Exhibit 10.39
SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT
This Amendment, dated as of October 30, 2002, (this "Amendment") is made by
and between SPECTRUM ORGANIC PRODUCTS, INC., a California corporation (the
"Borrower"), and XXXXX FARGO BUSINESS CREDIT, INC., a Minnesota corporation (the
"Lender").
Recitals
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A. The Borrower and the Lender have entered into a Credit and Security
Agreement dated as of October 6, 1999 and as amended by that certain First
Amendment to Credit and Security Agreement dated October 18, 2001 (the "Credit
Agreement").
B. The Borrower has requested that certain amendments be made to the Credit
Agreement.
C. The Lender is willing to amend the Credit Agreement pursuant to the
terms and conditions set forth herein. The Borrower is entering into this
Amendment with the understanding and agreement that, except as specifically
provided herein, none of the Lender's rights or remedies as set forth in the
Credit Agreement is being waived or modified by the terms of this Amendment.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:
1. Defined Terms. Capitalized terms used in this Amendment which are
defined in the Credit Agreement shall have the same meanings as defined therein,
unless otherwise defined herein.
2. Amendments to Article VI.
(a) Reporting Requirements. Section 6.1(f) of the Credit Agreement is
hereby amended and restated to read as follows:
"(f) cash receipts journals, deposit tickets, and invoices and
bills of lading that exceed amounts and on a frequency as
determined by Lender."
(b) Key Person Life Insurance. Notwithstanding anything stated to the
contrary in Section 6.11 of the Credit Agreement, the Borrower is no longer
required to maintain insurance upon the life of Xxxxxx Xxxxx. Accordingly, the
Lender shall release the Assignment of Policy as Collateral Security dated as of
October 5, 1999. Lender shall execute any release necessary, in form and
substance satisfactory to Lender, in order to evidence the release of such
assignment.
(c) Minimum Book Net Worth. Section 6.15 of the Credit Agreement is
hereby amended and restated to read as follows:
"The Borrower will maintain its Book Net Worth, determined
as at the end of each month, at an amount not less than the
amount set forth below. Any non-cash losses incurred as a
result of adjustments to reflect the impairment of assets
and any income recorded by Borrower from escrow proceeds of
certain product lines from Borrower's Aptos-based industrial
ingredients business, shall not be included in determining
whether or not Borrower has met the covenant set forth in
this Section 6.15.
At the End of: Minimum Book Net Worth
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August 2002 $2,524,000
September 2002 $2,683,000
October 2002 $2,851,000
November 2002 $2,971,000
December 2002, $3,035,000"
And each month end thereafter
(d) New Covenants. Section 6.16 of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:
"6.16 New Covenants. On or before March 31, 2003, Lender
shall set new covenant levels for Sections 6.13, 6.14 and
6.15 for periods after such date. The new covenant levels
will be based on the Borrower's projections for such periods
received by Lender pursuant to Section 6.1(e) and shall be
no less stringent than the present levels."
3. Amendment to Article VII.
(a) Section 7.10 is hereby amended and restated in its
entirety to read as follows:
"Section 7.10 Capital Expenditures. The Borrower will not
incur or contract to incur Capital Expenditures of more than
Six Hundred Thousand Dollars ($600,000) for the fiscal year
ending December 31, 2002."
4. No Other Changes. Except as explicitly amended by this Amendment, all of
the terms and conditions of the Credit Agreement shall remain in full force and
effect and shall apply to any advance or letter of credit thereunder.
5. Conditions Precedent. This Amendment, shall be effective when the Lender
shall have received an executed original hereof in substance and form acceptable
to the Lender in its sole discretion.
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6. Representations and Warranties. The Borrower hereby represents and
warrants to the Lender as follows:
(a) The Borrower has all requisite power and authority to execute this
Amendment and to perform all of its obligations hereunder, and this Amendment
has been duly executed and delivered by the Borrower and constitutes the legal,
valid and binding obligation of the Borrower, enforceable in accordance with its
terms.
(b) The execution, delivery and performance by the Borrower of this
Amendment has been duly authorized by all necessary corporate action and do not
(i) require any authorization, consent or approval by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) violate any provision of any law, rule or regulation or of any
order, writ, injunction or decree presently in effect, having applicability to
the Borrower, or the articles of incorporation or by-laws of the Borrower, or
(iii) result in a breach of or constitute a default under any indenture or loan
or credit agreement or any other agreement, lease or instrument to which the
Borrower is a party or by which it or its properties may be bound or affected.
(c) All of the representations and warranties contained in Article V
of the Credit Agreement are correct on and as of the date hereof as though made
on and as of such date, except to the extent that such representations and
warranties relate solely to an earlier date.
7. References. All references in the Credit Agreement to "this Agreement"
shall be deemed to refer to the Credit Agreement as amended hereby; and any and
all references in the Security Documents to the Credit Agreement shall be deemed
to refer to the Credit Agreement as amended hereby.
8. No Other Waiver. The execution of this Amendment and any documents
related hereto shall not be deemed to be a waiver of any Default or Event of
Default under the Credit Agreement or breach, default or event of default under
any Security Document or other document held by the Lender, whether or not known
to the Lender and whether or not existing on the date of this Amendment.
9. Costs and Expenses. The Borrower hereby reaffirms its agreement under
the Credit Agreement to pay or reimburse the Lender on demand for all costs and
expenses incurred by the Lender in connection with the Credit Agreement, the
Security Documents and all other documents contemplated thereby, including
without limitation all reasonable fees and disbursements of legal counsel.
Without limiting the generality of the foregoing, the Borrower specifically
agrees to pay all fees and disbursements of counsel to the Lender for the
services performed by such counsel in connection with the preparation of this
Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by the Borrower, make a loan to the
Borrower under the Credit Agreement, or apply the proceeds of any loan, for the
purpose of paying any such fees, disbursements, costs and expenses and the fee
required hereunder.
10. Miscellaneous. This Amendment and the Acknowledgment and Agreement of
Guarantor may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed an original and all of which
counterparts, taken together, shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.
XXXXX FARGO BUSINESS CREDIT, INC. SPECTRUM ORGANIC PRODUCTS, INC.
By: /s/ Xxxxxx Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx Xxxxxxxxx Name: Xxxxxx X. Xxxxxx
Title: Vice President Title: Chief Financial Officer
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