Exhibit 10.51
FIRST AMENDMENT
TO REVOLVING CREDIT
AND GUARANTY AGREEMENT
FIRST AMENDMENT, dated as of March 5, 1998 (the "Amendment"), to the
REVOLVING CREDIT AND GUARANTY AGREEMENT, dated as of February 2, 1998, among
BRUNO'S, INC., an Alabama corporation (the "Borrower"), a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code, the Guarantors
named therein (the "Guarantors"), THE CHASE MANHATTAN BANK, a New York banking
corporation ("Chase"), each of the other financial institutions party thereto
(together with Chase, the "Banks") and THE CHASE MANHATTAN BANK, as Agent for
the Banks (in such capacity, the "Agent"):
W I T N E S S E T H:
WHEREAS, the Borrower, the Guarantors, the Banks and the Agent are parties
to that certain Revolving Credit and Guaranty Agreement, dated as of February 2,
1998 (as the same may be further amended, modified or supplemented from time to
time, the "Credit Agreement"); and
WHEREAS, the Credit Agreement provides that from and after the entry of
the Final Order referred to therein, the aggregate extensions of credit
thereunder shall not exceed a Borrowing Base to be defined in a manner
satisfactory to the Agent; and
WHEREAS, the Borrower, the Guarantors, the Banks and the Agent have agreed
to certain modifications to the Credit Agreement in addition to the
incorporation of the Borrowing Base; and
WHEREAS, from and after the Effective Date (as hereinafter defined) of
this Amendment, the Credit Agreement shall be amended, subject to and upon the
terms and conditions set forth herein, to set forth the definition of the
Borrowing Base (and of related terms), and to reflect such additional
modifications, as follows:
NYFS10...:\80\56880\0003\1187\AGR3278K.020
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. As used herein, all terms that are defined in the Credit Agreement
shall have the same meanings herein.
2. Subparagraph (b) of the fourth paragraph of the Introductory Statement
is hereby amended by inserting the following immediately after the words
"Bankruptcy Code" appearing in the fourth line thereof: "but pari passu with the
Participating Vendor Claims".
3. Subparagraphs (c), (d) and (e) of the Introductory Statement are hereby
amended in their entireties to read as follows:
(c) with respect to the Obligations of the Borrower and the
Guarantors hereunder, a perfected first priority Lien, pursuant to
Section 364(c)(2) of the Bankruptcy Code, upon (x) all property of
the Borrower and the Guarantors that either was not subject to valid
and perfected Liens in existence on the Filing Date or was subject
to Liens in existence on the Filing Date that were released
subsequent to the Filing Date (which perfected first priority Lien
shall be pari passu with the Lien under Section 364(c)(2) of the
Bankruptcy Code granted pursuant to the Final Order to secure
Participating Vendor Claims) and (y) all cash and cash equivalents
that are (i) deposited in the Letter of Credit Account prior to the
Termination Date and (ii) deposited in the Letter of Credit Account,
out of the Agent's and the Banks' PARI PASSU recoveries from the
assets of the Borrower and the Guarantors, on and after the
Termination Date (which cash and cash equivalents so deposited in
the Letter of Credit Account (the "Separate Account") shall not be
subject to the Lien securing Participating Vendor Claims), provided
that following the Termination Date, amounts in the Letter of Credit
Account shall not be subject to the Carve-Out hereinafter referred
to; and
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(d) with respect to the Obligations of the Borrower and the
Guarantors hereunder, a perfected Lien, pursuant to Section
364(c)(3) of the Bankruptcy Code, upon all property of the Borrower
and the Guarantors that was subject to valid and perfected Liens in
existence on the Filing Date (including the existing Liens that
presently secure the Borrower's and Guarantors' pre-petition
Indebtedness under or in connection with that certain Credit
Agreement dated as of August 18, 1995, among the Borrower, the
several lenders from time to time party thereto and Chase, as
administrative agent (as heretofore amended, amended and restated or
otherwise modified, the "Existing Agreement") and any Liens granted
after the Filing Date on the property of the Guarantors to provide
adequate protection in respect of the Existing Agreement), junior to
such valid and perfected Liens (which junior Lien shall be pari
passu with the Lien under Section 364(c)(3) of the Bankruptcy Code
granted pursuant to the Final Order to secure Participating Vendor
Claims).
4. The definition of the term "Borrowing Base" set forth in Section 1.01
of the Credit Agreement is hereby amended in its entirety to read as follows:
"Borrowing Base" shall mean, on any date, an amount
(calculated based on the most recent Borrowing Base Certificate
delivered pursuant to this Agreement) that is equal to (i) the
amount by which the sum of (a) 65% of the Adjusted Eligible
Inventory located at the Distribution Center at such date and (b)
60% of the Adjusted Eligible Inventory located at the Stores (or in
transit from the Distribution Center to the Stores) at such date
exceeds the aggregate amount of Participating Vendor Claims at such
date, MINUS (ii) the aggregate amount of gift certificates then
outstanding entitling the holder thereof to use all or a portion
thereof to pay all or a portion of the purchase price for any
Inventory as of such day, PLUS (iii) the Real Property Component.
The Borrowing Base will be computed on a weekly and monthly basis
and established based upon the most recent
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Borrowing Base Certificate delivered to the Agent and shall remain
in effect until the delivery to the Agent of a subsequent Borrowing
Base Certificate. Borrowing Base standards may be fixed and revised
from time to time solely by the Agent in the Agent's exclusive
judgment with three Business Days prior notice by the Agent to the
Borrower and the Guarantors.
5. The definition of the term "Prepayment Date" set forth in Section 1.01
of the Credit Agreement is hereby amended by deleting the words (x) "thirty (30)
days after the entry of the Interim Order by the Bankruptcy Court" appearing in
the first and second lines thereof and inserting in lieu thereof the date "March
11, 1998" and (y) "the expiration of such thirty (30) day period" appearing at
the end thereof and inserting in lieu thereof the words "such date".
6. The definition of the term "Borrowing Base Certificate" set forth in
Section 1.01 of the Credit Agreement is hereby amended in its entirety to read
as follows:
"Borrowing Base Certificate" shall mean a certificate
substantially in the form of Exhibit E (with such changes therein as
may be required by the Agent to reflect the components of and
reserves against the Borrowing Base as provided for hereunder from
time to time), executed and certified by a Financial Officer of the
Borrower, which shall include appropriate exhibits and schedules as
referred to therein.
7. Section 1.01 of the Credit Agreement is hereby amended by inserting the
following new definitions in appropriate alphabetical order:
"Additional Reserve" shall mean, on any date, an amount that
is equal to 2% of Eligible Inventory on such date (other than
Eligible Inventory consisting of general merchandise located at the
Stores), PROVIDED that the calculation of the Additional Reserve
shall include
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general merchandise located at the Stores at such times as the
Additional Shrink Percentage is zero.
"Additional Shrink Amount" shall be calculated only if the
Additional Shrink Percentage is greater than zero and shall mean, on
any date, an amount that is equal to (x) (a) the Additional Shrink
Percentage multiplied by total sales of general merchandise for all
Stores for the immediately preceding twelve fiscal monthly periods
divided by (b) twelve, MULTIPLIED BY (y) the Turnover Rate for
general merchandise located at the Stores.
"Additional Shrink Percentage" shall be applicable solely to
general merchandise located at the Stores and shall mean, on any
date, a percentage that is equal to (a) a percentage equal to the
amount of shrink in cost dollars actually incurred by the Stores at
which physical inventories were taken by the Borrower and the
Guarantors divided by sales in retail dollars for the Stores at
which physical inventories were taken by the Borrower and the
Guarantors, in each case during the immediately preceding twelve
fiscal monthly periods MINUS (b) a percentage equal to the amount of
shrink in cost dollars recorded in the accounting records of the
Borrower and the Guarantors for all Stores divided by sales in
retail dollars for all Stores, in each case during the immediately
preceding twelve fiscal monthly periods (it being understood that
the Additional Shrink Percentage may not be less than zero).
"Adjusted Eligible Inventory" shall mean, on any date,
Eligible Inventory minus the sum of (a) the Additional Reserve and
(b) the Additional Shrink Amount.
"Average Inventory" shall mean, on any date, (a) aggregate
Inventory at the end of each fiscal monthly period beginning with
the first fiscal monthly period of the current fiscal year through
the most recent fiscal monthly period of the current fiscal year
divided by (b) the number of fiscal monthly periods then elapsed in
the current fiscal year.
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"Distribution Center" shall mean the warehouse facility
operated by the Borrower and the Guarantors and located in
Birmingham, Alabama.
"Eligible Inventory" shall mean grocery, general merchandise
and deli (as described in the definition of the term "Inventory"),
PROVIDED that no Inventory shall be considered eligible if: (a) it
is located at the reclamation center of the Distribution Center or
is held at the Distribution Center for return to vendor; (b) it
includes any profits or transfer price additions charged or accrued
in connection with transfers of Inventory between the Borrower and
the Guarantors or among the Guarantors; (c) it is supplies,
packaging, selling or display materials; (d) it is located at the
Distribution Center and is in excess of an eight weeks' supply based
on sales for the most recently preceding eight-week period
determined at an individual product level; (e) it is not owned
solely by the Borrower and the Guarantors; (f) it is on consignment
to the Borrower and the Guarantors; (g) it is not located at
property that is owned or leased by the Borrower and the Guarantors
or in transit from vendors; (h) it is not located in the United
States of America; (i) it is not subject to a perfected first
priority Lien securing the Obligations and Participating Vendor
Claims; or (j) it is not in good condition, does not meet all
standards imposed by any Governmental Authority having regulatory
authority over it, or is not currently saleable in the normal course
of business of the Borrower and the Guarantors.
"Inventory" shall mean all products available for sale by the
Borrower and the Guarantors in the following categories as defined
and classified by the Borrower and the Guarantors on a basis
consistent with the Borrower's and the Guarantors' current and
historical accounting practices: grocery, general merchandise,
pharmacy, meat, seafood, produce, floral, bakery and deli; valued at
cost on a basis consistent with the Borrower's and the Guarantors'
current and historical accounting practices (without giving effect
to LIFO reserves).
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"Participating Vendors" shall have the meaning set forth in
the Final Order.
"Participating Vendor Claims" shall mean the claims (net of
allowances, rebates, coupon reconciliations and other credits) held
by Participating Vendors on account of Inventory shipped to the
Borrower by Participating Vendors and accepted by the Borrower from
and after the date on which such vendors have become Participating
Vendors pursuant to the terms of the Final Order, provided that no
claim for goods shipped more than seven calendar days following the
giving of notice by the Agent to the Borrower and to the Vendor
Trustee referred to in the Final Order (or, in the absence of the
appointment of a Vendor Trustee, to counsel for the Official
Creditors' Committee appointed in the Cases) of the occurrence of an
Event of Default shall constitute a Participating Vendor Claim.
"Real Property Component" shall mean $125,000,000, PROVIDED
that such amount shall be (i) automatically and permanently reduced
at the time of the sale, transfer or other disposition by the
Borrower or any of the Guarantors of any real property or any
leasehold interest in real property (other than real property and
leasehold interests in real property described in Schedule 6.11) by
an amount that is equal to the appraised value thereof as reflected
in the most recent appraisal with respect thereto furnished to the
Agent pursuant to Section 5.10 or delivered to the Pre-Petition
Agent pursuant to the requirements of the Existing Agreement (it
being understood that if any such appraisal sets forth a range of
values for the subject property, the "appraised value" of such
property shall be the arithmetic mean of the high and low values
specified for such property in such appraisal as determined by the
Agent) and (ii) otherwise adjusted as determined by the Agent to
reflect the appraised values that are set forth in the appraisals
that are furnished to the Agent from time to time pursuant to
Section 5.10.
"Stores" shall mean all supermarket retail locations selling
Inventory owned by the Borrower and the Guarantors.
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"Turnover Rate" shall be an amount stated in months and shall
mean, on any date, an amount that is equal to (x) twelve DIVIDED BY
(y) (i) (a) the aggregate cost of goods sold from the beginning of
the current fiscal year through the end of the most recent fiscal
monthly period divided by (b) the number of weeks then elapsed in
the current fiscal year multiplied by (c) the total number of weeks
in the current fiscal year divided by (ii) Average Inventory.
8. Section 2.03(d) of the Credit Agreement is hereby amended by deleting
the percentage (x) "1-1/4%" appearing in the fourth line thereof and inserting
in lieu thereof the percentage "3/4 of 1%" and (y) "3-1/4%" appearing in the
fifth line thereof and inserting in lieu thereof the percentage "2-3/4%".
9. Section 2.08(a) of the Credit Agreement is hereby amended by deleting
the percentage "1-1/4%" appearing in the third line thereof and inserting in
lieu thereof the percentage "3/4 of 1%".
10. Section 2.08(b) of the Credit Agreement is hereby amended by deleting
the percentage "2-1/4%" appearing in the fourth line thereof and inserting in
lieu thereof the percentage "1-3/4%".
11. Section 2.09 of the Credit Agreement is hereby amended by deleting the
percentage (i) "4-1/4%" appearing in clause (x) thereof and inserting in lieu
thereof the percentage "3-3/4%" and (ii) "3-1/4%" appearing in clause (y)
thereof and inserting in lieu thereof the percentage "2-3/4%".
12. Section 2.19 of the Credit Agreement is hereby amended by inserting
the following sentence at the end thereof:
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Notwithstanding anything to the contrary set forth in such letter,
the annual administration fee referred to therein shall be equal to
$150,000, payable in quarterly installments each in the amount of
$37,500 at the times set forth in such letter.
13. Section 2.21 of the Credit Agreement is hereby amended by deleting the
words "two and one-quarter (2-1/4%)" appearing in the third line thereof and
inserting in lieu thereof the words "one and three-quarters per cent (1-3/4%)".
14. The first sentence of Section 2.23(a) of the Credit Agreement is
hereby amended in its entirety to read as follows:
The Borrower and each of the Guarantors hereby covenants, represents
and warrants that, upon entry of the Final Order, (i) pursuant to
Section 364(c)(1) of the Bankruptcy Code, the Obligations of the
Borrower and the Guarantors hereunder and under the Loan Documents
and in respect of Indebtedness permitted by Section 6.03(vi) shall
at all times constitute allowed administrative expense claims in the
Cases having priority over all administrative expenses of the kind
specified in Sections 503(b) or 507(b) of the Bankruptcy Code but
pari passu with the Participating Vendor Claims, (ii) pursuant to
Section 364(c)(2) of the Bankruptcy Code, the Obligations of the
Borrower and the Guarantors hereunder and under the Loan Documents
and in respect of Indebtedness permitted by Section 6.03(vi) shall
at all times be secured by a perfected first priority Lien on (x)
all property of the Borrower and the Guarantors that either was not
subject to valid and perfected Liens in existence on the Filing Date
or was subject to Liens in existence on the Filing Date that were
released subsequent to the Filing Date (which perfected first
priority Lien shall be pari passu with the Lien under Section
364(c)(2) of the Bankruptcy Code granted pursuant to the Final Order
to secure Participating Vendor Claims) and (y) the Separate Account
(which Separate Account shall not be subject to the Lien securing
Participating Vendor Claims), and (iii) pursuant to Section
364(c)(3) of the Bankruptcy Code, the Obligations of the
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Borrower and the Guarantors hereunder and under the Loan Documents
and in respect of Indebtedness permitted by Section 6.03(vi) shall
be secured by a perfected Lien upon all property of the Borrower and
the Guarantors that was subject to valid and perfected Liens in
existence on the Filing Date (including the existing Liens that
presently secure the Borrower's and the Guarantors' pre-petition
Indebtedness under the Existing Agreement and any Liens granted
after the Filing Date on the property of the Guarantors to provide
adequate protection in respect of the Existing Agreement), junior to
such valid and perfected Liens (which junior Lien shall be pari
passu with the Lien under Section 364(c)(3) of the Bankruptcy Code
granted pursuant to the Final Order to secure Participating Vendor
Claims), subject only to (x) in the event of the occurrence and
during the continuance of an Event of Default or an event that would
constitute an Event of Default with the giving of notice or lapse of
time or both, the payment of allowed and unpaid professional fees
and disbursements incurred by the Borrower, the Guarantors and any
statutory committees appointed in the Cases in an aggregate amount
not in excess of $2,500,000 and (y) the payment of unpaid fees
pursuant to 28 U.S.C. ss. 1930 (collectively, the "Carve-Out"),
provided that following the Termination Date amounts in the Letter
of Credit Account shall not be subject to the Carve-Out.
15. Clause (iv) of the first sentence of Section 3.06 of the Credit
Agreement is hereby amended by inserting the following at the end thereof:
and (from and after the entry of the Final Order) Liens securing
Participating Vendor Claims (all of which Liens referred to in this
clause (iv) shall be pari passu with one another, provided that the
Separate Account shall not be subject to the Lien securing
Participating Vendor Claims)
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16. Section 4.02 (d) of the Credit Agreement is hereby amended by deleting
the words "30 days after the entry of the Interim Order" appearing in the tenth
and eleventh lines thereof and inserting in lieu thereof the date "March 11,
1998".
17. Section 5.09 of the Credit Agreement is hereby amended by inserting
(x) the word "second" before the word "immediately" appearing in the third line
thereof and (y) the following sentence at the end thereof:
In addition, the Borrower shall furnish to the Agent, together with
each Borrowing Base Certificate, an estimate of the aggregate amount
of the Participating Vendor Claims as of the date of the Borrowing
Base set forth in such Borrowing Base Certificate.
18. Clause (iv) of Section 6.01 of the Credit Agreement is hereby amended
by inserting the following at the end thereof:
"and Liens securing Participating Vendor Claims (all of which Liens
referred to in this clause shall be pari passu with one another,
provided that the Separate Account shall not be subject to the Lien
securing Participating Vendor Claims)"
19. Section 6.04 of the Credit Agreement is hereby amended by inserting
the word "reasonably" immediately before the word "satisfactory" appearing in
the last line thereof.
20. Section 6.05(b) of the Credit Agreement is hereby amended by inserting
the word "reasonably" immediately before the word "satisfactory" appearing in
the last line thereof.
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21. Section 6.07 of the Credit Agreement is hereby amended by inserting
the following after the words "except for" appearing in the third line thereof:
"Participating Vendor Claims (which shall be pari passu with the
claims of the Agent and the Banks against the Borrower and the
Guarantors hereunder) and except for"
22. Section 7.01(e) of the Credit Agreement is hereby amended by inserting
the following at the end thereof:
", in each case other than Participating Vendor Claims (which shall
be pari passu with the claims of the Agent and the Banks hereunder)"
23. The Credit Agreement is hereby amended by replacing Exhibit A-2
thereto with Schedule 1 hereto.
24. The Credit Agreement is hereby further amended by adding Schedule 2
hereto as Exhibit E to the Credit Agreement.
25. This Amendment shall not become effective until the date (the "
Effective Date") on which this Amendment shall have been executed by the
Borrower, the Guarantors, the Banks and the Agent, and the Agent shall have
received evidence satisfactory to it of such execution.
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26. Except to the extent hereby amended, the Credit Agreement and each of
the Loan Documents remain in full force and effect and are hereby ratified and
affirmed.
27. The Borrower agrees that its obligations set forth in Section 10.05 of
the Credit Agreement shall extend to the preparation, execution and delivery of
this Amendment, including the reasonable fees and disbursements of special
counsel to the Agent.
28. This Amendment shall be limited precisely as written and shall not be
deemed (a) to be a consent granted pursuant to, or a waiver or modification of,
any other term or condition of the Credit Agreement or any of the instruments or
agreements referred to therein or (b) to prejudice any right or rights which the
Agent or the Banks may now have or have in the future under or in connection
with the Credit Agreement or any of the instruments or agreements referred to
therein. Whenever the Credit Agreement is referred to in the Credit Agreement or
any of the instruments, agreements or other documents or papers executed or
delivered in connection therewith, such reference shall be deemed to mean the
Credit Agreement as modified by this Amendment.
29. This Amendment may be executed in any number of counterparts and by
the different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.
30. This Amendment shall be governed by, and construed in accordance with,
the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and the year first above written.
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BORROWER:
BRUNO'S, INC.
By: _________________________
Title:
GUARANTORS:
PWS HOLDING CORPORATION
By: _________________________
Title:
FOOD MAX OF MISSISSIPPI, INC.
By: _________________________
Title:
A.F. STORES, INC.
By: _________________________
Title:
BR AIR, INC.
By: _________________________
Title:
FOOD MAX OF GEORGIA, INC.
By: _________________________
Title:
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FOOD MAX OF TENNESSEE, INC.
By: _________________________
Title:
FOODMAX, INC.
By: _________________________
Title:
LAKESHORE FOODS, INC.
By: _________________________
Title:
BRUNO'S FOOD STORES, INC.
By: _________________________
Title:
GEORGIA SALES COMPANY
By: _________________________
Title:
SSS ENTERPRISES, INC.
By: _________________________
Title:
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AGENT:
THE CHASE MANHATTAN BANK,
INDIVIDUALLY AND AS AGENT
By: _________________________
Title:
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