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EXHIBIT 10.0
First Amendment To
CREDIT AGREEMENT
dated as of
February 23, 1999
between
Xxxxxxxxx Foods Company
and
National City Bank
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FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT (this "Amendment") to Credit Agreement is entered
into as of the 23rd day of February, 1999, by and between Xxxxxxxxx Foods
Company (the "Company"), and National City Bank (the "Bank").
RECITALS:
A. As of March 30, 1998, the Company and the Bank executed a
certain Credit Agreement (the "Credit Agreement"), setting forth the terms of
certain extensions of credit to the Company; and
B. As of March 30, 1998, the Company executed and delivered to
the Bank, inter alia, a certain Revolving Note in the original principal sum of
Fifteen Million Dollars ($15,000,000.00) and a certain Revolving Note in the
original principal sum of Five Million Dollars ($5,000,000.00) (hereinafter
collectively, the "Notes"); and
C. In connection with the Credit Agreement and the Notes, the
Company executed and delivered to the Bank certain other loan documents,
instruments and agreements in connection with the indebtedness referred to in
the Credit Agreement (all of the foregoing, together with the Notes and the
Credit Agreement, are hereinafter collectively referred to as the "Loan
Documents"); and
D. The Company has requested that the Bank amend and modify
certain terms and covenants in the Credit Agreement, and the Bank is willing to
do so upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants, agreements
and promises contained herein, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the parties hereto for
themselves and their successors and assigns do hereby agree, represent and
warrant as follows:
1. Definitions. All capitalized terms not otherwise defined
herein shall have the meanings ascribed to such terms in the Credit Agreement.
2. Section 7, "SECURITY," of the Credit Agreement is hereby
amended to recite in its entirety as follows:
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The Loan shall be secured by the unconditional guaranty of
London's Farm Dairy, Inc., a Subsidiary of the Company, and by the
guaranty of all future Subsidiaries of the Company, in the form of
Exhibit H hereto or such other form as shall be acceptable to the Bank.
Upon request of the Bank, the Loan further shall be secured by the
guaranty of Somerset Computer Services, Inc. in the form of Exhibit H
hereto or such other form as shall be acceptable to the Bank. As used
in this Agreement, "Subsidiary" or "subsidiary" means (i) a corporation
more than 50% of the combined voting power of the outstanding voting
stock of which is owned, directly or indirectly, by the Company, by one
or more Subsidiaries of the Company, or by the Company and one or more
such Subsidiaries thereof or (ii) any other entity in which the
Company, one or more Subsidiaries of the Company or the Company and one
or more such Subsidiaries, directly or indirectly, has at least a
majority ownership or power to direct the policies, management and
affairs thereof.
3. Section 10.12, "Tangible Net Worth," of the Credit Agreement
is hereby amended to recite in its entirety as follows:
10.12 Tangible Net Worth.
The Company shall maintain a Tangible Net Worth of not less
than $21,000,000.00, plus, for each fiscal year end beginning with the
1998 fiscal year, 50% of the Company's positive Net Income for such
year and 50% of the net proceeds from any sale of equities by the
Company during such year. "Tangible Net Worth" shall mean the Company's
equity, minus the sum of all the following: (i) the excess of cost over
the value of net assets of purchased businesses, rights, and other
similar intangibles, less other liabilities and commitments, including
unfavorable leases, contracts and commitments and plant closing expense
incident to the acquisition, at present values of amounts to be paid
determined at appropriate current interest rates, (ii) organizational
expenses, (iii) goodwill, (iv) deferred charges or deferred financing
costs, (v) loans or advances to and/or accounts or notes receivable
from affiliates, (vi) non-compete agreements, (vii) all other
intangible assets, and (viii) all other assets not directly related to
the operation of the business of the Company. "Net Income" for any
period shall mean the net income (or deficit) of the Company for such
period that, in accordance with generally accepted accounting
principles, would be included as net income on the statements of income
of the Company for such period (but excluding any extraordinary gains
or losses attributed to such period). Tangible Net Worth and Net Income
shall be determined for the Company and its Subsidiaries on a
consolidated basis.
4. Section 10.13, "Ratio of Funded Debt to EBITDA," of the
Credit Agreement is hereby amended to recite in its entirety as follows:
10.13 Ratio of Funded Debt to EBITDA.
The Company shall maintain at all times a ratio of Funded Debt
to EBITDA of not more than 3.50 to 1.00. The ratio of Funded Debt to
EBITDA shall be determined as of the last day of the most recently
completed fiscal quarter. "Funded Debt" shall be defined and determined
in accordance with generally accepted accounting principles and
calculated as of the end of the most recently completed fiscal quarter.
"EBITDA" shall mean, for the period consisting of the four most
recently completed fiscal quarters, (a) the sum of the amounts for such
period, for the Company and for any companies acquired in their
entirety by the Company during such period (each an "Acquired
Company"), of (i) net income, (ii) interest expense, (iii) charges for
federal, state, local and foreign income taxes, (iv) depreciation,
amortization expense and non-cash charges that were deducted in
determining net income, (v) extraordinary losses (and any unusual
losses arising outside the ordinary course of business not included in
extraordinary losses determined in accordance with generally accepted
accounting principles) and (vi) other non-operating expenses that have
been deducted in the determination of net income, minus (b) the sum of
the amounts for such period of (i) extraordinary gains (and any unusual
gains arising outside the ordinary course of business not included in
extraordinary gains determined in accordance with generally accepted
accounting principles), (ii) other non-operating income not already
excluded from the determination of net income and (iii) to the extent
not deducted from total interest expense, any net payments received
during such period under interest rate contracts and any interest
income received in respect of cash investments. Funded Debt and EBITDA
shall be determined for the Company and its Subsidiaries on a
consolidated basis.
5. Section 10.14, "Cash Flow Coverage Ratio," of the Credit
Agreement is hereby amended to recite in its entirety as follows:
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10.14 Cash Flow Coverage Ratio.
The Company shall maintain at each fiscal quarter end a ratio
of EBITDA (as defined in Section 10.13), minus unfunded capital
expenditures, minus dividends, plus net proceeds from the sale of
equities, to Debt Service of not less than 2.00 to 1.00. The ratio
shall be determined as of the last day of each fiscal quarter for the
four fiscal quarter period ending on such date. "Debt Service" shall
mean with respect to any period of four fiscal quarters, the sum of (a)
all amounts paid, without duplication, as interest on the indebtedness
of the Company and each Acquired Company for such period, as determined
in accordance with generally accepted accounting principles, less
interest paid other than in cash, plus (b) scheduled principal payments
on term obligations and capital leases of the Company and each Acquired
Company for such period. EBITDA and Debt Service shall be determined
for the Company and its Subsidiaries on a consolidated basis.
6. Section 10.15, "Ratio of EBIT to Interest Expense," of the
Credit Agreement is hereby amended to recite in its entirety as follows:
10.15 Ratio of EBIT to Interest Expense.
The Company shall achieve as of the end of each fiscal year
during the term of this Agreement a ratio of EBIT to interest expense
of not less than 2.50 to 1.00.
"EBIT" shall mean for the Company and each Acquired Company
(a) the Net Income (or deficit) for such period, plus (b) the
aggregate amounts deducted in determining such net income in respect
of (i) all amounts paid (without duplication) as interest on all
indebtedness and obligations of the Company and each Acquired Company
for such period, all as determined in accordance with generally
accepted accounting principles, and (ii) income taxes for such period,
as determined in accordance with generally accepted accounting
principles. "Net Income" for any period shall mean the net income (or
deficit) of the Company or any Acquired Company for such period that,
in accordance with generally accepted accounting principles, would be
included as net income on the statements of income of the Company or
such Acquired Company for such period (but excluding any extraordinary
gains or losses attributed to such period). EBIT, interest expense and
Net Income shall be determined for the Company and its Subsidiaries on
a consolidated basis.
7. Subparagraphs (a) and (c) of Section 11, "INFORMATION AS TO
COMPANY," of the Credit Agreement are hereby amended to replace the phrase
"financial statement" in each subparagraph with the phrase "consolidated
financial statement." The remainder of Section 11 shall remain as originally
written.
8. Conditions of Effectiveness. This Amendment shall become
effective as of February 23, 1999, upon satisfaction of all the following
conditions precedent:
(a) The Bank shall have received two (2) duly executed
original counterparts of this Amendment, a duly executed guaranty of London's
Farm Dairy, Inc. and such other certificates, instruments, documents,
agreements, and opinions of counsel as may be required by the Bank, each of
which shall be in form and substance satisfactory to the Bank and its counsel;
and
(b) The representations contained in paragraph 9 below shall
be true and accurate.
9. Representations. The Company represents and warrants that
after giving effect to this Amendment:
(a) Each and every one of the representations and warranties
made by or on behalf of the Company in the Credit Agreement or the Loan
Documents is true and correct in all respects on and as of the date hereof,
except to the extent that any of such representations and warranties related,
by the expressed terms thereof, solely to a date prior hereto; and
(b) The Company has duly and properly performed, complied
with and observed each of its covenants, agreements and obligations contained
in the Credit Agreement and Loan Documents; and
(c) No event has occurred or is continuing, and no condition
exists which would constitute an Event of Default.
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10. Amendment to Credit Agreement.
(a) Upon the effectiveness of this Amendment, each reference
in the Credit Agreement to "Credit Agreement," "Agreement," the prefix
"herein," "hereof," or words of similar import, and each reference in the Loan
Documents to the Credit Agreement, shall mean and be a reference to the Credit
Agreement as amended hereby.
(b) Except as modified herein, all the representations,
warranties, terms, covenants and conditions of the Credit Agreement, the Loan
Documents and all other agreements executed in connection therewith shall
remain as written originally and in full force and effect in accordance with
their respective terms, and nothing herein shall affect, modify, limit or
impair any of the rights and powers which the Bank may have thereunder. The
amendment set forth herein shall be limited precisely as provided for herein,
and shall not be deemed to be a waiver of, amendment of, consent to or
modification of any of the Bank's rights under or of any other term or
provisions of the Credit Agreement, any Loan Document, or other agreement
executed in connection therewith, or of any term or provision of any other
instrument referred to therein or herein or of any transaction or future action
on the part of the Company which would require the consent of the Bank,
including, without limitation, waivers of Events of Default which may exist
after giving effect hereto. The Company ratifies and confirms each term,
provision, condition and covenant set forth in the Credit Agreement and the
Loan Documents and acknowledges that the agreement set forth therein continue
to be legal, valid and binding agreements, and enforceable in accordance with
their respective terms.
11. Authority. The Company hereby represents and warrants to the
Bank that:
(a) The Company has legal power and authority to execute and
deliver the within Amendment; and
(b) The officer executing the within Amendment on behalf of
the Company has been duly authorized to execute and deliver the same and bind
the Company with respect to the provisions provided for herein; and
(c) The execution and delivery hereof by the Company and the
performance and observance by the Company of the provisions hereof do not
violate or conflict with the articles of incorporation, regulations or by-laws
of the Company or any law applicable to the Company or result in the breach of
any provision of or constitute a default under any agreement, instrument or
document binding upon or enforceable against the Company; and
(d) This Amendment constitutes a valid and legally binding
obligation upon the Company in every respect.
12. Counterparts. This Amendment may be executed in two or more
counterparts, each of which, when so executed and delivered, shall be an
original, but all of which together shall constitute one and the same document.
Separate counterparts may be executed with the same effect as if all parties
had executed the same counterparts.
13. Costs and Expenses. The Company agrees to pay on demand in
accordance with the terms of the Credit Agreement all costs and expenses of the
Bank in connection with the preparation, reproduction, execution and delivery
of this Amendment and all other loan documents entered into in connection
herewith, including the reasonable fees and out-of-pocket expenses of the
Bank's counsel with respect thereto.
14. Governing Law. This Amendment shall be governed by and
construed in accordance with the law of the State of Ohio.
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IN WITNESS WHEREOF, the Company and the Bank have hereunto set their
hands as of the date first set forth above.
THE COMPANY:
XXXXXXXXX FOODS COMPANY
By:
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Its:
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THE BANK:
NATIONAL CITY BANK
By:
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Its:
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EXHIBIT H
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GUARANTOR: London's Farm Dairy, Inc. DEBTOR: Xxxxxxxxx Foods Company
0000 Xxxx Xxxxx Xxxxxx 000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxx 00000 Xxxxxxxx, Xxxx 00000
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CONTINUING GUARANTY
UNLIMITED
For the purpose of inducing National City Bank (hereinafter referred to as
"Bank") to lend money or advance credit to, or renew, extend or forbear from
demanding immediate payment of the Obligations of Xxxxxxxxx Foods Company
(hereinafter referred to as "Debtor"), the undersigned (hereinafter referred to
as "Guarantors" whether one or more), jointly and severally if more than one
(which joint and several liability shall exist regardless of whether additional
Guarantors have evidenced or may in the future evidence their undertaking by
executing this Guaranty, by co-signing one or more promissory notes or other
instruments of indebtedness, by executing one or more separate agreements of
guaranty of any or all of the Obligations referred to herein or otherwise),
hereby unconditionally guarantee the prompt and full payment to Bank when due,
whether by acceleration or otherwise, of all Obligations of any kind for which
Debtor is now or may hereafter become liable to Bank in any manner.
The word "Obligations" is used in its most comprehensive sense and includes,
without limitation, all indebtedness, debts and liabilities (including
principal, interest, late charges, collection costs, attorneys' fees and the
like) of Debtor to Bank, either created by Debtor alone or together with
another or others, primary or secondary, secured or unsecured, absolute or
contingent, liquidated or unliquidated, direct or indirect, whether evidenced
by note, draft, application for letter of credit, agreements of guaranty or
otherwise, and any and all renewals of, extensions of or substitutes therefor.
The word "Obligations" shall include, BUT NOT BE LIMITED TO, all indebtedness
owed by Debtor to Bank by reason of credit extended or to be extended to Debtor
in the principal amount of $20,000,000.00, pursuant to one or more instruments
of indebtedness and related loan documents.
Guarantors, and each of them, hereby promise that if one or more of the
Obligations are not paid promptly when due, they, and each of them, will, upon
request of Bank, pay the Obligations to Bank, irrespective of any action or
lack of action on Bank's part in connection with the acquisition, perfection,
possession, enforcement or disposition of any or all Obligations or any or all
security therefor or otherwise, and further irrespective of any invalidity in
any or all Obligations, the unenforceability thereof or the insufficiency,
invalidity or unenforceability of any security therefor.
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Guarantors waive notice of any and all acceptances of this Guaranty. This
Guaranty is a continuing guaranty, and, in addition to covering all present
Obligations of Debtor to Bank, will extend to all future Obligations of Debtor
to Bank, and this whether such Obligations are reduced or entirely extinguished
and thereafter increased or reincurred. This Guaranty is made and will remain
in effect as to any and all Obligations of Debtor incurred or arising prior to
receipt by the loan officer of Bank who is handling Debtor's Obligations of
written notice of termination of this Guaranty. No such written notice or other
revocation will in any way affect the duties of Guarantors to Bank with respect
to either Obligations incurred by Debtor or instruments executed by Debtor
prior to the receipt of such notice by such loan officer of Bank. In addition,
no such written notice or other revocation will in any way affect the
liabilities of Guarantors to Bank with respect to revolving Obligations of
Debtor on which loans or advances are made, whether such loans or advances are
made prior or subsequent to such notice. Revocation by any one or more of
Guarantors will not affect the duties of the remaining Guarantor or Guarantors.
Bank's rights hereunder shall be reinstated and revived, and this Guaranty
shall be fully enforceable, with respect to any amount at any time paid on
account of the Obligations which thereafter shall be required to be restored or
returned by Bank as a result of the bankruptcy, insolvency or reorganization of
Debtor, Guarantors, or any other person, or as a result of any other fact or
circumstance, all as though such amount had not been paid.
Guarantors waive any claims or other rights which they might now have or
hereafter acquire against Debtor or any other person, guarantor, maker or
endorser primarily or contingently liable on the Obligations that arise from
the existence or performance of Guarantors' obligations under this Guaranty or
under any instrument or agreement with respect to any property constituting
collateral or security herefor, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution, indemnification, or any
right to participate in any claim or remedy of Bank against Debtor or any
collateral security therefor which Bank now has or hereafter acquires; whether
such claim, remedy or right arises in equity, under contract or statute, at
common law, or otherwise.
Guarantors waive presentment, demand, protest, notice of protest and notice of
dishonor or other nonpayment of any and all Obligations and further waive
notice of sale or other disposition of any collateral or security now held or
hereafter acquired by Bank. Guarantors agree that no extension of time, whether
one or more, nor any other indulgence granted by Bank to Debtor, or to
Guarantors, or any of them, and no omission or delay on Bank's part in
exercising any right against, or in taking any action to collect from or pursue
Bank's remedies against Debtor or Guarantors, or any of them, will release,
discharge or modify the duties of Guarantors. Guarantors agree that Bank may,
without notice to or further consent from Guarantors, release or modify any
collateral, security or other guaranties now held or hereafter acquired, or
substitute other collateral, security or other guaranties, and no such action
will release, discharge or modify the duties of Guarantors hereunder.
Guarantors further agree that Bank will not be required to pursue or exhaust
any of its rights or remedies against Debtor or Guarantors, or any of them,
with respect to payment of any of the Obligations, or to pursue, exhaust or
preserve any of its rights or remedies with respect to any collateral, security
or other guaranties given to secure the Obligations, or to take any action of
any sort, prior to demanding payment from or pursuing its remedies against
Guarantors.
Guarantors agree to furnish true and complete financial statements from time to
time on request of Bank and agree that failure to furnish such financial
statements may constitute or be deemed to constitute a default or event of
default of the Obligations. Guarantors agree that any legal suit, action or
proceeding arising out of or relating to this Guaranty may be instituted in a
state or federal court of appropriate subject matter jurisdiction in the State
of Ohio; waive any objection which they may have now or hereafter to the laying
of venue of any such suit, action or proceeding; and irrevocably submit to the
jurisdiction of any such court in any such suit, action or proceeding.
WAIVER OF RIGHT TO TRIAL BY JURY
GUARANTORS ACKNOWLEDGE THAT, AS TO ANY AND ALL DISPUTES THAT MAY ARISE BETWEEN
GUARANTORS AND BANK, THE COMMERCIAL NATURE OF THE TRANSACTION OUT OF WHICH THIS
GUARANTY ARISES WOULD MAKE ANY SUCH DISPUTE UNSUITABLE FOR TRIAL BY JURY.
ACCORDINGLY, GUARANTORS HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY AS TO ANY AND
ALL DISPUTES THAT MAY ARISE RELATING TO THIS GUARANTY OR TO ANY OF THE OTHER
INSTRUMENTS OR DOCUMENTS EXECUTED IN CONNECTION HEREWITH.
Guarantors hereby authorize any attorney at law to appear for them in any action
on any or all Obligations guaranteed hereby at any time after such Obligations
become due, whether by acceleration or otherwise, in any court of record in or
of the State of Ohio or elsewhere, to waive the issuing and service of process
against, and confess
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judgment against Guarantors, or any of them, in favor of Bank for the amount
that may be due, including interest, late charges, collection costs, attorneys'
fees and the like as provided for in said Obligations, and costs of suit, and
to waive and release all errors in said proceedings and judgments, and all
petitions in error and rights of appeal from the judgments rendered. No such
judgment or judgments against less than all of Guarantors shall be a bar to a
subsequent judgment or judgments against any one or more of Guarantors against
whom judgment has not been obtained hereon, this being a joint and several
warrant of attorney to confess judgment. The attorney at law authorized hereby
to appear for the Guarantors may be an attorney at law representing the Bank,
and the Guarantors hereby expressly waive any conflict of interest that may
exist by virtue of such representation.
If any Obligation of Debtor is assigned by Bank, this Guaranty will inure to the
benefit of Bank's assignee, and to the benefit of any subsequent assignee, to
the extent of the assignment or assignments, provided that no assignment will
operate to relieve Guarantors, or any of them, from any duty to Bank hereunder
with respect to any unassigned Obligation. In the event that any one or more of
the provisions contained in this Guaranty or any application thereof shall be
determined to be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and any
other applications thereof shall not in any way be affected or impaired thereby.
This Guaranty shall be construed in accordance with the law of the State of
Ohio.
Executed and delivered at Columbus, Ohio, this 23rd day of February, 1999.
Guarantor:
LONDON'S FARM DAIRY, INC.
By:
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Its:
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WARNING--BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL.
IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR
PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU
REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED
GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY
OTHER CAUSE.
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