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EXHIBIT 10.38
FIRST AMENDMENT TO FINANCING AGREEMENT
THIS FIRST AMENDMENT TO FINANCING AGREEMENT (this
"Amendment"), made and entered into as of April 3, 1998, is by and between THE
DELICIOUS FROOKIE COMPANY, INC., a Delaware corporation (the "Borrower"), and
U.S. BANCORP REPUBLIC COMMERCIAL FINANCE, INC, fka REPUBLIC ACCEPTANCE
CORPORATION, a Minnesota corporation (the "Lender").
RECITALS
1. The Lender and the Borrower entered into a Financing
Agreement dated as of November 27, 1996 (the "Financing Agreement"); and
2. The Borrower desires to amend certain provisions of the
Agreement, and the Lender has agreed to make such amendments, subject to the
terms and conditions set forth in this Amendment.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto hereby
covenant and agree to be bound as follows:
Section 1. Capitalized Terms. Capitalized terms used herein
and not otherwise defined herein shall have the meanings assigned to them in the
Financing Agreement, unless the context shall otherwise require.
Section 2. Amendments. The Financing Agreement is hereby
amended as follows:
2.1. Section 1 of the Financing Agreement is amended in its
entirety as follows:
A. The Loans. At our request, you in your sole discretion may
lend to us, from time to time, amounts up to a maximum amount of Seven Million
and No/100 Dollars ($7,000,000.00) in the aggregate consisting of separate loans
("Loans") comprised of advances from time to time of amounts equal to:
(i) eighty-five percent (85%) of the net amount of
accounts ("Accounts Loan") (other than accounts owing by WB
Distributing Company) which are listed in current schedules
provided by us and which are deemed eligible for advances by
you in your sole judgement, or any greater or lesser
percentage at your absolute discretion, provided that eligible
accounts shall not include (a) accounts which are ninety (90)
days past due, (b) any account if twenty-five percent (25%) or
more of such account is ninety (90) days past due, (c) any and
all accounts owing from employees or affiliates of us, (d)
billed finance charges, (e) foreign accounts with prepaid
inventory or other prepaid or deposit arrangements and (f) any
other accounts deemed ineligible by you in your sole
discretion;
(ii) fifty percent (50%) of the net amount of
accounts owing to us by WB Distributing Company (the "WB
Accounts") which are listed in current schedules provided by
us and which are deemed eligible for advances by you in your
sole judgement, or any greater or lesser percentage at your
absolute discretion
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(collectively, the "WB Accounts Loans" and, together with the
WB Settlement Advance, the "WB Loans"), provided that:
(a) any WB Account deemed eligible by you in
your sole discretion shall be deemed eligible only
for a period of forty-five (45) days after the date
of the invoice relating to such WB Account, provided,
however, that no more than three (3) time during the
terms of the Loans, such forty-five (45) day period
shall be extended for an additional five (5) days
(each such period hereinafter referred to as an
"Eligible Period") to allow WB Distributing Company
to remit payment to us on such WB Account;
(b) if any WB Account remains unpaid after
the expiration of the applicable Eligibility Period,
then at your sole discretion all WB Accounts shall be
deemed ineligible and the other WB Loans immediately
shall be due and payable; and
(c) the outstanding aggregate amount of the
WB Loans at any one time shall not exceed Six Hundred
Fifty Thousand and No/100 Dollars ($650,000).
(iii) fifty-five percent (55%) of the net amount of
inventory (determined on lower of cost or market basis) which
constitutes raw materials or finished goods and is listed in
current schedules provided by us and deemed eligible for
advances by you and up to thirty per cent (30%) of eligible
packaging and display inventory which shall not exceed
$150,000 in the aggregate (provided that we understand that no
inventory which may constitute "perishable agricultural
commodities" as defined at U.S.C. ss. 499a(b)(4) and the
regulations promulgated thereunder, and all inventory,
receivables and proceeds of such commodities shall be so
eligible), or any greater or lesser percentage at your
absolute discretion, but not in excess of Two Million Six
Hundred Thousand and No/100 Dollars ($2,600,000.00) (the
"Inventory Loan");
provided that amounts advanced under these Loans may be repaid and
reborrowed within the above limits or other limits you may set in your
sole discretion so long as you have not demanded payment of outstanding
amounts. For purposes of the Inventory Loan, advances shall be
determined only on inventory (i) located at public warehouses and other
similar locations for which we have supporting documentation necessary
to insure lien rights in favor of you and (ii) which does not
constitute shipping supplies or obsolete items of inventory in your
absolute discretion (iii) which shall be subject to such other
documentation and agreements as you shall request.
2.3. Section 2 of the Financing Agreement is amended in its entirety as
follows:
A. Interest on Loans. We agree to pay interest on the net balance owed
to you at the close of each day on all amounts outstanding under the Accounts
Loan and the Inventory Loan at a rate per annum (computed on the basis of actual
number of days elapsed and a year of 360 days) which is equal to the reference
rate of interest publicly announced from time to time by U.S. Bank National
Association in Minneapolis, Minnesota (the"Reference Rate"), plus one and one
half percent (1.50%). All such interest
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on amounts outstanding under the Accounts Loan and the Inventory Loan shall be
due and payable to you on the first business day of each month.
B. Loan Fees. We agree to pay to you upon the execution of this
Amendment to the Financing Agreement a fee in the amount of $35,000.00, and a
like amount on each anniversary date of this Amendment thereafter provided
however the fee for 1999 may be prorated and payable monthly to November 30,
1999 the date when we expect that all amounts due Lender hereunder will be paid
from proceeds of an anticipated public offering.
C. We agree that if we give notice to you of the termination of this
Agreement under Section X hereof on or before August 31, 1998, we will pay to
you at the time of such termination prepayment charge, as additional
compensation for your costs of entering into this Agreement, in the amount of
three percent (3%) of the loan facility; and if we give notice to you of the
termination of this Agreement under Section X hereof at any time after August
31, 1998 we will pay to you at the time of such termination a prepayment charge,
as additional compensation for your costs of entering into this Agreement, in
the amount of two percent (2%) of the loan facility.
Notwithstanding the foregoing, if the portion of the Loans so prepaid
is refinanced by an affiliate of U.S. Bancorp no prepayment charge shall be due
and payable as a result of such payment.
D. (No change)
E. Minimum Charge. We further agree to pay you a minimum interest
charge ("Minimum Charge") of $12,500 per month for the availability of the
Loans.
F. (No change)
2.4. All references in the Financing Agreement to personal guaranties
or guaranties of the obligations of third parties to Republic of Borrowers
obligations are deleted and such guaranties are released and terminated.
Section 3. Effectiveness of Amendments. The amendments contained in
this Amendment shall become effective upon delivery by the Borrower of, and
compliance by the Borrower with, the following:
3.1. This Amendment, duly executed by the Borrower.
3.2. Subordination Agreements from Xxxxxxxx Xxxxxxx and American
Pacific Professional Park LLC, Xxxxxxx Foods, L.L.C. and all other creditors
that Republic may request in form and substance satisfactory to Republic.
3.3 Collateral Assignment of Trademarks duly executed by the Borrower.
3.4. A copy of the resolutions of the Board of Directors of the
Borrower authorizing the execution, delivery and performance of this Amendment
certified as true and accurate by its Secretary or Assistant Secretary, along
with a certification by such Secretary or Assistant Secretary (i)certifying that
there has been no amendment to the Articles of Incorporation or Bylaws of the
Borrower since true and accurate copies of the
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same were delivered to the Lender with a certificate of the Secretary of the
Borrower dated November 27, 1996, and (ii) identifying each officer of the
Borrower authorized to execute this Amendment and any other instrument or
agreement executed by the Borrower in connection with this Amendment, and
certifying as to specimens of such officer's signature and such officer's
incumbency in such offices as such officer holds.
3.5. Certified copies of all documents evidencing any necessary
corporate action or consent with respect to this Amendment.
3.6. A reaffirmation of Security Agreement in the form of Exhibit B
attached to this Amendment, duly executed by the Borrower.
3.7. The Borrower shall have paid all fees owed to Republic.
3.8. The Borrower shall have provided evidence to Republic and its
counsel that it has acquired certain assets of Xxxxxxx Foods, LLC.and that such
assets constitute collateral for the obligations of Borrower in accordance with
the terms of the Security Agreement.
3.9. Republic shall have received a final field audit of Xxxxxxx Foods
LLC prepared by Republics internal audit staff which shall contain information
regarding assets of Xxxxxxx in form and substance satisfactory to Republic.
3.10. The Borrower shall have satisfied such other conditions as
specified by the Lender or counsel to the Lender, including payment of all
unpaid legal fees and expenses incurred by the Lender through the date of this
Amendment in connection with the Financing Agreement including legal fees and
expenses not to exceed Ten Thousand and no/100 Dollars ($10,000.00) in
connection with the execution and preparation of this Agreement.
Section 4. Representations; Acknowledgments. The Borrower
hereby represents that on and as of the date hereof and after giving effect to
this Amendment (a)all of the representations and warranties contained in the
Financing Agreement, and in any and all other Loan Documents of the Borrower,
are true, correct and complete in all respects as of the date hereof as though
made on and as of such date, except for changes permitted by the terms of the
Financing Agreement, and (b) the Borrower is in compliance with all covenants
and agreements of the Borrower as set forth in the Financing Agreement and in
any and all other Loan Documents of the Borrower. The Borrower represents and
warrants that the Borrower has the power and legal right and authority to enter
into this Amendment and has duly authorized as appropriate the execution and
delivery of this Amendment and other agreements and documents executed and
delivered by the Borrower in connection herewith or therewith by proper
corporate action. The Borrower acknowledges and agrees that its obligations to
the Lender under the Financing Agreement and exist and are owing without offset,
defense or counterclaim assertable by the Borrower against the Lender. The
Borrower further acknowledges and agrees that its obligations to the Lender
under the Financing Agreement, as amended, constitute "Obligations" within the
meaning of the Security Agreement and are secured by the Security Agreement, as
amended.
Section 5. Affirmation, Further References. Except as
expressly modified under this Amendment, all of the terms, conditions,
provisions, agreements, requirements, promises, obligations, duties, covenants
and representations of the Borrower under the Financing Agreement, the Security
Agreement, and any and all other Loan Documents entered
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into with respect to the obligations under the Financing Agreement are
incorporated herein by reference and are hereby ratified and affirmed in all
respects by the Borrower. All references in the Financing Agreement to "this
Agreement," "herein," "hereof," and similar references, and all references in
the other Loan Documents to the "Agreement," shall be deemed to refer to the
Agreement, as amended by this Amendment.
Section 6. Merger and Integration, Superseding Effect. This
Amendment, from and after the date hereof, embodies the entire agreement and
understanding between the parties hereto and supersedes and has merged into it
all prior oral and written agreements on the same subjects by and between the
parties hereto with the effect that this Amendment, shall control with respect
to the specific subjects hereof and thereof.
Section 7. Severability. Whenever possible, each provision of
this Amendment and any other statement, instrument or transaction contemplated
hereby or thereby or relating hereto or thereto shall be interpreted in such
manner as to be effective, valid and enforceable under the applicable law of any
jurisdiction, but, if any provision of this Amendment or any other statement,
instrument or transaction contemplated hereby or thereby or relating hereto or
thereto shall be held to be prohibited, invalid or unenforceable under the
applicable law, such provision shall be ineffective in such jurisdiction only to
the extent of such prohibition, invalidity or unenforceability, without
invalidating or rendering unenforceable the remainder of such provision or the
remaining provisions of this Amendment or any other statement, instrument or
transaction contemplated hereby or thereby or relating hereto or thereto in such
jurisdiction, or affecting the effectiveness, validity or enforceability of such
provision in any other jurisdiction.
Section 8. Successors. This Amendment shall be binding upon
the Borrower and the Lender and their respective successors and assigns, and
shall inure to the benefit of the Borrower and the Lender and the successors and
assigns of the Lender.
Section 9. Legal Expenses. The Borrower agrees to reimburse
the Lender, upon execution of this Amendment, for all reasonable out-of-pocket
expenses (including attorneys' fees and legal expenses of Xxxxxx & Whitney,
counsel for the Lender) incurred in connection with the Financing Agreement,
including in connection with the negotiation, preparation and execution of this
Amendment and all other documents negotiated, prepared and executed in
connection with this Amendment (limited to $10,000.00 for only this Amendment),
and in enforcing the obligations of the Borrower under the Financing Agreement,
as amended by this Amendment, which obligations of the Borrower shall survive
any termination of the Financing Agreement.
Section 10. Headings. The headings of various sections of this
Amendment have been inserted for reference only and shall not be deemed to be a
part of this Amendment.
Section 11. Counterparts. This Amendment may be executed in
several counterparts as deemed necessary or convenient, each of which, when so
executed, shall be deemed an original, provided that all such counterparts shall
be regarded as one and the same document, and either party to this Amendment may
execute any such agreement by executing a counterpart of such agreement.
Section 12. Governing Law. The Amendment Documents shall be
governed by the internal laws of the State of Minnesota, without giving effect
to conflict of law principles thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the date and year first above written.
THE DELICIOUS FROOKIE COMPANY, INC.,
a Delaware Corporation
By: /s/ XXXXXXX XXXXX
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Title: PRESIDENT
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U.S. BANCORP REPUBLIC COMMERCIAL
FINANCE, INC., fka REPUBLIC ACCEPTANCE
CORPORATION, a Minnesota corporation
By: /s/ XXXXX XXXXX
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Title: RELATIONS MANAGER
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EXHIBIT B
REAFFIRMATION OF SECURITY AGREEMENT
The undersigned, The Delicious Frookie Company, Inc., (the "Borrower") hereby
reaffirms that (i) the Security Agreement made and given by the Borrower to
Republic Acceptance Corporation (the "Lender"), dated as of November 27, 1996,
(the "Security Agreement"), remains in full force and effect, and (ii) the
security interests granted pursuant to the Security Agreement secure, among
other things, the Borrower's obligations and duties under that certain Financing
Agreement, as amended by the Amendment to Financing Agreement by and between the
Borrower and the Lender dated as of even date hereof.
Dated as of: April 1, 1998
The Delicious Frookie Company, Inc
By:
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Its:
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