SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT, WAIVER AND CONSENT
Exhibit 10.30
SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT, WAIVER AND CONSENT
THIS SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT, WAIVER AND CONSENT (“Seventh
Amendment”) made as of the 1st day of June, 2010 (the “Effective Date”), by and among PRIMO WATER
CORPORATION, a Delaware corporation (together with its successors and assigns, “Primo”), PRIMO
PRODUCTS, LLC, a North Carolina limited liability company (“Primo Products”), and PRIMO DIRECT,
LLC, a North Carolina limited liability company (“Primo Direct” and together with Primo and Primo
Products, the “Borrowers”), and ▇▇▇▇▇ FARGO BANK, N.A., successor-by-merger to Wachovia Bank,
National Association, a national banking association (together with its successors and assigns, the
“Bank”).
BACKGROUND
The Borrowers and the Bank entered into a Loan and Security Agreement dated as of June 23,
2005, as amended by that certain First Amendment to Loan and Security Agreement dated as of April
26, 2006, by that certain Second Amendment to Loan and Security Agreement dated as of April 30,
2007, by that certain Third Amendment to Loan and Security Agreement dated as of June 24, 2008, by
that certain Fourth Amendment to Loan and Security Agreement dated as of January 7, 2009, by that
certain Fifth Amendment to Loan and Security Agreement dated as of December 30, 2009, and by that
certain Sixth Amendment to Loan and Security Agreement dated as of December 30, 2009 (as amended,
the “Loan Agreement”). Terms used herein and not herein defined shall have the meanings given to
them in the Loan Agreement.
Primo desires to issue shares of its capital stock through an initial public offering of new
shares of Primo stock and also contemplates the potential acquisition of assets from Culligan Store
Solutions, LLC and Culligan of Canada, Ltd. (the “Acquisition”).
The Borrowers have requested that the Loan Agreement be amended to permit the above-referenced
offering and that the Bank provide a waiver to permit Primo to form two wholly-owned Subsidiaries
in connection with the Acquisition, and have requested certain additional amendments to the
provisions of the Loan Agreement; and the Bank is willing to accommodate such requests, subject to
the terms and conditions of this Seventh Amendment.
NOW, THEREFORE, in consideration of the premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Borrowers and the Bank hereby
agree as follows:
1. Amendments to Loan Agreement. The Loan Agreement is hereby amended as follows:
(a) The definition of “Applicable Margin” in Section 1.1 of the Loan Agreement is amended and
restated to read as follows:
“Applicable Margin” means as to any Revolver Loan, or portion
thereof, that is: (i) a LMIR Loan, 4.00%; and (ii) a Base Rate Loan, 2.00%;
provided, however, that at any time when the outstanding principal balance
of any Revolver Loan includes any portion of the Overadvance Amount, the
Applicable Margin for all LMIR Loans shall be 5.00% and the Applicable
Margin for all Base Rate Loans shall be 3.00%. The Revolver Loans, at any
time, shall either be all LMIR Loans or all Base Rate Loans.
(b) The definition of “Termination Date” in Section 1.1 of the Loan Agreement is amended and
restated to read as follows:
“Termination Date” means the earliest of (i) January 30, 2011, (ii)
the date on which Borrower terminates this Agreement and the credit
facilities provided hereunder pursuant to Section 2.13 hereof, and (iii) the
date on which Bank terminates its obligation to make Loans and other
extensions of credit to Borrower pursuant to Section 8.2(a) hereof.
(c) The Loan Agreement is hereby amended:
(i) By adding the following definition thereto immediately following the definition of
“Business Day”:
“Capital Infusion” means receipt by Borrower of funds derived
pursuant to additional equity investments in Borrower, the Net Equity
Proceeds of which shall be in an amount sufficient, and shall be used by
Borrower, to repay the Obligations; provided, however, that payments
received by Borrower in connection with the exercise of outstanding options
or warrants shall not be considered a Capital Infusion.
(ii) By adding the following definitions thereto immediately following the definition of
“Material Agreement”:
“Monetary Injection” means receipt by Borrower of funds derived
pursuant to the Offering, the Net Equity Proceeds of which shall be in an
amount sufficient, and shall be used by Borrower, to repay the Obligations.
“Net Equity Proceeds” means, with respect to a Monetary
Injection, the proceeds of the Offering, less reasonable and customary
expenses incurred by Borrower in connection therewith, and, with respect to
a Capital Infusion, the proceeds received by Borrower pursuant to a plan by
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Borrower to raise additional equity capital less the reasonable and
customary expenses incurred by Borrower in the implementation of such plan.
(iii) By adding the following definitions thereto immediately following the definition of
“Obligations”:
“Offering” means an initial public offering of new shares of Primo
stock.
“Overadvance Amount” shall mean an amount advanced by Bank in excess
of the Borrowing Base in the sum of up to $3,000,000.00 provided that (x)
Borrower delivers to Bank a written request for the Overadvance Amount, (y)
the Overadvance Amount shall be used by the Borrower solely for the purpose
set forth in Section 5.1 hereof, and (z) ▇▇▇▇▇ ▇. ▇▇▇▇ shall have executed a
personal unconditional guaranty guaranteeing the obligations of the Borrower
to the Bank (provided that the maximum principal amount guaranteed under
such guaranty shall not at any time exceed the lesser of (i) the amount of
the Overadvance Amount outstanding at such time, and (ii) $3,000,000.00).
(d) Section 2.1.1 of the Loan Agreement is hereby amended and restated in its entirety to read
as follows:
2.1.1 Revolver Commitment. Bank agrees, on the terms and
conditions set forth in this Agreement, to make Revolver Loans to Borrower
and to issue Letters of Credit on behalf of Borrower from time to time
during the Term in amounts such that the aggregate principal amount of
Revolver Loans and the face amount of any Letters of Credit at any one time
outstanding will not exceed the lesser of (i) the Revolver Commitment and
(ii) the sum of the Borrowing Base plus the Overadvance Amount. Within the
foregoing limit, Borrower may borrow, prepay and reborrow Revolver Loans at
any time during the Term. Revolver Loans may be Base Rate Loans or LMIR
Loans.
(e) Section 2.3 of the Loan Agreement is hereby amended and restated in its entirety to read
as follows:
2.3 Interest. Borrower agrees to pay interest in respect of
all unpaid principal amounts of the Loans from the respective dates such
principal amounts are advanced until paid (whether at stated maturity, on
acceleration or otherwise) at a rate per annum equal to the applicable rate
indicated below (“Interest Rate”):
2.3.1 Base Rate Loans. For Loans made or
outstanding as Base Rate Loans, the Applicable Margin in effect
from time to time for such Base Rate Loans plus the Base Rate in
effect from time to time.
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2.3.2 LMIR Loans. For Loans made or outstanding as
LMIR Loans, the Applicable Margin in effect from time to time
for such LMIR Loans plus the greater of (i) the LMIR in effect
from time to time or (ii) two percent (2%).
(f) A new Section 2.6.5 is added to the Loan Agreement immediately following the text of
Section 2.6.4 thereof, which new Section 2.6.5 shall read as follows:
2.6.5 Mandatory Prepayment of Revolver Loans. Borrower shall
be required to prepay the principal balance of outstanding Revolver Loans in
full incident to and concurrently with any Monetary Injection. Borrower
shall be required to prepay the principal balance of outstanding Revolver
Loans in full incident to and concurrently with any Capital Infusion.
(g) Section 2.11.4 of the Loan Agreement is hereby amended and restated in its entirety to
read as follows:
2.11.4 Unused Line Fee. Borrower shall pay to Bank quarterly,
an unused line fee equal to one-half of one percent (0.50%) per annum
calculated upon the amount, if any, by which the lesser of: (a) the
Revolver Commitment; and (b) the sum of the Borrowing Base plus the
Overadvance Amount exceeds the average daily principal balance of the
outstanding Revolver Loans during the immediately preceding quarter while
this Agreement is in effect, which fee shall be payable on the first day of
each quarter in arrears.
(h) Section 5.1 of the Loan Agreement is hereby amended and restated in its entirety to read
as follows:
5.1 Use of Revolver Loan Proceeds. Shall use the proceeds of
Revolver Loans only for working capital to be used in the operation of
Borrower’s business (and, with respect to the Overadvance Amount, solely for
purposes directly related to Borrower’s “Primo Business” including bottle
exchange, water coolers and home and office delivery) and furnish Bank all
evidence that it may require with respect to such use.
(i) A new Section 5.13 is added to the Loan Agreement immediately following the text of
Section 5.12 thereof, which new Section 5.13 shall read as follows:
5.13 The Offering. Borrower filed a registration statement
regarding the Offering with the Securities and Exchange Commission on March
12, 2010. If Borrower for any reason determines not to proceed with the
Offering, then Borrower shall immediately notify Bank in writing of such
determination, and Bank shall have the right to notify Borrower to seek a
Capital Infusion in an amount sufficient to repay the Obligations in
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full. If Bank notifies Borrower to seek a Capital Infusion, Borrower
shall promptly (and in any event within fourteen (14) days after receipt of
Bank’s notification) deliver a written request to its then current and any
other potential equity investors for such Capital Infusion (“Equity
Request”). Borrower shall simultaneously provide a copy of the Equity
Request to Bank. After the date of the Equity Request, Borrower shall have a
period of up to sixty (60) days (but in no event shall such period extend
beyond the Termination Date) to obtain such Capital Infusion and repay the
Obligations in full. A failure by Borrower to (i) deliver the Equity
Request, or obtain such Capital Infusion and repay the Obligations in full,
in each case within the foregoing periods, or (ii) complete the Offering and
repay the Obligations in full on or before December 31, 2010, shall at
Bank’s option constitute an Event of Default, entitling Bank to exercise all
of its rights and remedies contained in this Agreement.
(j) Section 6.13 of the Loan Agreement is hereby amended and restated to read as follows:
6.13 Liquidation, Mergers, Consolidations and Dispositions of
Substantial Assets, Name and Good Standing. Shall not (a)(i) merge,
reorganize, consolidate or amalgamate with any Person, (ii) liquidate, wind
up its affairs or dissolve itself, (iii) acquire by purchase, lease or
otherwise any of the assets of any Person, (iv) sell, transfer, lease or
otherwise dispose of any of its property or assets, except for the Offering
or any Capital Infusion (provided that the Net Equity Proceeds thereof are
paid over to Bank as a prepayment of the Obligations), the sale of Inventory
in the ordinary course of business, the disposition of obsolete or worn out
equipment in the ordinary course of business, the disposition of equipment
if the proceeds of such disposition are credited or applied to the purchase
price of replacement equipment, and the voluntary termination of Swap
Agreements to which Borrower or such Subsidiary is a party, or (v) sell or
dispose of any equity ownership interests in any Subsidiary, in each such
case under items (a)(i) — (v) above whether in a single transaction or in a
series of related transactions; (b) change its name or jurisdiction of
organization or conduct business under any new fictitious name; (c) change
its Federal Employer Identification Number; or (d) fail to remain in good
standing and qualified to transact business as a foreign entity in any state
or other jurisdiction in which it is required to be qualified to transact
business as a foreign entity and in which the failure to be so qualified
could reasonably be expected to have a Material Adverse Effect.
(k) Section 7.1 of the Loan Agreement is hereby amended and restated in its entirety to read
as follows:
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7.1 Minimum EBITDA. EBITDA as of the end of each of the
following Fiscal Quarters shall be not less than the amount applicable to
such Fiscal Quarter set forth in the table below:
| FISCAL QUARTER ENDING | AMOUNT | |||
Q2-2010 (for one Fiscal Quarter only) |
$ | (291,000 | ) | |
Q3-2010 (for one Fiscal Quarter only) |
$ | (146,000 | ) | |
Q4-2010 (for one Fiscal Quarter only) |
$ | 329,000 | ||
As used herein, “EBITDA” means for any period the sum of the
following, without duplication: (A) consolidated net income of Borrower and
its Subsidiaries from continuing operations (computed without regard to any
extraordinary items of gain or loss) plus (B) to the extent deducted
from revenue in computing consolidated net income for such period, the sum
of (1) interest expense, (2) income and franchise taxes, tax expense, and
(3) depreciation, amortization and other non-cash charges (except to the
extent that such non-cash charges are reserved for cash charges to be taken
in the future), less interest income and any extraordinary gains.
(l) Section 7.2 of the Loan Agreement is hereby amended and restated in its entirety to read
as follows:
7.2 Minimum Gross Revenues. Gross revenues from sales achieved
by Borrower and its Subsidiaries from continuing operations as of the end of
each of the following Fiscal Quarters, shall be not less than the amounts
applicable to such Fiscal Quarter set forth in the table below:
| ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | ▇▇▇▇▇▇ | |||
▇▇-▇▇▇▇ |
$ | 9,300,000 | ||
Q3-2010 |
$ | 11,500,000 | ||
Q4-2010 |
$ | 13,800,000 | ||
(m) Section 7.4 of the Loan Agreement is hereby amended and restated in its entirety to read
as follows:
7.4 Net Worth. As of the end of the fiscal quarter ending
December 31, 2010 and at all times thereafter, the Borrower shall maintain a
Net Worth of at least $25,000,000.00. “Net Worth” means the
shareholders’ equity of Borrower, less Total Liabilities. “Total
Liabilities” means all liabilities of Borrower, including capitalized
leases and all reserves for deferred taxes and other deferred sums appearing
on the liabilities side of a balance sheet of Borrower.”
(n) Section 8.1(b) of the Loan Agreement is hereby amended and restated to read as follows:
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(b) There shall occur any default by Borrower in the performance of any
agreement, covenant or obligation contained in Section 5.1, 5.5, 5.6, 5.13
or Section 6 or Section 7 of this Agreement.
2. Limited Waiver and Consent.
(a) Subject to the terms and conditions of this Seventh Amendment, including without
limitation the satisfaction of the conditions precedent set forth in Section 4 hereof, the Bank
hereby consents to Primo’s formation of up to three wholly-owned Subsidiaries, including
potentially a Subsidiary organized under the laws of Canada; provided, that (i) Primo shall at all
times own all of the outstanding equity of such Subsidiaries and (ii) each such Subsidiary shall
become a “Borrower” under the Loan Agreement at such time as such Subsidiary shall have any
operations or assets (other than solely as a party to the purchase agreement related to the
Acquisition) and shall execute such documents as may be required by Bank in order to evidence its
becoming a Borrower and becoming bound by the terms of the Loan Agreement.
(b) Subject to the terms and conditions of this Seventh Amendment, including without
limitation the satisfaction of the conditions precedent set forth in Section 4 hereof, the Bank
hereby waives any Defaults or Events of Default that would otherwise occur under Section 6.12 of
the Loan Agreement as a result of the formation and ownership by Primo of such Subsidiaries.
(c) The foregoing limited waiver and consent is limited to the matters expressly set forth in
this Section 2 and shall not constitute (i) an amendment, modification or alteration of the Loan
Agreement or other Loan Documents, except as otherwise set forth in this Seventh Amendment, or (ii)
a custom or course of dealing or a waiver of the Bank’s right to withhold its waiver of any similar
request in the future. For the avoidance of debt, this Seventh Amendment does not constitute
Bank’s consent to the Acquisition.
3. Amendment Fee. The Borrowers hereby agree to pay to Bank an amendment fee on the
date hereof in the amount of Fifty Thousand and No/100 Dollars $50,000.00.
4. Conditions Precedent. In addition to any other requirement set forth herein, the
effectiveness of this Seventh Amendment shall be expressly conditioned upon the satisfaction on or
before the Effective Date of the following conditions precedent:
(a) Execution and delivery by the Borrowers of an original counterpart of this Seventh
Amendment;
(b) Payment by Borrowers of the amendment fee referred to in paragraph 2 above;
(c) Payment by Borrowers of all fees and out-of-pocket charges and other expenses of Bank, and
the fees and charges of Bank’s attorneys, incurred in connection with this Seventh Amendment and
the administration of the Loan Documents;
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(d) Execution and delivery of an Unconditional Guaranty of ▇▇▇▇▇ ▇. ▇▇▇▇ guaranteeing the
obligations of the Borrowers to the Bank.
5. Further Assurances. The Borrowers will execute such confirmatory instruments with
respect to the Loan Agreement and this Seventh Amendment as the Bank may reasonably request.
6. Warranties and Representations. The Borrowers hereby represent and warrant that
the representations and warranties contained in the Loan Agreement and in any Schedule to the Loan
Agreement or any document or instrument delivered to Bank or its representatives under or pursuant
to the Loan Agreement, are true and correct in all material respects on the date of this Seventh
Amendment as if made on such date, except to the extent such representations and warranties
expressly relate to an earlier specific date and except to the extent set forth on Schedule
1 attached to this Seventh Amendment.
7. Ratification by Borrower. The Borrowers ratify and confirm all of the
representations, warranties, covenants, liabilities and obligations under the Loan Agreement
(except as set forth in paragraph 6 above) and agrees that: (i) except as expressly modified by
this Seventh Amendment, the Loan Agreement shall continue in full force and effect as if set forth
specifically herein; and (ii) the Borrowers have no right of setoff, counterclaim or defense to
payment and performance of its obligations under the Loan Agreement. The Borrowers and the Bank
agree that this Seventh Amendment shall not be construed as an agreement to extinguish the
Borrowers’ obligations under the Loan Agreement and shall not constitute a novation as to the
obligations of the Borrowers under the Loan Agreement. The Bank hereby expressly reserves all
rights and remedies it may have against all parties who may be or may hereafter become secondarily
liable for the repayment of the obligations under the Loan Agreement.
8. Amendments. This Seventh Amendment may not be amended, changed, modified, altered,
or terminated without in each instance the prior written consent of the Bank. This Seventh
Amendment shall be construed in accordance with and governed by the laws of the State of North
Carolina.
9. Counterparts. This Seventh Amendment may be executed in any number of
counterparts, all of which when taken together shall constitute one agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, this Seventh Amendment has been executed as of the date first above
written.
| BORROWERS: | ||||||||
| PRIMO WATER CORPORATION | (SEAL) | |||||||
| By | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |||||||
| Name: | ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |||||||
| Its: | CFO | |||||||
| PRIMO PRODUCTS, LLC | (SEAL) | |||||||
| By: | PRIMO WATER CORPORATION, Its Manager | |||||||
| By | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ | |||||||
| Name: | ▇▇▇▇▇ ▇. ▇▇▇▇ | |||||||
| Its: | President | |||||||
| PRIMO DIRECT, LLC | (SEAL) | |||||||
| By | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ | |||||||
| Name: | ▇▇▇▇▇ ▇. ▇▇▇▇ | |||||||
| Its: | Manager | |||||||
| BANK: | ||||||||
| ▇▇▇▇▇ FARGO BANK, N.A., successor-by-merger to | ||||||||
| Wachovia Bank, National Association | (SEAL) | |||||||
| By | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, SVP | |||||||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President | ||||||||
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SCHEDULE 1
None, except as may be set forth below: