EXHIBIT 10.1

 

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

 

THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made and entered
into as of September 27, 2003 by and among POORE BROTHERS, INC., a Delaware
corporation (“PBI”) (including POORE BROTHERS ARIZONA, INC., formerly an Arizona
corporation (“PBAI”) and POORE BROTHERS DISTRIBUTING, INC., formerly an Arizona
corporation (“PBDI”), both of which are now merged with and into PBI by
operation of merger under Delaware and Arizona law), TEJAS PB DISTRIBUTING,
INC., an Arizona corporation (“Tejas”), POORE BROTHERS - BLUFFTON, LLC (formerly
known as Wabash Foods, LLC (“Wabash”)), a Delaware limited liability company
(“PBB”), BOULDER NATURAL FOODS, INC., an Arizona corporation (“Boulder”), and BN
FOODS, INC., a Colorado corporation (“BNF”) (PBI, Tejas, PBB, Boulder and BNF
each a “Borrower” and collectively the “Borrower” or the “Borrowers”), and U.S.
BANK NATIONAL ASSOCIATION, a national banking association, successor in interest
to U.S. BANCORP REPUBLIC COMMERCIAL FINANCE, INC.,  a Minnesota corporation (the
“Lender”).

 

RECITALS:

 

A.            PBI, PBAI, PBDI, Tejas, PBB (as Wabash) and the Lender entered
into a certain Credit Agreement dated as of October 3, 1999, as amended by a
First Amendment dated as of June 30, 2000, a Second Amendment dated as of
March 1, 2001, a Third Amendment dated as of March 30, 2001, and a Fourth
Amendment dated as of July 30, 2002 (as amended, the “Credit Agreement”).  All
capitalized terms not otherwise defined herein shall have the meanings given to
them in the Credit Agreement.

 

B.            Boulder became a party to, and a “Borrower” under, the Credit
Agreement pursuant to the terms and conditions of that certain Joinder Agreement
dated as of June 7, 2000 by and between Boulder, Lender, PBI, PBAI, PBDI, Tejas
and PBB (as Wabash).

 

C.            BNF became a party to, and a “Borrower” under, the Credit
Agreement pursuant to the terms and conditions of that certain Joinder Agreement
dated as of June 30, 2000 by and between BNF, Lender, PBI, PBAI, PBDI, Tejas,
PBB (as Wabash) and Boulder.

 

D.            The Borrowers have requested the Lender to amend the Credit
Agreement to modify certain financial covenants set forth therein.  The Lender
has agreed to do so upon the terms and subject to the conditions herein set
forth.

 

AGREEMENTS:

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and for One Dollar and other good and valuable
consideration, the nature, receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

 

1.             Delivery of Documents.

 

(a)           Pre-Closing.  At or prior to the execution of this Amendment,
Borrowers shall have delivered or caused to be delivered to the Lender the
following documents each dated such date and in form and substance satisfactory
to the Lender and duly executed by all appropriate parties:

 

(i)            This Amendment;

 

(ii)           A copy, duly certified by the secretary or an assistant secretary
of each Borrower, of the resolutions of the Board of Directors, Members, or
Managers (as applicable) of such Borrower authorizing the execution, delivery
and

 

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performance by such Borrower of this Amendment and any other documents delivered
or to be delivered in connection herewith to which such Borrower is a party or
by which it is bound, together with all documents evidencing other necessary
corporate action; and

 

(iii)          A certificate of the secretary or an assistant secretary of each
Borrower, certifying:  (A) the names of the officers of such Borrower authorized
to sign this Amendment and the other documents delivered or to be delivered in
connection herewith to which such Borrower is a party or by which it is bound,
and (B) that the Articles of Incorporation and Bylaws (or the equivalent of such
organizational documents for corporations and limited liability companies in
Delaware, Arizona, and Colorado, as applicable) of such Borrower have not been
amended, modified, supplemented or restated since the date such documents were
last certified to the Lender.

 

(b)           Post-Closing.  As soon as possible but in any event no later than
November 30, 2003, Borrowers shall deliver or caused to be delivered to the
Lender the following documents each dated such date and in form and substance
satisfactory to the Lender and duly executed by all appropriate parties:

 

(i)            An updated machinery and equipment appraisal, conducted by an
appraiser satisfactory to the Lender and at the Borrowers’ sole cost and
expense, which appraisal shall be accompanied by a written report of said
appraiser and shall identify no issues or conditions unacceptable to the Lender
in its sole discretion;

 

(ii)           Evidence that the Lender’s security interest in all of the
intellectual property described on Exhibit A attached hereto is properly
reflected on the records of the United States Patent and Trademark Office
(without limiting the generality of the foregoing, the Borrowers specifically
agree to provide satisfactory evidence that (A) all trademarks whose ownership
was previously registered on the records of the United States Patent and
Trademark Office (the “PTO Records”) under the name “Wabash Foods, LLC” have
been re-registered on such records under the name “Poore Brothers-Bluffton,
LLC”, (B) notice of the Lender’s security interest in all such trademarks is
properly reflected on the PTO Records, and (C) notice of the Lender’s security
interest in the “Crunch Toons” trademark (or the application therefor) is
properly reflected on the PTO Records);

 

(iii)          A certain Landlord’s Waiver relating to the Bluffton, IN
facility; and

 

(iv)          Such other documents or instruments as the Lender may reasonably
require, including, without limitation, (A) evidence of the termination of the
UCC filing against PBI in Maricopa County, Arizona showing Norwest Business
Credit, Inc. as secured party, (B) evidence of the termination of all UCC
filings against Boulder in the states of Arizona and Colorado showing Boulder
Potato Company as secured party, and (C) any other financing statements,
terminations, notices or other instruments required by Lender to evidence or
perfect more effectively the security interest of Lender in the Collateral (as
that term is defined in the Security Agreement).

 

2.             Amendments.

 

(a)           Amendment of Capital Expenditures Negative Covenant.  Section 6.4
of the Credit Agreement is hereby amended and restated in its entirety to read
as follows:

 

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“Section 6.4          Capital Expenditures.  The Borrowers will not make Capital
Expenditures, on a consolidated basis, in an aggregate amount exceeding (a)
$1,500,000 in the fiscal year ending December 31, 2003, and (b) $750,000 in any
subsequent fiscal year; provided, however, that the annual $750,000 limit for
the fiscal year ending December 31, 2004 will be increased by an amount equal to
(a) $1,500,000, minus (b) actual Capital Expenditures made by the Borrowers on a
consolidated basis during the fiscal year ended December 31, 2003 (with any
negative number counting as zero in said calculation); provided further that
Capital Expenditures made during a given fiscal year after December 31, 2003
that were funded solely with the proceeds of one or more private issuances or
public offerings of additional shares of the capital stock of PBI, to the extent
such issuance or offering was made during such fiscal year or the immediately
preceding fiscal year, will not count towards the annual $750,000 limit for such
fiscal year.

 

(b)           Amendment of Tangible Capital Base Negative Covenant.  Section 6.9
of the Credit Agreement is hereby amended and restated in its entirety to read
as follows:

 

“Section 6.9    Tangible Capital Base.  The Borrower will not permit its
Tangible Capital Base (the excess of its assets, excluding intangible assets,
plus subordinated debt (which includes, without limitation, debt subordinated
pursuant to the Subordination Agreements), over its liabilities, on a
consolidated basis) to be less than the amount set opposite the applicable
measurement date set forth below (said amount being referred to herein as the
“Minimum Tangible Capital Base”):

 

Applicable
Measurement Date

 

Minimum Tangible
Capital Base

 

 

 

 

 

December 31, 2003

 

$

11,000,000

 

 

on March 31, 2004 and the last day of each fiscal quarter thereafter, the
Minimum Tangible Capital Base shall be the Minimum Tangible Capital Base for the
previous quarter, except that (a) for each measurement date after September 27,
2003, the Minimum Tangible Capital Base will be equal to the sum of (i) the
Minimum Tangible Capital Base required as of the immediately preceding
measurement date (or, for December 31, 2003, $11,000,000), plus (ii) fifty
percent (50%) of the aggregate amount of all additional equity offerings or
other increases in the paid-in-capital of the Borrowers during the fiscal
quarter ending on said measurement date, and (b) for each measurement date that
falls on the end of the fiscal year, the Minimum Tangible Capital Base will be
equal to the sum of (i) the Minimum Tangible Capital Base required as of the
immediately preceding measurement date, plus (ii) fifty percent (50%) of the
consolidated Annual Net Profit realized by the Borrower in the fiscal year
ending on said measurement date (with any net loss counting as zero in such
calculation).”

 

(c)           Change from Reference Rate to Prime Rate.  The defined term
“Reference Rate” is hereby deleted from Section 1.1 of the Credit Agreement.  A
new defined term is hereby added to Section 1.1 of the Credit Agreement to read
as follows:

 

“Prime Rate” shall mean the Prime Rate announced by the Lender as its “prime
rate” as of 12:00 Noon on a given day in Minneapolis, Minnesota.  For purposes
of determining any interest rate which is based on the Prime Rate, such interest
rate shall be adjusted each time that the

 

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Prime Rate changes.  Each Borrower acknowledges that the Prime Rate is not
necessarily the lowest index rate used or the lowest rate made available to
customers by the Lender.

 

From and after the date of this Amendment, all references to “Reference Rate” in
the Credit   Agreement and any of the other Loan Documents shall be deleted and
replaced with a reference  to “Prime Rate”.

 

(d)         Revised Borrowing Base.  The first sentence of Section 2.5 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:

 

“The Borrowing Base shall be equal to the sum of:

 

(1)  the lesser of (x) 60% of the lower of cost (determined on a first-in,
first-out basis) or market value of Eligible Inventory that consists of finished
goods and 50% of the lower of cost (determined on a first-in-, first-out basis)
or market value of Eligible Inventory that consists of raw materials, or (y)
$1,500,000; plus

 

(2)  80% of the net amount of Eligible Accounts; minus

 

(3)  100% of all Producer Payables and the total of all outstanding checks
issued in full or partial payment of any Producer Payables which have not been
mailed or otherwise delivered; minus

 

(4)  100% of the Borrowers’ aggregate accrual for promotions, discounts and
allowances.”

 

3.             Continuing Obligation; Representations.  To induce the Lender to
enter into this Amendment, the Borrowers represent and warrant to the Lender as
follows:

 

(a)           Continuing Obligation.  Borrowers acknowledge and agree that they
remain obligated for the payment of indebtedness evidenced and secured by the
Credit Agreement and the other Loan Documents, and agree to be bound by and to
perform all of the covenants and agreements set forth in said documents and
instruments, as the same may be amended by this Amendment.

 

(b)           Reaffirmation of Representations.  Borrowers hereby restate and
reaffirm all representations, warranties and covenants contained in the Credit
Agreement and each of the other Loan Documents, the same as if such covenants,
representations and warranties were made by Borrowers on the date hereof.

 

(c)           Intellectual Property.           Borrowers represent and warrant
that Borrowers possess or have the right to use all of the patents, trademarks,
trade names, service marks and copyrights, and applications therefor, and all
technology, know-how, processes, methods and designs used in or necessary for
the conduct of their business, without known conflict with the rights of
others.  All such licenses, patents, trademarks, trade names, service marks and
copyrights, and applications therefor, existing on the date hereof are listed on
Exhibit A attached hereto.

 

4.             Fees and Expenses.  The Borrowers agree to pay or reimburse the
Lender for all reasonable out-of-pocket expenses (including, without limitation,
reasonable attorneys’ fees, and out-of-pocket disbursements of Lender’s legal
counsel) incurred by the Lender in connection with this Amendment and related
documents.

 

5.             Execution in Counterparts.  This Amendment may be executed in two
or more counterparts each of which shall be an original and all of which shall
constitute but one and the same instrument.

 

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6.             References.  All references to the Credit Agreement in any
document or instrument are hereby amended and shall refer to the Credit
Agreement as amended by this Amendment.  Except as amended hereby, the
provisions of the Credit Agreement shall remain unmodified and in full force and
effect.

 

[Remainder of page intentionally left blank;
signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to
Credit Agreement be executed as of the day and year first above written.

 

 

BORROWERS:

 

POORE BROTHERS, INC.,
a Delaware corporation

 

 

 

 

 

By

 

 

 

 

 Its

 

 

 

 

 

 

 

TEJAS PB DISTRIBUTING, INC.,
an Arizona corporation

 

 

 

 

 

By

 

 

 

 

 Its

 

 

 

 

 

 

 

POORE BROTHERS - BLUFFTON, LLC,
a Delaware limited liability company

(formerly known as Wabash Foods, LLC)

 

 

 

 

 

By

 

 

 

 

 Its

 

 

 

 

 

 

 

BOULDER NATURAL FOODS, INC.,

 

 

an Arizona corporation

 

 

 

 

 

By

 

 

 

 

 Its

 

 

 

 

 

 

 

BN FOODS, INC.,
a Colorado corporation

 

 

 

 

 

By

 

 

 

 

 Its

 

 

 

 

 

 

 

 

LENDER:

 

U.S. BANK NATIONAL ASSOCIATION,
a national banking association

 

 

 

 

 

By

 

 

 

 

 Its

 

 

 

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EXHIBIT A

 

Intellectual Property

 

 

Federal

 

 

 

 

 

1.   78-219422

 

CRUNCH TOONS    (and Design)   Pending – Final refusal   POORE BROTHERS, INC.

 

 

 

2.   78-249025

 

SNACK OUT LOUD      Pending – Initialized   POORE BROTHERS, INC.

 

 

 

3.   78-249022

 

SNACK OUT LOUD    Pending – Initialized   POORE BROTHERS, INC.

 

 

 

4.   78-209226

 

CRUNCH TOONS    Pending, Passed by Examiner – Publication/issue review
complete   POORE BROTHERS, INC.

 

 

 

5.   78-201222

 

SNACKTOONS    Published   POORE BROTHERS, INC.

 

 

 

6.   78-135824

 

PLAY SNACKS    Allowed – Notice of Allowance issued   POORE BROTHERS, INC.

 

 

 

7.   76-111820

 

PIZZARIAS    Registered   POORE BROTHERS, INC.

 

 

 

8.   76-111819

 

PIZZARIAS THE TASTE OF OLD ITALY    Registered   POORE BROTHERS, INC.

 

 

 

9.   75-664797

 

BOULDER CHIPS    Registered   BOULDER POTATO COMPANY

 

 

 

10.   75-648138

 

(Design only)   Registered   POORE BROTHERS, INC.

 

 

 

11.   75-648137

 

POORE BROTHERS    Registered   POORE BROTHERS, INC.

 

 

 

12.   75-455988

 

AN INTENSELY DIFFERENT TASTE    Registered   POORE BROTHERS SOUTHEAST, INC.

 

 

 

13.   75-365499

 

BOULDER POTATO COMPANY    Registered   BOULDER NATURAL FOODS, INC.

 

 

 

14.   75-109895

 

IF WE DIDN’T TELL YOU – YOU WOULDN’T KNOW!    Registered   POORE BROTHERS, INC.

 

 

 

15.   75-109888

 

POORE BROTHERS    Registered   POORE BROTHERS SOUTHEAST, INC.

 

 

 

16.   74-686536

 

BOULDER POTATO COMPANY  (and Design)   Registered   BOULDER NATURAL FOODS, INC.

 

 

 

17.   74-535454

 

POORE BROTHERS  (and Design)   Registered   POORE BROTHERS INC

 

 

 

18.   73-773244

 

RIPPLIN’S    Registered   KEEBLER COMPANY

 

 

 

19.   73-708785

 

O’BOISIES    Registered   KEEBLER COMPANY

 

 

 

20.   73-642394

 

BRAIDS    Registered   KEEBLER COMPANY

 

 

 

21.   73-591596

 

TEXAS STYLE POTATO CHIPS  (and Design)   Registered   BOB’S TEXAS STYLE POTATO
CHIPS, INC.

 

 

 

22.   73-591439

 

TEXAS STYLE    Registered   BOB’S TEXAS STYLE POTATO CHIPS, INC.

 

 

 

23.   73-488915

 

TATO SKINS    Registered   KEEBLER COMPANY

 

 

 

24.   72-424673

 

KNOTS    Renewed   KEEBLER COMPANY

 

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