FIRST AMENDMENT
TO
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT (the "Amendment") to that certain AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT is entered into as of September 28, 2000, by and
among US Bank National Association, a national banking association ("Bank"), and
Horizon Organic Holding Corporation, a Delaware corporation ("Borrower"), and is
entered into among the Borrower, Guarantors, Rachel's Dairy Limited (registered
number 2545149), a company incorporated in England and Wales ("Rachel's Dairy"),
Meadow Farms Limited (registered number 2508537), a company incorporated in
England and Wales ("Meadow Farms"), Organic Dairies Limited (registered number
366108), a company incorporated in England and Wales ("ODL"), Organic Matters
Limited (registered number 3573818), a company incorporated in England and Wales
("Organic Matters"), Horizon Organic Dairy Limited (registered number 3729723),
a company incorporated in England and Wales ("HODL") (Rachel's Dairy, Meadow
Farms, ODL, Organic Matters and HODL collectively referred to herein as the "UK
Subsidiaries"), 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, and Horizon Organic
International, Inc., a Delaware corporation (such companies collectively
referred to herein as "Guarantors").
R E C I T A L S :
A. Borrower was previously granted a Line of Credit and Term Loan
pursuant to the terms of that certain Amended and Restated Loan and Security
Agreement dated as of May 30, 2000, by and among the Bank, Borrower, and the
Guarantors (the "Loan Agreement").
B. Pursuant to the terms of the Loan Agreement, the parties agreed to
enter into an agreement regarding the specific collateral to be granted to the
Bank and the covenants and other agreements to be applicable to the UK
Subsidiaries on or before June 23, 2000.
C. Due to issues related to English law, the Bank has agreed, without
waiving any claims, to change the June 23, 2000, date to September 29, 2000.
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. All terms which are capitalized herein which are
not otherwise defined shall have the meanings given to them in the Loan
Agreement. As used herein, the following terms shall have the meanings
indicated, unless the context otherwise requires:
"CONSIDERATION PAYMENTS" means any payment of Consideration (as defined in
the respective agreement referred to below) made or remaining to be made (if
any) by:
(i) HODL pursuant to a share sale agreement dated May 31, 2000, made
between HODL, Xxxxx Xxxxxx and others, and Xxxxx Xxxxxxxx (the "MEADOW
FARMS SALE AGREEMENT") to the Covenantors (as defined in the Meadow Farms
Sale Agreement);
(ii) HODL pursuant to a share sale agreement dated June 9, 2000, made
between XXXX, Xxxxx Xxxxxx and others (the "ORGANIC MATTERS SALE
AGREEMENT") to the Sellers (as defined in the Organic Matters Sale
Agreement);
(iii) Meadow Farms pursuant to a share sale agreement dated May 31, 2000
made between Meadow Farms, Xxxxx Xxxxxxxxx and others, and Xxxxx Xxxxxxxx
(the "ORGANIC DAIRIES SALE AGREEMENT") to the Sellers as defined in the
Organic Dairies Sale Agreement
together with the payment of L2,000,000 made by Horizon Organic
International, Inc. to HODL on or about May 26, 2000, pursuant to a
subscription by Horizon Organic International, Inc., for 200,000 ordinary
shares of L1.00 each in the capital of HODL and any other payments in respect
of or in any way relating to or referable to directly or indirectly the above
payments of consideration and/or subscription monies (including without
limitation the payment of any interest or fees to the Bank or any of HODL's
professional advisers or otherwise).
"EXISTING UK INDEBTEDNESS" means the Indebtedness of the UK Subsidiaries
existing on the Closing Date as set forth on EXHIBIT A.
"OBLIGATIONS" means, (a) in relation to HODL, the Obligations, and (b) in
relation to each of the UK Subsidiaries other than HODL, such of the Obligations
(as defined in the Loan Agreement and including the duties of the UK
Subsidiaries under the Amendment) as the relevant UK Subsidiary may lawfully
guarantee and/or secure or become liable to pay or perform (or become subject to
the rights of offset and/or banker's lien due to such guarantee, security or
liability) without breaching section 151 of the English Companies Xxx 0000;
provided, however, that in relation to the UK Subsidiaries other than HODL, the
Obligations shall not extend to any obligation or liability of the Borrower to
the Bank incurred or to be incurred directly or indirectly in relation to the
making of all or any of the Consideration Payments in respect of the
acquisitions and subscription referred in the definition of "Consideration
Payments," to the extent, but only to the extent that which, if it were so
included, would result in a contravention of section 151 of the Companies Xxx
0000 (as amended)(or its equivalent in any other jurisdiction).
"PERMITTED UK LIENS" means the Liens in existence as of the date of this
Amendment held against assets of the UK Subsidiaries, as set forth on EXHIBIT A.
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"UK COLLATERAL" shall have the meaning set forth in Section 2.3 of this
Amendment.
"UK SECURITY INTERESTS" shall have the meaning set forth in Section 2.3 of
this Amendment.
"UK SUBSIDIARIES" shall mean Rachel's Dairy, Meadow Farms, ODL, Organic
Matters and HODL.
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.
ARTICLE TWO
COLLATERAL AND GUARANTIES
SECTION 2.1 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 UK Subsidiaries in and to each and every account and other property
of such UK Subsidiary which is in the possession of Bank to the extent of the
full amount of the Obligations.
SECTION 2.2 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 Bank shall not
currently require a Guaranty from Rachel's Dairy, but may require such Guaranty
upon written notice to Borrower and Rachel's Dairy.
SECTION 2.3 UK COLLATERAL. As security for the Obligations, each UK
Subsidiary other than Rachel's Dairy (which may be required in the future upon
written notice to the Borrower and Rachel's Dairy) shall forthwith grant to the
Bank a debenture creating fixed and floating charges (collectively, the "UK
Security Interests") over the whole of its undertaking and assets (the "UK
Collateral") including but not limited to:
(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 such entity;
(b) Any and all of the issued and outstanding Shares now owned or
hereafter acquired by such entity other than thirty-five percent (35%) of
the Shares of Rachel's Dairy;
(c) Any and all rights, titles, interests, security interests,
powers, and privileges such entity may now have or be or become entitled to
under or by virtue of any business acquired by such entity, in whole or in
part;
(d) Any and all rights, titles, and interests now owned or hereafter
acquired by
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such entity in and to any Leases;
(e) Any and all Real Estate now owned or hereafter acquired by such
entity; 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 UK Collateral described in Subsections (a)
through (e) preceding.
Such UK Collateral shall secure the payment and performance of the Obligations.
SECTION 2.4 OTHER PROVISIONS OF THE LOAN AGREEMENT. The UK Subsidiaries
agree to be bound by each of the terms of the Loan Agreement to the same extent
as if they were parties to such agreement, except as specifically amended by
this Amendment, and only to the extent that such UK Subsidiary may lawfully
agree to be bound without breaching Section 151 of the English Companies Xxx
0000. As to the parties to the Loan Agreement, to the extent there is any
conflict between the specific provisions of this Amendment and the Loan
Agreement, this Amendment shall govern.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
The Borrower and each of the UK Subsidiaries represent and warrant to Bank
as follows:
SECTION 3.1 CORPORATE EXISTENCE AND AUTHORITY. Each of the UK Subsidiaries
(a) is a corporation duly organized, validly existing, and in good standing
under the Laws of the England and Wales (b) is duly licensed or qualified to
transact business 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 each
UK Subsidiary, the consummation of all transactions contemplated thereby, and
the performance and discharge by such UK Subsidiary of its obligations
thereunder have been duly taken by such UK Subsidiary; no authorization,
approval, consent, or notice under the provisions of the company documents, or
any amendments thereof, of such UK Subsidiary, 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
such UK Subsidiary of its obligations thereunder, and all of such Loan Papers
will, upon execution and delivery, be legal, valid, and binding obligations of
the UK Subsidiary, enforceable in accordance with their respective terms.
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SECTION 3.3 COMPLIANCE WITH LAWS AND DOCUMENTS. None of the UK Subsidiaries
is, nor will the execution, delivery, and the performance of and compliance with
the terms of the Loan Papers cause any UK Subsidiary to be: (a) in violation of
any Laws or its respective company organizational documents 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 any UK 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 or any UK Subsidiary, threatened against any UK Subsidiary which
could have a Material Adverse Effect.
SECTION 3.5 TAXES. All Tax returns of the UK Subsidiaries required to be
filed have been filed, and all Taxes imposed upon the UK Subsidiaries which are
due and payable have been paid.
SECTION 3.6 PROPERTIES; PERMITTED UK LIENS. The UK Subsidiaries have good
and marketable title to all their respective properties reflected on the
Financial Statements referenced in Section 3.8; all material leases under which
any UK 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 UK
Liens, to the knowledge of Borrower and the UK Subsidiaries after reasonable
investigation, there is no Lien on any asset of any of the UK Subsidiaries
except as set forth on EXHIBIT "A". The registered office and principal place of
business of each of the UK Subsidiaries is located at the address set forth in
EXHIBIT "B " hereto, and all of the UK Subsidiaries' records relating to its
businesses or the UK 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 "B" hereto.
SECTION 3.7 OWNERSHIP OF SUBSIDIARIES AND NAMES. The extent of the
ownership of the capital stock of and jurisdiction of incorporation of the UK
Subsidiaries is shown on EXHIBIT "C", and, except as set forth thereon, none of
the UK Subsidiaries (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 3.8 FINANCIAL STATEMENTS. The Financial Statements of each of the
UK Subsidiaries, heretofore or hereafter furnished to Bank, fairly present the
financial condition and results of operations of the UK 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 the UK
Subsidiaries as of the date of the Financial Statements referenced above 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 UK Subsidiaries from
those shown in the Financial Statements referenced above between such date and
the date of this Amendment,
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nor have such UK Subsidiaries incurred any material liability, direct or
indirect, fixed, or contingent.
Section 3.9 EXISTING UK INDEBTEDNESS. Except as fully described on EXHIBIT
"A ", none of the UK Subsidiaries is directly, indirectly, or contingently
obligated with respect to any Indebtedness.
SECTION 3.10 MATERIAL AGREEMENTS. EXHIBIT "D" contains a true and complete
description of all material written and oral contracts, agreements, commitments,
and understandings to which any of the UK Subsidiaries is a party, by which any
UK Subsidiary is directly or indirectly bound, or to which any of the assets of
any UK Subsidiary 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 3.11 LOCATION OF UK COLLATERAL. The present and foreseeable
obligations of any and all of the UK Collateral or of the books and records with
respect thereto, as the case may be, are stated on EXHIBIT "B".
SECTION 3.12 ENVIRONMENTAL MATTERS. (a) Except as disclosed on EXHIBIT "E",
none of the UK Subsidiaries has 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 Environmental Laws or are the subject of
any governmental 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 such UK Subsidiary; (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 such UK Subsidiary; (c) there are no underground 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 UK
Subsidiary; and (d) except as disclosed on EXHIBIT "E", 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 3.13 GENERAL. There is no significant material fact or condition
relating to the financial conditions and businesses of the UK Subsidiaries,
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 UK Subsidiary are and will be genuine and in all respects what
they purport and appear to be.
SECTION 3.14 RIGHTS TO PAYMENT. Each right to payment and each instrument,
document, chattel paper and other agreement constituting or evidencing UK
Collateral or other collateral covered by the Loan Documents is (or, in the case
of all future UK Collateral or such other collateral,
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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 UK Subsidiary's records pertaining
thereto as being obligated to pay such obligation.
ARTICLE FOUR
CONDITIONS PRECEDENT TO ADVANCES
SECTION 4.1 INITIAL ADVANCE. Bank will not be obligated to make any Advance
unless and until each UK Subsidiary has delivered, or has caused to be
delivered, to Bank, or Bank otherwise receives, on or prior to September 29,
2000, the following described documents, certificates, evidences, opinions, and
other instruments:
(a) COMPANY DOCUMENTS. A copy of the certificate of incorporation,
any certificate of incorporation on change of name, the memorandum of
association and the articles of association for each of the UK
Subsidiaries, and all amendments thereto, accompanied by certificates that
such copy is correct and complete issued by the Secretary or a Director of
the UK Subsidiary, as applicable, dated as of the effective date of this
Amendment.
(b) INCUMBENCY. A certificate of incumbency of each UK Subsidiaries'
officers who will be authorized to execute or attest any of the Loan Papers
on behalf of such UK Subsidiary, as applicable, dated the effective date of
this Amendment, executed by the Secretary or a Director of such UK
Subsidiary, as applicable.
(c) 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 each of UK Subsidiaries, as applicable,
accompanied by a certificate of the Secretary or a Director of such UK
Subsidiary, as applicable, dated the effective date of this Amendment, 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 such UK 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 effective date of this Amendment.
(d) OPINION OF COUNSEL. Opinion of counsel for the UK Subsidiaries
and/or the Bank, as required by the Bank, dated the effective date of this
Amendment, in form and substance acceptable to the Bank.
(e) GUARANTIES. The Guaranties, duly executed and properly completed
by each of the UK Subsidiaries (other than Rachel's Dairy, as set forth in
Section 2.2), together with evidence satisfactory to Bank of the due
authorization thereof.
(f) DEBENTURES. Debentures creating fixed and floating charges over
the whole
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of the undertaking and assets of each of the UK Subsidiaries (other than
Rachel's Dairy, as set forth in Section 2.3) dated the effective date of
this Amendment, executed and delivered by the appropriate UK Subsidiaries,
as debtors, to Bank, as secured party, creating the UK Security Interests
in and to all of the UK Collateral, as security for full payment and
performance of the Obligations.
(g) SHARE CERTIFICATES; PURPOSE STATEMENT; AND SECRETARY
CERTIFICATES. At the request of the Bank, share certificates evidencing all
of the Shares, together with: (i) Blank share transfer covering the Shares
executed by the appropriate Company or Companies; (ii) certificates of the
Secretary of each Company owning any of the Shares and each Pledged
Company, dated the effective date of this Amendment, certifying, with
respect to the share capital 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 share capital of such Pledged
Company and that the shareholders of such Pledged Company are not entitled
to any preemptive rights with respect to the issuance or transfer of any
share capital of such Pledged Company.
(h) PRIORITY. Evidence that the UK Security Interests are first and
prior and there are no other superior, equal, or inferior Liens or charges
except the Permitted UK Liens.
(i) AFFILIATE OBLIGATION SUBORDINATION AGREEMENTS. Subordination
agreements executed by the appropriate UK Subsidiary and by Borrower or
other Subsidiary, as appropriate, with respect to, and subordinating to the
Obligations, any and all Affiliate Obligations existing on the effective
date of this Amendment.
(j) INSURANCE. Evidence that the UK Collateral granted by the UK
Subsidiaries is fully insured in such amounts, against such risks, and with
such insurers as may be satisfactory to Bank, with Bank named as loss payee
or co-insured for the use and benefit of Bank, together with the policies
or certificates evidencing such insurance.
(k) OTHER DOCUMENTS. Such other documents, opinions, certificates,
and evidences as Bank may request.
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 the Bank
provides prior written approval of a deviation, each UK Subsidiary covenants and
agrees with Bank that it will:
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SECTION 5.1 MONTHLY FINANCIAL STATEMENTS OF UK SUBSIDIARIES. Deliver to
Bank, within 45 days after the last day of each month of each fiscal year, (a)
balance sheet and income statement showing the consolidating financial
conditions and results of operations of all of the UK Subsidiaries as of, and
for the period from the beginning of the current fiscal year to, such last day
prepared by management, and (b) a certificate executed by the principal
financial officer of HODL, certifying that such balance sheet and income
statements present fairly the financial conditions and results of operations of
the UK Subsidiaries and that the UK Subsidiaries are in full compliance with all
the terms, provisions, and conditions of the Loan Papers (including this
Amendment).
SECTION 5.2 OTHER REPORTS. Promptly upon their becoming available, deliver
to Bank a copy of any other information pertinent to any covenant, provision, or
condition hereof, or to any matter in connection with the business of any UK
Subsidiary, at all reasonable times as often as the Bank may reasonably request.
SECTION 5.3 NOTICE OF LITIGATION OR CHANGES IN FACT. Promptly notify Bank
of (a) the existence and status of any Litigation against any UK 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 5.4 PREFERENTIAL CLAIMS. Punctually pay, as the same becomes due,
all debts and liabilities which by virtue of the provisions of the English
Companies Xxx 0000, the English Insolvency Xxx 0000 or otherwise would have
priority to all or any part of the security created by or pursuant to the UK
Security Interests.
SECTION 5.5 PAYMENT OF DEBTS. 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 5.6 MAINTENANCE OF CORPORATE EXISTENCE, ASSETS, BUSINESS. 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 the UK 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 5.7 INSURANCE. Maintain or cause to be maintained, with financially
sound and reputable insurers, insurance with respect to the UK 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.
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SECTION 5.8 COMPLIANCE WITH LOAN PAPERS. Promptly and fully perform all of
the obligations of the UK Subsidiaries under the Loan Papers and refrain from
doing any act or acts that would violate any covenant under the Loan Papers.
SECTION 5.9 INCUMBENCY. From time to time, at the request of Bank, certify
to Bank, the names, signatures, and positions of all persons authorized to
execute and deliver any of the Loan Papers.
SECTION 5.10 EXPENSES OF BANK. 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 5.11 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.
SECTION 5.12 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 5.13 NOTICE BEFORE MOVING WITH RESPECT TO UK COLLATERAL; NAME
CHANGE. Notify Bank at least ten (10) days prior to any intended move of any of
the UK 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 any UK Subsidiary.
SECTION 5.14 MAINTENANCE OF PRIORITY OF UK 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 UK Security Interests in favor of Bank and preserve and protect the
Rights of Bank.
SECTION 5.15 INSPECTION. Keep, and cause each Subsidiary to keep, proper
and complete books, records, and accounts. UK Subsidiaries shall permit any
representatives of Bank to visit and inspect any of the properties of the UK
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 the UK Subsidiaries authorize said auditors to discuss
with Bank representatives the finances and affairs of the UK Subsidiaries) at
all such reasonable times and as often as may be reasonably requested.
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SECTION 5.16 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 the UK 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, the UK Subsidiaries
covenant that, unless the Bank shall otherwise consent in writing:
SECTION 6.1 CAPITAL CONTRIBUTIONS OR INDEBTEDNESS. No UK Subsidiary shall
create or suffer to exist any direct, indirect, fixed, or contingent liability
for, or incur, any Indebtedness from any Person other than an Affiliate, or
accept any funding from an Affiliate, including but not limited to by loan or
capital contribution, except (a) the Obligations, (b) the Existing UK
Indebtedness, (c) Indebtedness secured by Permitted UK Liens, (d) Indebtedness
from a third party other than an Affiliate in the ordinary course of business
except for borrowed money, and (e) Indebtedness between Affiliates and/or UK
Subsidiaries or capital contributions from an Affiliate to any UK Subsidiary up
to a maximum aggregate amount of US $1,000,000 in any calendar year.
SECTION 6.2 PREPAYMENTS OF OTHER DEBTS. No UK Subsidiary shall 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 SECURITY. No UK Subsidiary shall create, or suffer to be
created or to exist any security interest in or over its property or assets,
except the Permitted UK Liens, nor shall any UK Subsidiary enter into an
agreement with any other Person which prohibits such UK Subsidiary from
incurring any security interests in or over any of its property or assets.
SECTION 6.4 SALES OF ASSETS. Except as otherwise provided below, no UK
Subsidiary shall, 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 UK Collateral other than sales in the ordinary course of business for
a fair and adequate consideration.
SECTION 6.5 MERGER AND CONSOLIDATION. No UK Subsidiary shall, 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 Affiliate as of the date of this Amendment may be consolidated
with or merged into a UK Subsidiary if (i) such UK Subsidiary is the surviving
corporation, and (ii) immediately after giving effect to such transaction, no
condition or event shall exist which constitutes a Default.
SECTION 6.6 BUSINESS. No UK Subsidiary shall engage, directly or through
other Persons,
11
in any business other than the business now carried on, and other businesses
directly related thereto.
SECTION 6.7 LOANS, ADVANCES AND INVESTMENTS. No UK Subsidiary shall
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 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 Xxxxx'x.
SECTION 6.8 FISCAL YEAR; ACCOUNTING METHOD. No UK Subsidiary shall change
its fiscal year or change its method of accounting, unless a UK Subsidiary
elects to change to the fiscal year of the Borrower.
SECTION 6.9 TRANSACTIONS WITH AFFILIATES. No UK Subsidiary shall enter into
any transaction with any Affiliate except in the ordinary course of such UK
Subsidiary's business and on fair and reasonable terms no less favorable to such
UK Subsidiary than would obtain in a comparable arm's length transaction with a
Person not an Affiliate.
SECTION 6.10 CONTINGENT LIABILITIES. None of the UK Subsidiaries 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 6.11 CAPITAL EXPENDITURES. The UK Subsidiaries 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 of the Loan Agreement, for such period, which
amounts have been approved in writing in advance by the Bank.
SECTION 6.12 PERMITTED LEASE OBLIGATIONS. None of the UK Subsidiaries 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 6.13 INSIDER COMPENSATION. None of the UK Subsidiaries will,
directly or indirectly, pay excessive or unreasonable salaries, bonuses,
commissions, consultant fees or other compensation.
SECTION 6.14 REDEMPTION OF STOCK. None of the UK Subsidiaries will,
directly or indirectly, purchase, redeem, or otherwise acquire for value or
retire any share capital issued by any Company which is not a wholly-owned
Subsidiary of such UK Subsidiary.
SECTION 6.15 PAYMENT OF WITHHOLDING TAXES. None of the UK Subsidiaries
will, directly or indirectly, use any portion of the proceeds of the Line of
Credit to pay the wages of employees
12
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 such entity under
applicable law.
SECTION 6.16 LOCATION WITH RESPECT TO UK COLLATERAL. None of the UK
Subsidiaries will, directly or indirectly, move or permit any of the UK
Collateral (or books or records with respect to the UK Collateral) to be moved
from its present location, except as otherwise allowed herein.
SECTION 6.17 SALES AND LEASEBACKS. No UK Subsidiary will 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 6.18 ASSIGNMENT. The UK Subsidiaries 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 6.19 DEVIATION FROM LOAN PAPERS. The UK Subsidiaries 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
In addition to the "Defaults" as set forth in the Loan Agreement, the
following shall also be deemed a Default under the Loan Agreement:
SECTION 7.1 COVENANTS. The failure or refusal of any of the UK Subsidiaries
to punctually and properly perform, observe, and comply with any covenant,
agreement, or condition contained in any of the Loan Papers and such failure or
refusal continues for a period of thirty (30) days after such UK Subsidiary 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 such UK Subsidiary
during such thirty (30) day grace period.
SECTION 7.2 INSOLVENCY AND RESCHEDULING. Any of the UK Subsidiaries ceases
or suspends generally payment of its debts or announces an intention to do so
(or is deemed for the purposes of any law applicable to it to be) or is unable
to pay its debts as they fall due or commences negotiations with or makes a
proposal to any one or more of its creditors with a view to the general
readjustment or rescheduling of its indebtedness or makes a general assignment
for the benefit of or a composition with its creditors or a moratorium is
declared in respect of the indebtedness of any of the UK Subsidiaries.
SECTION 7.3 WINDING UP AND EXECUTION OR DISTRESS. Any of the UK
Subsidiaries takes any corporate action or other steps are taken or formal
proceedings are started for its winding up,
13
dissolution, administration or reorganization (whether by way of voluntary
arrangement, scheme of arrangement or otherwise) (save for any pursuant to a
solvent reorganization previously approved in writing by the Bank or contested
in good faith by the relevant UK Subsidiary and permanently discharged, stayed,
withdrawn or satisfied within 30 days of the commencement thereof) or for the
appointment of a liquidator, receiver, administrator, administrative receiver,
conservator, custodian, trustee or similar officer, of it or of any or all of
its revenues and assets (or any event occurs or proceedings are taken with
respect to any of the UK Subsidiaries which has a similar or equivalent effect
to any of the foregoing, or any execution or distress is levied against, or any
encumbrancer takes possession of, the whole or any part of the property,
undertaking or assets of any of the UK Subsidiaries or any event occurs which
under the laws of any jurisdiction has a similar or analogous effect save where
such execution, distress, attachment, process or taking of possession is
contested in good faith by the relevant UK Subsidiary and is permanently
discharged, stayed, withdrawn or satisfied or the encumbrancer ceases to have
possession in each case within 30 days.
SECTION 7.4 ACCELERATION OF OTHER DEBT. The acceleration, by the holder
thereof, of the maturity of any Indebtedness owed by any UK Subsidiary.
SECTION 7.5 IMPAIRMENT OF UK COLLATERAL OR ABILITY TO PAY. The discovery by
Bank of information that the value of the UK Collateral granted by the UK
Subsidiaries 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 UK Subsidiary and Borrower.
SECTION 7.6 MISREPRESENTATION. The discovery by Bank that any statement,
representation, or warranty in this Amendment or any of the other Loan Papers or
in any writing ever delivered to Bank pursuant to this Amendment or any of the
other Loan Papers, is false, misleading, or erroneous in any material respect.
ARTICLE EIGHT
MISCELLANEOUS
SECTION 8.1 NOTICES. The address of the UK Subsidiaries for the purposes of
notices under this Amendment or the Loan Agreement is as follows:
Rachel's Dairy: c/o Horizon Organic Dairy Limited
Xxxxxxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxx, XX00XX
Xxxxxx Xxxxxxx
Attn: Xxx Xxxxxxx
Meadow Farms: c/o Horizon Organic Dairy Limited
Xxxxxxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxx, XX00XX
00
Xxxxxx Xxxxxxx
Attn: Xxx Xxxxxxx
ODL: c/o Horizon Organic Dairy Limited
Xxxxxxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxx, XX00XX
Xxxxxx Xxxxxxx
Attn: Xxx Xxxxxxx
Organic Matters: c/o Horizon Organic Dairy Limited
Xxxxxxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxx, XX00XX
Xxxxxx Xxxxxxx
Attn: Xxx Xxxxxxx
HODL: Xxxxxxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxx, XX00XX
Xxxxxx Xxxxxxx
Attn: Xxx Xxxxxxx
15
in each case with a copy to: Xxxxxxx Sabian, Esq.
Xxxxxxxx Xxxxxxx & Xxxxxx
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
SECTION 8.2 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 Amendment, the Loan Agreement,
or any of the Loan Papers, 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 Amendment, the Loan Agreement, or any of the Loan Papers,
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 UK
Subsidiary hereby appoints the Borrower as its authorized agent upon which
notices hereunder or any process may be served in any suit, action or proceeding
arising out of or based on this Amendment or any Loan Papers which are
instituted in any of the aforementioned state or federal courts in Colorado and
expressly accepts the jurisdiction of any court in respect of such action. Such
appointment shall be irrevocable so long as any Obligations remain unpaid unless
and until the appointment of a successor or authorized agent located in Colorado
and notice thereof is give to Bank. Each of the UK Subsidiaries will take any
and all action, including the filing of any and all documents and instruments,
that may be necessary to continue such appointment or appointments in full force
and effect as aforesaid. EACH OF THE UK SUBSIDIARIES HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AMENDMENT OR THE LOAN AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 8.3 SEVERABILITY. If any provision of this Amendment or 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 8.4 SURVIVAL. Except as specifically provided herein, all
representations, warranties, covenants and agreements of the UK Subsidiaries
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 8.5 FURTHER ASSURANCES. Each of the UK Subsidiaries agrees that at
any time and
16
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 8.6 COUNTERPARTS. This Amendment 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 Amendment, but, in
making proof of this Amendment, it shall not be necessary to produce or account
for more than one such counterpart.
SECTION 8.7 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.
17
IN WITNESS WHEREOF, the parties hereto have caused this Amendment 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:
--------------------------------
Xxx X. Xxxxxxx, Chief Financial
Officer
UK SUBSIDIARIES: RACHEL'S DAIRY LIMITED
By:
--------------------------------
Xxx X. Xxxxxxx, Director
MEADOW FARMS LIMITED
By:
--------------------------------
Xxx X. Xxxxxxx, Director
ORGANIC DAIRIES LIMITED
By:
--------------------------------
Xxx X. Xxxxxxx, Director
ORGANIC MATTERS LIMITED
By:
--------------------------------
Xxx X. Xxxxxxx, Director
HORIZON ORGANIC DAIRY LIMITED
By:
--------------------------------
Xxx X. Xxxxxxx, Finance Director
GUARANTORS:
HORIZON ORGANIC DAIRY, INC.
By:
--------------------------------
Xxx X. Xxxxxxx
Chief Financial Officer/Vice
President-Finance
HORIZON ORGANIC DAIRY,
MARYLAND FARM, INC.
By:
--------------------------------
Xxx X. Xxxxxxx, Assistant Secretary
HORIZON ORGANIC DAIRY,
IDAHO FARM, INC.
By:
--------------------------------
Xxx X. Xxxxxxx, Assistant Secretary
HORIZON ORGANIC DAIRY,
CALIFORNIA FARM, INC.
By:
--------------------------------
Xxx X. Xxxxxxx
Chief Financial Officer/Vice
President-Finance
HORIZON ORGANIC INTERNATIONAL, INC.
By:
--------------------------------
Xxx X. Xxxxxxx
Chief Financial Officer/Vice
President-Finance
BANK: U.S. BANK NATIONAL ASSOCIATION
By:
--------------------------------
Xxxxx X. Xxxxx, Vice President
EXHIBITS:
Exhibit A Permitted UK Liens and Existing UK Indebtedness
Exhibit B Locations/Properties
Exhibit C Subsidiaries
Exhibit D Material Agreements
Exhibit E Environmental
