Weis Markets, Inc Form 8-K Revolving Credit Agreement

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 27, 2019

WEIS MARKETS, INC.

(Exact name of registrant as specified in its charter)

Pennsylvania

(State or other jurisdiction of incorporation)

1-5039

(Commission File Number)

24-0755415

(IRS Employer Identification No.)

1000 South Second Street

Sunbury, PA

(Address of principal executive offices)

17801

(Zip Code)

Registrant's telephone number, including area code: (570) 286-4571

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01 Entry into a Material Definitive Agreement.

On August 21, 2019 (the "Closing Date"), Weis Markets, Inc.; Dutch Valley Food Company, LLC; Weis Transportation, LLC and WMK Financing, Inc. (collectively, the "Company") entered into an Amendment to Revolving Credit Agreement (the "Amended Credit Agreement"), which amends the Revolving Credit Agreement (the “Credit Agreement”) dated September 1, 2016 with Wells Fargo Bank, National Association (the "Lender"). The Amended Credit Agreement provides for an unsecured revolving credit facility with an aggregate principal amount not to exceed thirty million dollars ($30,000,000.00), with an additional discretionary availability of seventy million dollars ($70,000,000.00) (the "Commitment").

The material terms of the Amended Credit Agreement include, among others:

Maturity: The Amended Credit Agreement is scheduled to mature, and the commitments thereunder will terminate, on September 1, 2022, or earlier pursuant to the terms of the Amended Credit Agreement.

Payments of Principal: No payments of outstanding principal are due until the maturity date of the Amended Credit Agreement.

Letters of Credit: The Amended Credit Agreement can be utilized by the Company for standby letters of credit provided, however, (A) the aggregate amount of outstanding letter of credit liabilities cannot at any time exceed eighteen million dollars ($18,000,000.00) and (B) the sum of any amount of any outstanding loans under the line of credit and outstanding letter of credit liabilities cannot at any time exceed the Commitment. Upon termination of the Commitment, any letter of credit then outstanding which has been fully cash collateralized to the reasonable satisfaction of Lender will no longer be considered a "letter of credit" as defined in the Amended Credit Agreement but the letter of credit fees payable will continue to accrue to the Lender with respect to such letter of credit until the expiry thereof.

Interest Rate and Fees: The loans will bear interest on the outstanding principal amount thereof from the date when made until paid at the LIBOR Rate plus the applicable margin rate of sixty-five hundredths of one percent (0.65%). In the event that the LIBOR Rate is suspended, the loans will bear interest at the base rate, plus the applicable margin. The base rate will be, for any day, the higher of (a) the rate of interest publicly announced by the Lender from time to time at its principal office as its prime commercial lending rate (which rate is not necessarily the lowest rate charged by the Lender to its borrowers) or (b) the federal funds rate, plus one-half of one percent (0.50%). Notwithstanding anything in the Amended Credit Agreement to the contrary, if the base rate determined as provided above would be less than zero percent (0.00%) then the base rate shall be deemed to be zero percent (0.00%). The variable rate of interest applicable to the loans is subject to daily change.

During the existence of any event of default, at the election of the Lender, the loans will bear interest at a rate equal to the sum of two percent (2%) per annum plus the prevailing rate identified above.

The Company will pay to the Lender quarterly in arrears on each quarterly payment date, at any time there shall be a reduction in the amount of the Commitment and on the maturity date, a non-refundable unused fee (the "Unused Fee") (calculated on the basis of a 365 day year and the actual days elapsed) equal to the product of the Unused Fee Rate of one eighth of one percent (0.125%) times the average daily unborrowed portion of the amount of the Commitment during the period ended on the quarterly payment date, Commitment reduction date or maturity date.

The Company will pay to the Lender a fee in arrears on the first quarterly payment date occurring after the date of the issuance of the first letter of credit and on each quarterly payment date thereafter until the date of expiration or termination of all letters of credit, calculated by reference to the product of the actual daily undrawn face amount of all issued letters of credit multiplied by a rate per annum equal to one-half of one percent (0.50%) on the basis of a year of 360 days and the actual number of days elapsed (including the first day but excluding the last day). The Company will also pay to the Lender all customary issuance and other fees for issuing and processing letters of credit and for amendments to and processing of the letters of credit.

Voluntary Reductions and Prepayments: Subject to certain conditions and restrictions, the Amended Credit Agreement allows the Company to voluntarily reduce the amount of the revolving commitment and to prepay loans.

Mandatory Prepayments: If at any time the Company's outstanding principal balance under the Amended Credit Agreement exceeds the Commitment, the Company will be required to prepay and reduce, the outstanding principal balance by the amount of such excess.

Covenants: The Amended Credit Agreement contains affirmative and negative covenants that, among other things, limit or restrict the Company's ability to: incur debt; create liens; make investments and acquisitions; engage in certain transactions with affiliates; consolidate or merge; sell, lease, abandon, or otherwise transfer or dispose of assets; enter into a management agreement or undergo a change in control; violate environmental laws; and change the nature of the Company's business.

In addition, the Company is required to maintain minimum EBITDA of not less than seventy-five million dollars ($75,000,000.00). EBITDA is defined as net income of the Company, on a consolidated basis, plus (to the extent otherwise deducted therefrom) interest expense, income tax expense, depreciation and amortization minus only gains or losses from asset sales not in the ordinary course of business, non-cash nonrecurring gain plus any non-cash non-recurring charges to the extent included in determining net income. EBITDA is tested on the last day of each fiscal quarter on a trailing twelve (12) month basis.

Events of Default: The Amended Credit Agreement contains customary events of default such as for non-payment of obligations under the Amended Credit Agreement, violation of affirmative and negative covenants, material inaccuracy of representations, cross defaults under other material debt, bankruptcy, ERISA and judgment defaults, invalidity of the credit documents (or the Company's assertion of any such validity) and change in control.

The foregoing description of the Amended Credit Agreement is not complete and is qualified in its entirety by reference to the Amended Credit Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference. The Credit Agreement was previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated September 8, 2016.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibit.

10.1 First Amendment to Revolving Credit Agreement dated and effective August 21, 2019 between Weis Markets, Inc.; Dutch Valley Food Company, LLC.; Weis Transportation, LLC. and WMK Financing, Inc. as Co-Borrowers and Wells Fargo Bank, National Association, as Lender.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


		WEIS MARKETS, INC.


		By: /s/Scott F. Frost
		Name: Scott F. Frost
		Title: Senior Vice President, Chief Financial Officer and Treasurer
		(Principal Financial Officer)

Dated: August 27, 2019

EXHIBIT INDEX

Octobe

Exhibit No.	Description
10.1	First Amendment to Revolving Credit Agreement dated and effective August 21, 2019 between Weis Markets, Inc.; Dutch Valley Food Company, LLC.; Weis Transportation, LLC. and WMK Financing, Inc. as Co-Borrowers and Wells Fargo Bank, National Association, as Lender.

THIS FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT AMENDS THE REVOLVING CREDIT AGREEMENT DATED AS OF SEPTEMBER 1, 2016.

FIRST AMENDMENT TO

REVOLVING CREDIT AGREEMENT

THIS FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (the “First Amendment”), dated and effective as of this 21st day of August, 2019, by and among WEIS MARKETS, INC., a Pennsylvania corporation, DUTCH VALLEY FOOD COMPANY, LLC, a Pennsylvania limited liability company, WEIS TRANSPORTATION, LLC, a Pennsylvania limited liability company, and WMK FINANCING, INC., a Delaware corporation (the “Borrowers” and each a “Borrower”) and WELLS FARGO BANK, N.A., a national banking association (the “Lender”).

BACKGROUND

A. The Borrowers and the Lender entered into that certain Revolving Credit Agreement dated as of September 1, 2016 (as previously modified, hereinafter the “Agreement”).

B. The parties desire to amend the Agreement, as set forth herein, so as to (x) acknowledge and agree that the maximum principal amount of the Line of Credit shall be Thirty Million Dollars ($30,000,000.00), with an additional discretionary availability of Seventy Million Dollars ($70,000,000.00), subject in all events to the terms and conditions set forth below and in the Agreement, (y) extend the Maturity Date, and (z) amend certain other provisions of the Agreement.

NOW, THEREFORE, in consideration of the premises and the covenants herein contained and intending to be legally bound hereby, the parties hereto agree as follows:

Background

. The foregoing Background paragraphs are incorporated herein by reference hereto and the accuracy of the same are hereby acknowledged. The Agreement and all terms thereof are incorporated herein by reference hereto. Unless expressly provided otherwise in this First Amendment, capitalized terms used in this First Amendment shall have the meanings given to them in the Agreement.

(a) The definition of “Maturity Date” set forth in Section 1.1 of the Agreement is hereby amended and restated in its entirety as follows:

Maturity Date: September 1, 2022, or such earlier date as the Commitment shall terminate pursuant to the terms hereof.

(b)A new definition of “UCC” is added to Section 1.1 of the Agreement as follows:

Uniform Commercial Code or UCC: means the Uniform Commercial Code as adopted and in effect from time to time in Pennsylvania.

Maximum Amount of Line of Credit

. Sections 2.2.2(a)(i) and 2.2.2(a)(iv) of the Agreement, entitled “Commitment” and “Increase of Commitment” respectively, are hereby amended and restated in their entirety as follows:

(i)Commitment. The Lender shall make advances to the Borrowers until the Maturity Date in an aggregate principal amount not to exceed at any time outstanding Thirty Million Dollars ($30,000,000.00) (as the same may be reduced or increased pursuant to the terms of this Agreement, the “Commitment”); provided however, that the aggregate amount of the Commitment available for borrowing at any time shall not exceed the amount of the Commitment at that time less the amount of any outstanding Loans under the Line of Credit and the Letter of Credit Liabilities. Within the foregoing limits, and subject to the terms and conditions set forth in this Agreement until the Maturity Date, the Borrowers may borrow under this Subsection 2.2.2, repay or prepay such advances, and reborrow under this Subsection 2.2.2. The Lender shall have no obligation to advance any principal sums in excess of the amount of the Commitment set forth above in this Section 2.2.2(a)(i) and any agreement between the parties to permit advances of the Accordion Amount greater than the Commitment amount set forth above in this Section 2.2.2(a)(i) must be evidenced by compliance with Section 2.2.2(a)(iv) below.

* * *

(iv)Increase of Commitment. At any time or times when no Event of Default exists (and provided no Event of Default will occur if the request is given effect), the Borrowers may request in writing that the Lender agree to increase the Commitment by an amount not exceeding in the aggregate Seventy Million Dollars ($70,000,000.00) (“Accordion Amount”), thereby increasing the Commitment to a total sum no greater than One Hundred Million Dollars ($100,000,000.00). The Lender shall consider such request in its sole discretion. The Lender shall grant or decline such request within thirty (30) days of its receipt of the request and shall confirm same in writing. Requests by the Borrowers for approval of advances under this Section 2.2.2(a)(iv) shall seek an increased amount of no less than $5,000,000.00 per request (or, if less, any remaining unfunded amount of the Accordion Amount or such lower amounts agreed to by Lender), and shall not be made less than thirty (30) days prior to the Maturity Date. A request for an advance of all or a portion of the Accordion Amount shall be made by a written notice substantially in the form of Exhibit B annexed hereto and incorporated herein, which is delivered to the Lender in accordance with Section 10.1 below, and shall be executed by the Borrowers’ Chief Financial Officer or other authorized signatory. Any Loans made by Lender pursuant to all or any portion of the Accordion Amount which has been approved for advances by the Lender shall be on the same terms set forth in this Agreement (including, for the avoidance of doubt, the Maturity Date and pricing).

Letter of Credit Sublimit

. The amount of the “Letter of Credit Sublimit”, as defined in Subsection 2.2.2(c)(i) of the Agreement, is hereby decreased from Thirty Million Dollars ($30,000,000.00) to Eighteen Million Dollars ($18,000,000.00).

5. Other Amendments.

(a) The address of the Lender set forth in Section 10.1(a) of the Agreement is amended and restated as follows:

Lender:Wells Fargo Bank, N.A.

4905 Tilghman Street, Suite 150

Allentown, PA 18104

Email: michael.gigler@wellsfargo.com

Attention: Michael Gigler, Sr. Relationship Manager

(b) A new subsection 1.2.4 is added to the Agreement as follows:

If at any time any change in GAAP would affect the computation of any covenant (including the computation of any financial covenant) and/or pricing grid set forth in this Agreement or any other Loan Documents, Borrower and Lender shall negotiate in good faith to amend such covenant and/or pricing grid to preserve the original intent in light of such change; provided, that, until so amended, (i) such covenant and/or pricing grid shall continue to be computed in accordance with the application of GAAP prior to such change and (ii) Borrower shall provide to Lender a written reconciliation in form and substance reasonably satisfactory to Lender, between calculations of such covenant and/or pricing grid made before and after giving effect to such change in GAAP.

Deliveries

. The agreement of the Lender to modify the terms of the Agreement is and shall be subject to the delivery to the Lender of all of the following (which are hereby included within the meaning of the term “Loan Documents” as defined in the Agreement):

(a) This First Amendment executed by the Borrowers;

(b) The Amended and Restated Promissory Note executed by the Borrowers;

(c) An updated Secretary’s Certificate in the form of Exhibit C to the Agreement and complying with the terms of Section 3.1.1 of the Agreement; and

(d) Such other documentation, resolutions and confirmations as the Lender may reasonably require.

Additional Representations

. As an inducement to the Lender to execute this First Amendment, the Borrowers make the following representations and warranties and acknowledge the Lender’s justifiable reliance thereon:

(a) No Event of Default has occurred under the Agreement (as previously amended) or any of the Loan Documents;

(b) All representations and warranties previously made by the Borrower pursuant to Article 4 of the Agreement (as previously amended), or in any of the Loan Documents, remain true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct in all material respects as of such earlier date) and are fully applicable to this First Amendment; and

(c) The Agreement, as modified and amended by this First Amendment, is a valid and binding obligation of the Borrowers and is fully enforceable in accordance with all of its terms except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

Prior Representations

. All of the terms, provisions, conditions, covenants, warranties, representations and agreements set forth in the Agreement, except as and to the extent modified by this First Amendment, shall remain in full force and effect. The Lender and the Borrowers ratify and confirm each to the other all of the provisions of the Agreement and Loan Documents, as amended by this First Amendment, and any Loan Documents to be executed in connection herewith.

No Additional Commitments

. Nothing contained in this First Amendment shall be deemed to be an offer, commitment, covenant and/or agreement by the Lender to renew, restate, amend, extend or otherwise modify the terms of the Agreement, except as is expressly stated in this First Amendment; and no such offer, commitment, covenant and/or agreement exists unless same is expressly stated in this First Amendment.

Costs and Expenses

. Borrowers agree to pay all of Lender’s reasonable and documented, out of pocket legal fees and expenses in connection with the review, preparation, negotiation, documentation and closing of this First Amendment. Nothing contained in this First Amendment shall limit in any manner whatsoever Lender’s right to reimbursement of costs and expenses under any of the Loan Documents.

No Novation

. Nothing contained herein and no actions taken pursuant to the terms hereof are intended to constitute a novation of the Agreement or any of the Loan Documents and shall not constitute a release, termination or waiver of any of the liens and security interests (if any), rights or remedies granted to the Lender in the Loan Documents.

No Waiver

. Except as may be otherwise expressly provided herein, nothing herein contained and no actions taken by Lender in connection herewith shall constitute nor shall they be deemed to be a waiver, release or amendment of or to any rights, remedies, or privileges afforded to the Lender under the Loan Documents or under the UCC. Nothing herein shall constitute a waiver by the Lender of the Borrowers’ compliance with the terms of the Loan Documents, nor shall anything contained herein constitute an agreement by the Lender to enter into any further amendments with Borrowers.

Inconsistencies

. To the extent of any inconsistency between the terms and conditions of this First Amendment and the terms and conditions of the Agreement (as amended)

and the Loan Documents, the terms and conditions of this First Amendment shall prevail. All terms and conditions of the Agreement and Loan Documents, as previously amended, not inconsistent herewith shall remain in full force and effect.

Binding Effect

. This First Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

Governing Law; Multiple Counterparts

. This First Amendment shall be governed and construed in accordance with the laws of the Commonwealth of Pennsylvania. This First Amendment may be executed in multiple counterparts.

Successors and Assigns

. This First Amendment and all rights and powers granted hereby will bind and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

No Third Party Beneficiaries

. The rights and benefits of this First Amendment and the Loan Documents shall not inure to the benefit of any third party.

Headings

. The headings of the sections of this First Amendment are inserted for convenience only and shall not be deemed to constitute a part of this First Amendment.

Joint and Several Liability

. The Borrowers acknowledge and reaffirm the terms of Section 10.19 of the Agreement.

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