AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (the "Agreement") is
entered into as of May 30, 2000, among US Bank National Association, a national
banking association ("Bank"), and Horizon Organic Holding Corporation, a
Delaware corporation ("Borrower"), and Horizon Organic Dairy, Inc., a Colorado
corporation, Horizon Organic Dairy, Maryland Farm, Inc., a Colorado corporation,
Horizon Organic Dairy, Idaho Farm, Inc., a Colorado corporation, Horizon Organic
Dairy, California Farm, Inc., a Delaware corporation, Horizon Organic
International, Inc. a Delaware corporation, and Horizon Organic Dairy, Ltd., a
United Kingdom company (collectively referred to herein as "Guarantors").
R E C I T A L S :
A. Borrower was previously granted a revolving line of credit pursuant to
the terms of a Loan and Security Agreement between Borrower, Horizon Organic
Dairy, Inc., Horizon Organic Dairy, Maryland Farm, Inc., Horizon Organic Dairy,
Idaho Farm, Inc., and Bank, as successor by assignment to U.S. Bancorp Ag
Credit, Inc., f/k/a FBS Ag Credit, Inc., a Colorado corporation, as such Loan
and Security Agreement was amended by amendments dated March 23, 1998, April 6,
1998, October 14, 1998, and April 23, 1999 (as so amended prior to this
Agreement, the "Existing Credit Agreement").
B. Borrower has applied to Bank for an increase in the revolving line of
credit such that the total amount of the line of credit would not exceed
Twenty-Five Million and 00/100 Dollars ($25,000,000.00) principal amount at any
time outstanding (the "Line of Credit"), and extend to Borrower a term loan in
amount equal to Twenty-Five Million Dollars ($25,000,000.00) (the "Term Loan").
C. The proceeds of the Line of Credit and the Term Loan will be used for
general working capital and certain acquisitions as permitted herein.
D. Bank is willing to extend the Line of Credit and Term Loan upon the
terms and conditions hereof and subject to the covenants and agreements herein
set forth.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties, and agreements contained herein, and for other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto covenant and agree as follows:
ARTICLE ONE
DEFINITIONS AND USE OF TERMS
SECTION 1.1 DEFINED TERMS. As used herein, the following terms shall have
the meanings indicated, unless the context otherwise requires:
"ACCOUNTS" means all present and future rights (including without
limitation, rights under any margin accounts) of Borrower or its
Subsidiaries to payment for Inventory or other goods sold or leased or for
services rendered, which rights are not evidenced by instruments or chattel
paper, regardless of whether such rights have been earned by performance.
"ADVANCE" means any disbursement of an amount or amounts loaned or to
be loaned hereunder.
"AFFILIATE" means a person that directly, or indirectly through one or
more intermediaries, controls or is controlled by or is under common
control with, another person.
"AFFILIATE OBLIGATIONS" means all present and future Indebtedness
which Borrower may now or hereafter owe to any present or future
Subsidiary.
"AGENT" means in connection with any participation or assignment of
any part of the Obligations hereunder by the Bank, the agent for the Bank
and for any other bank who participated or assigned part of the
Obligations, which shall be U.S. Bank National Association.
"APPLICABLE MARGIN" means, when the Total Funded Debt Ratio (as in
effect as of the most recent quarterly Total Funded Debt Ratio
Determination Date) is as set forth below, the percentage set forth
opposite such Total Funded Debt Ratio:
Total Funded Applicable Applicable
Debt Ratio LIBOR Margin Base Rate Margin
---------- ------------ ----------------
Less than 1.25 to 1 1.65% 0.0%
Greater than or equal to 1.25 to 1
but Less than or equal to 2.5 to 1 2.00% 0.0%
Greater than 2.5 to 1 2.50% 0.0%
The Applicable Margin shall be determined quarterly as of the date of
delivery of the Financial Statements required to be delivered pursuant to
Sections 5.2 and 5.3, and shall be effective on and after such date (the
"TOTAL FUNDED RATIO DETERMINATION DATE").
No adjustment to the Applicable Margin shall be effective or remain in
effect for any period unless the Borrower shall have delivered to the Bank
the Financial Statements and certificates required to be delivered pursuant
to Sections 5.2 and 5.3, in respect of the
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relevant fiscal month, quarter, or year; provided that if any Financial
Statements referred to above are not delivered within the time periods
specified in Sections 5.2 and 5.3, then for the period from and including
the date on which such Financial Statements are required to be delivered to
but not including the date on which such Financial Statements are
delivered, the Applicable Margin as at the end of the fiscal period that
would have been covered thereby shall be deemed to be based on a Leverage
Ratio one level above the then-existing Leverage Ratio.
"AVERAGE MATURITY PERIOD" means, as of any prepayment date, the
weighted average time period computed by multiplying the dollar amount of
each installment or payment of principal prepaid by the number of days from
such prepayment date until the earlier of the scheduled maturity of that
installment or payment or the next Interest Change Date (if any), adding
together the resulting products and dividing the resulting sum by the total
dollar amount of principal being prepaid.
"BASE RATE" means the rate charged by banks for commercial loans,
whether or not such rate is charged in each instance, and called the "Prime
Rate," as published in the "Money Rates" section of the WALL STREET JOURNAL
(or if not so published, as determined by Bank by using the average of
quotes obtained by Bank from primary national banks located in the United
States selected by Bank) from time to time plus the Applicable Margin.
"BORROWER" means Horizon Organic Holding Corporation, a Delaware
corporation.
"BUSINESS DAY" means a day other than a Saturday on which commercial
banks are generally open for business in the State of Colorado.
"CAPITALIZED LEASES" means capitalized leases and subleases, which are
treated on the books of the Borrower as a capitalized cost in accordance
with GAAP.
"CASH FLOW LEVERAGE RATIO" shall mean the ratio of (a) Total Principal
Debt (plus the amounts of any requested Advances) to (b) TTM EBITDA of
Borrower and its consolidated Subsidiaries plus the EBITDA of any
businesses acquired hereunder, adjusted to reflect the Borrower's cost
structure, as such adjustment is approved by the Bank.
"CLOSING DATE" means the day and year first above written.
"CODE" means the Internal Revenue Code of 1954, as amended.
"COLLATERAL" has the meaning set forth in Section 2.10.
"COMPANIES" means the Borrower and its Subsidiaries.
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"CURRENT DATE" means a date within thirty (30) days prior to the
Closing Date.
"CURRENT FINANCIALS" means the consolidated Financial Statements of
the Borrower and its Subsidiaries as of March 31, 2000.
"DEBTOR RELIEF LAWS" means any applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization, or similar Debtor Relief Laws affecting the rights of
creditors generally from time to time in effect.
"DEFAULT" has the meaning set forth in Article Seven.
"DEFAULT RATE" means eighteen percent (18%) per annum.
"DEFERRED COSTS" means deferred costs (specifically excluding deferred
Taxes), as determined in accordance with GAAP, and shall include other
items generally defined under GAAP and designated as goodwill, intangibles,
franchises, deferred development costs (excluding depreciation and
amortization, but including deferred loan expense, included therein),
deferred charges, and other items generally classified as intangibles and
other assets and deferred charges.
"DOCUMENTS" means any and all warehouse receipts, bills of lading or
similar documents of title relating to goods in which Borrower at any time
has an interest.
"EBITDA" means, for any period, Net Before Tax Income plus the sum of
(i) interest expense determined in accordance with GAAP (including interest
expense payable pursuant to Capitalized Leases), (ii) charges or deductions
for depreciation and amortization, determined in accordance with GAAP, and
(iii) lease expense payable pursuant to Operating Leases, determined in
accordance with GAAP.
"EQUIPMENT" means any and all goods, other than Inventory (including
without limitation, equipment, machinery, motor vehicles, mobile homes,
implements, tools, parts and accessories) which are at any time owned by
Borrower or its Subsidiaries, together with any and all accessions, parts
and appurtenances.
"EQUITY OFFERINGS" means public or non-public offerings by Borrower of
Shares of Borrower, and does not include any issuances of Shares pursuant
to any stock option or similar plan.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and all regulations thereunder.
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"EXISTING INDEBTEDNESS" means the Indebtedness of Borrower existing on
the Closing Date as set forth in the Current Financials or on EXHIBIT "C".
"FARM PRODUCTS" means all of Borrower's and its Subsidiaries' seed and
harvested or unharvested crops of all types and descriptions, whether
annual or perennial and all other personal property of Borrower and its
Subsidiaries used or for use in farming operations, including without
limitation, native grass, grain, harvested crops, feed, feed additives,
feed ingredients, feed supplements, fertilizer, hay, silage, supplies
(including without limitation, veterinary supplies and related goods),
livestock (including without limitation, the offspring of such livestock
and livestock in gestation) and any other "farm products" (as defined in
the UCC).
"FINANCIAL STATEMENTS" includes, but is not necessarily limited to,
balance sheets, profit and loss statements, reconciliations of capital and
surplus, statements of cash flow, and schedules of sources and applications
of funds.
"FIXED CHARGES" means, for any period, the total amount of (i)
interest expense determined in accordance with GAAP (including interest
expense payable pursuant to Capitalized Leases), plus (ii) the amount of
principal and interest paid during such period with respect to long term
debt, determined in accordance with GAAP, for Borrower and its consolidated
Subsidiaries.
"FIXED CHARGES COVERAGE RATIO" means the ratio of Net Earnings
Available for Fixed Charges to Fixed Charges as of the end of each fiscal
quarter.
"FIXED RATE" means the rate equal to the sum of the annual rate of
interest of the corresponding five year US Treasury Securities plus three
and one-half percent (3.5%) per annum.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, set forth in opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and/or their
successors which are applicable in the circumstances as of the date in
question, and the requisite that such principles be applied on a consistent
basis means that the accounting principles observed in a current period are
comparable in all material respects to those applied in a preceding period.
"GENERAL INTANGIBLES" shall mean all of Borrower's and Subsidiaries'
right, title and interest in and to any bank deposit accounts, customer
deposit accounts, deposits, rights related to prepaid expenses, negotiable
or nonnegotiable instruments or securities, chattel paper, choses in
action, causes of action and all other intangible personal property of
every kind and nature (other than Accounts), including without limitation,
corporate or other business records, inventions, designs, patents, patent
applications, trademarks, trade names,
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trade secrets, goodwill, registrations, copyrights, licenses, franchises,
customer lists, tax refunds, tax refund claims, customs claims, guarantee
claims, cooperative memberships or patronage benefits, rights to any
government subsidy, set aside, diversion, deficiency or disaster payment or
payment in kind, milk bases, brands and brand registrations, water rights
(including without limitation, water stock, ditch rights, well permits,
water permits, applications and the like), Commodity Credit Corporation
storage agreements or contracts, leasehold interests in real and personal
property and any security interests or other security held by or granted to
Borrower or its Subsidiaries to secure payment by any account debtor of any
of the Accounts, and any other "general intangibles" (as defined in the
UCC).
"GOVERNMENT YIELD" means the annual yield (converted as necessary to
the equivalent semi-annual compound rate) on a U.S. Treasury Security
having a maturity date closest to the date computed by adding the Average
Maturity Period to the date of prepayment, as published in THE WALL STREET
JOURNAL (or, if not so published, as determined by the Bank based on
quotations by secondary market dealers selected by the Bank). If more than
one issue of U.S. Treasury Securities is scheduled to mature at or about
the time of such computed date, then to the extent possible the U.S.
Treasury Security trading closest to its par value will be chosen as the
basis of the Government Yield.
"GUARANTY" means a guaranty in the form and upon the terms of EXHIBIT
"D".
"HIGHEST LAWFUL RATE" means the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged, or received on the Total Principal Debt under the Laws
of the United States and the State of Colorado applicable thereto which are
presently in effect or, to the extent allowed by Law under such applicable
Laws of the United States and the State of Colorado which may hereafter be
in effect and which allow a higher maximum nonusurious interest rate than
applicable Laws now allow.
"INDEBTEDNESS" means and includes for any Person, as of any date as of
which the amount thereof is to be determined (i) all items which in
accordance with GAAP would be included in determining total liabilities as
shown on the liabilities side of a balance sheet of such Person as of such
date, (ii) all obligations which are secured by any Lien existing on
property owned by such Person whether or not the obligations secured
thereby shall have been assumed by such Person, (iii) all obligations of
such Person to purchase any materials, supplies or other property, or to
obtain the services of any other Person, if the relevant contract or other
related document requires that payment for such materials, supplies, or
other property, or for such services, shall be made regardless of whether
delivery of such materials, supplies, or other property is ever made or
tendered or such services are ever performed or tendered, (iv) all
obligations of such Person to advance or supply funds to or to purchase
property or services from, any other Person in order to maintain the
working capital, net worth, or any other balance sheet condition of such
other Person or to pay debts,
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dividends, or expenses of such other Person or to assure such other Person
or any third party against any liability or loss, and (v) guaranties,
endorsements, and other contingent obligations, direct or indirect, on the
part of such Person (other than endorsements of negotiable instruments for
collection in the ordinary course of business) for the payment, discharge,
or satisfaction of Indebtedness of others of the character described in
clauses (i), (ii), (iii) and (iv) above.
"INTEREST CHANGE DATE" means the date of any regularly scheduled
adjustment in the interest rate on the Term Note.
"INTEREST DIFFERENTIAL" means, as of any prepayment date, (i) the
interest rate payable on the Term Note as in effect on the date of
prepayment MINUS (ii) the sum of (A) the Government Yield as of such date,
PLUS (B) the Issuance Spread.
"INTEREST PERIOD" means the period of time specified by Borrower in
the applicable Notice of LIBOR Rate; provided that (i) the duration of each
Interest Period shall be for a period of 1, 2, 3, 6, 9, or 12 months, (ii)
any Interest Period which would otherwise end on a day which is not a
Business Day, shall be extended to the next succeeding Business Day, unless
such next succeeding Business Day falls in the next calendar month, then
the Interest Period shall be shorted to the preceding Business Day and
(iii) each Interest Period must begin on a Business Day.
"INVENTORY" means any and all dairy livestock, feed and dairy products
or other goods which shall at any time constitute "inventory" (as defined
in the UCC) or Farm Products of Borrower or its Subsidiaries, wherever
located (including without limitation, goods in transit), or which from
time to time are held for sale, lease or consumption in Borrower's
business, furnished under any contract of service or held as raw materials,
work in progress, finished inventory or supplies (including without
limitation, packaging and/or shipping materials).
"ISSUANCE SPREAD" means the Bank's brokerage commission, if any, plus
any of the Bank's other marginal costs for providing Fixed Rate financing
that are in excess of the Government Yield expressed as a percent per
annum. These brokerage commissions and marginal costs are to be determined
by the Bank in its sole discretion on the date of conversion to a Fixed
rate. For example, the Issuance Spread on May 25,2000 would have been 0.97%
[or 97 basis points]."
"LAW OR LAWS" means all applicable statutes, laws, ordinances,
regulations, orders, writs, injunctions, or decrees of the United States of
America, any state or commonwealth, any nation or country, any territory or
possession, or any Tribunal.
"LEASES" has the meaning set forth in Section 2.11(d).
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"LETTERS OF CREDIT" means letters of credit issued by Bank upon the
request of Borrower and pursuant to the terms hereof, and shall include,
without limitation, that certain Letter of Credit #▇▇▇▇▇▇▇▇▇▇▇▇ issued for
the benefit of H.P. Hood, Inc. in the face amount of $9,600,000.00, and
expiring on May 1, 2003, and that certain Letter of Credit #SLCDDEN00347
issued for the benefit of State of Vermont in the face amount of
$187,000.00 and expiring on August 31, 2000.
"LIBOR RATE" or "LONDON INTERBANK OFFERED RATE" means (a) for any
Interest Period, a rate per annum equal to the sum of the rate at which
deposits in United States dollars (comparable in amount to the principal
debt hereunder to be covered by LIBOR and with a maturity equal to the
Interest Period elected therefor) are offered to Bank by leading banks in
the London interbank market at approximately 11:00a.m. London, England,
time, on the first day of that Interest Period, or as soon thereafter as is
practicable, adjusted for any reserve requirements, if any, which may be
imposed by any governmental agency, plus (b) the Applicable Margin.
"LIEN" means any lien, security interest, tax lien, mechanics lien,
materialmen's lien, or other encumbrance, whether arising by mortgage,
security agreement, or other contract or under Law.
"LINE OF CREDIT" has the meaning set out in the Recitals.
"LITIGATION" means any proceeding, claim, and lawsuit before any
Tribunal, including, but not limited to, proceedings, claims, and/or
lawsuits under or pursuant to any environmental, occupational safety and
health, antitrust, unfair competition, securities, Tax and other Law, or
under or pursuant to any contract, agreement or other instrument.
"LOAN PAPERS" means this agreement, the Note, the Guaranties, the
security agreements, and any other instruments, documents, and agreements
executed and/or delivered pursuant to the terms of this agreement, and any
future amendments, modifications, restatements, renewals, or extensions
hereof or thereof.
"LOC COMMITTED SUM" means Twenty-Five Million and 00/100 Dollars
($25,000,000.00). The LOC Committed Sum shall be reduced by the face amount
of any Letters of Credit which have been or are issued hereunder which
remain outstanding.
"LOC MATURITY DATE" means May 31, 2003.
"LOC NOTE" means the promissory note evidencing the Indebtedness of
Borrower under the Line of Credit, in the form and upon the terms of
EXHIBIT "A".
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"MARGIN STOCK" has the meaning given thereto in Section 221.3(v) of
Regulation U, promulgated by the Board of Governors of the Federal Reserve
System, 12 C.F.R. Section 221.3, as amended from time to time.
"MATERIAL ADVERSE EFFECT" means any effect which will be material and
adverse to the financial condition or business operations of Borrower or
its Subsidiaries, or which will cause a Default.
"MEADOW FARMS" means ▇▇▇▇▇▇▇ Farms Limited, a United Kingdom Company.
"NET BEFORE TAX INCOME" means consolidated net profit before income
Taxes, determined in accordance with GAAP.
"NET EARNINGS AVAILABLE FOR FIXED CHARGES" means, for any period,
EBITDA of Borrower and its consolidated Subsidiaries, minus (i) cash income
Taxes paid by Borrower or any of its Subsidiaries, minus (ii) cash
dividends paid by Borrower or any of its Subsidiaries, minus (iii) any
capital expenditures made by Borrower and its Subsidiaries which have not
been directly financed through the Line of Credit or Term Loan and approved
by the Bank.
"NET INCOME" means the consolidated net profit after income Taxes of
Borrower and its consolidated Subsidiaries as determined in accordance with
GAAP.
"NET WORTH" means, as of any date, the excess of total assets
(excluding Deferred Costs) over total liabilities, as each is determined in
accordance with GAAP, plus an amount equal to total Subordinated Debt.
"NOTES" means the Term Note and the LOC Note.
"NOTICE OF FIXED RATE" shall have the meaning set forth in Section
2.5(b)(2).
"NOTICE OF LIBOR RATE" shall have the meaning set forth in Section
2.6.
"OBLIGATIONS" means all present and future indebtedness, obligations,
and liabilities and all renewals and extensions thereof, or any part
thereof, of Borrower to Bank, arising pursuant to this Agreement, and all
interest accruing thereon and costs, expenses and attorney's fees incurred
in the enforcement or collection thereof, regardless of whether such
indebtedness, obligations, and liabilities are direct, indirect, fixed,
contingent, liquidated, unliquidated, joint, several, or joint and several,
including, but not limited to, the indebtedness, obligations, and
liabilities evidenced, secured, or arising pursuant to any of the Loan
Papers, and all renewals and extensions thereof, or any part thereof, and
all present and future amendments thereto.
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"OPERATING LEASES" means leases and subleases which have not been
capitalized, and which are treated on the books of Borrower as an operating
cost in accordance with GAAP.
"PBGC" means the Pension Benefit Guaranty Corporation established
under ERISA.
"PERMITTED LEASE OBLIGATIONS" means all obligations of the Companies
under all leases and subleases which do not, for any 12-month period ending
on or after the Closing Date, exceed the amounts which have been stated in
the projections provided to the Bank for the current or upcoming fiscal
year, as applicable, in accordance with Section 5.4, for such period, which
amounts have been approved in writing in advance by the Bank.
"PERMITTED LIENS" means (a) the Liens in existence at Closing Date, as
set forth and described on EXHIBIT "E", (b) Liens which arise by operation
of Law, and (c) deposits under worker's compensation, unemployment
insurance and social security Laws, or to secure the performance of
contracts, statutory obligations or surety or appeal bonds, or to secure
indemnity, performance, or other similar bonds in the ordinary course of
business.
"PERSON" means any individual, firm, corporation, association,
partnership, joint venture, trust, other entity, or a Tribunal.
"PLAN" means an employee benefit plan maintained for employees of
Borrower or its Subsidiaries and subject to the provisions of ERISA.
"PLEDGED COMPANY" has the meaning set forth in Section 4.1(k).
"PREPAYMENT INDEMNITY" shall equal the present value (determined by
the Bank using the Government Yield as of the date of prepayment as the
discount factor) on the prepayment date of a stream of equal monthly
payments in number equal to the number of whole months (using a thirty-day
month) in the Average Maturity Period. The amount of each such monthly
payment shall equal the quotient obtained by DIVIDING (a) the product of
the amount prepaid, TIMES the Interest Differential, TIMES a fraction, the
numerator of which is the number of days in the Average Maturity Period and
the denominator of which is 360, BY (b) the number of whole months (using a
thirty-day month) in the Average Maturity Period.
"PRINCIPAL LOC DEBT" means the aggregate unpaid principal balance of
all Advances made with respect to the Line of Credit at the time in
question, and shall include all outstanding amounts paid under any Letters
of Credit.
"PRINCIPAL OFFICE" for Bank means the principal place of business of
Bank in the city where Bank is entitled to receive notices pursuant hereto.
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"PRINCIPAL TERM DEBT" means the aggregate unpaid principal balance of
all Advances made with respect to the Term Loan at the time in question.
"RACHEL'S DAIRY" means Rachel's Dairy, Ltd., a United Kingdom company.
"REAL ESTATE" has the meaning set forth in Section 2.11(e).
"REPORTABLE EVENT" means a reportable event as defined in Title IV of
ERISA, except actions of general applicability by the Secretary of Labor
under Section 110 of ERISA.
"REVOLVER PERIOD" means the period of time from the Closing Date to
and including May 31, 2003.
"RIGHTS" means rights, remedies, powers, and privileges exercisable
under the Loan Papers, at Law, in equity, or otherwise.
"SECURITY INTERESTS" has the meaning set forth in Section 2.11.
"SHARES" means any and all outstanding shares of capital stock or
ownership interest of any other entity now owned or hereafter acquired by
any Company.
"SUBORDINATED DEBT" means a note, debenture, or other instrument or
evidence of Indebtedness executed by the Company or for which the Company
is liable, the payment of the principal and interest of which is
subordinated to the prior payment of the Obligations, which subordination
shall be in a form and substance satisfactory to Bank.
"SUBSIDIARY" means every firm, corporation, association, partnership,
joint venture, trust, or other entity of which an aggregate of fifty
percent (50%) or more of the equity interests or the issued and outstanding
stock having ordinary voting power (except directors' qualifying shares)
is, at the time the determination is being made, owned, either directly or
indirectly, or controlled by the Borrower and/or one or more Subsidiaries.
"TAXES" means all taxes, assessments, fees, or other charges from time
to time or at any time imposed by any Laws or by any Tribunal.
"TERM LOAN" has the meaning set forth in the Recitals hereto.
"TERM LOAN COMMITTED SUM" means Twenty-Five Million and 00/100 Dollars
($25,000,000.00).
"TERM LOAN DRAWDOWN PERIOD" means the period from the Closing Date to
and including thirty (30) Business Days thereafter.
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"TERM MATURITY DATE" means May 31, 2005.
"TERM NOTE" means the promissory note evidencing under the Term Loan,
in the form and upon the terms of EXHIBIT "B".
"TOTAL FUNDED DEBT RATIO" means the ratio of (a) the Total Principal
Debt as of the calculation date plus the amount of any requested Advance to
(b) EBITDA of Borrower and its consolidated Subsidiaries, determined in
accordance with GAAP.
"TOTAL FUNDED RATIO DETERMINATION DATE" shall have the meaning for
such term as set forth in the definition of "APPLICABLE MARGIN," above.
"TOTAL INTEREST EXPENSE COVERAGE" means the ratio of (a) TTM EBITDA of
Borrower and its consolidated Subsidiaries plus the TTM EBITDA of any
businesses acquired hereunder, adjusted to reflect the Borrower's cost
structure, as such adjustment is approved by the Bank, to (b) the greater
of (i) the cash interest expense of Borrower and its Subsidiaries or, (ii)
if an Advance is being requested hereunder, Total Principal Debt plus the
amount of the requested Advance multiplied by the applicable annual
interest rate.
"TOTAL LIABILITIES" means the amount of total liabilities which would
be shown in accordance with GAAP on a balance sheet.
"TOTAL PRINCIPAL DEBT" means the aggregate unpaid principal balance of
the Notes at the time in question.
"TRADE RECEIVABLES" means all Accounts of Borrower which arose from
goods sold by Borrower in the ordinary course of business to the account
debtor.
"TRIBUNAL" means any state, commonwealth, federal, foreign,
territorial, or other court or governmental department, commission, board,
bureau, agency or instrumentality.
"TTM" means trailing twelve months of the particular financial
calculation.
"UCC" means the Uniform Commercial Code, as amended and adopted in the
State of Colorado.
"UK SUBSIDIARIES" means Rachel's Dairy, Meadow Farms, and Organic
Dairies, Ltd., a United Kingdom company.
"U.S. TREASURY SECURITIES" means actively traded U.S. Treasury bonds,
bills and notes.
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"WORKING CAPITAL" means the amount by which current assets excluding
prepaid expenses other than prepaid insurance exceed current liabilities.
SECTION 1.2 HEADINGS. The headings, captions, and arrangements used in any
of the Loan Papers are, unless specified otherwise, for convenience only and
shall not be deemed to limit, amplify, or modify the terms of the Loan Papers,
nor affect the meaning thereof.
SECTION 1.3 NUMBER AND GENDER OF WORDS. Whenever herein the singular number
is used, the same shall include the plural where appropriate, and words of any
gender shall include each other gender where appropriate.
SECTION 1.4 ACCOUNTING TERMS. All accounting and financial terms used
herein, and the compliance with each covenant contained herein which relates to
financial matters, shall be determined in accordance with GAAP, except to the
extent that the deviation therefrom is expressly stated herein.
SECTION 1.5 ARTICLES, SECTIONS, AND EXHIBITS. All references to Articles
and Sections contained herein are, unless specifically indicated otherwise,
references to articles and sections of this agreement. All references to
"Exhibits" contained herein are references to exhibits attached hereto, all of
which are made a part hereof for all purposes, the same as if set forth herein
verbatim, it being understood that if any exhibit attached hereto, which is to
be executed and delivered, contains blanks, the same shall be completed
correctly and in accordance with the terms and provisions contained and as
contemplated herein prior to or at the time of the execution and delivery
thereof.
ARTICLE TWO
COMMITMENT TO LEND, TERMS OF PAYMENT,
COLLATERAL AND GUARANTIES
SECTION 2.1 COMMITMENT TO LEND. Subject to and upon the terms, conditions
and covenants, hereinafter set forth, Bank shall (a) make the Term Loan in one
or more Advances to the Borrower, provided that (i) the initial Advance shall be
in an amount not less than $500,000.00, and further Advances shall be in the
amount of $100,000.00 or an integral multiple thereof; (ii) Advances under the
Term Loan will be available to Borrower only during the Term Loan Drawdown
Period; and (iii) the Principal Term Debt shall never exceed the Term Loan
Committed Sum; and (b) extend the Line of Credit to Borrower, in one or more
Advances from time to time during the Revolver Period upon three (3) Business
Day's prior request therefor by Borrower, and the Borrower may borrow, repay,
and reborrow funds from time to time during the Revolver Period under the Line
of Credit, so long as the Principal LOC Debt, never exceeds the LOC Committed
Sum.
SECTION 2.2 LETTERS OF CREDIT. Subject to and upon the terms, conditions
and covenants hereinafter set forth, Bank agrees to issue Letters of Credit upon
application of the Borrower, up to
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an amount equal to (a) the LOC Committed Sum minus (b) the Principal LOC Debt.
Bank shall issue Letters of Credit, upon request by Borrower and receipt by Bank
of a completed and executed letter of credit application in form and content
satisfactory to Bank, and payment of the applicable letter of credit fee. Each
Letter of Credit shall be payable against sight drafts drawn on Bank or at a
certain time, and shall expire on or before the LOC Maturity Date. Letters of
Credit issued pursuant to the terms hereof shall be in a form and on terms which
shall be at the time mutually agreeable to Bank and Borrower. All amounts
outstanding (i.e. once the Letter of Credit has been drawn on and remains
unpaid) under any Letter of Credit issued hereunder shall bear interest prior to
maturity at a rate per annum, calculated on the basis of actual days elapsed
over a 360-day year, which shall be equal to the lesser of (i) the Highest
Lawful Rate, or (ii) the LIBOR Rate.
SECTION 2.3 THE NOTES. The indebtedness arising by reason of the Line of
Credit shall be evidenced by the LOC Note, executed and delivered by Borrower,
dated the date hereof and in the principal amount of the LOC Committed Sum. The
indebtedness arising by reason of the Term Loan shall be evidenced by the Term
Note, executed and delivered by the Borrower, dated the date hereof and in the
principal amount of the Term Loan.
SECTION 2.4 PAYMENTS OF PRINCIPAL.
(a) PRINCIPAL LOC DEBT. The Principal LOC Debt outstanding shall be due
and payable in full on the LOC Maturity Date.
(b) PRINCIPAL TERM DEBT. The Principal Term Debt outstanding shall be due
and payable in quarterly installments of principal, commencing on the last day
of September, 2000, and continuing on the last day of each December, March,
June, and September thereafter in the amounts set forth in the Term Note,
provided, however, that the last installment on the Term Maturity Date shall be
in the amount necessary to repay in full the unpaid principal amount of the Term
Loan.
(c) LINE OF CREDIT AND TERM PAYMENTS AND PREPAYMENTS. Each payment or
prepayment on the LOC Note must be paid at the Principal Office of Bank in
immediately available funds in U.S. Dollars. Borrower shall be entitled to
prepay that portion of the Total Principal Debt which is not, at the time,
subject to a LIBOR Rate or Fixed Rate, from time to time and at any time, in
whole or in part, without penalty, but only if all accrued fees and interest,
which are then due and payable, are paid, and only in amounts of One Hundred
Thousand Dollars ($100,000.00) or more. Prepayment of principal which is made of
a portion of the Total Principal Debt which is at the time subject to a LIBOR
Rate may be prepaid by Borrower at any time, however may be subject to
prepayment/breakage fees, if any. Borrower agrees to immediately pay
prepayment/breakage fees to Bank upon presentation of such charges. A
certificate of Bank setting forth the basis for the determination of such amount
necessary to compensate Bank as aforesaid shall be delivered to Borrower and
shall be conclusive as to such determination and such amount, absent manifest
error. Prepayment of principal with is made of a portion of the Total Principal
Debt which is at the time subject to a Fixed Rate shall be subject to payment of
a Prepayment Indemnity as set forth in Section
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2.5. Any principal payment made within ten days prior to a principal installment
due date shall be deemed a "payment" rather than a prepayment to the extent
necessary to discharge the next due principal installment. All payments and
prepayments of the Obligations, including proceeds of any of the Collateral
(hereinafter defined), shall be paid to and received by Bank and disbursed by
Bank for application to the Obligations as follows: First pro rata to interest
due on the Obligations; then to expenses for which Bank has not been reimbursed
pursuant hereto; then pro rata to the Total Principal Debt until it is paid in
full; and then to all other indebtedness, liabilities, and obligations owed by
Borrower to Bank.
SECTION 2.5 INTEREST.
(a) PRINCIPAL LOC DEBT. The Principal LOC Debt from day to day outstanding
shall bear interest prior to maturity at a rate per annum, calculated on the
basis of actual days elapsed over a 360-day year, which shall be equal to the
lesser of (a) the Highest Lawful Rate, or (b) the Base Rate in effect from day
to day; PROVIDED, however, that Borrower may from time to time in accordance
with Section 2.6 elect to substitute the LIBOR Rate for the Base Rate. The
interest so calculated on the LOC Note shall be due and payable as it accrues on
the last day of each calendar month of each year, commencing June 30, 2000 and
at maturity; provided, however, that during any Interest Period when a LIBOR
Rate is in effect, interest for such Interest Period shall be due and payable
with respect to that portion of the Principal LOC Debt subject to the LIBOR Rate
on the last day of such Interest Period. From and after maturity (whether
stated, by acceleration, or otherwise) the matured Principal LOC Debt and, to
the extent permitted by Law, any accrued interest thereon at maturity, shall, at
the option of the holder of the LOC Note, bear interest, payable on demand, at
the Default Rate.
(b) PRINCIPAL TERM DEBT. The Principal Term Debt from day to day
outstanding shall bear interest prior to maturity at a rate per annum,
calculated on the basis of actual days elapsed over a 360-day year, which shall
be equal to the lesser of (a) the Highest Lawful Rate, or (b) the Base Rate in
effect from day to day; PROVIDED, however, that Borrower may from time to time
in accordance with Section 2.6 elect to substitute the LIBOR Rate for the Base
Rate.
(1) PAYMENTS OF INTEREST. The interest so calculated on the Term Note
shall be due and payable as it accrues on the last day of each calendar
month of each year, commencing September 30, 2000 and continuing until the
Term Maturity Date; provided, however, that during any Interest Period when
a LIBOR Rate is in effect, interest for such Interest Period shall be due
and payable with respect to that portion of the Principal Term Debt subject
to the LIBOR Rate on the last day of each calendar month and on the last
day of such Interest Period. From and after maturity (whether stated, by
acceleration, or otherwise) the matured Principal Term Debt and, to the
extent permitted by Law, any accrued interest thereon at maturity, shall,
at the option of the holder of the Term Note, bear interest, payable on
demand, at the Highest Lawful Rate.
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(2) FIXED RATE OPTION ON PRINCIPAL TERM DEBT. In addition to the
interest rates set forth in Section 2.5(b), above, the Borrower may elect a
Fixed Rate (exercisable only once) in lieu of the Base Rate or LIBOR Rate
by telephonic notice to Bank to be confirmed in writing (a "Notice of Fixed
Rate") by delivering to Bank a confirmation letter in form and upon the
terms of EXHIBIT "F" within three (3) Business Days of the date on which
the charging of the Fixed Rate is to commence. Election of a Fixed Rate is
irrevocable. Such Fixed Rate shall apply to all amounts outstanding under
the Principal Term Debt, and may not be elected while a LIBOR Rate is in
effect for any portion of the Principal Term Debt. A Fixed Rate may only be
elected if the Cash Flow Leverage Ratio is less than 3.75 to 1 at the time
of the election. In the event that Borrower has elected a Fixed Rate, any
prepayments of principal or interest under the Principal Term Debt, shall
be subject to the Prepayment Indemnity for payments made after the Fixed
Rate election.
(A) PREPAYMENTS. The Borrower acknowledges and agrees as
follows: (i) the Borrower has no right to prepay the
principal of the Term Note which is subject to a Fixed Rate
without the Bank's consent, which the Bank will grant only
on the terms and subject to the conditions hereinafter
provided; (ii) the Bank will be harmed by reason of any
prepayment of the principal of the Term Note which is
subject to a Fixed Rate at a time when interest rates have
declined below the levels prevailing at the time the
existing interest rate was established, because any
reinvestment of the prepaid funds at the lower rates
prevailing at the time of prepayment will produce a lower
return to the Bank; (iii) there is no readily available
index of rates payable on loans such as that from the Bank
to the Borrower, nor any assurance that the Bank could
replace the loan with a similar loan; and (iv) changes in
the yields on U.S. government securities provide a
reasonable approximation for changes in interest rates
generally.
(B) To induce the Bank to agree to accept voluntary prepayments,
to the extent permitted by applicable law, the Borrower
agrees to pay the Bank a Prepayment Indemnity as described
herein upon any prepayment of the Term Note which is subject
to a Fixed Rate, whether voluntary, mandatory or upon
acceleration of the principal of the Term Note, and agrees
to all of the other terms of prepayment herein.
(C) Any voluntary prepayment under the Term Note which is
subject to a Fixed Rate shall be either in the full amount
of the Principal Term Debt or, if a partial prepayment, in
the amount of $100,000.00 or an integral multiple thereof,
and partial prepayments shall be applied to installments or
payments due under the Term Note as set forth in
16
Section 2.4. If, at the time of any prepayment (whether
voluntary, mandatory or upon acceleration of the principal
of the Term Note), the Interest Differential shall exceed
zero, such prepayment shall be accompanied, to the extent
permitted by applicable law, by payment of the Prepayment
Indemnity.
SECTION 2.6 LIBOR RATE. Subject to the limitations herein, Borrower may
elect a LIBOR Rate in lieu of the Base Rate by telephonic notice to Bank to be
confirmed in writing (a "Notice of LIBOR Rate") by delivering to Bank a
confirmation letter in form and upon the terms of EXHIBIT "G" within three (3)
Business Days of the date on which the charging of the LIBOR Rate is to
commence, specifying the commencement date and duration of the period (the
Interest Period) during which the LIBOR Rate is to be charged, and the amount of
the Principal LOC Debt or the Principal Term Debt, as applicable, to be covered
by the LIBOR Rate (which shall be in an amount equal to One Hundred Thousand
Dollars ($100,000) or an integral multiple thereof). At the expiration of any
Interest Period wherein the LIBOR Rate is in effect, the interest rate for the
Principal LOC Debt or Principal Term Debt, as applicable, previously covered by
the LIBOR Rate shall revert to the Base Rate. Election of a LIBOR Rate (i) is
irrevocable for the duration of the Interest Period elected, (ii) may not be
made for any Interest Period which would extend beyond the LOC Maturity Date or
the Term Maturity Date, as applicable, and (iii) may not be made for the
Principal Term Debt in the event that the Borrower has elected a Fixed Rate, as
described in Section 2.5(b)(2), above.
(a) INCREASED COSTS. If any change in applicable law or in the
interpretation or administration thereof by any Tribunal (whether or not having
the force of law) shall impose, modify, or deem applicable any reserve
requirement of the Board of Governors of the Federal Reserve System, or any Tax,
duty, or charge of any character is imposed on any portion of the Total
Principal Debt hereunder subject to a LIBOR Rate, or any other reserve, special
deposit, Tax, duty, charge, or similar requirement against assets of, deposits
with or for the account of, or credit extended by, Bank, hereof, or shall impose
on Bank any other condition affecting the Notes or any Total Principal Debt
hereunder subject to a LIBOR Rate and the result of any of the foregoing is to
increase the cost to Bank of making or maintaining the Total Principal Debt
hereunder subject to a LIBOR Rate, then Borrower shall pay to Bank on demand as
additional interest such additional cost. A certificate of Bank setting forth
the basis for the determination of such amount necessary to compensate Bank as
aforesaid shall be delivered to Borrower and shall be conclusive as to such
determination and such amount, absent manifest error.
SECTION 2.7 TERMINATION OF FACILITY. The Borrower may terminate this
Agreement at any time and, subject to payment and performance of all of the
Borrower's obligations to the Bank, may obtain any release or termination of the
Security Interest to which the Borrower is otherwise entitled by law by (a)
giving at least 30 days' prior written notice to the Bank of the Borrower's
intention to terminate this Agreement; and (b) if such repayment is due to
refinancing by third party or through the proceeds of an Equity Offering prior
to two years after the Closing Date, Borrower shall pay to
17
the Bank a termination fee, in addition to any applicable Prepayment Indemnity
due in accordance with Section 2.5, equal to: (i) for prepayment prior to the
first anniversary of the Closing Date, one- half percent (0.5%) of the LOC
Committed Sum and Term Committed Sum, and (ii) for prepayment on or after the
first anniversary but prior to the second anniversary of the Closing Date, one
quarter of one percent (0.25%) of the LOC Committed Sum and Term Committed Sum.
In the event that U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ underwrites or co-underwrites an
Equity Offering which results in a significant paydown of the LOC Committed Sum
or the Term Committed Sum, the termination fee shall be reduced to one-eighth of
one percent (0.125%) of the amount of the LOC Committed Sum or the Term
Committed Sum which is paid down by the proceeds of such Equity Offering.
SECTION 2.8 OFFSET. If a Default occurs and is continuing, Bank shall be
entitled to exercise the rights of offset and/or banker's lien against the
interests of Borrower in and to each and every account and other property of
Borrower which is in the possession of Bank to the extent of the full amount of
the Obligations.
SECTION 2.9 GUARANTIES. Each present and future Subsidiary shall
unconditionally guarantee payment and performance of the Obligations by each
executing and delivering a Guaranty; provided, however that Guaranties for the
UK Subsidiaries are addressed in Section 4.3 below.
SECTION 2.10 COLLATERAL. As security for the Obligations, Borrower and each
Subsidiary (except for the UK Subsidiaries, as addressed in Section 4.3, below)
hereby assigns and grants to the Bank Liens and security interests
(collectively, the "Security Interests") on, in, and to the following described
Collateral (herein so called):
(a) Any and all present and future Accounts, General Intangibles,
chattel paper, documents, instruments, Inventory, Farm Products, and
Equipment now owned or hereafter acquired by any Company;
(b) Any and all of the issued and outstanding shares of capital stock
of any corporation or ownership interest of any other entity (the "Shares")
now owned or hereafter acquired by any Company;
(c) Any and all rights, titles, interests, security interests,
powers, and privileges any Company may now have or be or become entitled to
under or by virtue of any business acquired by any Company, in whole or in
part;
(d) Any and all rights, titles, and interests now owned or hereafter
acquired by any Company in and to any leases covering real property or any
interest therein, equipment, or other personal property (collectively, the
"Leases");
18
(e) Any and all real estate now owned or hereafter acquired by any
Company, together with all improvements thereon and fixtures attached
thereto (collectively, the "Real Estate"); and
(f) Any and all Accounts, General Intangibles, Documents, chattel
paper, and proceeds arising from or by virtue of, or from the sale or other
disposition of, or collections with respect to, or insurance proceeds
payable with respect to, or proceeds payable by virtue of warranty claims
against manufacturers of, or claims against any other Persons with respect
to, all or any part of the Collateral described in Subsections (a) through
(e) preceding.
Such Collateral shall secure the payment and performance of the Obligations.
SECTION 2.11 EXPIRATION OF BANK'S COMMITMENTS. Bank shall have no
obligation to make any Advance under the Line of Credit after, and the
commitment of Bank to make Advances under the Line of Credit shall terminate and
expire at 1:00 p.m., Colorado time on the LOC Maturity Date; Bank shall have no
obligation to make any Advance under the Term Loan after 1:00 p.m., Colorado
time, on the date of the expiration of the Term Loan Drawdown Period; provided
that the Obligations of Borrower and Subsidiaries and the Rights of the Bank
under the Loan Papers shall continue in full force and effect until the
Obligations have been paid and performed in full.
SECTION 2.12 CAPITAL ADEQUACY. If the Bank shall determine that the
adoption after the date hereof of any applicable law, rule or regulation
regarding capital adequacy, or any change therein after the date hereof, any
change after the date hereof in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank or its
parent corporation with any guideline or request issued after the date hereof
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the Bank's or the Bank's parent corporation's
capital as a consequence of the Bank's obligations hereunder to a level below
that which the Bank or its parent corporation could have achieved but for such
adoption, change or compliance (taking into consideration the Bank's policies
with respect to capital adequacy and those of the Bank's parent corporation) by
an amount deemed to the Bank or its parent corporation to be material, then from
time to time on demand by the Bank, the Borrower shall pay to the Bank such
additional amount or amounts as will compensate the Bank or its parent
corporation for such reduction. Certificates of the Bank sent to the Borrower
from time to time claiming compensation under this Section, stating the reason
therefor and setting forth in reasonable detail the calculation of the
additional amount or amounts to be paid to the Bank hereunder shall be
conclusive absent manifest error. In determining such amounts, the Bank or its
parent corporation may use any reasonable averaging and attribution methods.
19
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Bank as follows:
SECTION 3.1 CORPORATE EXISTENCE AND AUTHORITY. Each of the Subsidiaries and
Borrower (a) is a corporation duly organized, validly existing, and in good
standing under the Laws of the state of its incorporation (b) is duly licensed
or qualified to transact business as a foreign corporation in each jurisdiction
where the nature and extent of its business and properties require the same, and
(c) possesses all requisite authority, power, licenses, permits, and franchises
to conduct its business and execute, deliver, and comply with the terms of the
Loan Papers.
SECTION 3.2 CORPORATE AUTHORITY. All requisite corporate action to
authorize the execution and delivery of the Loan Papers to be executed by
Borrower, the consummation of all transactions contemplated thereby, and the
performance and discharge by Borrower of its obligations thereunder have been
duly taken by Borrower; no authorization, approval, consent, or notice under the
provisions of the articles of incorporation or bylaws, or any amendments
thereof, of Borrower, or under any other relevant instrument or applicable Law
or by any additional party or Tribunal is required with respect to the execution
and delivery of such Loan Papers, the consummation of all transactions
contemplated thereby or the performance and discharge by Borrower of its
obligations thereunder, and all of such Loan Papers will, upon execution and
delivery, be legal, valid, and binding obligations of Borrower, enforceable in
accordance with their respective terms.
SECTION 3.3 COMPLIANCE WITH LAWS AND DOCUMENTS. Neither the Borrower nor
any of the Subsidiaries is, nor will the execution, delivery, and the
performance of and compliance with the terms of the Loan Papers cause Borrower
or any Subsidiary to be: (a) in violation of any Laws or its respective articles
of incorporation or bylaws in any respect which could have any effect whatsoever
upon the validity, performance, or enforceability of any of the terms of the
Loan Papers or which could have a Material Adverse Effect; or (b) in default
(nor has any event occurred which, with notice or lapse of time or both, could
constitute a default) under any material agreement or instrument to which
Borrower or any Subsidiary is a party or under which any of them or any of their
property is bound.
SECTION 3.4 LITIGATION. There is no Litigation pending or, to the knowledge
of Borrower, threatened against Borrower or any Subsidiary which could have a
Material Adverse Effect.
SECTION 3.5 TAXES. All federal, state, local, foreign, and other Tax
returns of Borrower and the Subsidiaries required to be filed have been filed,
and all federal, state, foreign, and other Taxes imposed upon Borrower which are
due and payable have been paid.
SECTION 3.6 PURPOSE OF LOANS. The proceeds of Advances under the Line of
Credit will be used for working capital, capital expenditures and acquisitions
of industry-related companies as
20
may be permitted herein and for general corporate purposes. The proceeds of
Advances under the Term Loan will be used for the acquisition of Meadow Farms
and other properties and/or entities approved by Bank and related fees and
expenses, and for general corporate purposes. No Advance hereunder will be used
directly or indirectly for the purpose of purchasing or carrying any Margin
Stock or for the purpose of extending credit to others for the purpose of
purchasing or carrying any such Margin Stock.
SECTION 3.7 PROPERTIES; PERMITTED LIENS. Borrower and its Subsidiaries have
good and marketable title to all their respective properties reflected on the
Current Financials; all material leases under which the Borrower or any
Subsidiary is lessee or tenant are in full force and effect, and there exists no
default (nor has any event occurred which with notice or lapse of time or both,
could constitute a default) thereunder; except for the Permitted Liens, to the
knowledge of Borrower after reasonable investigation, there is no Lien on any
asset of Borrower or any of its Subsidiaries. The chief executive office and
principal place of business of the Borrower and its Subsidiaries is located at
the address set forth in EXHIBIT "H " hereto, and all of the Borrower's and
Subsidiaries' records relating to its businesses or the Collateral are kept at
that location. All Inventory and Equipment is located at that location or at one
of the other locations set forth in EXHIBIT "H" hereto.
SECTION 3.8 OWNERSHIP OF SUBSIDIARIES AND NAMES. The extent of the
Companies' ownership of the capital stock of and jurisdiction of incorporation
of the Subsidiaries is shown on EXHIBIT "I", and, except as set forth thereon,
none of the Companies (a) has any other Subsidiaries, or (b) has used or
transacted business under any other corporate or trade name in the five-year
period preceding the date hereof.
SECTION 3.9 FINANCIAL STATEMENTS. The Current Financials, heretofore
furnished to Bank, were prepared in accordance with GAAP, and fairly present the
financial condition and results of operations of Borrower and the consolidated
Subsidiaries, as of, and for the portion of the fiscal year ending on, the date
thereof. There were no material liabilities, direct or indirect, fixed or
contingent, of Borrower or the consolidated Subsidiaries as of the date of the
Current Financials which are not reflected therein or in the notes thereto.
Except for transactions directly related to, or specifically contemplated by,
this agreement and transactions heretofore disclosed in writing to Bank, there
have been no material adverse changes in the financial condition of Borrower or
the consolidated Subsidiaries from those shown in the Current Financials between
such date and the Closing Date, nor have Borrower or any of such Subsidiaries
incurred any material liability, direct or indirect, fixed, or contingent.
Section 3.10 ERISA. (a) Neither any of the Plans nor any trusts created
thereunder, nor any trustee or administrator thereof, has engaged in a
"prohibited transaction", as such term is defined in Section 4975 of the Code,
which could subject the Plans or any of them, any such trust, or any trustee or
administrator thereof, or any party dealing with the Plans or any such trust to
the tax or penalty on prohibited transactions imposed by Section 4975 of the
Code; (b) neither any of the Plans nor any such trusts have been terminated, nor
have there been any Reportable Events since
21
the effective date of ERISA; and (c) neither any of the Plans nor any such
trusts have incurred any accumulated funding deficiency," as such term is
defined in Section 302 of ERISA (whether or not waived), since the effective
date of ERISA.
SECTION 3.11 SECURITIES LAWS. None of the Companies has, nor has any Person
known to any of the Companies to be acting or purporting to act on behalf of any
of the Companies, directly or indirectly, offered any or all of the Notes for
sale to, or solicited any offer to buy any or all of the Notes from, or
otherwise negotiated in respect thereof, with any Person, other than Bank, or
done (or omitted to do) any other act, so as to bring the issuance or sale
thereof to Bank within the registration requirements of the Securities Act of
1933, as amended, and the Companies have complied with or are exempt from the
registration provisions of all state securities or "blue sky" Laws applicable to
the issuance or sale of the Notes to the Bank.
SECTION 3.12 INVESTMENT COMPANY ACT. None of the Companies is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 3.13 EXISTING INDEBTEDNESS. Except as fully described in the notes
to the Current Financials or on EXHIBIT "C", none of the Companies is directly,
indirectly, or contingently obligated with respect to any Indebtedness.
SECTION 3.14 MATERIAL AGREEMENTS. EXHIBIT "J" contains a true and complete
description of all material written and oral contracts, agreements, commitments,
and understandings to which any Company is a party, by which any Company is
directly or indirectly bound, or to which any of the assets of any Company may
be subject, except (a) those which are otherwise specifically described in the
Loan Papers, and (b) contracts which are cancellable upon 30 days' or less
notice without liability for further payment other than nominal penalty.
SECTION 3.15 LOCATION OF COLLATERAL. The present and foreseeable
obligations of any and all of the Collateral or of the books and records with
respect thereto, as the case may be, are stated on EXHIBIT "H".
SECTION 3.16 ENVIRONMENTAL MATTERS. (a) Except as disclosed on part 10 of
EXHIBIT "L", Borrower has not received any notice to the effect, or has any
knowledge, that any real property or its operations are not in compliance with
any of the requirements of applicable federal, state and local environmental,
health and safety statutes and regulations ("Environmental Laws") or are the
subject of any federal or state investigation evaluating whether any remedial
action is needed to respond to a release of any toxic or hazardous waste or
substance into the environment, which noncompliance or remedial action could
have a material adverse effect on the business, operations, real property,
assets or conditions (financial or otherwise) of Borrower; (b) there have been
no releases of hazardous material at, on or under the real property that, singly
or in the aggregate, have, or any reasonably be expected to have, a material
adverse effect on the financial condition, operations, assets, business, real
property or prospects of Borrower; (c) there are no underground
22
storage tanks, active or abandoned, including without limitation petroleum
storage tanks, on or under the real property that, singly or in the aggregate,
have, or may reasonably be expected to have, a material adverse effect on the
financial condition, operations, assets, business or real property or prospects
of Borrower; (d) Borrower has not directly transported or directly arranged for
the transportation of any hazardous material to any location which is listed or
proposed for listing on the National Priorities List pursuant to CERCLA, on the
CERCLIS or on any similar state list or which is the subject of federal, state
or local enforcement actions or other investigations which may lead to material
claims against Borrower for any remedial work, damage to natural resources or
personal injury, including without limitation, claims under CERCLA; and (e)
except as disclosed on part 10 of EXHIBIT "L", no conditions exist at, on or
under the real property which, with the passage of time, or the giving of notice
or both, would rise to any material liability under any Environmental Laws.
SECTION 3.17 GENERAL. There is no significant material fact or condition
relating to the financial conditions and businesses of the Companies,
collectively or individually, which has not been related, in writing, to Bank,
and all writings heretofore or hereafter exhibited or delivered to Bank by or on
behalf of any Company are and will be genuine and in all respects what they
purport and appear to be.
SECTION 3.18 PERSONS IN CONTROL. To the knowledge of Borrower, no Person
having "control" of Borrower or any Subsidiary is an "executive officer,"
"director, if or person who directly or indirectly or in concert with one or
more persons, owns, controls, or has the power to vote more than 10% of any
class of voting securities" (as such terms are defined in the Financial
Institutions Regulatory and Interest Rate Control Act of 1978, as amended, and
regulations promulgated thereunder) of the Bank.
SECTION 3.19 FINANCING STATEMENTS. The Borrower has provided to the Bank
signed financing statements sufficient when filed to perfect the Security
Interests and the other security interests created by the Loan Documents. When
such financing statements are filed in the offices noted therein, the Bank will
have a valid and perfected security interest in all Collateral and all other
collateral described in the Loan Documents which is capable of being perfected
by filing financing statements. None of the Collateral or other collateral
covered by the Loan Documents is or will become a fixture on real estate, unless
a sufficient fixture filing is in effect with respect thereto.
SECTION 3.20 RIGHTS TO PAYMENT. Each right to payment and each instrument,
document, chattel paper and other agreement constituting or evidencing
Collateral or other collateral covered by the Loan Documents is (or, in the case
of all future Collateral or such other collateral, will be when arising or
issued) the valid, genuine and legally enforceable obligation, subject to no
defense, setoff or counterclaim, of the account debtor or other obligor named
therein or in the Borrower's records pertaining thereto as being obligated to
pay such obligation.
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ARTICLE FOUR
CONDITIONS PRECEDENT TO ADVANCES
SECTION 4.1 INITIAL ADVANCE. Bank will not be obligated to make any Advance
unless and until Borrower has delivered, or has caused to be delivered, to Bank,
or Bank otherwise receives, on or prior to the Closing Date, the following
described documents, certificates, evidences, opinions, and other instruments:
(a) ARTICLES OF INCORPORATION. A copy of the articles of
incorporation of Borrower and each of its Subsidiaries, and all amendments
thereto, accompanied by certificates that such copy is correct and complete
issued by (i) the appropriate governmental official of the jurisdiction of
incorporation of Borrower or Subsidiary, as applicable, bearing a Current
Date, and (ii) the Secretary of Borrower or Subsidiary, as applicable,
dated as of the Closing Date.
(b) BYLAWS. A copy of the bylaws of Borrower, and all amendments
thereto, accompanied by a certificate that such copy is correct and
complete, dated the Closing Date, executed by the Secretary of Borrower or
Subsidiary, as applicable.
(c) GOOD STANDING AND AUTHORITY. Certificates of the appropriate
governmental officials of such jurisdictions as Bank may request, each
bearing a Current Date, to the effect that Borrower and each Subsidiary is
in good standing with respect to payment of franchise and similar Taxes and
is duly qualified to transact business therein, accompanied by the
certificate of the Secretary of Borrower or Subsidiary, as applicable,
dated the Closing Date, that such certificates are true and correct.
(d) INCUMBENCY. A certificate of incumbency of all of Borrower's and
each Subsidiaries's officers who will be authorized to execute or attest
any of the Loan Papers on behalf of the Borrower or Subsidiary, as
applicable, dated the Closing Date, executed by a vice president and by the
Secretary of Borrower or Subsidiary, as applicable.
(e) RESOLUTIONS. A copy of resolutions approving the Loan Papers and
authorizing the transactions contemplated in this agreement, duly adopted
by the Board of Directors of Borrower and each of its Subsidiaries, as
applicable, accompanied by a certificate of the Secretary of Borrower or
Subsidiary, as applicable, dated the Closing Date, that such copy is a true
and correct copy of resolutions duly adopted at a meeting of, or by the
unanimous written consent of, the Board of Directors of Borrower or
Subsidiary, as applicable, and that such resolutions have not been amended,
modified, or revoked in any respect, and are in full force and effect as of
the Closing Date.
(f) OPINION OF COUNSEL FOR BORROWER. Opinion of counsel for Borrower
and the Subsidiaries, dated the Closing Date, in form and substance as set
forth on EXHIBIT "K".
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(g) NOTES. Duly executed and properly completed Notes, dated the
Closing Date.
(h) GUARANTIES. The Guaranties, duly executed and properly completed
by each of the Subsidiaries, together with evidence satisfactory to Bank of
the due authorization thereof (except for Guaranties for the UK
Subsidiaries, as addressed in Section 4.3, below).
(i) SECURITY AGREEMENT. Security agreements, chattel mortgages,
assignments, or other similar agreements, documents, or instruments dated
the Closing Date, executed and delivered by the appropriate Companies, as
debtors, to Bank, as secured party, creating the Security Interests in and
to all of the Collateral other than the Real Estate, as security for full
payment and performance of the Obligations (except for security agreements
signed by the UK Subsidiaries, as addressed in Section 4.3, below).
(j) FINANCING STATEMENTS. Financing statements executed and delivered
by the appropriate Company or Companies, as debtor or debtors, and Bank, as
secured party covering all of the Collateral.
(k) STOCK CERTIFICATES; PURPOSE STATEMENT; AND SECRETARY
CERTIFICATES. Stock certificates evidencing all of the Shares, together
with: (i) Blank stock powers covering the Shares executed by the
appropriate Company or Companies with the signature guaranteed by a
national bank or member of the New York Stock Exchange; (ii) Regulation U
Purpose Statements (Federal Reserve Board Form U-1), duly executed by the
appropriate Company or Companies with respect to the Shares; and (iii)
certificates of the Secretary of each Company owning any of the Shares and
each corporate issuer of any of the Shares (a "Pledged Company"), dated the
Closing Date, certifying, with respect to the capital stock of each Pledged
Company, the number of authorized shares, the number of shares issued and
outstanding, the number of shares owned by each Company, and the percentage
of the issued and outstanding shares owned by each Company and further
certifying that there are no outstanding contracts, instruments, documents,
or agreements binding upon such Pledged Company granting to any Person or
groups of Persons any right to purchase or acquire shares of the capital
stock of such Pledged Company and that the stockholders of such Pledged
Company are not entitled to any preemptive rights with respect to the
issuance of any capital stock of such Pledged Company.
(l) PRIORITY. Evidence that the Security Interests are first and
prior and there are no other superior, equal, or inferior Liens except the
Permitted Liens.
(m) PERMITTED LIEN ESTOPPEL CERTIFICATES. A certificate from the
holder of each of the Liens in existence on Closing Date covering all or
any portion of the Collateral stating: (i) The unpaid principal balance of
the Indebtedness secured thereby; (ii) that no default has occurred (nor
has any event occurred which, with notice or the passage of time or both,
could cause a default) and is continuing under or pursuant to the
instrument or instruments creating
25
such Lien or evidencing the Indebtedness secured thereby; and (iii) that it
will give Bank notice of any such default by the Company or Companies
involved or whose assets are obligated under such instrument or instruments
and a period of ten days thereafter (or a reasonable period if the default
cannot be cured in ten days) to cure such default.
(n) LEASE ESTOPPEL AND SUBORDINATION AGREEMENTS. Estoppel and
subordination agreements, in recordable form, executed and acknowledged by
the lessor and/or lessee under each Lease which is part of the Collateral,
(i) stating that (A) the subject Lease is in full force and effect and that
the Company or Companies involved are not in default (nor has any event
occurred which, with notice or lapse of time or both, would cause a
default) thereunder, and (B) that it will give Bank notice of any such
default by the Company or Companies involved or whose property is obligated
under such instrument or instruments and a period of ten days thereafter
(or a reasonable period if the default cannot be cured in ten days) to cure
such default, and (ii) consenting (if consent is necessary) to the Security
Interests and agreeing to recognize Bank or any other purchaser at
foreclosure as lessor and/or lessee, as the case may be, upon any
foreclosure of the Security Interests.
(o) AFFILIATE OBLIGATION SUBORDINATION AGREEMENTS. Subordination
agreements executed by the appropriate Subsidiary and by Borrower with
respect to, and subordinating to the Obligations, any and all Affiliate
Obligations existing on the Closing Date.
(p) INSURANCE. Evidence that the Collateral is fully insured in such
amounts, against such risks, and with such insurers as may be satisfactory
to Bank, with loss payable to Bank for the use and benefit of Bank,
together with the policies or certificates evidencing such insurance.
(q) OTHER DOCUMENTS. Such other documents, opinions, certificates,
and evidences as Bank may request.
SECTION 4.2 EACH ADVANCE. In addition to the conditions precedent stated
elsewhere herein, Bank will not be obligated to make any Advance unless:
(a) REPRESENTATIONS. The representations and warranties made in
Article Three are true and correct at and as of the time the Advance is to
be made, and the request for an Advance shall constitute the representation
and warranty by Borrower that such representations and warranties are true
and correct at such time.
(b) NO DEFAULT. On the date of the Advance, no Default, and no event
which, with the lapse of time or notice or both, could become a Default,
has occurred and is continuing.
26
(c) AVAILABILITY OF COMMITMENT UNDER LINE OF CREDIT. The sum of (i)
the Principal LOC Debt, plus (ii) the amount of the requested Advance under
the Line of Credit is equal to or less than the LOC Committed Sum.
(d) AVAILABILITY OF COMMITMENT UNDER TERM LOAN. The sum of the
Principal Term Debt, plus the amount of the requested Advance under the
Term Loan is equal to or less than the Term Committed Sum, and such request
is made during the Term Loan Drawdown Period.
(e) APPLICATION FOR ADVANCE. Borrower either (a) delivers to Bank a
written application therefor, or (b) contacts Bank by telephone concerning
its application, to be confirmed in writing within three (3) Business Days
thereafter.
(f) SUBSIDIARIES. Except as otherwise specifically provided herein,
each Subsidiary shall have executed a Guaranty and security agreements
covering the Collateral, financing agreements, and such other documents as
may be requested by the Bank.
(g) CERTIFICATION. A certificate signed by the President or principal
financial officer of Borrower that the Borrower and the Subsidiaries are in
full compliance with the terms, provisions, and conditions of the Loan
Papers.
(h) ADDITIONAL EVIDENCE. If requested by Bank, the Borrower shall
have delivered to Bank evidence satisfactory to Bank substantiating any of
the matters contained in Articles One through Three or this Article Four
which are necessary to enable Borrower to qualify for such Advance.
SECTION 4.3. UK SUBSIDIARIES. In addition to the conditions precedent
stated elsewhere herein, Bank will not be obligated to make any Advance after
the initial Advance under the Term Loan unless the Bank and the Companies agree
to the specific collateral to be granted to the Bank and the covenants to be
applicable to the UK Subsidiaries, which agreement and any other related
documentation shall be agreed to in writing by the parties on or before June 23,
2000.
ARTICLE FIVE
AFFIRMATIVE COVENANTS
So long as Bank is committed to make Advances hereunder and thereafter
until payment and performance in full of the Obligations, unless Borrower
receives prior written approval of a deviation from Bank, Borrower covenants and
agrees with Bank that it will:
SECTION 5.1 ANNUAL FINANCIAL STATEMENTS OF BORROWER. Deliver to Bank,
within 120 days after the last day of each fiscal year of Borrower (a) Financial
Statements showing the consolidated and consolidating financial conditions and
results of operations of Borrower and its consolidated
27
Subsidiaries as of, and for the year ended on, such last day; (b) accompanied by
the opinion of a firm of independent certified public accountants acceptable to
Bank, based on an audit using generally accepted auditing standards, that the
consolidated Financial Statements were prepared in accordance with GAAP and
present fairly the financial condition and results of operations of Borrower and
its consolidated Subsidiaries; and (c) the certificate of the President or
principal financial officer of Borrower that all of such Financial Statements
were prepared in accordance with GAAP and represent fairly the consolidated and
consolidating financial conditions and results of operations of Borrower and its
consolidated Subsidiaries, and that the Borrower and the Subsidiaries are in
full compliance with the terms, provisions and conditions of the Loan Papers.
SECTION 5.2 QUARTERLY FINANCIAL STATEMENTS OF BORROWER. Deliver to Bank,
within 45 days after the last day of each quarter of each fiscal year, (a)
Financial Statements showing the consolidated and consolidating financial
conditions and results of operations of Borrower and its consolidated
Subsidiaries as of, and for the period from the beginning of the current fiscal
year to, such last day, and (b) a certificate executed by the President or
principal financial officer of Borrower, certifying that such Financial
Statements present fairly the consolidated financial conditions and results of
operations of Borrower and its consolidated Subsidiaries, that the Borrower and
the Subsidiaries are in full compliance with all the terms, provisions, and
conditions of the Loan Papers, and certifying that such Financial Statements
were prepared in accordance with GAAP, and further certifying that the Borrower
is in full compliance with Sections 6.5, 6.6, 6.7, and 6.8 of this Agreement,
and all the other terms, provisions, and conditions of the Loan Papers.
SECTION 5.3 MONTHLY FINANCIAL STATEMENTS OF BORROWER. Deliver to Bank,
within 30 days after the last day of each month of each fiscal year, (a) balance
sheet and income statements showing the consolidated and consolidating financial
conditions and results of operations of Borrower and its consolidated
Subsidiaries as of, and for the period from the beginning of the current fiscal
year to, such last day, and (b) a certificate executed by the President or
principal financial officer of Borrower, certifying that such balance sheet and
income statements present fairly the consolidated financial conditions and
results of operations of Borrower and its consolidated Subsidiaries, that the
Borrower and the Subsidiaries are in full compliance with all the terms,
provisions, and conditions of the Loan Papers, and certifying that such balance
sheet and income statements were prepared in accordance with GAAP.
SECTION 5.4 OTHER REPORTS. Promptly upon their becoming available, deliver
to Bank a copy of (a) prior to the end of any fiscal year of Borrower, deliver
to Bank the projections of Borrower and its Subsidiaries for the upcoming fiscal
year, which shall include a capital expenditure budget which shall be subject to
the prior approval of the Bank (b) each financial statement, report, and notice
of proxy statement sent by Borrower or any Subsidiary to stockholders generally,
(c) each regular or periodic report and any registration statement, prospectus
or written communication in respect thereof filed by Borrower or any Subsidiary
with, or received by any Person in connection therewith from, any securities
exchange or with the Securities and Exchange Commission or any successor agency,
(d) any other reports to or by Borrower or any Subsidiary pursuant to ERISA, the
28
Code or otherwise, and (e) any other information pertinent to any covenant,
provision, or condition hereof, or to any matter in connection with the business
of Borrower or any Subsidiary, at all reasonable times as often as the Bank may
reasonably request.
SECTION 5.5 NOTICE OF LITIGATION OR CHANGES IN FACT. Promptly notify Bank
of (a) the existence and status of any Litigation against Borrower or any
Subsidiary which has resulted in, or might result in, a Material Adverse Effect,
and (b) any change in any material fact or circumstance represented or warranted
in any of the Loan Papers.
SECTION 5.6 TAXES. Duly pay and discharge, and cause the Subsidiaries to
pay and discharge, all its respective Taxes, assessments, and governmental
charges prior to the date on which penalties will attach thereto.
SECTION 5.7 PAYMENT OF DEBTS. Pay, and cause the Subsidiaries to pay, all
of its respective material Indebtedness prior to the date on which penalties
attach thereto (except to the extent and so long as the payment thereof is being
properly contested in good faith by appropriate proceedings and adequate
reserves have been established therefor) .
SECTION 5.8 MAINTENANCE OF CORPORATE EXISTENCE, ASSETS, BUSINESS. Maintain,
and cause the Subsidiaries to maintain, (a) at all times its corporate existence
and authority to transact business and good standing in its jurisdiction of
incorporation and all other jurisdictions where the same may be necessary, (b)
in full force and effect all Rights, leases, agreements, government clearances
or certificates and all other licenses or rights necessary to comply with all
Laws and other provisions applicable to the business of Borrower and its
Subsidiaries, and (c) the assets used in their respective businesses in good
repair, working order, and condition and make such proper repairs, renewals, and
replacements as may be reasonably required.
SECTION 5.9 INSURANCE. Maintain or cause to be maintained, with financially
sound and reputable insurers, insurance with respect to its and its
Subsidiaries' properties and business against such casualties and contingencies
and of such types and in such amounts as is customary in the case of businesses
engaged in the same or a similar business or having similar properties similarly
situated with such deviations therefrom as may be agreed upon by Bank.
SECTION 5.10 DEPOSIT BALANCES. Maintain at Bank all material operating and
investment accounts of Borrower and the Subsidiaries, including treasury
management services.
SECTION 5.11 COMPLIANCE WITH ERISA. Comply, and shall cause each Subsidiary
to comply, when required, with ERISA, and (a) at all times make prompt payment
or contributions to meet the minimum funding standards set forth in ERISA, with
respect to any Plan; (b) notify the Bank immediately of any fact, including but
not limited to, any Reportable Event arising in connection with any Plan which
might constitute grounds for the termination thereof by the PBGC
29
or for the appointment by a Tribunal of a trustee to administer the Plan; and
(c) furnish to the Bank upon such request such additional information concerning
any Plan as Bank may reasonably request.
SECTION 5.12 PROCEEDS OF ADVANCES. Use the proceeds of all Advances for
proper corporate purposes and as represented and warranted herein.
SECTION 5.13 COMPLIANCE WITH LOAN PAPERS. Promptly and fully perform, and
cause the Subsidiaries to promptly and fully perform, all of the obligations of
the Companies under the Loan Papers and refrain from doing any act or acts that
would violate any covenant under the Loan Papers.
SECTION 5.14 INCUMBENCY. From time to time, at the request of Bank, certify
to Bank, and cause the Subsidiaries to certify to Bank, the names, signatures,
and positions of all persons authorized to execute and deliver any of the Loan
Papers.
SECTION 5.15 EXPENSES OF BANK. Promptly pay, and cause the Subsidiaries to
promptly pay, all reasonable costs, fees, and expenses paid or incurred by Bank
incident to any of the Loan Papers (including the reasonable fees and expenses
of counsel for Bank in connection with the negotiation, preparation, and
execution hereof and any amendment hereto and the making of the Line of Credit,
Term Loan, or any Advance) or to the enforcement of the obligations of any of
the Companies or the exercise of any Rights (including, but not limited to,
reasonable attorneys' fees and court costs), all of which shall be and become a
part of the Obligations.
SECTION 5.16 ADDITIONAL GUARANTIES. Cause each Subsidiary hereinafter
formed or acquired to duly execute and deliver to Bank a Guaranty,
unconditionally guaranteeing full payment and complete performance of the
Obligations (except for the UK Subsidiaries, which is discussed in Section 4.3,
above).
SECTION 5.17 ADDITIONAL AFFILIATE SUBORDINATION AGREEMENTS. Simultaneously
with the creation of any and all future Affiliate obligations, cause to be
executed and delivered to Bank a subordination agreement by the appropriate
Subsidiary and/or with respect to such Affiliate Obligation.
SECTION 5.18 NOTICE BEFORE MOVING WITH RESPECT TO COLLATERAL; NAME CHANGE.
Notify Bank at least ten (10) days prior to any intended move of any of the
Collateral (or any of the books or records with respect thereto) to any other
state, commonwealth, territory, possession, county, parish, or foreign country,
or the name change of Borrower or any Subsidiary.
SECTION 5.19 MAINTENANCE OF PRIORITY OF SECURITY INTERESTS. Perform all
such acts as Bank may reasonably request in order to enable Bank to report,
file, and record every instrument that Bank may deem necessary to perfect and
maintain the Security Interests in favor of Bank and preserve and protect the
Rights of Bank.
30
SECTION 5.20 INSPECTION. Keep, and cause each Subsidiary to keep, in
accordance with GAAP, proper and complete books, records, and accounts. Borrower
and its Subsidiaries shall permit any representatives of Bank to visit and
inspect any of the properties of Borrower and its Subsidiaries, to examine all
books of account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss the affairs, finances and accounts with their
respective officers, employees and auditors (and by this provision Borrower and
its Subsidiaries authorize said auditors to discuss with Bank representatives
the finances and affairs of Borrower and its Subsidiaries) at all such
reasonable times and as often as may be reasonably requested.
SECTION 5.21 INFORMATION AND OTHER DOCUMENTS. Promptly deliver to Bank such
information (not otherwise required to be furnished herein) respecting the
business affairs, assets, and liabilities of Borrower and its Subsidiaries, and
such opinions, certifications, and documents, in addition to those herein
mentioned, as Bank may reasonably request.
ARTICLE SIX
NEGATIVE COVENANTS
So long as Bank is committed to make Advances hereunder, and thereafter
until payment and performance in full of the Obligations, Borrower and
Subsidiaries covenant that, unless the Bank shall otherwise consent in writing:
SECTION 6.1 INDEBTEDNESS. Borrower shall not, nor shall it permit any
Subsidiary to, create or suffer to exist any direct, indirect, fixed, or
contingent liability for, or incur, any Indebtedness, except (a) the
Obligations, (b) the Existing Indebtedness, (c) Indebtedness secured by
Permitted Liens, (d) Indebtedness in the ordinary course of business except for
borrowed money and (e) Indebtedness between Borrower and/or Subsidiaries
specifically in connection with the Meadow Farms acquisition in an amount not to
exceed $27,000,000.00.
SECTION 6.2 PREPAYMENTS OF OTHER DEBTS. Borrower shall not, nor shall it
permit any Subsidiary to, make any voluntary prepayment on the principal of any
Indebtedness for borrowed money other than the Obligations, whether subordinate
to the Obligations or not.
SECTION 6.3 LIENS. Borrower shall not, nor shall it permit any Subsidiary
to, create, or suffer to be created or to exist any Lien upon its property or
assets, except the Permitted Liens, nor shall any Company enter into an
agreement with any other Person which prohibits such Company from incurring any
Liens upon any of its property or assets.
SECTION 6.4 SALES OF ASSETS. Except as otherwise provided below, Borrower
shall not, nor shall it permit any Subsidiary to, directly or indirectly, sell,
lease, transfer, abandon or otherwise dispose of (a) any of its assets other
than sales and dispositions in the ordinary course of business for a fair and
adequate consideration, or (b) any of the Collateral other than sales in the
ordinary course of business for a fair and adequate consideration.
31
SECTION 6.5 CASH FLOW LEVERAGE RATIO. Borrower shall not permit its Cash
Flow Leverage Ratio to be more than 3.75 to 1.0 as of the end of any fiscal
quarter or as of the date of any Advance hereunder.
SECTION 6.6 TOTAL INTEREST EXPENSE COVERAGE. Borrower shall not permit its
Total Interest Expense Coverage to be less than 3.0 to 1.0 as of the end of any
fiscal quarter or as of the date of any Advance hereunder.
SECTION 6.7 FIXED CHARGES COVERAGE RATIO. Borrower shall not permit its
Fixed Charges Coverage Ratio as of the end of any fiscal quarter or as of the
date of any Advance hereunder to be less than (a) 1.10 to 1.0 from the Closing
Date to December 31, 2000, (b) 1.15 to 1.0 from January 1, 2001 to December 31,
2001, (c) 1.15 to 1.0 from January 1, 2002 to ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) 1.20 to 1.0
from January 1, 2003 to December 31, 2003, or (e) 1.25 to 1.0 on and after
January 1, 2004.
SECTION 6.8 NET WORTH. Borrower shall not permit the consolidated Net Worth
of Borrower and is Subsidiaries to be at any time less than $55,000,000 plus (a)
seventy-five percent (75%) of all Net Income after ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) the
aggregate amount of any Equity Offerings after the date of this Agreement, and
(c) the aggregate amount of all Net Worth acquired by any Company after the date
of this Agreement.
SECTION 6.9 MERGER AND CONSOLIDATION. Borrower shall not, nor shall it
permit any Subsidiary to, directly or indirectly, acquire all or any substantial
portion of the property, assets, or stock of, or interest in, any Person, or
merge or consolidate with any Person, except that any corporation may be
consolidated with or merged into Borrower if (i) Borrower is the surviving
corporation, and (ii) immediately after giving effect to such transaction, no
condition or event shall exist which constitutes a Default.
SECTION 6.10 DIVIDENDS. Borrower shall not declare or pay any dividend on
any class of the capital stock of Borrower now or hereafter outstanding, or make
any distribution of cash or property to holders of any shares of such stock.
SECTION 6.11 BUSINESS. Neither Borrower nor any Subsidiary shall engage,
directly or through other Persons, in any business other than the business now
carried on, and other businesses directly related thereto.
SECTION 6.12 LOANS, ADVANCES AND INVESTMENTS. Borrower shall not, nor shall
it permit any Subsidiary to, purchase or hold beneficially stock or other
securities or evidence of Indebtedness of, or make or permit to exist any loans
or advances to, or make any investments or acquire any interest whatsoever in,
any Person except (i) investments in direct obligations of the United States of
America, certificates of deposit issued by Bank or a banking association having
a capitalization of at least One Hundred Million Dollars ($100,000,000), or
commercial paper
32
rated P-1 or better by Standard and Poors; (ii) investments in readily
marketable direct obligations of the United States of America; and (iii)
corporate debt instruments rated B or better by ▇▇▇▇▇'▇.
SECTION 6.13 ERISA. Borrower shall not, nor shall it permit any Subsidiary
to, permit (i) the funding requirements of ERISA with respect to any Plan ever
to be less than the minimum required by ERISA or the regulations thereunder, or
(ii) any Plan ever to be subject to involuntary termination proceedings.
SECTION 6.14 FISCAL YEAR; ACCOUNTING METHOD. Borrower shall not, nor shall
it permit any Subsidiary to, change its fiscal year or change its method of
accounting, unless such change is required by GAAP or for a Subsidiary to elect
to change to the fiscal year of the Borrower.
SECTION 6.15 TRANSACTIONS WITH AFFILIATES. Borrower shall not, nor shall it
permit any Subsidiary to, enter into any transaction with any Affiliate except
in the ordinary course of Borrower's or such Subsidiary's business and on fair
and reasonable terms no less favorable to Borrower or such Subsidiary than would
obtain in a comparable arm's length transaction with a Person not an Affiliate.
SECTION 6.16 CONTINGENT LIABILITIES. None of the Companies will, directly
or indirectly, endorse, guarantee, or otherwise become surety for, or
contingently liable upon, the obligations of any Person, except to the extent
expressly provided for herein.
SECTION 6.17 CAPITAL EXPENDITURES. The Companies will not, directly or
indirectly, make expenditures for plant, equipment, or other fixed or capital
assets in excess of the amounts which have been stated in the projections
provided to the Bank for the current or upcoming fiscal year, as applicable, in
accordance with Section 5.4, for such period, which amounts have been approved
in writing in advance by the Bank.
SECTION 6.18 PERMITTED LEASE OBLIGATIONS. None of the Companies will,
directly or indirectly, enter into, assume, or otherwise obligate itself for the
performance of the obligations of the lessee or tenant under any lease or
sublease of property except the Permitted Lease Obligations.
SECTION 6.19 INSIDER COMPENSATION. None of the Companies will, directly or
indirectly, pay excessive or unreasonably salaries, bonuses, commissions,
consultant fees or other compensation.
SECTION 6.20 REDEMPTION OF STOCK. None of the Companies will, directly or
indirectly, purchase, redeem, or otherwise acquire for value or retire any
shares of capital stock issued by Borrower or any Company which is not a
wholly-owned Subsidiary.
33
SECTION 6.21 PAYMENT OF WITHHOLDING TAXES. None of the Companies will,
directly or indirectly, use any portion of the proceeds of the Line of Credit to
pay the wages of employees unless a portion of the proceeds or other funds are
also used to make timely payment to or deposit with the United States of all
amounts of tax required to be deducted and withheld with respect to such wages
by the Borrower under Subtitle C of the Code.
SECTION 6.22 LOCATION WITH RESPECT TO COLLATERAL. None of the Companies
will, directly or indirectly, move or permit any of the Collateral (or books or
records with respect to the Collateral) to be moved from its present location,
except as otherwise allowed herein.
SECTION 6.23 SALES AND LEASEBACKS. Borrower will not sell, transfer, or
otherwise dispose of, nor will it permit any Subsidiary to sell, transfer, or
otherwise dispose of, any real or personal property to any person and thereafter
directly or indirectly lease back the same or similar property.
SECTION 6.24 CHANGE IN OWNERSHIP OR MANAGEMENT. The Borrower will not issue
or sell any Shares if immediately thereafter, the Borrower's shareholders would
be materially different than the Borrower's shareholders on the date hereof.
SECTION 6.25 ASSIGNMENT. The Companies will not, directly or indirectly,
assign or transfer, or attempt to do so, any of their rights, powers, duties, or
obligations under any of the Loan Papers.
SECTION 6.26 DEVIATION FROM LOAN PAPERS. The Companies will not, directly
or indirectly, permit, or act in any manner that could cause, a violation of or
deviation from any of the terms, conditions, covenants, or obligations under the
Loan Papers.
ARTICLE SEVEN
DEFAULT
The term "Default," as used herein, means the occurrence of any one or more
of the following events (including the passage of time, if any, specified
therefor) provided that if any such event occurs and Bank subsequently agrees in
writing that it will not exercise any remedies hereunder as a result thereof,
the occurrence of such event shall no longer be deemed a "Default" hereunder
insofar as the state of facts giving rise to such event is concerned, but the
same shall not operate as or be deemed to be a waiver with respect to any
identical or similar state of facts which occurs thereafter:
SECTION 7.1 PAYMENT OF OBLIGATIONS. The failure or refusal of Borrower to
pay principal of or interest on the Obligations, or any part thereof, within
five (5) days of when it becomes due in accordance with the terms of the Loan
Papers.
34
SECTION 7.2. DEFAULT ON COVENANTS. The failure or refusal of Borrower to
punctually and properly perform, observe, and comply with the terms of Sections
6.1, 6.2, 6.3, 6.4 or 6.9 of this Agreement.
SECTION 7.3 OTHER COVENANTS. The failure or refusal of Borrower to
punctually and properly perform, observe, and comply with any covenant,
agreement, or condition contained in any of the Loan Papers (other than as
described in Sections 7.1 and 7.2, above) and such failure or refusal continues
for a period of thirty days after Borrower has or, with the exercise of
reasonable investigation, should have, notice thereof; provided, however, that
such grace period shall not apply, and a Default shall be deemed to have
occurred and to exist immediately if such failure or neglect may not, in Bank's
reasonable determination, be cured by Borrower during such thirty (30) day grace
period.
SECTION 7.4 VOLUNTARY DEBTOR RELIEF. Borrower shall (a) execute an
assignment for the benefit of creditors, or (b) admit in writing its inability
to pay its debts generally as they become due, or (c) voluntarily seek the
benefit or benefits of any Debtor Relief Law or become a party to any proceeding
provided for by any Debtor Relief Law that could suspend or otherwise affect any
of the Rights of the Bank granted in the Loan Papers.
SECTION 7.5 INVOLUNTARY PROCEEDINGS. Borrower shall involuntarily (a) have
an order, judgment, or decree entered against it by any Tribunal pursuant to any
Debtor Relief Law that could suspend or otherwise affect any of the Rights
granted to Bank in any of the Loan Papers, and such order, judgment, or decree
is not permanently stayed or reversed within 30 days after the entry thereof, or
(b) have a petition filed against it seeking the benefit or benefits provided
for by any Debtor Relief Law that would suspend or otherwise affect any of the
Rights granted to Bank in any of the Loan Papers, and such petition is not
discharged within 30 days after the filing thereof.
SECTION 7.6 ACCELERATION OF OTHER DEBT. The acceleration, by the holder
thereof, of the maturity of any Indebtedness owed by Borrower.
SECTION 7.7 UNDISCHARGED FINAL JUDGMENTS. The entry of a final judgment or
final judgments against Borrower or any Subsidiary for the payment of money in
an amount which, in the aggregate, could have a Material Adverse Effect, and the
same shall remain undischarged for a period of thirty (30) days during which
execution shall not be effectively stayed.
SECTION 7.8 ATTACHMENT. The failure to have discharged within a period of
30 days after the commencement thereof any attachment, sequestration, or similar
proceeding against any of the assets of any of the Companies.
SECTION 7.9 ANTITRUST PROCEEDINGS. A petition or complaint is filed before
or by any Tribunal, including, but not limited to, the Federal Trade Commission
or the United States Justice Department, seeking to cause any Company to divest
a significant portion of its assets or any of its
35
Subsidiaries pursuant to any antitrust, restraint of trade, unfair competition,
or similar Laws, and such petition or complaint is not dismissed or discharged
within 30 days of the filing thereof.
SECTION 7.10 OTHER AGREEMENTS. The occurrence of a default under any other
material financial or loan agreement to which any of the Companies is a party or
by which it or any of its assets is bound.
SECTION 7.11 IMPAIRMENT OF COLLATERAL OR ABILITY TO PAY. The discovery by
Bank of information that the prospect of payment or performance of the
Obligations is materially impaired, or that the value of the Collateral has or
will be materially decreased and the situation giving rise thereto is not
corrected to the satisfaction of Bank within 20 days after notice thereof, from
Bank to Borrower.
SECTION 7.12 MISREPRESENTATION. The discovery by Bank that any statement,
representation, or warranty in the Loan Papers or in any writing ever delivered
to Bank pursuant to the Loan Papers, is false, misleading, or erroneous in any
material respect.
SECTION 7.13 ERISA. Any Reportable Event which Bank reasonably determines
could have a Material Adverse Effect on the business or condition, financial or
otherwise, of Borrower, shall have occurred and shall be continuing seventy-five
(75) days after written notice of such determination shall have been given by
Bank to Borrower, or any Plan the termination of which Bank reasonably
determines could have a Material Adverse Effect on the business or condition,
financial or otherwise, of Borrower, shall be terminated within the meaning of
Title IV of ERISA or a trustee shall be appointed by the appropriate United
States District Court to administer any such Plan, or the PBGC shall institute
proceedings to terminate any such Plan or to appoint a trustee to administer any
such Plan.
ARTICLE EIGHT
RIGHTS OF BANK
SECTION 8.1 REMEDIES UPON DEFAULT. Should a Default occur and be
continuing, Bank may, at its election, do any one or more of the following:
(a) ACCELERATION. Declare the entire unpaid balance of the Obligation
and all other Indebtedness of Borrower to Bank, or any part thereof,
immediately due and payable, whereupon it shall be due and payable.
(b) TERMINATION. Terminate the Bank's commitment to lend hereunder.
(c) JUDGMENT. Reduce any claim to judgment.
36
(d) FORECLOSURE. Request Bank to take, and it shall take, such steps
as the Bank may deem appropriate to foreclose or otherwise enforce the
Security Interests and all Liens granted to Bank to secure payment and
performance of the Obligation.
(e) RIGHTS. Exercise any and all Rights afforded by the Laws of the
State of Colorado or any other jurisdiction as Bank shall deem appropriate,
including, but not limited to, the Uniform Commercial Code of Colorado or
of such other jurisdiction, or by any of the Loan Papers, or by Law or
equity, or otherwise.
SECTION 8.2 CUMULATIVE RIGHTS. All Rights available to Bank under the Loan
Papers shall be cumulative of and in addition to all other Rights granted to
Bank at Law or in equity, whether or not the Obligations are due and payable and
whether or not Bank shall have instituted any suit for collection, foreclosure,
or other action in connection with the Loan Papers.
SECTION 8.3 APPLICATION OF PROCEEDS. Any expenses incurred by Bank pursuant
to the exercise of any Right provided herein shall become part of the
Obligations and shall bear interest at the Default Rate from the date spent
until the date repaid by Borrower.
SECTION 8.4 PERFORMANCE BY BANK. Should any covenant, duty, or agreement of
any of the Companies fail to be performed in accordance with the terms of the
Loan Papers, Bank may, at its option, perform, or attempt to perform, such
covenant, duty, or agreement on behalf of any of the Companies. In such event,
Borrower shall, at the request of Bank, promptly pay any amount expended by Bank
in such performance or attempted performance to Bank at Bank's Principal Office,
together with interest thereon at the highest lawful rate from the date of such
expenditure by Bank until paid. Notwithstanding the foregoing, it is expressly
understood that Bank does not assume and shall never have, except by express
written consent of Bank, any liability or responsibility for the performance of
any duties of any of the Companies hereunder, or under, or in connection with
all or any part of the Collateral.
SECTION 8.5 DIMINUTION IN COLLATERAL VALUE. Bank does not assume, and shall
never have any liability or responsibility for, any loss or diminution in the
value of the Collateral or any part thereof.
SECTION 8.6 BANK NOT IN CONTROL. None of the covenants or other provisions
contained in this agreement shall, or shall be deemed to, give Bank the Rights
or power to exercise control over the affairs and/or management of any of the
Companies, the power of Bank being limited to the Right to exercise the remedies
provided in the other subsections of this Article; provided that, if Bank
becomes the owner of any stock of any Person, whether through foreclosure or
otherwise, Bank shall be entitled to exercise such legal Rights as it may have
by being a shareholder of such Person.
37
SECTION 8.7 WAIVERS. The acceptance by Bank at any time and from time to
time of part payment on the Obligation shall not be deemed to be a waiver of any
Default then existing. No waiver by Bank of any Default shall be deemed to be a
waiver of any other then existing or subsequent Default. No delay or omission by
Bank in exercising any Right under the Loan Papers shall impair such Right or be
construed as a waiver thereof or any acquiescence therein, nor shall any single
or partial exercise of any such Right preclude other or further exercise
thereof, or the exercise of any other Right under the Loan Papers or otherwise.
SECTION 8.8 APPLICATION OF PROCEEDS. Any and all proceeds ever received by
Bank from any disposition of the Collateral, or any part thereof, or the
exercise of any other Right pursuant to the Loan Papers shall be applied by Bank
to the Obligations in the order and manner set forth in Section 2.4(c),
notwithstanding any instructions to the contrary by any of the Companies;
provided that Borrower shall remain liable to Bank for the deficiency.
ARTICLE NINE
MISCELLANEOUS
SECTION 9.1 NOTICES. Whenever this agreement requires or permits any
consent, approval, notice, request, or demand from one party to another, the
consent, approval, notice, request, or demand must be in writing to be effective
and shall be deemed to have been given (a) when received, when sent by facsimile
at the facsimile numbers provided by the parties from time to time, with a copy
immediately being sent in the method described in subsection (b), and (b) on the
third Business Day after it is enclosed in an envelope, addressed to the party
to be notified at the address stated below (or at such other address as may have
been designated by written notice), properly stamped, sealed, and deposited in
the United States mail. The address of each party for the purposes hereof is as
follows:
BORROWER: Horizon Organic Holding Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ Sabian, Esq.
▇▇▇▇▇▇▇▇ Thomson & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
GUARANTORS: Horizon Organic Dairy, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
38
Horizon Organic Dairy, Maryland Farm, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Horizon Organic Dairy, Idaho Farm, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Horizon Organic Dairy, California Farm, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Horizon Organic International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Horizon Organic Dairy, Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
BANK: US Bank National Association
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
with a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SECTION 9.2 GOVERNING LAW; JURISDICTION; VENUE; WAIVER OF JURY TRIAL. The
Loan Papers are being executed and delivered, and are intended to be performed,
in the State of Colorado, and the substantive Laws of such state shall govern
the validity, construction, enforcement, and interpretation of the Loan Papers,
unless otherwise specified therein. Each party consents to the personal
jurisdiction of the state and federal courts located in the State of Colorado in
connection with any controversy related to this Agreement, waives any argument
that venue in any such forum is not convenient and agrees that any litigation
initiated by any of them in connection with this Agreement shall be venued in
either the District Court of the City and County of Denver, Colorado, or the
United States District Court, District of Colorado. EACH OF THE BORROWER,
SUBSIDIARIES, AND THE BANK HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
39
SECTION 9.3 MAXIMUM INTEREST RATE. Regardless of any provision contained in
any of the Loan Papers, Bank shall never be entitled to receive, collect, or
apply, as interest on the Obligations, any amount in excess of the maximum
amount of interest permitted to be charged by applicable Law, and, in the event
Bank ever receive, collect, or apply as interest, any such excess, such amount
which would be excessive interest shall be deemed a partial prepayment of
principal and treated hereunder as such; and, if the Total Principal Debt is
paid in full, any remaining excess shall forthwith be paid to Borrower. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, Companies and Bank shall, to the
maximum extent permitted under applicable Law, (a) characterize any nonprincipal
payment as an expense, fee, or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread, in equal parts, the total amount of interest throughout
the entire contemplated term of the Obligations so that the interest is uniform
throughout the entire term of the Obligations.
SECTION 9.4 SEVERABILITY. If any provision of any of the Loan Papers is
held to be illegal, invalid, or unenforceable under present or future Laws
effective during the term thereof, such provision shall be fully severable; the
appropriate Loan Paper shall be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part thereof; and the
remaining provisions thereof shall remain in full force and effect and shall not
be affected by the illegal, invalid, or unenforceable provision or by its
severance therefrom. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision there shall be added automatically as a part of such
Loan Paper a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid, and enforceable.
SECTION 9.5 SURVIVAL. Except as specifically provided herein, all
representations, warranties, covenants and agreements of Borrower contained
herein shall continue in full force and effect so long as any part of the
Obligations remains unpaid and, except as otherwise indicated, shall not be
affected by any investigation made by any party.
SECTION 9.6 FURTHER ASSURANCES. Borrower agrees that at any time and from
time to time, upon the written request Bank, it will execute and deliver such
further documents and do such further acts and things Bank may reasonably
request in order to fully effect the purpose of this agreement and the other
Loan Papers and to provide for the payment of the principal and interest on the
Obligations in accordance with the terms and provisions of the Loan Papers.
SECTION 9.7 COUNTERPARTS. This agreement has been executed in a number of
identical counterparts, each of which, for all purposes, is to be deemed an
original, and all of which constitute, collectively, one agreement, but, in
making proof of this agreement, it shall not be necessary to produce or account
for more than one such counterpart.
SECTION 9.8 ENTIRE AGREEMENT. This instrument embodies the entire agreement
between the parties and supersedes all prior agreements and understandings, if
any, relating to the subject
40
matter hereof (except documents, agreements and instruments delivered or to be
delivered in accordance with the express terms hereof).
SECTION 9.9 SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
except that none of the Borrower, Guarantors, or any other Subsidiary, may
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of the Bank.
(b) The Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its LOC Committed
Sum and/or the Term Loan Committed Sum or any or all of its Obligations, with
(and subject to) the written consent of the Borrower, which consents shall not
be unreasonably withheld; PROVIDED that if a Participant is an affiliate of such
grantor Bank or is another bank, no such consent shall be required. In the event
of any such grant by Bank of a participating interest to a Participant, Bank
shall remain responsible for the performance of its obligations hereunder, and
the Borrower and the Subsidiaries shall continue to deal solely and directly
with Bank in connection with Bank's rights and obligations under this Agreement.
Any agreement pursuant to which Bank may grant such a participating interest
shall provide that Bank shall retain the sole right and responsibility to
enforce the obligations of the Borrower and the Subsidiaries hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; PROVIDED that such participation
agreement may provide that Bank will not agree to any modification, amendment or
waiver of this Agreement without the consent of the Participant. The Borrower
agrees that each Participant shall, to the extent provided in its participation
agreement, be entitled to the benefits of this Agreement with respect to its
participating interest. An assignment or transfer which is not permitted by
subsection (c) or (d) below but which is consented to in accordance with this
subsection (b) shall be given effect for purposes of this Agreement only to the
extent of a participating interest granted in accordance with this subsection
(b).
(c) Bank may at any time assign to one or more banks or other institutions
(each an "Assignee") all, or a proportionate part of all, of its rights and
obligations under this Agreement and the Notes, and such Assignee shall assume
such rights and obligations, pursuant to an Assignment and Assumption Agreement
(herein so called) in substantially the form of EXHIBIT "M" hereto executed by
such Assignee and such transferor Bank, with (and subject to) the subscribed
consent of the Borrower, which consent shall not be unreasonably withheld;
PROVIDED that (i) if an Assignee is an affiliate of such transferor Bank or is
another bank, no such consent shall be required; (ii) such assignment may, but
need not, include rights of the transferor Bank in respect of outstanding Notes
subject to a LIBOR Rate or a Fixed Rate; and (iii) any assignment shall not be
less than $5,000,000, or if less, shall constitute an assignment of all of such
Bank's rights and obligations under this Agreement and the Notes except for any
rights retained in accordance with clause (ii) of this proviso. Upon execution
and delivery of such instrument and payment by such Assignee to such transferor
41
Bank of an amount equal to the purchase price agreed between such transferor
Bank and such Assignee, such Assignee shall be deemed an Assignor-bank with a
LOC Committed Amount and/or Term Loan Committed Amount as set forth in such
Assumption Agreement, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Agent, and the
Borrower shall make appropriate arrangements so that, if required, new Notes are
issued to the Assignee. In connection with any such assignment, the transferor
Bank shall pay to the Agent an administrative fee for processing such assignment
in the amount of $2,500. If the Assignee is not incorporated under the laws of
the United States of America or a state thereof, it shall deliver to the Company
and the Agent certification as to exemption from deduction or withholding of any
United States federal income taxes. Upon the request of Bank, and Borrower and
the Subsidiaries agree to provide any information requested by any Assignee or
potential Assignee hereunder, and to comply with any due diligence or meeting
requests made by such Assignee or potential Assignee.
(d) Bank or any Assignee may at any time assign all or any portion of its
rights under this Agreement and its Notes to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of Bank's rights shall be
entitled to receive any greater payment under this Agreement than Bank would
have been entitled to receive with respect to the rights transferred, unless
such transfer is made with the Borrower's prior written consent.
SECTION 9.10 EXISTING CREDIT AGREEMENTS. The Borrower, the Subsidiaries and
Bank agree that the "Revolving Loan Commitments" as defined in the Existing
Credit Agreements shall be replaced in their entirety on the Closing Date with
the LOC Committed Sum and Term Loan Committed Sum as described in this
Agreement. All existing Obligations will be included in amounts deemed to be
outstanding under the Line of Credit.
SECTION 9.11 PARTIES BOUND. This agreement shall be binding upon and inure
to the benefit of Borrower and Bank and their respective successors and assigns;
provided that Borrower may not, without the prior written consent of Bank,
assign any rights, powers, duties, or obligations hereunder.
SECTION 9.12 AMENDMENTS AND WAIVERS. This Agreement may be modified or
amended only in writing by an agreement or agreements entered into by Borrower
and Bank, and Bank may waive compliance by Borrower with any provision of this
Agreement; provided, however, that no such consent, waiver, modification, or
amendment shall extend to or affect any obligation not expressly consented to,
waived, modified, or amended, or impair any Right consequent on such obligation.
42
SECTION 9.13 FORM OF DOCUMENTS. Each agreement, document, instrument, or
other writing to be furnished to Bank under any provision of this agreement must
be in form and substance satisfactory to Bank and its counsel.
SECTION 9.14 CONFLICTING PROVISIONS. Borrower shall not be deemed to be
permitted to take any action or fail to take any action which is permitted as an
exception to any of the covenants herein if such action or omission would result
in the breach of any other covenant contained herein.
[the remainder of this page is left intentionally blank]
43
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed and delivered by their duly authorized officers to be effective as of
the date first hereinabove written.
BORROWER: HORIZON ORGANIC HOLDING CORPORATION
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
GUARANTORS:
HORIZON ORGANIC DAIRY, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer/Vice
President - Finance
HORIZON ORGANIC DAIRY,
MARYLAND FARM, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Secretary
HORIZON ORGANIC DAIRY,
IDAHO FARM, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Secretary
HORIZON ORGANIC DAIRY,
CALIFORNIA FARM, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer/Vice
President-Finance
44
HORIZON ORGANIC DAIRY,
INTERNATIONAL, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer/Vice
President-Finance
HORIZON ORGANIC DAIRY, LTD.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Director
BANK: U.S. BANK NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
45
EXHIBITS:
Exhibit A LOC Note
Exhibit B Term Note
Exhibit C Existing Indebtedness
Exhibit D Form of Guaranty
Exhibit E Permitted Liens
Exhibit F Notice of Fixed Rate
Exhibit G Notice of LIBOR Rate
Exhibit H Properties
Exhibit I Subsidiaries
Exhibit J Material Agreements
Exhibit K Opinion of Counsel
Exhibit L Environmental
Exhibit M Assignment and Assumption Agreement
46
Exhibit A
LINE OF CREDIT NOTE
$25,000,000.00 Boulder, Colorado
May 30, 2000
FOR VALUE RECEIVED, the undersigned Horizon Organic Holding Corporation, a
Delaware corporation (hereinafter referred to as "Borrower"), promises to pay to
the order of U.S. Bank National Association ("Bank"), at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as Bank may designate, in lawful
money of the United States of America, the principal sum of Twenty Five Million
Dollars ($25,000,000) or so much thereof as may be advanced and be outstanding,
together with interest on any and all principal amounts outstanding calculated
in accordance with the provisions set forth below. This Note is issued under
that certain Amended and Restated Loan and Security Agreement by and among
Borrower, Borrower's Subsidiaries, and Bank dated as of May 30, 2000 (as the
same may be amended, replaced, restated and/or supplemented from time to time,
the "Loan Agreement"). All terms not defined herein shall have the definition
given to them in the Loan Agreement.
Interest on the principal balance hereof from time to time remaining unpaid
prior to maturity shall accrue at a varying rate per annum which shall be equal
to the lesser of (a) the Highest Lawful Rate or (b) the Base Rate in effect from
day to day, calculated each day on the basis of a 360-day year (provided,
however, that Borrower may from time to time by telephonic notice which is
confirmed in writing in accordance with the terms of the Loan Agreement elect to
substitute the LIBOR Rate for the Base Rate). Election of a LIBOR Rate (i) is
irrevocable for the duration of the Interest Period elected, and (ii) may not be
made for any Interest Period which would extend beyond the LOC Maturity Date.
If any change in applicable law or in the interpretation or administration
thereof by any Tribunal (whether or not having the force of law) shall impose,
modify, or deem applicable any reserve requirement of the Board of Governors of
the Federal Reserve System, or any Tax, duty, or charge of any character is
imposed on any portion of the Principal LOC Debt hereunder subject to a LIBOR
Rate, or any other reserve, special deposit, Tax, duty, charge, or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, Bank, hereof, or shall impose on Bank any other condition affecting
this Note or any Principal LOC Debt hereunder subject to a LIBOR Rate and the
result of any of the foregoing is to increase the cost to Bank of making or
maintaining the Principal LOC Debt hereunder subject to a LIBOR Rate, then
Borrower shall pay to Bank on demand as additional interest such additional
cost. A certificate of Bank setting forth the basis for the determination of
such amount necessary to compensate Bank as aforesaid shall be delivered to
Borrower and shall be conclusive as to such determination and such amount,
absent manifest error.
The interest so calculated on this Note shall be due and payable as it
accrues on the last day of each calendar month of each year, commencing June 30,
2000, and at maturity; provided, however, that during any Interest Period when a
LIBOR Rate is in effect, interest for such Interest Period shall be due and
payable with respect to that portion of the Principal LOC Debt subject to the
LIBOR Rate on the last day of each calendar month on the last day of such
Interest Period. From
and after maturity (whether stated, by acceleration, or otherwise) the
matured Principal LOC Debt and, to the extent permitted by Law, any accrued
interest thereon at maturity, shall, at the option of the holder of the LOC
Note, bear interest, payable on demand, at the Default Rate.
As used herein, "BASE RATE" means the rate charged by banks for commercial
loans, whether or not such rate is charged in each instance, and called the
"Prime Rate," as published in the "Money Rates" section of the WALL STREET
JOURNAL (or if not so published, as determined by Bank by using the average of
quotes obtained by Bank from primary national banks located in the United States
selected by Bank) from time to time plus the Applicable Margin. "DEFAULT RATE"
means eighteen percent (18%) per annum. "HIGHEST LAWFUL RATE" means the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged, or received on the Principal LOC Debt
under the Laws of the United States and the State of Colorado applicable thereto
which are presently in effect or, to the extent allowed by Law under such
applicable Laws of the United States and the State of Colorado which may
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than applicable Laws now allow. "INTEREST PERIOD" means the period of time
specified by Borrower in the applicable Notice of LIBOR Rate; provided that (i)
the duration of each Interest Period shall be for a period of 1, 2, 3, 6, 9, or
12 months, (ii) any Interest Period which would otherwise end on a day which is
not a Business Day, shall be extended to the next succeeding Business Day,
unless such next succeeding Business Day falls in the next calendar month, then
the Interest Period shall be shorted to the preceding Business Day, and (iii)
each Interest Period must begin on a Business Day. "LIBOR RATE" or "LONDON
INTERBANK OFFERED RATE" means (a) for any Interest Period, a rate per annum
equal to the sum of the rate at which deposits in United States dollars
(comparable in amount to the principal debt hereunder to be covered by LIBOR and
with a maturity equal to the Interest Period elected therefor) are offered to
Bank by leading banks in the London interbank market at approximately 11:00 a.m.
London, England, time, on the last day of that Interest Period, or as soon
thereafter as is practicable, adjusted for any reserve requirements, if any,
which may be imposed by any governmental agency, plus (b) the Applicable Margin.
"APPLICABLE MARGIN" means, when the Total Funded Debt Ratio (as in effect as of
the most recent quarterly Total Funded Debt Ratio Determination Date) is as set
forth below, the percentage set forth opposite such Total Funded Debt Ratio:
Total Funded Applicable Applicable
Debt Ratio LIBOR Margin Base Rate Margin
------------ ------------ ----------------
Less than 1.25 to 1 1.65% 0.0%
Greather than or equal to 1.25 to 1
but Less than or equal to 2.5 to 1 2.00% 0.0%
Greater than 2.5 to 1 2.50% 0.0%
The Applicable Margin shall be determined quarterly as set forth the Loan
Agreement. "BUSINESS DAY" means a day other than a Saturday on which commercial
banks are generally open for business in the State of Colorado. "LOC COMMITTED
SUM" means Twenty-Five Million and 00/100 Dollars ($25,000,000.00). The LOC
Committed Sum shall be reduced by the face amount of any Letters of Credit which
have been or are issued hereunder which remain outstanding. "PRINCIPAL LOC DEBT"
means the aggregate unpaid principal balance of all Advances made with respect
to the Line of
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Credit at the time in question, and shall include all outstanding amounts paid
under any Letters of Credit.
Borrower shall have the right to borrow, repay, and reborrow, all or part
of the LOC Committed Sum from time to time prior to maturity, provided that the
Principal LOC Debt shall never exceed the LOC Committed Amount. Borrower shall
be entitled to prepay that portion of the Principal LOC Debt which is not, at
the time, subject to a LIBOR Rate, from time to time and at any time, in whole
or in part, without penalty, but only if all accrued fees and interest, which
are then due and payable, are paid, and only in amounts of One Hundred Thousand
Dollars ($100,000.00) or more. Prepayment of principal which is made of a
portion of the Principal LOC Debt which is at the time subject to a LIBOR Rate
may be prepaid by Borrower at any time, however may be subject to
prepayment/breakage fees, if any. Borrower agrees to immediately pay
prepayment/breakage fees to Bank upon presentation of such charges. A
certificate of Bank setting forth the basis for the determination of such amount
necessary to compensate Bank as aforesaid shall be delivered to Borrower and
shall be conclusive as to such determination and such amount, absent manifest
error.
In addition to the repayment requirements imposed upon Borrower under the
Loan Agreement, if any, together with the agreements referred to therein, the
principal amount owing under this Note shall be payable on the LOC Maturity
Date. Payments made by Borrower either pursuant the Loan Agreement or as a
voluntary prepayment shall be applied as set forth in the Loan Agreement.
Anything herein or in the Loan Agreement to the contrary notwithstanding,
all principal and interest remaining unpaid on the LOC Maturity Date, shall be
immediately due and payable.
Advances hereunder, to the total amount of principal sum stated above, may
be made by Bank at the oral or written request of ▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, who are authorized to request Advances and direct the disposition of any
such Advances until written notice of the revocation of such authority is
received by Bank at the address designated above. Any such Advances shall be
conclusively presumed to have been made to or for the benefit of Borrower when
Bank believes in good faith that such requests and directions have been made by
authorized persons, or when said Advances are mailed to Borrower or deposited to
the credit of the account of Borrower regardless of the fact that persons other
than those authorized hereunder may have authority to draw against such account.
Should any Event of Default occur, as provided for in the Loan Agreement,
which shall not have been cured, if a right to cure is provided for therein,
then at Bank's option, Bank may declare all sums of principal and interest
outstanding hereunder to be immediately due and payable without presentment,
demand or notice of dishonor, all of which are expressly waived, and Bank shall
have no obligation to make any further Advances hereunder.
Payment of this Note is secured by, among other things, a Security
Agreement (herein so
-3-
called) of even date herewith executed by Borrower, covering the rights and
properties more fully described therein.
If more than one person or entity executes this Note as maker, all of said
parties shall be jointly and severally liable for the repayment of the
indebtedness evidenced hereby. The Borrower, guarantors and endorsers hereof
severally waive presentment for payment, protest, notice of nonpayment and of
protest, and agree to any extension of time of payment and partial payments
before, at or after maturity, and if this note or interest thereon is not paid
when due, or suit is brought, agree to pay all reasonable costs of collection,
including a reasonable sum for attorney's fees.
This Note shall be construed in accordance with the laws of the State of
Colorado.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed in its
corporate name by its officers thereunto duly authorized, on the day, month and
year first above written.
HORIZON ORGANIC HOLDING CORPORATION
By
---------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Financial Officer
-4-
Exhibit B
TERM NOTE
$25,000,000.00 Boulder, Colorado
May 30, 2000
FOR VALUE RECEIVED, the undersigned Horizon Organic Holding Corporation, a
Delaware corporation (hereinafter referred to as "Borrower"), promises to pay to
the order of U.S. Bank National Association ("Bank"), at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as Bank may designate, in lawful
money of the United States of America, the principal sum of Twenty Five Million
Dollars ($25,000,000) or so much thereof as may be advanced and be outstanding,
together with interest on any and all principal amounts outstanding calculated
in accordance with the provisions set forth below. This Note is issued under
that certain Amended and Restated Loan and Security Agreement by and among
Borrower, Borrower's Subsidiaries, and Bank dated as of May 30, 2000 (as the
same may be amended, replaced, restated and/or supplemented from time to time,
the "Loan Agreement"). All terms not defined herein shall have the definition
given to them in the Loan Agreement.
Interest on the principal balance hereof from time to time remaining unpaid
prior to maturity shall accrue at a varying rate per annum which shall be equal
to the lesser of (a) the Highest Lawful Rate or (b) the Base Rate in effect from
day to day, calculated each day on the basis of a 360-day year (provided,
however, that Borrower may from time to time by telephonic notice which is
confirmed in writing in accordance with the terms of the Loan Agreement elect to
substitute the LIBOR Rate for the Base Rate). Election of a LIBOR Rate (i) is
irrevocable for the duration of the Interest Period elected, and (ii) may not be
made for any Interest Period which would extend beyond the Term Maturity Date.
If any change in applicable law or in the interpretation or administration
thereof by any Tribunal (whether or not having the force of law) shall impose,
modify, or deem applicable any reserve requirement of the Board of Governors of
the Federal Reserve System, or any Tax, duty, or charge of any character is
imposed on any portion of the Principal Term Debt hereunder subject to a LIBOR
Rate, or any other reserve, special deposit, Tax, duty, charge, or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, Bank, hereof, or shall impose on Bank any other condition affecting
this Note or any Principal Term Debt hereunder subject to a LIBOR Rate and the
result of any of the foregoing is to increase the cost to Bank of making or
maintaining the Principal Term Debt hereunder subject to a LIBOR Rate, then
Borrower shall pay to Bank on demand as additional interest such additional
cost. A certificate of Bank setting forth the basis for the determination of
such amount necessary to compensate Bank as aforesaid shall be delivered to
Borrower and shall be conclusive as to such determination and such amount,
absent manifest error.
The Borrower may elect a Fixed Rate (exercisable only once) in lieu of the
Base Rate or LIBOR Rate by telephonic notice to Bank to be confirmed in writing
within three (3) Business Days of the date on which the charging of the Fixed
Rate is to commence, in accordance with the terms of the Loan Agreement. Such
Fixed Rate shall apply to all amounts outstanding under the Principal Term
Debt, and may not be elected while a LIBOR Rate is in effect for any portion
of the Principal
Term Debt. A Fixed Rate may only be elected if the Cash Flow Leverage Ratio
(as defined in the Loan Agreement) is less than 3.75 to 1 at the time of the
election. In the event that Borrower has elected a Fixed Rate, any
prepayments of principal or interest under the Principal Term Debt which are
made after the Fixed Rate election, shall be subject to the Prepayment
Indemnity. The Borrower acknowledges and agrees as follows: (i) the Borrower
has no right to prepay the principal of the Term Note which is subject to a
Fixed Rate without the Bank's consent, which the Bank will grant only on the
terms and subject to the conditions hereinafter provided; (ii) the Bank will
be harmed by reason of any prepayment of the principal of the Term Note which
is subject to a Fixed Rate at a time when interest rates have declined below
the levels prevailing at the time the existing interest rate was established,
because any reinvestment of the prepaid funds at the lower rates prevailing
at the time of prepayment will produce a lower return to the Bank; (iii)
there is no readily available index of rates payable on loans such as that
from the Bank to the Borrower, nor any assurance that the Bank could replace
the loan with a similar loan; and (iv) changes in the yields on U.S.
government securities provide a reasonable approximation for changes in
interest rates generally. To induce the Bank to agree to accept voluntary
prepayments, to the extent permitted by applicable law, the Borrower agrees
to pay the Bank a Prepayment Indemnity as defined in the Loan Agreement upon
any prepayment of the Term Note which is subject to a Fixed Rate, whether
voluntary, mandatory or upon acceleration of the principal of the Term Note,
and agrees to all of the other terms of prepayment herein. Any voluntary
prepayment under the Term Note which is subject to a Fixed Rate shall be
either in the full amount of the Principal Term Debt or, if a partial
prepayment, in the amount of $100,000.00 or an integral multiple thereof, and
partial prepayments shall be applied to installments or payments due under
the Term Note as set forth in the Loan Agreement. If, at the time of any
prepayment (whether voluntary, mandatory or upon acceleration of the
principal of the Term Note), the Interest Differential (as defined in the
Loan Agreement) shall exceed zero, such prepayment shall be accompanied, to
the extent permitted by applicable law, by payment of the Prepayment
Indemnity.
The interest so calculated on this Note shall be due and payable as it
accrues on the last day of each calendar month of each year, commencing
September, 30, 2000, and at maturity; provided, however, that during any
Interest Period when a LIBOR Rate is in effect, interest for such Interest
Period shall be due and payable with respect to that portion of the Principal
Term Debt subject to the LIBOR Rate on the last day of each calendar month
and on the last day of such Interest Period. From and after maturity (whether
stated, by acceleration, or otherwise) the matured Principal Term Debt and,
to the extent permitted by Law, any accrued interest thereon at maturity,
shall, at the option of the holder of this Term Note, bear interest, payable
on demand, at the Default Rate.
As used herein, "BASE RATE" means the rate charged by banks for commercial
loans, whether or not such rate is charged in each instance, and called the
"Prime Rate," as published in the "Money Rates" section of the WALL STREET
JOURNAL (or if not so published, as determined by Bank by using the average of
quotes obtained by Bank from primary national banks located in the United States
selected by Bank) from time to time plus the Applicable Margin. "DEFAULT RATE"
means eighteen percent (18%) per annum. "HIGHEST LAWFUL RATE" means the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged, or received on the Principal Term
under the Laws of the United States and the State of Colorado
-2-
applicable thereto which are presently in effect or, to the extent allowed by
Law under such applicable Laws of the United States and the State of Colorado
which may hereafter be in effect and which allow a higher maximum nonusurious
interest rate than applicable Laws now allow. "INTEREST PERIOD" means the period
of time specified by Borrower in the applicable Notice of LIBOR Rate; provided
that (i) the duration of each Interest Period shall be for a period of 1, 2, 3,
6, 9, or 12 months, (ii) any Interest Period which would otherwise end on a day
which is not a Business Day, shall be extended to the next succeeding Business
Day, unless such next succeeding Business Day falls in the next calendar month,
then the Interest Period shall be shorted to the preceding Business Day, and
(iii) each Interest Period must begin on a Business Day. "LIBOR RATE" or "LONDON
INTERBANK OFFERED RATE" means (a) for any Interest Period, a rate per annum
equal to the sum of the rate at which deposits in United States dollars
(comparable in amount to the principal debt hereunder to be covered by LIBOR and
with a maturity equal to the Interest Period elected therefor) are offered to
Bank by leading banks in the London interbank market at approximately 11:00 a.m.
London, England, time, on the last day of that Interest Period, or as soon
thereafter as is practicable, adjusted for any reserve requirements, if any,
which may be imposed by any governmental agency, plus (b) the Applicable Margin.
"APPLICABLE MARGIN" means, when the Total Funded Debt Ratio (as in effect as of
the most recent quarterly Total Funded Debt Ratio Determination Date) is as set
forth below, the percentage set forth opposite such Total Funded Debt Ratio:
Total Funded Applicable Applicable
Debt Ratio LIBOR Margin Base Rate Margin
------------ ------------ ----------------
Less than 1.25 to 1 1.65% 0.0%
Greater than or equal to 1.25 to 1
but Less than or equal to 2.5 to 1 2.00% 0.0%
Greater than 2.5 to 1 2.50% 0.0%
The Applicable Margin shall be determined quarterly as set forth the Loan
Agreement. "BUSINESS DAY" means a day other than a Saturday on which commercial
banks are generally open for business in the State of Colorado. "TERM LOAN
COMMITTED SUM" means Twenty-Five Million and 00/100 Dollars ($25,000,000.00).
The Term Loan Committed Sum shall be reduced by the face amount of any Letters
of Credit which have been or are issued hereunder which remain outstanding.
"PRINCIPAL TERM DEBT" means the aggregate unpaid principal balance of all
Advances made with respect to the Line of Credit at the time in question, and
shall include all outstanding amounts paid under any Letters of Credit.
Borrower shall be entitled to prepay that portion of the Principal Term
Debt which is not, at the time, subject to a LIBOR Rate or Fixed Rate, from time
to time and at any time, in whole or in part, without penalty, but only if all
accrued fees and interest, which are then due and payable, are paid, and only in
amounts of One Hundred Thousand Dollars ($100,000.00) or more. Prepayment of
principal which is made of a portion of the Principal Term Debt which is at the
time subject to a LIBOR Rate may be prepaid by Borrower at any time, however may
be subject to prepayment/breakage fees, if any. Borrower agrees to immediately
pay prepayment/breakage fees to Bank upon presentation of such charges. A
certificate of Bank setting forth the basis for the determination of such amount
necessary to compensate Bank as aforesaid shall be delivered to
-3-
Borrower and shall be conclusive as to such determination and such amount,
absent manifest error. Prepayment of principal which is made of a portion of the
Principal Term Debt which is at the time subject to a Fixed Rate shall be
subject to the Prepayment Indemnity.
Principal Term Debt outstanding shall be due and payable in quarterly
installments of principal, commencing on the last day of September, 2000, and
continuing on the last day of each December, March, June, and September
thereafter in the amounts as follows:
Payment Date Principal Payment
------------ -----------------
September 30, 2000 $ 400,000.00
December 31, 2000 600,000.00
March 31, 2001 750,000.00
June 30, 2001 750,000.00
September 30, 2001 750,000.00
December 31, 2001 750,000.00
March 31, 2002 800,000.00
June 30, 2002 800,000.00
September 30, 2002 800,000.00
December 31, 2002 800,000.00
March 31, 2003 1,000,000.00
June 30, 2003 1,000,000.00
September 30, 2003 1,000,000.00
December 31, 2003 1,000,000.00
March 31, 2004 1,250,000.00
June 30, 2004 1,250,000.00
September 30, 2004 1,250,000.00
December 31, 2004 1,250,000.00
March 31, 2005 1,500,000.00
June 30, 2005 All outstanding principal amounts
provided, however, that the last installment on the Term Maturity Date shall be
in the amount necessary to repay in full the unpaid principal amount of the Term
Loan the principal amount owing under this Note shall be payable on the Term
Maturity Date. Payments made by Borrower either pursuant the Loan Agreement or
as a voluntary prepayment shall be applied as set forth in the Loan Agreement.
Anything herein or in the Loan Agreement to the contrary notwithstanding,
all principal and interest remaining unpaid on the Term Maturity Date, shall be
immediately due and payable.
Advances hereunder, to the total amount of principal sum stated above, may
be made by Bank at the oral or written request of ▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, who are authorized to request Advances and direct the disposition of any
such Advances until written notice of the revocation of such authority is
received by Bank at the address designated above. Any such
-4-
Advances shall be conclusively presumed to have been made to or for the benefit
of Borrower when Bank believes in good faith that such requests and directions
have been made by authorized persons, or when said Advances are mailed to
Borrower or deposited to the credit of the account of Borrower regardless of the
fact that persons other than those authorized hereunder may have authority to
draw against such account.
Should any Event of Default occur, as provided for in the Loan Agreement,
which shall not have been cured, if a right to cure is provided for therein,
then at Bank's option, Bank may declare all sums of principal and interest
outstanding hereunder to be immediately due and payable without presentment,
demand or notice of dishonor, all of which are expressly waived, and Bank shall
have no obligation to make any further Advances hereunder.
Payment of this Note is secured by, among other things, a Security
Agreement (herein so called) of even date herewith executed by Borrower,
covering the rights and properties more fully described therein.
If more than one person or entity executes this Note as maker, all of said
parties shall be jointly and severally liable for the repayment of the
indebtedness evidenced hereby. The Borrower, guarantors and endorsers hereof
severally waive presentment for payment, protest, notice of nonpayment and of
protest, and agree to any extension of time of payment and partial payments
before, at or after maturity, and if this note or interest thereon is not paid
when due, or suit is brought, agree to pay all reasonable costs of collection,
including a reasonable sum for attorney's fees.
This Note shall be construed in accordance with the laws of the State of
Colorado.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed in its
corporate name by its officers thereunto duly authorized, on the day, month and
year first above written.
HORIZON ORGANIC HOLDING CORPORATION
By
---------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Financial Officer
-5-
EXHIBIT C
EXISTING INDEBTEDNESS
ITEM DESCRIPTION
---- -----------
Maryland Farm Mortgage Security for two notes payable to Peoples Bank of
Kent County, Maryland
Maryland Farm Capital Lease Security for Irrigation Equipment
with Telmark Financial
Services, Inc.
Maryland Farm Capital Lease Security for Tractor and Mower Purchase
with Case Credit Corp.
Idaho Farm Mortgage Security for loan with Farm Credit Services
Idaho Farm Capital Lease Security for Tractor Purchase
with Case Credit Corp.
Idaho Farm Capital Leases For: 1) Composter; 2) Milk Separator
with Farm Credit Leasing
Juniper Valley Note See notes to financial statements
The Organic Cow Note See notes to financial statements
Rachel's Dairy, Ltd. Line Line of Credit with Barclay's Bank for 80,000
of Credit Pounds secured by all of the assets of Rachel's*
* It is understood, however, that the above referenced lien will be subject
to discussion with Bank pursuant to Section 4.3 of the Agreement.
EXHIBIT D
GUARANTY
This absolute, continuing and unconditional guaranty is given by the
undersigned, hereinafter called the "Guarantor" (and if more than one,
collectively, jointly and severally referred to as the "Guarantor"), to induce
U.S. BANK NATIONAL ASSOCIATION, a national banking association (the "Bank"),
located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, to extend credit to HORIZON
ORGANIC HOLDING CORPORATION, a Delaware corporation, hereinafter called the
"Borrower", having a business address of ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
WHEREAS, Borrower has executed or will execute in favor of Bank that
certain Line of Credit Note (the "LOC Note") dated as of May 30, 2000, in the
principal amount of $25,000,000.00, and a Term Note (herein so called) dated as
of the May 30, 2000, in the principal amount of $25,000,000.00 (the LOC Note and
the Term Note collectively referred to herein as the "Notes"), upon such terms
as set forth in the Notes and in a certain Amended and Restated Loan and
Security Agreement dated as of May 30,2000, among Borrower, Borrower's
Subsidiaries, and Bank (the "Loan Agreement") ; and
WHEREAS, Bank is unwilling to extend the loans in connection with the terms
of the Loan Agreement, which loans will be evidenced by the Notes, unless and
until, among other things, the Guarantor executes and delivers this Guaranty to
Bank; and
WHEREAS, the Guarantor is a Subsidiary of the Borrower.
NOW, THEREFORE, in consideration of the foregoing, and such other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the Guarantor does hereby agree as follows:
1. RECITALS. The recitals set forth above are true and correct and
constitute a part hereof.
2. OBLIGATION OF GUARANTOR. The Guarantor absolutely and unconditionally
guarantees to the Bank, its successors and assigns (whether collateral assigns
or otherwise), the prompt and full payment of (i) the Notes, and all renewals,
extensions, replacements, modifications or amendments thereof, (ii) all future
advances or other advances of money made pursuant to the Notes, (iii) all
advances of money made by Bank pursuant to any other documents executed or given
in connection with the Notes, (iv) any and all amounts for which Borrower may
now or hereafter become indebted to Bank in any capacity, whether as maker,
drawer, guarantor, endorser or otherwise, directly or indirectly, primarily or
secondarily, jointly or severally, contingent or otherwise, (v) interest on any
of the foregoing at the rate or rates provided for in the applicable instrument,
and (vi) all attorneys' fees, costs and expenses of collection incurred by the
Bank, in connection with any matter covered by this Guaranty, whether incurred
at trial, on appeal, in any bankruptcy proceeding or otherwise.
3. TERM OF GUARANTY. This Guaranty shall be an absolute, continuing and
unconditional guaranty of the Guarantor which may not be cancelled or terminated
by Guarantor for any reason whatsoever. The liability and obligations of the
Guarantor hereunder shall continue until the
amounts guaranteed hereunder have been paid finally and in full. To the extent
the Bank, for any reason (bankruptcy or otherwise), is not permitted to retain
any payments made to the Bank of amounts guaranteed hereby, the Guarantor shall
remain liable hereunder until all such amounts guaranteed hereby have been fully
and finally paid to Bank. The obligations and liabilities of Guarantor hereunder
shall not be discharged or released, in whole or in part, by any act or
occurrence which might, but for the provisions of this Guaranty, be deemed a
legal or equitable discharge or release of Guarantor.
4. CONSENT TO BANK'S ACTS. Guarantor hereby agrees that Guarantor's
obligations and liabilities under the terms of this Guaranty shall not be
released, diminished, impaired, reduced or affected by the occurrence of any one
or more of the following events: (a) the taking or accepting of any other
security or guaranty for this Guaranty or for any or all of the amounts and
obligations guaranteed hereby; (b) any release, modification, impairment,
surrender, exchange, subordination, renewal or loss of any security, or of any
documents or agreements evidencing or concerning any security, at any time
existing in connection herewith or any or all of the amounts and obligations
guaranteed hereby; (c) any partial release of the liability of Guarantor
hereunder; (d) the death, insolvency, bankruptcy, disability, dissolution,
termination, receivership, reorganization or lack of corporate, partnership or
other power of Borrower, the undersigned, or any party at any time liable for
the payment or performance of any or all of the amounts and obligations
guaranteed hereby, whether now existing or hereafter occurring; (e) the renewal,
extension, modification or rearrangement of the payment or performance of any or
all of the amounts and obligations guaranteed hereby, either with or without
notice to or consent of Guarantor, or any adjustment, indulgence, forbearance,
or compromise that may be granted or given by Bank to Borrower or Guarantor; (f)
any neglect, delay, omission, failure, or refusal of Bank to take or prosecute
any action for the collection or enforcement of any of the amounts and
obligations guaranteed hereby or to foreclose or take or prosecute any action to
foreclose upon any security therefore or to take or prosecute any action in
connection with any instrument or agreement evidencing or securing all or any
part of the amounts and obligations guaranteed hereby; (g) any failure of Bank
to notify Guarantor of any renewal, extension, rearrangement, modification or
assignment of the amounts and obligations guaranteed hereby, or any part
thereof, or of any instrument evidencing or securing the amounts and obligations
guaranteed hereby or any part thereof, or of the release of or change in any
security or of any other action taken or refrained from being taken by Bank
against Borrower, it being understood that Bank shall not be required to give
Guarantor any notice of any kind under any circumstances with respect to or in
connection with the amounts and obligations guaranteed hereby; (h) the
unenforceability of all or any part of the amounts and obligations guaranteed
hereby against Borrower, whether because the amounts and obligations guaranteed
hereby exceed the amount permitted by law, the act of creating the amounts and
obligations guaranteed hereby, or any part thereof, is ULTRA ▇▇▇▇▇, the officers
or persons creating same acted in excess of their authority, or otherwise, it
being agreed that Guarantor shall remain liable hereon regardless of whether
Borrower or any other person be found not liable on the amounts and obligations
guaranteed hereby, or any part thereof, for any reason; (i) any payment by
Borrower to Bank is held to constitute a preference under the bankruptcy laws or
if for any other reason, Bank is required to refund such payment or pay the
amount thereof to someone else; (j) any settlement or compromise of any claim of
the Bank
-2-
against the Borrower, or against any other person, firm or corporation, whose
obligation is held by the Bank as collateral security for any obligation of the
Borrower to the Bank; (k) any release, in whole or in part, of any person liable
for the payment of any obligation of the Borrower or the Guarantor to the Bank
including, but not limited to, any person liable as an endorser, guarantor or
judgment debtor (if the Bank obtains a judgment on any obligation of the
Borrower) of said obligation hereof; (1) the failure of the Bank to perfect or
to maintain the perfection of any security interest or other lien on property to
secure this Guaranty or the indebtedness of the Borrower to the Bank; or (m) the
assignment or participation by Bank of the Notes, this Guaranty or any documents
or agreements securing or executed in connection therewith or herewith. The
Guarantor hereby ratifies and confirms any and all of the foregoing actions and
the Guarantor hereby waives all defenses, counterclaims, or offsets which the
Guarantor might have by reason thereof.
5. WAIVERS BY GUARANTOR. The Guarantor waives: (a) notice of acceptance
of this Guaranty by the Bank; (b) notice of presentment, demand for payment,
notice of dishonor or protest of any of the Borrower's or Guarantor's
obligations or the obligation of any persons, firm, or corporation held by the
Bank as collateral security for the Borrower's obligation; (c) notice of the
failure of the Guarantor or of any person, firm, or corporation to pay to the
Bank any indebtedness held by the Bank as collateral security for any obligation
of the Borrower; (d) failure of the Bank to obtain and perfect or maintain the
perfection or priority of any security interest or lien on property to secure
this Guaranty or any indebtedness of the Borrower; and (e) all defenses, offsets
and counterclaims which the Guarantor may at any time have to any claim of the
Bank against the Borrower.
6. SUBROGATION. Nothing herein contained is intended or shall be
construed to give to Guarantor any right of subrogation in or under any note,
security document or any other loan document evidencing in any way or relating
to any obligation of the Borrower to the Bank which is or may be covered by this
Guaranty, any right to participate in any way therein, or in the right, title
and interest of the Bank in and to any collateral covered by any loan or
security documents relating to any such obligations, notwithstanding any
payments made by Guarantor under this Guaranty, all such rights of subrogation
and participation being hereby expressly waived and released.
7. SUBORDINATION. In the event that for any reason whatsoever, the
Borrower is now or hereafter becomes indebted to the Guarantor, the Guarantor
agrees that the amount of such indebtedness and all interest thereon shall at
all times be subordinate as to lien, time of payment and in all other respects
to all obligations of the Borrower to the Bank which are covered by this
Guaranty, and that the Guarantor shall not be entitled to enforce or receive
payment thereof until all sums then due and owing to the Bank shall have been
paid in full. If any payment shall have been made to the Guarantor by the
Borrower on any said indebtedness during any time that there are obligations
outstanding from the Borrower to the Bank which are covered by this Guaranty,
the Guarantor shall hold in trust all such payments for the benefit of the Bank
and shall make said payments to the Bank to be credited and applied against
obligations of the Borrower to the Bank, whether matured or unmatured, in
accordance with the discretion of the Bank.
-3-
8. REPRESENTATIONS BY GUARANTOR. The Guarantor represents that, at the
time of the execution and delivery of this Guaranty, nothing exists to impair
the effectiveness of the liabilities and obligations of the Guarantor to the
Bank hereunder, or the immediate taking effect of this Guaranty as the sole
agreement between the Guarantor and the Bank with respect to guaranteeing the
Borrower's obligation to the Bank.
9. REMEDIES OF BANK. The Bank may at its option proceed in the first
instance against the Guarantor to collect any obligation covered by this
Guaranty, without first proceeding against the Borrower for said obligation, or
any other person, firm or corporation liable for said obligation, and without
first resorting to any property at any time held by the Bank as collateral
security for said obligation and without any marshalling of assets whatsoever.
The Guarantor hereby grants to the Bank a lien on, and a security interest in,
any and all property of the Guarantor now or hereafter in the possession of the
Bank to secure, and as collateral, for the payment and performance of this
Guaranty. The Bank shall further have any other rights provided by law or under
any other document, all of which rights are cumulative and nonexclusive, may be
pursued separately, successively or concurrently, and shall in no way limit or
prejudice any other legal or equitable right, remedy or recourse which Bank may
have.
10. CONSTRUCTION AND BENEFIT. This Guaranty shall be construed pursuant to
and governed by the laws of the State of Colorado, without regard to its choice
of law rules. This Guaranty is binding upon the Guarantor and its legal
representatives and successors, and shall inure to the benefit of the Bank, its
successors and assigns.
11. MISCELLANEOUS. In the event it becomes necessary for the Bank to
exercise its rights under this Guaranty, whether suit be brought or not, the
Guarantor shall be liable for all costs and attorneys' fees incurred by the
Bank, whether incurred at trial, on appeal, in any bankruptcy proceeding or
otherwise. To the extent the Guarantor is obligated to make any payments to the
Bank under this Guaranty, the Bank may offset and retain in payment of said
amounts any and all monies of the Guarantor in the possession of the Bank at any
time. In the further event the Bank obtains a final judgment against the
Guarantor upon this Guaranty, the judgment shall bear interest not at the
judgment rate but at eighteen percent (18%) per annum. The liability of the
Guarantor hereunder, if more than one, shall be joint and several. Whenever used
herein the singular number shall include the plural, the plural the singular and
the use of any gender shall be applicable to all genders.
12. SEVERABILITY. In case any one or more of the provisions contained in
this Guaranty shall for any reason be held to be invalid, illegal or
unenforceable in any respect, the same shall not affect any other provision of
this Guaranty, and this Guaranty shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein.
13. INTEREST. It is not the intention of Bank or Guarantor to obligate
Guarantor to pay interest in excess of that legally permitted to be paid by
Guarantor under applicable law. Should it be determined that any portion of the
amounts guaranteed hereby constitutes interest in excess of the maximum amount
of interest which Guarantor (in such capacity) may lawfully be required to pay
-4-
under applicable law, the obligation of Guarantor to pay such interest shall
automatically be limited to the payment thereof at the maximum rate so permitted
under applicable law.
14. NOTICES. Any notice provided for in this Guaranty shall be given by
personal delivery, by overnight mail service, by U.S. mail, return receipt
requested, with all charges prepaid or billed to the sender, unless applicable
law requires use of another method. The notice shall be directed to the address
of the Guarantor or the Bank set forth herein or to any other address of which
the parties have given each other notice in accordance herewith. Any notice
provided for in this Guaranty shall be deemed to have been given upon receipt,
or refusal to accept delivery.
15. COMPLETE AGREEMENT. The whole of this Guaranty is herein set forth and
there is no verbal or other written agreement, and no understanding or custom
affecting the terms hereof. This Guaranty can be modified only by a written
instrument signed by the party to be charged therewith.
IN WITNESS WHEREOF, Guarantor has signed this agreement as of the 30th day
of May, 2000.
[GUARANTOR]
Signed, sealed and delivered
in the presence of: By:
---------------------------------
Its:
------------------------------ --------------------------------
-5-
EXHIBIT E
PERMITTED LIENS
ITEM DESCRIPTION
---- -----------
Rachel's Dairy, Ltd. Line of Credit Line of Credit with Barclay's Bank for
80,000 Pounds secured by all of the
assets of Rachel's*
* It is understood, however, that the above referenced lien will be subject
to discussion with Bank pursuant to Section 4.3 of the Agreement.
EXHIBIT F
NOTICE OF FIXED RATE
[Borrower Letterhead]
[Date]
US Bank National Association
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Re: Amended and Restated Loan and Security Agreement by and among U.S.
Bank National Association ("Bank"), Horizon Organic Holding
Corporation ("Borrower") and certain Subsidiaries of Borrower dated as
of May 30, 2000 (the "Loan Agreement")
Dear ▇▇. ▇▇▇▇▇:
Pursuant to Section 2.5(b)(2) of the Loan Agreement, please consider this letter
as confirmation of our telephone request to elect the Fixed Rate for all amounts
outstanding under the Principal Term Debt:
1. Commencement Date: ___________________
2. The Borrower hereby certifies that the Cash Flow Leverage Ratio is less
than 3.75 to 1.
3. The Borrower understands that this election is irrevocable.
Terms used with initial capital letters and not otherwise defined herein shall
have the meanings given to such terms in the Loan Agreement.
Very truly yours,
HORIZON ORGANIC HOLDING CORPORATION
By:
---------------------------------
Title:
------------------------------
EXHIBIT G
NOTICE OF LIBOR RATE
[Borrower Letterhead]
[Date]
US Bank National Association
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Re: Amended and Restated Loan and Security Agreement by and among U.S.
Bank National Association ("Bank"), Horizon Organic Holding
Corporation ("Borrower") and certain Subsidiaries of Borrower dated as
of May 30, 2000 (the "Loan Agreement")
Dear ▇▇. ▇▇▇▇▇:
Pursuant to Section 2.6 of the Loan Agreement, please consider this letter as
confirmation of our telephone request to elect the LIBOR Rate instead of the
Base Rate as follows:
1. Commencement Date: ___________________
2. Selected Interest Period: ______________________*
* (i.e. duration of 1, 2, 3, 6, 9, 12 months)
3. Amount to be subject to LIBOR Rate: _____________________________**
** amount must be $100,000 or integral multiple thereof
4. This amount is from the PRINCIPAL LOC DEBT / / or
PRINCIPAL TERM DEBT / /
[select one or specify amounts from each credit facility]
Terms used with initial capital letters and not otherwise defined herein shall
have the meanings given to such terms in the Loan Agreement.
Very truly yours,
HORIZON ORGANIC HOLDING CORPORATION
By:
---------------------------------
Title:
------------------------------
EXHIBIT H
PROPERTIES
PROPERTIES
LOCATION USE OWNERSHIP/LEASE
-------- --- ---------------
6311 Horizon Lane, Corporate Headquarters Lease
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Idaho Farm Farm Own
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇,
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Maryland Dairy Farm Own
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
California Farm Farm Own
▇▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Office in Bristol, England, UK Executive office Lease - month to month
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
U.S. Naval Academy Dairy Farm Visitors Center Lease
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Aurora Dairy Corporation Farm equipment and N/A
Dairy Farm in Platteville, assets are located here
Colorado
EXHIBIT I
SUBSIDIARIES
JURISDICTION OF OTHER OTHER
NAME CAPITAL STOCK OWNERSHIP INCORPORATION SUBSIDIARIES TRADENAMES
--- ----------------------- --------------- ------------ ----------
Horizon Organic HOHC owns all outstanding Colorado NONE Natural Horizons, Inc.
Dairy, Inc. shares
Horizon Organic HOHC owns 117,478 Colorado NONE Sunrise Organic Farms, Inc.
Dairy, Idaho shares of the 401,360
Farm, Inc. shares outstanding,
Horizon Organic Dairy,
Inc. owns the remaining
283,882 outstanding shares
Horizon Organic HOHC owns all outstanding Colorado NONE
Dairy, Maryland shares
Farm, Inc.
Horizon Organic HOHC owns all outstanding Delaware NONE
Dairy, California shares
Farm, Inc.
Horizon Organic HOHC owns all outstanding Delaware Horizon Organic
International, Inc. shares Dairy, Ltd.
Horizon Organic Horizon Organic United Kingdom Rachel's Dairy,
Dairy, Limited International, Inc. owns Ltd.
all outstanding shares
Meadow Farms
Limited (as of
June 1, 2000)
Rachel's Dairy, Horizon Organic Dairy, Ltd. United Kingdom NONE
Ltd. owns all outstanding shares
▇▇▇▇▇▇▇ Farms Horizon Organic Dairy, Ltd. United Kingdom Organic Dairies
Limited (as of owns all outstanding shares Limited (as of
June 1, 2000) June 1, 2000)
EXHIBIT J
MATERIAL AGREEMENTS
AGREEMENT DESCRIPTION
--------- -----------
The Organic Cow of Vermont Purchased certain intangible assets and entered
into a processing agreement with a related
entity of the seller
Suiza Foods Corporation Long-term processing and distribution
agreements in place with Suiza Foods
Corporation and its affiliates
▇▇▇▇▇▇▇▇ Dairy, Inc. Processing and Distribution Agreement
Aurora Dairy Corporation ("ADC") Agreement with ADC in which ADC will maintain
Dairy Herd Management and Supply an organic dairy on its facilities in
Agreement dated March 5, 1999 Platteville, Colorado for Horizon's benefit
Takanashi Mild Products Company, Licensing Agreement with Japanese milk company
Ltd. Licensing Agreement
Juniper Valley Farms Purchase Purchased certain assets of Juniper Valley
Agreement Farms financed by promissory note
Worcester Creameries Corp. Long-term processing agreement
Processing Agreement
Meadow Farms Purchased the stock of this company and
entered into related agreements involving
this transaction (as of June 1, 2000)
Steuben Food, Inc. Long Term Processing Agreement
Processing Agreement
EXHIBIT K
REPLY TO DENVER OFFICE
May 30, 2000
U.S. Bank National Association
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We are counsel for Horizon Organic Holding Corporation, a Delaware
corporation ("Borrower"), and Horizon Organic Dairy, Inc., a Colorado
corporation ("HODI"), Horizon Organic Dairy, Maryland Farm, Inc., a Colorado
corporation ("Maryland Farm"), Horizon Organic Dairy, Idaho Farm, Inc., a
Colorado corporation ("Idaho Farm"), Horizon Organic Dairy, California Farm,
Inc., a Delaware corporation ("California Farm"), and Horizon Organic
International, Inc., a Delaware corporation ("International") (collectively
referred to herein as "Guarantors") (Borrower and Guarantors are collectively
referred to herein as the "Companies"), and for Horizon Organic Dairy Limited, a
United Kingdom Company ("HODL"), and have represented the Companies and HODL in
connection with the execution and delivery to you of the following documents,
each dated as of May 31, 2000 (the "Documents"):
1. Amended and Restated Loan and Security Agreement between you and the
Companies at HODL (the "Loan Agreement').
2. Security Agreements between you and each of the Companies and HODL.
3. Trademark Security Agreement between you and the Companies and HODL.
4. The other Loan Papers (as defined in said Loan Agreement).
This opinion is provided to you at the request of the Company pursuant to
Section 4.1(f) of the Loan Agreement.
In so acting, we have examined copies of the Documents executed by the
Companies and HODL, we have reviewed the Certificate or Articles of
Incorporation, as applicable, and other constituent documents of the Companies,
and pertinent indentures and agreements, known to us, binding upon the
Companies, we have supervised the necessary action to authorize the Documents,
and we have reviewed such matters of law and made inquiry into such matters of
fact as we have considered appropriate for purposes of rendering this opinion to
you.
Based upon the foregoing, it is our opinion that:
1. The Borrower is a corporation, duly incorporated and validly existing
and in good standing under the laws of the State of Delaware, and is duly
licensed or qualified to transact business in all jurisdictions where the
character of the property owned or leased or the nature of the business
transacted by it makes such licensing or qualification necessary. It has all
requisite
U.S. Bank National Association
May 30, 2000
Page 2
power and authority to conduct its business and to own its properties. The name
of the Borrower set forth above is now, and has been at all times since its
incorporation, its correct corporate name. Attached hereto as EXHIBIT A is a
true, correct, and complete copy of the Certificate/Articles of Incorporation of
Borrower in full force and effect on the date hereof. No amendment to the
Certificate/Articles of Incorporation of the Borrower has been authorized by the
shareholders or the Board of Directors of the Borrower that has not been filed
with the Secretary of State of the State of Delaware. Attached hereto as EXHIBIT
B is a true, correct, and complete copy of the bylaws of the Borrower as in full
force and effect on the date hereof.
2. Each Guarantor is a corporation, duly organized and validly existing
and in good standing under the laws of the State of Colorado (except California
Farm and International, which are duly organized and validly existing and in
good standing under the laws of the State of Delaware), and is duly licensed or
qualified to transact business in all jurisdictions where the character of the
property owned or leased or the nature of the business transacted by it makes
such licensing or qualification necessary. It has all requisite power and
authority to conduct its business and to own its properties. The name of each of
the Companies set forth above is now, and has been at all times since its
incorporation, its correct corporate name, except that Idaho Farm was previously
named Aurora Dairy Corporation of Idaho, Aurora Farms, Inc., Sunrise Organic
Dairy, Inc., and Horizon Dairy Corporation of Idaho and HODI was previously
known as Natural Horizons, Inc., and ▇▇▇▇▇▇▇▇, Inc.
3. The Borrower is duly authorized and empowered to execute, deliver,
perform, and comply with the terms of the Documents and to borrow money from
you.
4. Each of the Guarantors is duly authorized and empowered to execute,
deliver, perform, and comply with the terms of the Documents, including but not
limited to the Guaranty and the Security Agreements.
5. The execution, delivery and performance of the Documents, and the
performance by each of the Companies of its obligations thereunder, do not and
will not violate or conflict with any provision of law or the Certificate or
Articles of Incorporation, as applicable or Bylaws of such Company and do not
and will not violate or conflict with, or cause any default or event of default
to occur under, any agreement presently binding upon any of the Companies known
to us.
6. The execution and delivery of the Documents have been duly approved by
all necessary action of the Board of Directors of the applicable Company; and
the Documents have been duly executed and delivered by each of the Companies and
constitute its lawful and binding obligations, legally enforceable against it in
accordance with their respective terms (subject to laws generally affecting the
enforcement of creditors' rights).
7. To our knowledge, no litigation, tax claims or governmental
proceedings are pending or are threatened against any of the Companies and no
judgment or order of any court or
U.S. Bank National Association
May 30, 2000
Page 3
administrative agency is outstanding against any of the Companies.
8. The transaction evidenced by the Documents does not violate any law
pertaining to usury or the payment of interest on loans.
9. The authorization, execution, delivery and performance of the
Documents by the Companies are not and will not be subject to the jurisdiction,
approval or consent of, or to any requirement of registration with or
notification to. any federal, state or local regulatory body or administrative
agency.
10. The proper place to file financing statements to perfect the security
interests created by the Loan Agreement and Security Agreements is the office of
the Secretary of State of the State of Colorado to the extent such security
interests are capable of being perfected by filing and relate to accounts and
general intangibles owned by the Borrower, HODI and International and the
equipment owned by any of the Companies and located in Colorado. The proper
places to file financing statements to perfect the security interests created by
the Loan Agreement and Security Agreements to the extent such security interests
are capable of being perfected by filing and relate to equipment owned by any
Company are the states where the equipment is located which are Idaho, Maryland,
California, Illinois, and New Jersey. The financing statements signed by the
Companies are sufficient in form to perfect, when so filed, such security
interests.
11. EXHIBIT C attached hereto and incorporated herein sets forth the
authorized capital stock, issued and outstanding capital stock and the number of
shares held by each shareholder of each Guarantor and HODL. There are no
outstanding options, loan agreements, rights of first refusal preemptive rights,
or other rights to purchase the capital stock of any Guarantor or HODL except
that the shares of HODL presently held by the Borrower are being transferred to
International, and International will subscribe for an additional 200,000 shares
of HODL.
12. ▇▇▇ ▇▇▇▇▇▇▇ is the duly appointed, qualified and acting Vice President
- Finance of HODI, California Farm, and International, and chief financial
officer is an accurate description of that office. ▇▇▇ ▇▇▇▇▇▇▇ is the Chief
Financial Officer of the Borrower and a director of HODL.
Each of the opinions set forth above is subject to the following
qualifications:
(i) We express no opinion as to the legality, validity, binding
effect or enforceability of any provision of the Loan Agreement regarding the
remedies available to any party: (a) which permits any party to take
discretionary action which is arbitrary, unreasonable or capricious, or is not
taken in good faith or in a commercially reasonable manner, whether or not such
action is permitted under the Agreement; (b) upon the breach of any covenant or
provision which imposes restrictions or burdens upon a debtor, including the
acceleration of indebtedness due under debt instruments, if it cannot be
demonstrated that the enforcement of such restrictions
U.S. Bank National Association
May 30, 2000
Page 4
or burdens is reasonably necessary for the protection of the creditor; or (c)
for violations or breaches which are determined by a court to be nonmaterial or
without substantial adverse effect upon the ability of the obligor to perform
its material obligations thereunder.
(ii) Enforcement and waiver provisions contained in the Loan Agreement
may be limited to the extent such provisions are contrary to statute, case law,
or public policy.
(iii) Requirements in the Loan Agreement specifying that provisions
thereof may only be waived in writing may not be binding or enforceable to the
extent that a non-executory oral agreement has been created modifying any
provision of the Loan Agreement or an implied agreement by trade practice or
course of conduct has been created allowing a waiver.
(iv) We note that a Colorado court might not permit the exercise or
attempted exercise of any right or remedy provided in the Loan Agreement if such
exercise or attempted exercise is not done in a commercially reasonable manner
or if such exercise is deemed to be in breach of the covenant of good faith and
fair dealing implied under Colorado law to exist in all agreements or fails to
fulfill other duties imposed by statute or judicial decisions under such cases.
(v) We express no opinion as to the legality, validity, binding
effect, or enforceability of: (a) any provision of the Loan Agreement insofar as
it provides for the payment or requirement of costs and expenses or
indemnifications for claims, losses, or liabilities in excess of a reasonable
amount determined by any court or other tribunal; (b) covenants, to the extent
they can be construed as independent obligations as distinguished from
conditions that may trigger an event of default; or (c) provisions that rights
or remedies are not exclusive, that every right or remedy is cumulative and may
be exercised in addition to any other right or remedy, and that the election of
a particular remedy does not preclude recourse to one or more others.
We do not express any opinion as to the laws of any jurisdiction other than
the present federal laws of the United States of America and the present laws of
the States of Colorado and Delaware, and the present judicial interpretation
thereof, and to the facts as they have been presented to us.
The opinions expressed herein are solely for the benefit of U.S. Bank
National Association, to whom this opinion is addressed, and permitted assignees
under the Loan Agreement in connection with the above transaction and may not be
relied on in any other context and may not be relied on in any manner or for any
purpose by any other person.
Very truly yours,
EXHIBIT C
ENTITY TYPE OF STOCK AUTHORIZED ISSUED OUTSTANDING SHARE HOLDINGS
------ ------------- ---------- ------ ----------- --------------
Horizon Organic Only Common 10,000,000 3,664,000 3,664,000 The Borrower: 3,664,000
Dairy, Inc.
Horizon Organic Only Common 10,000,000 401,360 401,360 HODI: 283,882
Dairy, Idaho
Farm, Inc. The Borrower: 117,478
Horizon Organic Only Common 1,000,000 10,000 10,000 The Borrower: 10,000
Dairy, Maryland
Farm, Inc.
Horizon Organic Common Common-500 Common-50 Common-50 The Borrower: ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
Farm, Inc. Preferred Preferred-100 Preferred-0 Preferred-0
Horizon Organic Common ▇▇▇▇▇▇-▇▇▇ ▇▇▇▇▇▇-▇▇▇ ▇▇▇▇▇▇-▇▇▇ The Borrower: 500 Common
International, Inc.
Preferred Preferred-100 Preferred-0 Preferred-0
Horizon Organic Ordinary 1,000,000 100,000 100,000 International: 100,000
Dairy, Limited
EXHIBIT L
ENVIRONMENTAL
"None"
EXHIBIT M
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 200__ among [ASSIGNOR] (the "Assignor"),
[ASSIGNEE] (the "Assignee"),__________ (the "Company") and US BANK NATIONAL
ASSOCIATION, as Administrative Agent (the "Agent").
W I T NE S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "Agreement") relates
to the Amended and Restated Loan and Security Agreement dated as of May 31, 2000
among the Company, the Borrowers named therein, the Assignor and the other Banks
party thereto, as Banks, the other agents named therein and the Agent (the
"Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans in an aggregate principal amount at any time
outstanding not to exceed $______________;
WHEREAS, Committed Loans made by the Assignor under the Credit Agreement in
the aggregate principal amount of $_________ are outstanding at the date hereof,
and
WHEREAS, the Assignor proposes to assign to the Assignee all of the rights
of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $______________ (the "Assigned
Amount"), together with a corresponding portion of its outstanding Committed
Loans, and the Assignee proposes to accept assignment of such rights and assume
the corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. All capitalized terms not otherwise defined herein
shall have the respective meanings set forth in the Credit Agreement.
SECTION 2. ASSIGNMENT. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion of the principal amount of the
Committed Loans made by the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor, the Assignee, the Company and the
Agent and the payment of the amounts specified in Section 3 required to be paid
on the date hereof (i) the Assignee shall,
as of the date hereof, succeed to the rights and be obligated to perform the
obligations of a Bank under the Credit Agreement with a Commitment in an amount
equal to the Assigned Amount, and (ii) the Commitment of the Assignor shall, as
of the date hereof, be reduced by a like amount and the Assignor released from
its obligations under the Credit Agreement to the extent such obligations have
been assumed by the Assignee. The assignment provided for herein shall be
without recourse to the Assignor.
SECTION 3. PAYMENTS. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them. It is
understood that commitment and/or facility fees accrued to the date hereof are
for the account of the Assignor and such fees accruing from and including the
date hereof are for the account of the Assignee. Each of the Assignor and the
Assignee hereby agrees to that if it receives any amount under the Credit
Agreement which is for the account of the other party hereto, it shall receive
the same for the account of such other party to the extent of such other party's
interest therein and shall promptly pay the same to such other party.
[SECTION 4. CONSENT OF THE COMPANY AND THE AGENT. This Agreement is
conditioned upon the consent of the Company and the Agent pursuant to Section
9.9(c) of the Credit Agreement. The execution of this Agreement by the Company
and the Agent is evidence of this consent. Pursuant to Section 9.9 (c) the
Borrower agrees to execute and deliver a Note payable to the order of the
Assignee to evidence the assignment and assumption provided for herein.]
SECTION 5. NON-RELIANCE ON ASSIGNOR. The Assignor makes no representation
or warranty in connection with, and shall have no responsibility with respect
to, the solvency, financial condition, or statements of the Borrower or any
Subsidiary, or the validity and enforceability of the obligations of the
Borrower or any Subsidiary in respect of the Credit Agreement or any Note. The
Assignee acknowledges that it has, independently and without reliance on the
Assignor, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the Borrower or
any Subsidiary.
SECTION 6. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Colorado.
SECTION 7. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date first above
written.
BORROWER: HORIZON ORGANIC HOLDING CORPORATION
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
GUARANTORS:
HORIZON ORGANIC DAIRY, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer/Vice
President-Finance
HORIZON ORGANIC DAIRY,
MARYLAND FARM, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Secretary
HORIZON ORGANIC DAIRY,
IDAHO FARM, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Secretary
HORIZON ORGANIC DAIRY,
CALIFORNIA FARM, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer/Vice
President-Finance
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HORIZON ORGANIC DAIRY,
INTERNATIONAL, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer/Vice
President-Finance
HORIZON ORGANIC DAIRY, LTD.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Director
BANK: U.S. BANK NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
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