TENTH AMENDMENT TO LOAN AGREEMENT
This TENTH AMENDMENT TO LOAN AGREEMENT (this "Amendment", or
the "Tenth Amendment") is made and entered into effective as of July 6, 2001
by and among the following parties:
(a) HOMELAND STORES, INC. ("Borrower"), a Delaware corporation,
(b) HOMELAND HOLDING CORPORATION ("Parent"), a Delaware corporation
(Borrower and Parent are sometimes hereinafter referred to as the
"Companies" and individually as a "Company"),
(c) SLB MARKETING, INC. ("SLB"), a Texas corporation, as a Credit
Party under the Loan Agreement,
(d) JCH BEVERAGE, INC. ("JCH"), a Texas corporation, as a Credit
Party under the Loan Agreement,
(e) IBJ WHITEHALL BUSINESS CREDIT CORPORATION
("IBJ"), formerly IBJ ▇▇▇▇▇▇▇▇ Business Credit Corporation, the assignee of
IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company,
(f) ▇▇▇▇▇▇ FINANCIAL, INC. ("▇▇▇▇▇▇"),
(g) NATIONAL BANK OF CANADA ("NBC"), a Canadian chartered bank,
(such lenders and other financial institutions and their
respective successors and assigns, individually, a "Lender" and
collectively, the "Lenders"), and
(h) NBC, as agent for the Lenders (in such capacity, the "Agent").
RECITALS:
A. Pursuant to that certain Loan Agreement, dated as of December 17, 1998,
by and among Borrower, Parent, the Lenders and the Agent, as amended by the
following:
(1) First Amendment to Loan Agreement, dated as of April 23, 1999,
by and among Borrower, Parent, the Lenders and the Agent;
(2) Second Amendment to Loan Agreement, dated as of October 22,
1999, by and among Borrower, Parent, the Lenders, the Agent and SLB;
(3) Third Amendment to Loan Agreement, dated as of November 2,
1999, by and among Borrower, Parent, the Lenders, and the Agent;
(4) Fourth Amendment to Loan Agreement, dated as of November 19,
1999, by and among Borrower, Parent, the Lenders, the Agent, SLB, and JCH;
(5) Fifth Amendment to Loan Agreement, dated as of February 29,
2000, by and among Borrower, Parent, the Lenders, the Agent, SLB, and JCH;
(6) Sixth Amendment to Loan Agreement, dated as of April 25, 2000,
by and among Borrower, Parent, the Lenders, the Agent, SLB, and JCH;
(7) Seventh Amendment to Loan Agreement, dated as of December 22,
2000, by and among Borrower, Parent, the Lenders, the Agent, SLB, and JCH;
(8) Eighth Amendment to Loan Agreement, dated as of March 23,
2001, by and among Borrower, Parent, the Lenders, the Agent, SLB, and JCH;
and
(9) Ninth Amendment to Loan Agreement (the "Ninth Amendment"),
dated as of April 24, 2001, by and among, Borrower, Parent, the Lenders,
the Agent, SLB, and JCH.
(as the same may be amended, renewed, extended, restated or otherwise modified
from time to time, the "Loan Agreement"), the Lenders agreed to provide to
Borrower a senior secured revolving credit and letter of credit facility, a
senior secured term loan facility, and two secured acquisition term loan
facilities.
B. Pursuant to the Ninth Amendment, the Credit Parties agreed that the
Agent and the Lenders would have the right to adjust the percentages set forth
in the definition of the Borrowing Base in the event that either the appraisal
prepared by Great American Appraisal & Valuations Services, LLC and presented
to the Agent on April 18, 2001, any of the appraisals required by Section
12.14(c) of the Loan Agreement, or any further information received by the Agent
from appraisers indicated appraised values of the Inventory, which, in the
Agent's discretion, make a reduction in such percentages appropriate, with
conforming adjustments to be made to the Borrowing Base Certificate.
C. This Amendment is the result of the Agent's and the Lenders' analysis
and evaluation of, inter alia, the appraisal prepared by Great American
Appraisal & Valuations Services, LLC and presented to the Agent; and this
Amendment is consistent with and contemplated by the terms of the Ninth
Amendment.
D. Borrower and Parent have requested that the Agent and the Lenders
amend the Loan Agreement to provide for the following:
(a) amendment of the definition of the Borrowing Base; and
(b) approval of a temporary overadvance under the Revolving Credit
Facility Commitment, which results from the amendment to the definitions
of the Borrowing Base and the Revolving Loan Borrowing Limit, and from
the re-instatement of certain reserves, as deemed appropriate in
accordance with the Loan Agreement and as indicated on the revised form
of the Borrowing Base Certificate, which is attached to this Amendment
as Exhibit 12.1(j).
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree to
the Recitals stated above and further, as follows:
1. Terms Defined; Definition of UCC. Unless otherwise defined in this
Amendment, each capitalized term used in this Amendment has the meaning given to
such term in the Loan Agreement (as amended by this Amendment). The Companies,
SLB, JCH, the Lenders and the Agent acknowledge and agree that the term "UCC" as
used in the Loan Agreement, as amended hereby, shall mean and refer to the UCC
as amended effective July 1, 2001, it being the express intention of all parties
to treat such amendments as the adoption of a successor statute for purposes of
the Loan Agreement.
2. Borrowing Base. The definition of Borrowing Base, as set forth in
Section 1.1 of the Loan Agreement, is hereby amended to read in full as follows:
"Borrowing Base" shall mean, as of any time, an amount equal to the sum
of the following:
(a) the lesser of:
(i) up to fifty percent (50%) of the Net Amount of
Eligible Inventory (excluding Pharmaceutical Inventory), or
(ii) up to ninety percent (90%) of the "forced
liquidation" value of the Eligible Inventory (excluding
Pharmaceutical Inventory), pursuant to the most recent appraisal
received by the Agent,
(b) the lesser of:
(i) up to sixty-five percent (65%) of the Net Amount of
Eligible Pharmaceutical Inventory, or
(ii) up to ninety percent (90%) of the "forced liquidation"
value of the Eligible Pharmaceutical Inventory, pursuant to the
most recent appraisal received by the Agent,
(c) up to eighty-five percent (85%) of the Net Amount of Eligible
Coupons,
(d) up to fifty percent (50%) of the Net Amount of Eligible
Pharmaceutical Receivables, and
(e) up to sixty-five percent (65%) of the Net Amount of
Eligible Vendor Receivables,
as determined by reference to and as set forth in the last Borrowing Base
Certificate required to be delivered to the Agent and each Lender prior to such
time pursuant to Section 12.1(j) hereof, beginning with the Borrowing Base
Certificate delivered to the Agent and each Lender on for the period as of May
19, 2001.
3. Revolving Loan Borrowing Limit. Section 2.2(a) of the Loan Agreement
is hereby amended to read in its entirety as follows:
(a) The aggregate unpaid principal amount of the Revolving Credit Advances
outstanding at any time shall not exceed an amount equal to the least of
(i) the Revolving Credit Facility Commitment, minus the Letter
of Credit Usage at such time (after giving effect to any concurrent
reimbursement of a Letter of Credit with the proceeds of an Advance
pursuant to Section 7.1(c) hereof), minus the amount of any reserve
established pursuant to Section 2.8 hereof (e.g., landlord's
reserves), and
(ii) the Borrowing Base as of such time, minus the Letter of
Credit Usage at such time (after giving effect to any concurrent
reimbursement of a Letter of Credit with the proceeds of an Advance
pursuant to Section 7.1(c) hereof), minus the amount of any reserve
established pursuant to Section 2.8 hereof (e.g., landlord's
reserves), and
(iii) the amount that would be permitted under the Indenture;
pursuant to the definition of "Permitted Indebtedness," as defined
in the Indenture
(the least of (i), (ii) and (iii) being the "Revolving Loan Borrowing
Limit").
4. Consent to Temporary Overadvances Under the Revolving Credit Facility
Commitment. Section 2.2(d) of the Loan Agreement is hereby amended to read in
its entirety as follows:
(d) During the period from July 6, 2001 through July 30, 2001, the
Lenders consent to the addition to the determination of the Revolving Loan
Borrowing Limit, as calculated pursuant to Section 2.2(a)(ii), of an
amount up to $4,546,000, which is the amount of the reduction to the
Revolving Loan Borrowing Limit existing on May 19, 2001, as calculated
pursuant to the Borrowing Base Certificate delivered to the Agent for the
period ending May 19, 2001, after giving effect to the re-instatement of
certain ineligible Inventory categories and the definitions of the
Borrowing Base and the Revolving Loan Borrowing Limit, as set forth in the
Tenth Amendment (the "Temporary Overadvance"). The Temporary Overadvance
(net of any mandatory reductions as required below) will be added to the
determination of the Revolving Loan Borrowing Limit, as calculated
pursuant to Section 2.2(a)(ii), through July 31, 2001. The extent to
which the outstanding amount of Revolving Credit Advances exceeds the
Revolving Loan Borrowing Limit shall be paid in full on or before July 31,
2001. Mandatory reductions to the Temporary Overadvance shall be made in
like amounts from the net proceeds of dispositions of Real Property owned
by Borrower but not operated by Borrower as a grocery store and the net
proceeds of dispositions of Real Property that is leased by Borrower.
5. Establishment of Reserves. Section 2.8 of the Loan Agreement is hereby
amended to read in full as follows:
ESTABLISHMENT OF RESERVES. The Agent may at any time and from time
to time in its discretion establish reserves, which shall be subtracted
from the Borrowing Base when calculating the amount of the Revolving Loan
Borrowing Limit. Further, in lieu of considering all Inventory at a leased
location not to be Eligible Inventory (as contemplated by clause (h) of the
definition of Eligible Inventory), and without limiting the foregoing, the
Credit Parties specifically agree that the Agent may establish such
reserves for any leased store location of Borrower that constitutes a Real
Property where the Agent has not received a waiver of landlord's lien,
substantially in the form and substance of the form of Landlord's Waiver
attached as Exhibit 12.20 hereto or such other form as approved by the
Agent. Borrower specifically acknowledges that the existing landlord's
waivers received in conjunction with the Original Agreement are not
satisfactory for purposes of satisfying Borrower's obligations under
Sections 9.20 or 12.20 of this Agreement, that the Agent and the Lenders
nevertheless shall be entitled to enjoy the benefits of such existing
landlord's waivers, and that the Agent's and the Lenders' enjoyment of the
benefits of such existing landlord's waivers shall not constitute approval
thereof for purposes of this Section 2.8. The amount of the reserve
established as a result of the failure of the Agent to receive a Landlord's
Waiver will be equal to the amount of rent payable with respect to the
applicable store and Real Property for a period of three (3) months.
6. Borrowing Base Certificate. The form of the Borrowing Base Certificate
attached to the Loan Agreement as Exhibit 12.1(j) is hereby amended and replaced
by the form of the Borrowing Base Certificate attached as Exhibit 12.1(j) to
this Amendment.
7. Errata. The last sentence of Section 21(c) of the Ninth Amendment,
pertaining to engagement of a consultant by the Agent and the Lenders, is
amended and restated to read in its entirety as follows:
The Borrower shall cooperate in every respect with the Agent's or the
Lenders' consultant, including providing any requested information in a
timely manner. Borrower shall reimburse the Agent for all fees and
expenses charged by the Agent's or the Lenders' consultant.
8. Conditions Precedent. The effectiveness of this Amendment is expressly
conditioned upon the satisfaction of the following conditions precedent:
(a) the Agent shall have received all of the following, each dated
(unless otherwise indicated) the date of this Amendment, in form and
substance satisfactory to the Agent:
(i) Amendment Documents. This Amendment and any other
instrument, including, document or certificate required by the Agent
to be executed or delivered by Borrower, Parent or any other party in
connection with this Amendment or any consent granted herein, duly
executed by the parties thereto (collectively, the "Amendment
Documents"); and
(ii) Additional Information. Such additional documents,
instruments and information as the Agent or its legal counsel, ▇▇▇▇▇▇
& ▇▇▇▇, L.L.P., special counsel to the Agent, and all local counsel
to the Agent, may reasonably request to effect the transactions
contemplated hereby.
(b) Delivery of Documents. All corporate proceedings taken in
connection with the transactions contemplated by this Amendment and all
other agreements, documents and instruments executed and/or delivered
pursuant hereto, and all legal matters incident thereto, shall be
satisfactory to the Agent and its legal counsel, ▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.
9. Representations and Warranties. Each Company hereby represents and
warrants to the Agent and the Lenders that, as of the date of and after giving
effect to this Amendment, (a) the execution, delivery and performance of this
Amendment has been authorized by all requisite corporate action on the part of
each Company and will not violate the corporate charter or bylaws of any
Company, (b) all representations and warranties set forth in the Loan Agreement
and in any other Loan Documents are true and correct, in all material respects,
as if made again on and as of such date (including, without limitation, the
representations and warranties previously made as of the Closing Date in the
Loan Agreement), (c) no Default or Event of Default has occurred and is
continuing, and (d) the Loan Agreement (as amended by this Amendment), the
Notes (as the same may be amended and restated from time to time) and the other
Loan Documents are and remain legal, valid, binding and enforceable obligations
of each Company, as applicable.
10. Amendment Documents as Loan Documents. The term Loan Documents as
defined in the Loan Agreement and as used in any of the Loan Documents includes,
without limitation, this Amendment and each of the other Amendment Documents
executed in connection herewith.
11. Governing Law. THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
12. Counterparts. This Amendment may be executed in any number of
counterparts, all of which when taken together shall constitute one agreement,
and any of the parties hereto may execute this Amendment by signing any such
counterpart.
13. No Commitment. Borrower, Parent and Guarantors agree that neither the
Agent nor the Lenders have made any commitment or other agreement regarding the
Loan Agreement, or the Loan Documents, except as expressly set forth in this
Amendment. Borrower, Parent and Guarantors warrant and represent that none of
the Credit Parties will rely on any commitment, further agreement to amend or
other agreement on the part of the Agent or the Lenders unless such commitment
or agreement is in writing and signed by the Agent and the Lenders.
14. No Oral Agreements. THIS AMENDMENT, TOGETHER WITH THE LOAN AGREEMENT
AND THE OTHER LOAN DOCUMENTS AS WRITTEN, REPRESENT THE FINAL AGREEMENTS BETWEEN
AND AMONG THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN (A) BORROWER, OR PARENT, AND (B) AGENT OR ANY
LENDER.
15. Loan Agreement Remains in Effect: No Waiver. Except as expressly
provided herein, all terms and provisions of the Loan Agreement and the other
Loan Documents shall remain unchanged and in full force and effect and are
hereby ratified and confirmed. No waiver by the Agent or any Lender of any
Default or Event of Default shall be deemed to be a waiver of any other Default
or Event of Default. No delay or omission by the Agent or any Lender in
exercising any power, right or remedy shall impair such power, right or remedy
or be construed as a waiver thereof or an acquiescence therein, and no single or
partial exercise of any such power, right or remedy shall preclude other or
further exercise thereof or the exercise of any other power, right or remedy
under the Loan Agreement, the Loan Documents or otherwise.
16. Ratification of Guaranties. Each of Parent and by their signature
below SLB and JCH, reaffirms its respective obligations under its respective
Guaranty, agrees that its respective Guaranty shall remain in full force and
effect not withstanding execution of this Amendment and the Amendment Documents,
and agrees that its respective Guaranty and the Loan Agreement shall continue to
be legal, valid and binding obligations of such Guarantor, enforceable in
accordance with the terms therein with regard to the Indebtedness.
17. Counterclaims. EACH OF BORROWER, PARENT AND GUARANTORS HEREBY
ACKNOWLEDGES THAT AS OF THE DATE HEREOF IT HAS NO DEFENSE, COUNTERCLAIM, OFFSET,
CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE
ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS LIABILITY TO REPAY THE
OBLIGATIONS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE
FROM AGENT, ANY LENDER OR ITS RESPECTIVE AFFILIATES, PARTICIPANTS OR ANY OF
THEIR RESPECTIVE DIRECTORS OFFICERS, AGENTS, EMPLOYEES OR ATTORNEYS. EACH OF
BORROWER, PARENT, AND GUARANTORS HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND
FOREVER DISCHARGES AGENT, EACH LENDER, AND THEIR RESPECTIVE AFFILIATES AND
PARTICIPANTS, AND EACH OF THEIR RESPECTIVE PREDECESSORS, AGENTS, OFFICERS,
DIRECTORS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS,
ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER,
KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED,
CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART
ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH EITHER BORROWER, PARENT
OR GUARANTORS MAY NOW OR HEREAFTER HAVE AGAINST AGENT, ANY LENDER, THEIR
RESPECTIVE PREDECESSORS, AGENTS, OFFICERS, DIRECTORS, EMPLOYEES, SUCCESSORS AND
ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF
CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING
FROM THE OBLIGATIONS, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN
AGREEMENT OR OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS
AMENDMENT. BORROWER, PARENT AND GUARANTORS HEREBY COVENANT AND AGREE NEVER TO
INSTITUTE ANY ACTION OR SUIT AT LAW OR IN EQUITY, NOR INSTITUTE, PROSECUTE, OR
IN ANY WAY AID IN THE INSTITUTION OR PROSECUTION OF ANY CLAIM, ACTION OR CAUSE
OF ACTION, RIGHTS TO RECOVER DEBTS OR DEMANDS OF ANY NATURE AGAINST AGENT, EACH
LENDER, THEIR RESPECTIVE AFFILIATES, AND PARTICIPANTS, AND THEIR RESPECTIVE
SUCCESSORS, AGENTS, ATTORNEYS, OFFICERS, DIRECTORS, EMPLOYEES, AND PERSONAL AND
LEGAL REPRESENTATIVES ARISING OUT OF OR RELATED TO AGENT'S AND ANY LENDER'S
ACTIONS, OMISSIONS, STATEMENT, REQUESTS OR DEMANDS IN ADMINISTERING, ENFORCING,
MONITORING, COLLECTION OR ATTEMPTING TO COLLECT THE INDEBTEDNESS OF BORROWER TO
AGENT AND EACH LENDER, WHICH INDEBTEDNESS IS EVIDENCED BY THE LOAN AGREEMENT AND
THE LOAN DOCUMENTS.
18. Fees and Expenses. Borrower agrees to pay all expenses paid or
incurred by the Agent in connection with this Amendment and any related
documents, including but not limited to recording fees, computer fees,
duplication fees, telephone and telecopier fees, travel and transportation fees,
search and filing fees, and the reasonable fees and expenses of ▇▇▇▇▇▇ & ▇▇▇▇,
L.L.P., counsel to the Agent.
19. Survival of Representations and Warranties. All representations and
warranties made in this Amendment or any other Amendment Document shall survive
the execution and delivery of this Amendment and the other Amendment Documents,
and no investigation by the Lender or any closing shall affect the
representations and warranties or the right of the Lender to rely upon them.
20. Reference to Loan Agreement. Each of the Loan Documents, including
the Loan Agreement, the Amendment Documents and any and all other agreements,
documents or instruments now or hereafter executed and/or delivered pursuant to
the terms hereof or pursuant to the terms of the Loan Agreement as amended
hereby, are hereby amended so that any reference in such Loan Documents to the
Loan Agreement shall mean a reference to the Loan Agreement as amended hereby.
21. 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.
22. Successors and Assigns. This Amendment is binding upon and shall
inure to the benefit of the Agent, the Lenders, Borrower, Parent, SLB and JCH
and their respective successors and assigns, except Borrower, Parent, SLB and
JCH may not assign or transfer any of their rights or obligations hereunder
without the prior written consent of the Lenders.
23. Headings. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
[Signature Pages Follow]
IN WITNESS WHEREOF, Borrower, Parent, SLB, JCH, the Agent and the
Lenders have caused this Amendment to be executed and delivered by their duly
authorized officers effective as of the date first above written.
BORROWER:
HOMELAND STORES, INC.
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Senior Vice President - Finance and
Chief Financial Officer and Secretary
PARENT:
HOMELAND HOLDING
CORPORATION
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Senior Vice President - Finance and
Chief Financial Officer and Secretary
CREDIT PARTIES:
SLB MARKETING, INC.
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Attorney-in-Fact
JCH BEVERAGE, INC.
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Attorney-in-Fact
AGENT AND A LENDER:
NATIONAL BANK OF CANADA,
a Canadian chartered bank
By:
▇▇▇ ▇▇▇▇▇▇▇▇▇,
Vice President
By:
Name:
Title:
ADDITIONAL LENDERS:
IBJ WHITEHALL BUSINESS CREDIT
CORPORATION
By:
Name:
Title:
▇▇▇▇▇▇ FINANCIAL, INC.
By:
Name:
Title: