMENT TO REVOLVING LOAN AGREEMENT (the "Agreement") made
and entered into as of February 6, 1997, by and between FIRST AMERICAN NATIONAL
BANK, a national banking association organized and existing under the statutes
of the United States of America (hereinafter "Lender"), and UNITED FOODS, INC.,
a corporation organized and existing under the laws of the State of Delaware
("Borrower").
W I T N E S S E T H:
WHEREAS, Lender and Borrower executed a Loan Agreement dated as of April
7, 1993 (the "Loan Agreement") pursuant to which the Lender made a Twenty-Three
Million Dollar ($23,000,000.00) revolving credit loan to Borrower for the
purpose of providing working capital to the Borrower (the "Revolving Loan");
WHEREAS, the Lender and Borrower have previously amended the Loan
Agreement; and
WHEREAS, the Lender and Borrower desire to further modify the Loan
Agreement as hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and other good
and valuable consideration the receipt and sufficiency of which is hereby
acknowledged by each of the parties, the parties do mutually agree as follows:
Section 1.1 of the Loan Agreement is hereby deleted in its
entirety and the following paragraph is substituted in lieu thereof:
"1.1 Acceptable Account. 'Acceptable Account' shall mean an
Account Receivable which meets all of the following requirements:
(a) such Receivable is owned by the Borrower and represents a
complete bona fide transaction which requires no further act under
any circumstances on the part of the Borrower to make such
Receivable payable by the Account Debtor; (b) such Receivable is
not past due more than sixty (60) days, or ninety (90) days in the
case of a United States Government Receivable, from the date of
the original invoice; (c) the goods, the sale of which gave rise
to such Receivable, were shipped or delivered to the Account
Debtor on an absolute sale basis and not on a xxxx and hold sale
basis, a consignment sale basis, a guaranteed sale basis, a sale
or return basis, or on the basis of any other similar
understanding and no material part of such goods has been returned
or rejected; (d) such Receivable is not evidenced by chattel paper
or an 'instrument' (as defined in Article IX of the Tennessee
Uniform Commercial Code) of any kind; (e) the Account Debtor with
respect to such Receivable is not Insolvent or the subject of any
bankruptcy or insolvency proceedings of any kind or of any other
proceeding or action, threatened or pending, which might have a
materially adverse effect on such Account Debtor and is not deemed
ineligible for credit for other reasons; (f) such Receivable is
not owing by an Account Debtor having twenty-five percent (25%) or
more in face value of its then-existing accounts owing to the
Borrower past due more than sixty (60) days, or ninety (90) days
in the case of a United States Government Receivable, from the
date of the original invoice; (g) such Receivable is not owing by
an Account Debtor whose then-existing accounts owing to
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the Borrower exceed in face amount twenty percent (20%) of the
Borrower's total Acceptable Accounts; (h) if such Receivable
arises from the performance of services, such services have been
fully rendered; (i) such Receivable is a valid, legally
enforceable obligation of the Account Debtor with respect thereto
and is not subject to any present, and no facts are known which
are the basis for any future, offset, deduction or counterclaim,
dispute or other defense on the part of such Account Debtor, other
than allowances to the Account Debtor in the ordinary course of
the Borrower's business, which allowances shall reduce the face
amount of the Receivable for the purposes of determining its
eligibility; (j) except as provided in the last sentence of this
Section 1.1 with respect to United States Government Receivables,
such Receivable is subject to a perfected security interest
pursuant to the Security Agreement and is subject to no other Lien
whatsoever other than Permitted Exceptions; (k) such Receivable is
evidenced by an invoice or other documentation in form acceptable
to the Lender; (l) such Receivable does not arise out of any
transaction with any Affiliate of the Borrower; (m) the goods and
services giving rise to such Receivable were not, at the time of
the sale or rendering thereof, subject to any Lien, except the
security interest granted hereunder and Permitted Exceptions; (n)
is not a Foreign Receivable; and (o) such Receivable does not
arise from the sale of goods or services to a military
distributor. A United States Government Receivable that otherwise
satisfies the foregoing requirements shall be an Acceptable
Account notwithstanding the failure by the Lender and the Borrower
to comply with the Federal Assignment of Claims Act of 1940, as
amended; provided that the Lender, in its sole and absolute
discretion, may notify the Borrower of the Lender's determination
to comply with such Act, and at the expiration of thirty (30) days
following such notice any United States Government Receivable will
cease to be an Acceptable Account unless and until all steps
necessary under the Act to complete an assignment of such United
States Government Receivable to the Lender have been taken."
Section 1.42 of the Loan Agreement is hereby deleted in its
entirety and the following paragraph is substituted in lieu thereof:
"1.42 Revolving Credit Loan Maturity Date. June 1, 1999;
provided, however, that the Revolving Credit Loan Maturity Date
may be extended by Lender, at the request of the Borrower but in
Lender's sole and absolute discretion, for one (1) additional year
on each anniversary date of this Agreement.
Section 1.7 of the Loan Agreement is hereby deleted in its
entirety and the following paragraph is substituted in lieu thereof:
"1.7 Borrowing Base. The limitation on the aggregate Total
Exposure which may be outstanding at any time during the term of
this Agreement. The Borrowing Base is the sum of (a) eighty-five
percent (85%) of Acceptable Accounts, such amounts to be decreased
by an amount equal to (i) One Hundred Twenty Thousand Dollars
($120,000.00) plus (ii) all amounts due on accounts payable to
growers of agricultural commodities that are outstanding for more
than thirty (30) days from due date plus (b) sixty percent (60%)
of Acceptable Inventory."
Section 4.1 of the Loan Agreement is hereby deleted in its
entirety and the following paragraph is substituted in lieu thereof:
4.1 The Commitment. Subject to the terms and conditions
herein set out, Lender agrees and commits to make loan advances
and issue Letters of Credit to or for the account of the Borrower
from time to time, from the date hereof until the Revolving Credit
Loan Maturity Date, in an aggregate amount of Total Exposure not
to exceed, at any one time outstanding, the lesser of (a) Eighteen
Million Dollars ($18,000,000.00), or (b) the Borrower's Borrowing
Base, as defined in Article I.
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Section 6.1(s) of the Loan Agreement is hereby deleted in its entirety and
the following paragraph is substituted in lieu thereof:
(s) Borrowing Base Certificate. Borrower shall furnish on the fifteenth
(15th) day of each calendar month a Borrowing Base Certificate
substantially in the form of EXHIBIT "A" attached hereto, executed by a
Responsible Officer of Borrower stating the Borrowing Base as of the last
day of the immediately preceding calendar month, and having attached
thereto an inventory report, an accounts receivable aging report and a
listing of accounts receivable, listing each account, and an accounts
payable summary aging report, with a detail listing of those accounts
payable due to growers of agricultural commodities, all to be as of the
last day of the immediately preceding calendar month, certified by the
Responsible Officer of Borrower. The inventory report shall specify the
location of all Acceptable Inventory, and shall report the value of such
Inventory at the lower of current year's anticipated cost or market
value. The accounts receivable aging report shall report Borrower's
total accounts receivable and shall segregate such accounts receivable
into categories, according to whether such accounts receivable remain
unpaid for no more than sixty (60) days from the date of invoice, or for
more than sixty (60) days, but no more than ninety (90) days from the
date of invoice, or more than ninety (90) days from the date of invoice,
and according to whether the account debtor is a department, agency or
other instrumentality of the federal government of the United States.
Section 7 of the Loan Agreement is hereby amended by adding the
following:
7.13 Accounts Payable to Growers. Any account payable to a grower
of agricultural commodities shall be outstanding and unpaid for more than
sixty (60) days from the due date of invoice to Borrower, except for good
faith disputes with growers that Borrower is actively attempting to
resolve.
Exhibit "A" is hereby deleted in its entirety and replaced with the new
Exhibit "A" attached hereto and incorporated herein by reference.
As amended hereby, the Loan Agreement, as previously amended, is confirmed
and ratified in all other respects.
IN WITNESS WHEREOF, this Amendment has been executed on the day and year
first above written.
FIRST AMERICAN NATIONAL BANK
By: S/N Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Title: Assistant Vice President
UNITED FOODS, INC.
By: S/N Xxxx X. Xxxxxxxxxx, XX
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Xxxx X. Xxxxxxxxxx, XX
Title: Senior Vice President,Chief Financial
Officer & Treasurer
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EXHIBIT A
UNITED FOODS, INC.
BELLS, TN
Borrowing Base Certificate
______________________________________________________________________________
Status as of
-----------------.
(Date)
1. Total Accounts Receivable balance $
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2. Less: Mushroom Receivables $
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3. Less: Non-Government Accounts over
60 days from invoice $
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4. Less: Government Accounts
over 90 days $
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5. Less: Other Ineligible Accounts
Receivable (including, but not limited to,
xxxx and hold and military distributors) $
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6. Less $120,000.00 plus all amounts due on
accounts payable to growers of agricultural commodities
that are outstanding for more than thirty (30) days from due date
$
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7. Total Acceptable Accounts $
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8. Advance rate on Acceptable Accounts 85%
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9. Availability from Account Receivable
(Line 6 times Line 7) $
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10. Total Inventory balance $
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11. Less: Mushroom Inventory $
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12. Less: Other ineligible inventory $
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13. Total Acceptable Inventory $
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14. Advance rate on Acceptable Inventory 60%
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15. Availability from Acceptable
Inventory (Line 13 times $
Line 14) -------------------
16. Total Availability (Line 8 plus Line 14) $
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17. Outstanding Letters of Credit $
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18. Outstanding Loan Balance $
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19. Excess or (deficit)
(Line 16 minus Line 17 minus Line 18) $
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Exhibits Attached Hereto:
(a) Aging of Accounts Receivable (and Listing of Accounts Receivable)
(b) Identification of Acceptable Inventory by location.
(c) Summary Aging of Accounts Payable with detail listing of balances due
to growers of agricultural commodities.
The undersigned certifies that the information set out herein and the
Exhibits attached hereto is true and correct in all material respects as of the
status date above. The undersigned further certifies that the figures set out
herein pertain only to Acceptable Accounts, and Acceptable Inventory as those
terms are defined in the Loan Agreement between United Foods, Inc. and First
American National Bank. To the best of the undersigned's knowledge, no Account
Debtor is Insolvent.
UNITED FOODS, INC.
By:
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Title:
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