EXHIBIT 10.2
THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT (Third Amendment) executed as of
the 13th day of September, 1996, by and between SILVERADO FOODS, INC., an
Oklahoma corporation (Silverado), SILVERADO MARKETING SERVICES, INC., an
Oklahoma corporation, formerly known as Honor Snack, Inc. (Marketing), TEXAS
B&B, INC., a Texas corporation (TBB), (Silverado, Marketing, and TBB will
sometimes be hereinafter referred to collectively as the Borrower), XXXXXXXX X.
FIELD and XXXXXXX FIELD (Guarantors), and LIBERTY BANK AND TRUST COMPANY OF
TULSA, NATIONAL ASSOCIATION (hereinafter sometimes referred to as Bank).
W I T N E S S E T H:
WHEREAS, on April 11, 1995, Bank and Borrower entered into that certain
Loan Agreement whereby Bank provided Borrower with revolving credit and term
loan facilities in an aggregate principal amount of up to $10,000,000.00 (the
Loan Agreement), and the Guarantors executed the Guaranties;
WHEREAS, on November 10, 1995, Bank and Borrower entered into a letter
agreement whereby certain provisions of the Loan Agreement were modified or
waived (the First Amendment);
WHEREAS, on April 18, 1996, Bank and Borrower entered into that certain
Second Amendment to Loan Agreement whereby additional modifications were made to
the Loan Agreement and the First Amendment (the Second Amendment). For
convenience, the Loan Agreement, the First Amendment, and the Second Amendment
will be referred to collectively as the Original Loan Agreement;
WHEREAS, Borrower and Guarantors have requested that Bank make certain
additional amendments to the Original Loan Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, all capitalized
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terms shall have the meaning ascribed to them in the Original Loan
Agreement.
2. The second sentence of Section 1(k) of the Original Loan Agreement is
hereby deleted in its entirety, and the following substituted in its
place:
For the calendar years ending December 31, 1996, and December
31, 1997 only, Cash Flow Ratio shall mean the ratio of the
Borrower's Net Cash Flow for the period under consideration,
annualized where applicable, divided by an amount equal to
current maturities of long term debt and Capitalized Lease
Obligations for the next ensuing twelve months, calculated in
accordance with GAAP.
3. Section 1(k) of the Original Loan Agreement is amended in part by
adding the following sentence:
The calculation of the Cash Flow Ratio shall not include
current amounts on Debt owed by Borrower to Guarantors so long
as the terms of such Debt require that any payments made by
Borrower to Guarantors or any Affiliate of Guarantors in
respect of such Debt must receive prior approval by Bank in
writing.
4. The first sentence of Section 1(hh) of the Original Loan Agreement is
amended in part as follows:
(hh) Guaranties. The Second Amended and Restated Guaranty
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dated September 13, 1996, in the form attached hereto as
Exhibit A to this Third Amendment.
5. Section 1(ll) of the Original Loan Agreement is hereby amended in part
by adding the following sentences:
The amount of any margin debt (such amount limited to the
lesser of (i) the margin debt, or (ii) the market value of the
Silverado common stock securing the margin debt incurred by
the Guarantors) secured solely by Guarantors' shares of
Silverado common stock shall not be included in liabilities
for purposes of calculating the Liquid Assets Ratio.
6. Section 1(ddd) of the Original Loan Agreement is hereby amended in its
entirety as follows:
(ddd) That certain $7,000,000.00 Amended and Restated
Revolving Note attached as Exhibit B to this Third Amendment
to Loan Agreement.
7. Section 1(ll) of the Original Loan Agreement is amended in part by
adding the following:
(ll) However, as of any date subsequent to the Guarantors'
pledge of Unencumbered Liquid Assets pursuant to section 6(d)
of the Second Amended and Restated Guaranty but prior to any
pledge of Unencumbered Liquid Assets pursuant to section 6(e)
of the Second Amended and Restated Guaranty, the Liquid Assets
Ratio shall refer to a quotient, the numerator of which is
Unencumbered Liquid Assets minus the lesser of $5,000,000.00
or the current market value of the Unencumbered Liquid Assets
pledged pursuant to section 6(d) of the Second Amended and
Restated Guaranty
and the denominator of which is
the total amount outstanding under this Agreement at any time
minus the lesser of $5,000,000.00 or the current market value
of the Unencumbered Liquid Assets pledged pursuant to section
6(d) of the Second Amended and Restated Guaranty plus all
direct and contingent liabilities incurred by the Guarantors
since December 31, 1994.
As of any date subsequent to the Guarantors' pledge of Unencumbered
Liquid Assets pursuant to section 6(e) of the Second Amended and
Restated Guaranty, the definition of the Liquid Assets Ratio shall be
modified at the Bank's discretion to reflect the coverage requirements
of section 6(e) of the Second Amended and Restated Guaranty.
8. Sections 2(a), 2(d), and 3(a) of the Original Loan Agreement are hereby
amended in part by deleting the amount $5,000,000.00 wherever it
appears, and substituting in its place the amount $7,000,000.00.
9. Section 2(b) of the Original Loan Agreement is amended in part by
deleting the second sentence in its entirety and substituting the
following:
Advances under the Term Loan may be drawn from time to time
by requesting an Advance as provided under Section 2(c)(ii);
provided, however, that the aggregate principal amount of all
Advances under the Term Loan Commitment shall not exceed the
sum of $5,192,307.70, minus amounts transferred pursuant to 2
(bb).
10. Section 2(bb) of the Original Loan Agreement is deleted in its
entirety.
11. Section 3(e)(i) of the Original Loan Agreement is hereby deleted in its
entirety and the following is substituted in its place:
(I) The Borrowers shall pay all accrued interest monthly on
the first day of each and every month.
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12. Section 3(e)(ii) of the Original Loan Agreement is deleted in its
entirety and the following substituted in its place:
(ii) So long as no Event of Default has occurred, the unpaid
principal balance of the Term Loan Note shall be due and
payable in monthly installments on the first day of each
calendar month commencing April 1997, as follows:
Payment Date Principal Payment
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April 1, 1997, through and including
January 1, 1998 (10 payments) $115,000.00
February 1, 1998, through and including
January 1, 1999 (12 payments) 125,000.00
February 1, 1999, through and including
January 1, 2000 (12 payments) 135,000.00
February 1, 2000, through and including
June 1, 2000 (5 payments) 146,000.00
The final Maturity Date of the Term Loan Note shall be June 1, 2000.
Borrower has made certain reductions in the principal balance of the
Term Loan and Bank has agreed that Borrower may reborrow Advances under
the Term Loan so long as the total amount of all Advances outstanding
under the Term Loan does not exceed $5,192,307.70. This is a one-time
waiver of the prohibition against reborrowing under the Term Loan and
Borrower and Guarantors each agree that Bank shall have no obligation
to permit any additional reborrowing under the Term Loan.
13. Section 4 of the Second Amendment is hereby deleted in its entirety.
14. Section 12 of the Original Loan Agreement is amended in part by adding
the following as Section 12(s):
12(s) Limitation on Repayment of Debt to Guarantors. Borrower
shall not make any payments on any Debt owed by Borrower to
Guarantors or any Affiliate of Guarantors without the prior
written
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consent of the Bank unless (i) such payment is accomplished
via application of proceeds of the Subordinated Debt Issuance
(as such term is defined in paragraph 6(e) of the Second
Amended and Restated Guaranty) to the extent that such
proceeds exceed $4,000,000.00 and (ii) no Default or Event of
Default exists or would be created at the time of such
payment.
15. Additional Agreements of Bank. Bank's obligations under this Third
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Amendment are expressly subject to (i) Borrower complying with the
terms of this Third Amendment, (ii) the Guarantors' entering into the
Amended and Restated Guaranties, (iii) Borrower's payment of (x) the
$20,000.00 loan fee provided for in Section 16 of this Third Amendment,
(iv) Guarantors delivering to Lender a completed Liquidity Maintenance
Certificate in the form attached as Schedule 11(p) to the Loan
Agreement for June 30, 1996, showing a Liquid Assets Ratio for the
Guarantors of not less than 1.25:1; and (v) delivery by Guarantors to
Bank of the Pledge Agreement attached hereto as Exhibit C, along with
Unencumbered Liquid Assets in the amount of $5,000,000.00, together
with stock powers or other instruments of assignment or transfer
acceptable to Bank to perfect Bank's security interest therein.
16. Agreements of Borrower.
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A. Loan Fee. Concurrently with the execution of this Third
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Amendment, Borrower will pay Bank the sum of $20,000.00 which
shall encompass Borrower's reimbursement for the cost and
expense incurred by Bank in connection with this Third
Amendment.
B. Corporate Resolutions. Borrower shall provide Bank with
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appropriate certified corporate resolutions of Borrower
authorizing the transactions contemplated by this Third
Amendment concurrently with the execution hereof. Further, the
Borrower acknowledges and agrees that, until Bank receives a
further certificate of the authorized officers of Borrower
canceling or amending the prior certificate and submitting
signatures of the officers named in such further certificate,
Bank may conclusively rely on certificates previously
submitted by Borrower.
17. Concurrently with the execution hereof, Borrower shall execute and
deliver an Amended and Restated Revolving Note in the form of Exhibit
D.
18. Except as provided herein, the terms and provisions hereof shall in no
manner impair, limit, restrict, or otherwise affect the obligations
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of Borrower, the Guarantors, or any third party to Bank, as evidenced
by the Loan Documents as previously amended and as amended hereby (the
Revised Loan Documents ). Borrower and Guarantors hereby acknowledge,
agree, and represent that (i) Borrower is indebted to Bank pursuant to
the terms of the Revised Loan Documents; (ii) the liens, security
interests, and assignments created and evidenced by the Loan Documents
are, respectively, valid and subsisting liens, security interests, and
assignments of the respective dignity and priority recited in the
Revised Loan Documents (or, to the extent the priority is not as
stated, it shall not reduce or otherwise limit the extent of Borrower's
or Guarantors' liability under the Revised Loan Documents); (iii) there
are no claims or offsets against, or defenses or counterclaims to, the
terms or provisions of the Revised Loan Documents, and the other
obligations created or evidenced by the Revised Loan Documents; (iv)
neither Borrower nor Guarantors have any claims, offsets, defenses, or
counterclaims arising from any of Bank's acts or omissions with respect
to the Property, the Revised Loan Documents, or Bank's performance
under the Revised Loan Documents or with respect to the Property; (v)
no indulgence or past indulgence by Bank and nothing contained herein
or in any other agreement between Borrower, Guarantors, and Bank, nor
any other action or inaction by Bank, has waived or shall constitute a
waiver of any default or event of default which may exist under the
Revised Loan Documents or an election of remedies by Bank or a waiver
of any of the rights, remedies, or recourse of Bank provided in any of
the Revised Loan Documents or otherwise afforded at law or in equity;
and (vi) Bank is not in default and no event has occurred which, with
the passage of time, giving of notice, or both, would constitute a
default by Bank of Bank's obligations under the terms and provisions of
the Revised Loan Documents.
19. Amendment. Except to the extent amended hereby, the Loan Agreement, as
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amended by the First Amendment, the Second Amendment, and this Third
Amendment, shall remain in full force and effect according to its
terms.
BORROWER:
SILVERADO FOODS, INC.,
an Oklahoma corporation
By:
Name: Xxxxxxxx X. Field
Title: Chairman
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SILVERADO MARKETING SERVICES, INC.
(formerly Honor Snack, Inc.),
an Oklahoma corporation
By:
Name: Xxxxxxxx X. Field
Title: Chairman
TEXAS B&B, INC.,
a Texas corporation
By:
Name: Xxxxxxxx X. Field
Title: Chairman
BANK:
LIBERTY BANK AND TRUST COMPANY OF
TULSA, NATIONAL ASSOCIATION
By:
Name: Xxxxx X. Xxxxx
Title: Vice President
GUARANTORS:
XXXXXXXX X. FIELD
XXXXXXX FIELD
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