EXHIBIT 10.1
AMENDMENT AND WAIVER
This Amendment and Waiver, dated as of April 26, 2005 among PERFORMANCE
FOOD GROUP COMPANY, a Tennessee corporation, (the "Borrower"), the Lenders party
to the Credit Agreement referenced below (the "Lenders") and WACHOVIA BANK,
NATIONAL ASSOCIATION, as administrative agent (the "Administrative Agent"), for
the Lenders.
STATEMENT OF PURPOSE:
The Lenders agreed to extend certain credit facilities to the Borrower
pursuant to an Amended and Restated Credit Agreement dated as of April 28, 2003
by and among the Borrower, the Lenders and the Administrative Agent (as amended
by a First Amendment dated as of September 15, 2004 and as thereafter amended,
restated, supplemented, or otherwise modified from time to time, the "Credit
Agreement").
The Borrower desires to (i) sell all of the capital stock of certain of
its Wholly-Owned Subsidiaries which comprise the Borrower's Fresh Cut produce
segment, which consists of Fresh International Corp., Fresh Advantage, Inc.,
Redi-Cut Foods, Inc. and K.C. Salad Holdings, Inc. (collectively, the
"Subsidiary Disposition") for an aggregate sale price of approximately
$855,000,000 and (ii) utilize a portion of the proceeds of the Subsidiary
Disposition (the "Subsidiary Disposition Proceeds") to pay a cash dividend to
the shareholders of the Borrower and/or to repurchase certain of the issued and
outstanding capital stock of the Borrower (the "Dividend/Stock Repurchase").
Section 10.5 of the Credit Agreement prohibits the Borrower or any
Subsidiary from merging, consolidating or entering into any similar combination
with another Person except the Borrower or another Wholly-Owned Subsidiary or
except in connection with a permitted acquisition. Further, Section 10.6(e) of
the Credit Agreement prohibits the sale of assets by the Borrower or any
Subsidiary if the value of all such sales during any consecutive twelve (12)
month period exceeds 15% of the Borrower's Consolidated Assets. In addition,
Section 10.7(c) of the Credit Agreement prohibits the payment of dividends or
stock repurchases in an aggregate amount in excess of $100,000,000 during the
term of the Credit Agreement. Also, Section 10.11 of the Credit Agreement
prohibits the amendment, modification, redemption, repurchase, prepayment,
cancellation or forgiveness of any Debt in excess of $50,000,000. Finally, the
Borrower has also requested that certain of the Subsidiary Disposition Proceeds
be temporarily invested by the Borrower in certain investments which are
currently not permitted pursuant to the terms of Section 10.4(b) of the Credit
Agreement (the "Sale Proceeds Investment").
Accordingly, the Borrower has requested that the Administrative Agent
and the Required Lenders (i) consent to the Subsidiary Disposition, the
Dividend/Stock Repurchase and the Sale Proceeds Investment and (ii) waive any
violation of the terms of Section 10.4(b), 10.5, 10.6(e), 10.7(c) or 10.11 of
the Credit Agreement, in each case, to the extent such violations are caused
solely by the consummation of the Subsidiary Disposition, the Dividend/Stock
Repurchase or the Sale Proceeds Investment.
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The Administrative Agent and the Required Lenders are willing, solely
upon the terms and conditions set forth below, to consent to the foregoing
transactions and to waive any such violation of the terms of the Credit
Agreement to the extent set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Borrower, the Administrative
Agent and the Required Lenders hereby agree as follows:
1. Capitalized Terms. All capitalized undefined terms used in this
Amendment and Waiver (including, without limitation, in the statement of purpose
hereto) shall have the meanings assigned thereto in the Credit Agreement.
2. Consent. The Administrative Agent and the Required Lenders hereby
consent to:
(a) The Subsidiary Disposition; provided that the Subsidiary
Disposition Proceeds are used solely (i) to consummate the
Dividend/Stock Repurchase, (ii) to make the Sale Proceeds Investment,
(iii) to pay the Obligations, (iv) to pay (A) the Senior Notes and (B)
to pay the outstanding balance of (I) the Carrollton Payroll
Development Authority Industrial Development Revenue Bonds (KMB
Produce, Inc. Project), Series 1999, in the original principal amount
of $9,000,000 and (II) the Tax-Exempt Multi-Modal Industrial
Development Revenue Bonds (K.C. Salad Real Estate, L.L.C. Project),
Series 1999, in the original principal amount of $7,000,000, (v) to pay
any fees, expenses or taxes incurred by the Borrower in connection with
the Subsidiary Disposition, and (vi) for purposes otherwise permitted
pursuant to the terms of the Credit Agreement;
(b) The Dividend/Stock Repurchase; provided that the aggregate amount
of Subsidiary Disposition Proceeds used for this purpose shall not
exceed $500,000,000; and
(c) The Sale Proceeds Investment; provided that (i) Subsidiary
Disposition Proceeds so invested shall be invested only in the
investments permitted pursuant to Section 10.4(b) of the Credit
Agreement or in the investments more particularly described on Annex A
attached hereto (the "Permitted Temporary Investments"), (ii) the
aggregate amount of Subsidiary Disposition Proceeds invested in
Permitted Temporary Investments shall not exceed $700,000,000 as of any
date of determination, and (iii) Subsidiary Disposition Proceeds may be
invested in Permitted Temporary Investments for a period not to exceed
nine (9) months following the date of the consummation of the
Subsidiary Disposition.
3. Waiver. The Administrative Agent and the Required Lenders hereby
waive (i) any and all violations of the covenants made by the Borrower in
Sections 10.4(b), 10.6(e), 10.7(c) and 10.11 of the Credit Agreement and (ii)
any and all Defaults or Events of Default caused thereby, in each instance, with
respect to clauses (i) and (ii) of this Paragraph 3, solely to the extent that
such violation, Default or Event of Default results from the consummation of the
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Subsidiary Disposition, the Dividend/Stock Repurchase or the Sale Proceeds
Investment in accordance with the terms of this Amendment and Waiver.
4. Amendments. The Credit Agreement is hereby amended as follows:
(a) Section 1.1 of the Credit Agreement is hereby amended by adding, in
alphabetical order, a new definition "Fresh Cuts Disposition" as
follows:
"Fresh Cuts Disposition" means the sale of the Borrower's Fresh Cut
produce segment consisting of Fresh International Corp., Fresh Advantage, Inc.,
Redi-Cut Foods, Inc. and K.C. Salad Holdings, Inc. in a transaction approved by
the Required Lenders.
(b) Section 1.1 of the Credit Agreement, definition of "EBITDA" is
hereby amended by deleting the existing text of said definition and by
substituting the following in lieu thereof:
"EBITDA" means, for any period, the sum of the following determined on
a Consolidated basis, without duplication, for the Borrower and its Subsidiaries
in accordance with GAAP: (a) Net Income for such period plus (b) the sum of the
following to the extent deducted in determining Net Income: (i) income and
franchise taxes, (ii) the sum of (A) Interest Expense and (B) losses on the sale
of receivables in connection with the Receivables Purchase Facility, (iii)
amortization and depreciation, (iv) non-cash expenses related to the
transactions contemplated by this Agreement, (v) non-cash losses on sales of
assets, (vi) non-cash expenses in connection with the impairment of intangible
assets in accordance with SFAS 141 and SFAS 142, and (vii) any and all write
offs, write downs, and other deductions of in-process research and development
expenses in connection with the transactions contemplated by this Agreement less
(c) interest income and any extraordinary gains which were included in
determining Net Income. For purposes of this Agreement, EBITDA shall be adjusted
on a pro forma basis (1) to include, as of the first day of any applicable
period, any Permitted Acquisition closed during such period, including, without
limitation, adjustments reflecting any non-recurring costs and any extraordinary
expenses of any Permitted Acquisition closed during such period and (2) to
exclude, for the fiscal quarters ending September 30, 2004, December 31, 2004,
March 31, 2005 and June 30, 2005, as of the first day of such applicable
quarter, the Fresh Cuts Disposition (including, without limitation, any gain
resulting from the Fresh Cuts Disposition), in each case, calculated on a basis
consistent with GAAP and Regulation S-X of the SEC.
(c) Section 1.1 of the Credit Agreement, definition of "EBITDAR" is
hereby amended by deleting the existing text of said definition and by
substituting the following in lieu thereof:
"EBITDAR" means, for any period, the sum of (a) EBITDA for such period
plus (b) Rental Expense with respect to each ELLF for such period, in each case
on a Consolidated basis, without duplication, for the Borrower and its
Subsidiaries in accordance with GAAP. For purposes of this Agreement, EBITDAR
shall be adjusted on a pro forma basis (1) to include, as of the first day of
any applicable period, any Permitted Acquisition closed during such period,
including, without limitation, adjustments reflecting any non-recurring costs
and any
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extraordinary expenses of any Permitted Acquisition closed during such period
and (2) to exclude, for the fiscal quarters ending September 30, 2004, December
31, 2004, March 31, 2005 and June 30, 2005, as of the first day of such
applicable quarter, the Fresh Cuts Disposition (including, without limitation,
any gain resulting from the Fresh Cuts Disposition), in each case, calculated on
a basis consistent with GAAP and Regulation S-X of the SEC.
(d) Section 1.1 of the Credit Agreement, definition of "Interest
Expense" is hereby amended by deleting the existing text of said
definition and by substituting the following in lieu thereof:
"Interest Expense" means, for any period, total interest expense
(including, without limitation, interest expense attributable to capital leases)
determined on a Consolidated basis, without duplication, for the Borrower and
its Subsidiaries in accordance with GAAP; provided that for the fiscal quarters
ending September 30, 2004, December 31, 2004, March 31, 2005 and June 30, 2005
Interest Expense shall be adjusted on a pro forma basis to exclude interest
expense of the Subsidiaries which are part of the Fresh Cuts Disposition.
(e) Section 9.3 of the Credit Agreement is hereby Amended by deleting
the existing text of Section 9.3 in its entirety and by substituting
the following in lieu thereof:
"SECTION 9.3 Minimum Net Worth. Permit Net Worth to be less than the
following amounts for the following periods:
PERIOD AMOUNT
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As of each fiscal quarter end through The sum of (a) $530,000,000 plus (b) fifty percent
March 31, 2005 (50%) of Net Income (to the extent positive) after the
initial Closing Date plus (c) one hundred percent
(100%) of Equity Net Cash Proceeds after the Closing
Date.
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Fiscal quarter ending June 30, 2005 $600,000,000
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As of each fiscal quarter end thereafter The sum of (a) $600,000,000 plus (b) fifty percent
(50%) of Net Income (to the extent positive) after the
initial Closing Date plus (c) one hundred percent
(100%) of Equity Net Cash Proceeds after the Closing
Date.
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5. Conditions to Effectiveness.
(A) The provisions of Paragraphs 2 and 3 of this Amendment and Waiver
shall only be effective on the date that each of the following conditions has
been satisfied:
(i) The Administrative Agent shall have received counterparts of this
Amendment and Waiver executed by the Borrower and the Required Lenders;
(ii) The Administrative Agent shall have received the final executed
Stock Purchase Agreement with respect to the Subsidiary Disposition
(the "Stock
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Purchase Agreement") and all of the other final definitive instruments
and documents to be executed by the Borrower and its Subsidiaries in
connection with the Subsidiary Disposition, the Dividend/Stock
Repurchase and the Sale Proceeds Investment in form and substance
reasonably acceptable to the Administrative Agent;
(iii) The Administrative Agent shall have been reimbursed for all fees
and out of pocket charges and other expenses incurred in connection
with this Amendment and Waiver, including, without limitation, the fees
and expenses referred to in Paragraph 8 of this Amendment and Waiver;
and
(iv) The Administrative Agent shall have received such other
instruments, documents and certificates as the Administrative Agent
shall reasonably request in connection with the transactions described
herein.
(B) The provisions of Paragraph 4 of this Amendment and Waiver shall
only be effective on the date that each of the following conditions has
been satisfied:
(i) All of the conditions set forth in Paragraph 5(A) hereof shall have
been satisfied; and
(ii) The Subsidiary Disposition shall have been consummated in
accordance with the terms of the Stock Purchase Agreement.
6. Effect of Amendment and Waiver. The consent, waiver and amendment
granted herein is specific and limited only to the sections of the Credit
Agreement referred to in Paragraphs 2, 3 and 4 above and only with respect to
the consummation of the Subsidiary Disposition, the Dividend/Stock Repurchase
and the Sale Proceeds Investment and shall not be construed as (i) a waiver of
the Borrower's compliance with such sections of the Credit Agreement on any
other occasion, a waiver of the Borrower's compliance with any other provision
of the Credit Agreement or a waiver of any other Default or Event of Default
under the Credit Agreement, the Loan Documents or any other document or
instrument entered into in connection therewith or (ii) an amendment of any
other provision of the Credit Agreement or any of the Loan Documents or a
modification, consent, acceptance or waiver or a future modification, consent,
acceptance or waiver of the provisions set forth therein, except to the extent
specifically set forth in Paragraphs 2, 3 and 4.
7. Representations and Warranties/No Default. By its execution hereof,
the Borrower hereby certifies, represents and warrants to the Administrative
Agent and the Lenders that:
(a) Each of the representations and warranties set forth in the Credit
Agreement and the other Loan Documents is true and correct in all
material respects as of the date hereof as if fully set forth herein,
except for any representation and warranty made as of an earlier date,
which representation and warranty shall remain true and correct as of
such earlier date (provided that any representation and warranty that
is qualified by materiality or reference to Material Adverse Effect
shall be true and correct in all respects) and (ii) no Default or Event
of Default has occurred and is continuing as of the date hereof.
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(b) It has the right, power and authority and has taken all necessary
corporate and company action to authorize the execution, delivery and
performance of this Amendment and Waiver and each other document
executed in connection herewith to which it is a party in accordance
with their respective terms.
(c) This Amendment and Waiver and each other document executed in
connection herewith has been duly executed and delivered by its duly
authorized officers, and each such document constitutes the legal,
valid and binding obligation of the Borrower, enforceable in accordance
with its terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar state or
federal debtor relief laws from time to time in effect which affect the
enforcement of creditors' rights in general and the availability of
equitable remedies.
8. Fees and Expenses. The Borrower shall pay all reasonable
out-of-pocket fees and expenses of the Administrative Agent in connection with
the preparation, execution and delivery of this Amendment and Waiver, including,
without limitation, the reasonable fees and disbursements of counsel for the
Administrative Agent.
9. Governing Law. This Amendment and Waiver shall be governed by and
construed in accordance with the laws of the State of North Carolina, without
reference to the conflicts or choice of law provisions thereof.
10. Counterparts. This Amendment and Waiver may be executed in separate
counterparts, each of which when executed and delivered is an original but all
of which taken together constitute one and the same instrument.
11. Facsimile Transmission. A facsimile, telecopy or other reproduction
of this Amendment and Waiver may be executed by one or more parties hereto, and
an executed copy of this Amendment and Waiver may be delivered by one or more
parties hereto by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such party can be
seen, and such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto, all parties
hereto agree to execute an original of this Amendment and Waiver as well as any
facsimile, telecopy or other reproduction hereof.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Waiver to be duly executed as of the date and year first above written.
BORROWER:
PERFORMANCE FOOD GROUP COMPANY, as Borrower
By:_________________________________
Name:_________________________
Title:________________________
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WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent and Lender
By:
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Name:
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Title:
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_____________________________, as Lender
By:
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Name:
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Title:
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ANNEX A
1. Investments in money market mutual funds organized under the laws of the
United States or any State thereof which have daily pricing and daily redemption
features and invest at least twenty-five percent (25%) of their assets in the
investments described in clauses (i) through (iv) of Section 10.4 (b) of the
Credit Agreement; and
2. Investments in tax-exempt municipal bonds and securities, including, but not
limited to dutch auction securities, demand and put securities, commercial
paper, notes and other debt obligations, in each case having a rating of "AAA"
(or the equivalent) or better from either Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc. or Xxxxx'x Investors Service, Inc.
