Exhibit 10.35
FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENT
This Amendment, dated as of October 18, 2001, (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 (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 I.
(a) The following definitions are hereby added to Section 1.1 in
respective alphabetical order:
"Issuer" means the issuer of any Letter of Credit.
"L/C Amount" means the sum of (i) the aggregate face amount of
any issued and outstanding Letters of Credit and (ii) the unpaid
amount of the Obligation of Reimbursement.
"L/C Application" means an application and agreement for letters
of credit in a form acceptable to the Issuer and the Lender.
"Letter of Credit" has the meaning specified in Section 2.18.
"Obligation of Reimbursement" has the meaning given in Section
2.19.
"Special Account" means a specified cash collateral account
maintained by a financial institution acceptable to Lender in
connection with Letters of Credit, as contemplated by Section
2.20.
(b) The definition of "Availability Reserve" as set forth in Section
1.1 of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:
"Availability Reserve" means as of any date of determination, such amount
or amounts as Lender may from time to time establish and revise in good faith
reducing the amount of Revolving Advances which would otherwise be available to
Borrower under the lending formula(s) provided for herein: (a) to reflect
events, conditions, contingencies or risks which, as determined by Lender in
good faith, do or may affect (i) the Collateral or its value, (ii) the assets,
business or prospects of Borrower, or (iii) the security interests and other
rights of Lender in the Collateral (including the enforceability, perfection and
priority thereof), or (b) to reflect Lender's good faith belief that any
collateral report or financial information furnished by or on behalf of Borrower
to Lender is or may have been incomplete, inaccurate or misleading in any
material respect, or (c) to reflect the L/C Amount, or (d) in respect of any
state of facts which Lender determines in good faith constitutes an Event of
Default or may, with notice or passage of time or both, constitute an Event of
Default. Availability Reserves will include, without limitation, the Dilution
Reserve and the Grower Reserve.
(c) The following is hereby added to the end of the definition of
"Collateral" set forth in Section 1.1 of the Credit Agreement:
";and (vii) all sums on deposit in the Special Account."
(d) The definition of "Commitment" set forth in Section 1.1 of the
Credit and Security Agreement is hereby amended and restated in its entirety to
read as follows:
""Commitment' means the Lender's commitment to make Advances
and to cause the Issuer to issue Letters of Credit to or for
the Borrower's account pursuant to Article II."
(e) The first sentence of the definition of "Eligible Inventory" as
set forth in Section 1.1 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
""Eligible Inventory' means all Inventory of the Borrower,
including inventory obtained using a Letter of Credit, at
the lower of cost or market value as determined in
accordance with GAAP; provided, however, that the following
shall not in any event be deemed Eligible Inventory:"
(f) The definition of "Obligations" set forth in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
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""Obligations' means the Note and each and every other debt,
liability and obligation of every type and description which
the Borrower may now or at any time hereafter owe to the
Lender, whether such debt, liability or obligation now
exists or is hereafter created or incurred, whether it
arises in a transaction involving the Lender alone or in a
transaction involving other creditors of the Borrower, and
whether it is direct or indirect, due or to become due,
absolute or contingent, primary or secondary, liquidated or
unliquidated, or sole, joint, several or joint and several,
and including specifically, but not limited to, the
Obligation of Reimbursement and all indebtedness of the
Borrower arising under this Agreement, the Note, any L/C
Application completed by the Borrower, or any other loan or
credit agreement or guaranty between the Borrower and the
Lender, whether now in effect or hereafter entered into."
(g) The definition of "Revolving Floating Rate" as set forth in
Section 1.1 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
""Revolving Floating Rate' means, beginning August 1, 2000,
an annual rate equal to the Base Rate plus two percent
(2.0%), which annual rate shall change when and as the Base
Rate changes. If, however, the Borrower's CPA audited
financial statements for the period ending December 31, 2001
reflect a net profit of a least Five Hundred Thousand
Dollars ($500,000) the Revolving Floating Rate shall be
decreased by one percent (1.0%). Such decrease, if
applicable, shall take effect on the first day of the month
following Lender's receipt of the CPA audited financial
statements for the period ending December 31, 2001,
reflecting a net profit of at least Five Hundred Thousand
Dollars ($500,000). Borrower's net profit for the purposes
of this definition shall not include any losses associated
with the sale of Borrower's tomato based business to Acirca,
Inc. or other non-cash losses as a result of restructuring
charges, adjustments to reflect the impairment of assets or
sale of significant assets.
(h) The definition of "Term Floating Rate" as set forth in Section 1.1
of the Credit Agreement is hereby amended and restated in its entirety to read
as follows:
""Term Floating Rate' means, beginning August 1, 2000, an
annual rate equal to the sum of the Base Rate plus two and
two-quarter percent (2.25%), which annual rate shall change
when and as the Base Rate changes. If, however, the
Borrower's CPA audited financial statements for the period
ending December 31, 2001 reflect a net profit of a least
Five Hundred Thousand Dollars ($500,000) the Term Floating
Rate shall be decreased by one percent (1.0%). Such
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decrease, if applicable, shall take effect on the first day
of the month following Lender's receipt of the CPA audited
financial statements for the period ending December 31,
2001, reflecting a net profit of at least Five Hundred
Thousand Dollars ($500,000). Borrower's net profit for the
purposes of this definition shall not include any losses
associated with the sale of Borrower's tomato based business
to Acirca, Inc. or other non-cash losses as a result of
restructuring charges, adjustments to reflect the impairment
of assets or sale of significant assets.
3. Amendments to Article II
(a) The second sentence of Section 2.1 of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:
"The Lender shall have no obligation to make a Revolving
Advance if, after giving effect to such requested Revolving
Advance, the sum of the outstanding and unpaid Revolving
Advances under this Section 2.1 or otherwise would exceed
the Borrowing Base less the L/C Amount."
(b) Section 2.3(a)(i) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"(i) Beginning on October 1, 2001, and on the first day of
each month thereafter, in thirty seven (37) substantially
equal monthly installments equal to Ten Thousand Two Hundred
Ninety Eight and 52/100 Dollars ($10,298.52); and"
(c) Section 2.9(b) is hereby amended and restated in its entirety to
read as follows:
""Return', for any period, means the return as determined
by such Related Lender on the Advances and Letters of Credit
based upon its total capital requirements and a reasonable
attribution formula that takes account of the Capital
Adequacy Rules then in effect and costs of issuing or
maintaining any Letter of Credit. Return may be calculated
for each calendar quarter and for the shorter period between
the end of a calendar quarter and the date of termination in
whole of this Agreement."
(d) Section 2.9(c) is hereby amended and restated in its entirety to
read as follows:
""Rule Change', means any change in any Capital Adequacy
Rule or L/C Rule occurring after the date of this Agreement,
but the term does not include any changes in applicable
requirements that at the Closing Date are scheduled to take
place under the existing Capital Adequacy Rules or L/C Rules
or any increases in the capital that any Related Lender is
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required to maintain to the extent that the increases are
required due to a regulatory authority's assessment of the
financial condition of such Related Lender."
(e) Section 2.9(d) is hereby amended and restated in its entirety to
read as follows:
""Related Lender', includes (but is not limited to) the
Lender, the Issuer, any parent corporation of the Lender or
the Issuer and any assignee of any interest of the Lender
hereunder and any participant in the loans made hereunder."
(f) Section 2.10 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"Section 2.10 Maturity' Date. This Agreement and the other
Loan Documents shall become effective as of the date set
forth on the first page hereof and shall continue in full
force and effect for a term ending on October 5, 2004 (the
"Maturity Date"), unless earlier terminated by Lender or
Borrower pursuant to the terms hereof. Upon the Termination
Date, Borrower shall immediately pay to Lender, in full,
all outstanding and unpaid Obligations and shall furnish
cash collateral to Lender in such amounts as Lender
determines are reasonably necessary to secure Lender from
loss, cost, damage or expense, including attorneys' fees and
legal expenses, in connection with any contingent
Obligations, including checks and other payments
provisionally credited to the Obligations and/or as to which
Lender has not yet received final and indefeasible payment."
(g) Section 2J2(a) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"(a) Termination and Line Reduction Fees. If the Credit
Facility is terminated for any reason as of a date other
than the Maturity Date, or the Borrower reduces the Maximum
Line, the Borrower shall pay to the Lender a fee in an
amount equal to a percentage of the Maximum Line (or the
reduction, as the case may be) as follows: (i) 1.0% if the
termination or reduction occurs on or before the third
anniversary of the Funding Date; (ii) 0.67% if the
termination or reduction occurs after the third anniversary
of the Funding Date but on or before the fourth anniversary
of the Funding Date; and (iii) 0.5% if the termination or
reduction occurs after the fourth anniversary of the Funding
Date."
(h) Section 2.12(b) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
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"(b) Prepayment Fees. If the Term Note is prepaid for any
reason except in accordance with 2.3 or any Capital
Expenditure Note is prepaid for any reason except in
accordance with 2.5, the Borrower shall pay to the Lender a
fee in an amount equal to a percentage of the amount prepaid
as follows: (i) 1.0% if the prepayment occurs on or before
the third anniversary of the Funding Date; (ii) 0.67% if
prepayment occur; after the third anniversary of the Funding
Date but on or before the fourth anniversary of the Funding
Date; and (iii> 0.5% if prepayment occurs after the fourth
anniversary of the Funding Date."
(i) Section 2.13 is hereby amended and restated in its entirety to
read as follows:
"Mandatory Prepayment. Without notice or demand, if the sum
of the outstanding principal balance of the Revolving
Advances plus the L/C Amount shall at any time exceed the
Borrowing Base, the Borrower shall (i) first, immediately
prepay the Revolving Advances to the extent necessary to
eliminate such excess; and (ii) if prepayment in full of the
Revolving Advances is insufficient to eliminate such excess,
pay to the Lender in immediately available funds for deposit
in the Special Account an amount equal to the remaining
excess. Any payment received by the Lender under this
Section 2.13 or under Section 2.11 may be applied to the
Obligations, in such order and in such amounts as the
Lender; in its discretion, may from time to time determine;
provided that any prepayment under Section 2.11 which the
Borrower designates as a partial prepayment of the Term Note
shall be applied to principal installments of the Term Note
in inverse order of maturity."
(j) Section 2.16 is hereby amended and restated in its entirety as
follows:
"Use of Proceeds. The Borrower shall use the proceeds of
Advances, and each Letter of Credit, if any, for ordinary
working capital purposes."
(k) The following sections are hereby added to Article II:
"Section 2.7(c) Letter of Credit Fees. The Borrower agrees
to pay the Lender a fee with respect to each Letter of
Credit, if any, accruing on a daily basis and computed at
the annual rate of one and one half percent (130%) of the
aggregate amount that may then be drawn on all issued and
outstanding Letters of Credit assuming compliance with all
conditions for drawing thereunder (the "Aggregate Face
Amount"), from and including the date of issuance of such
Letter of Credit until such date as such Letter of Credit
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shall terminate by its terms or be returned to the Lender,
due and payable monthly in arrears on the first day of each
month and on the Termination Date; provided, however that
during Default Periods, in the Lender's sole discretion and
without waiving any of its other rights and remedies, such
fee shall increase to four and one half percent (4.50%) of
the Aggregate Face Amount. The foregoing fee shall be in
addition to any and all fees, commissions and charges of any
Issuer of a Letter of Credit with respect to or in
connection with such Letter of Credit."
"2.7(d) Letter of Credit Administrative Fees. The Borrower
agrees to pay the Lender, on written demand, the
administrative fees charged by the Issuer in connection with
the honoring of drafts under any Letter of Credit,
amendments thereto, transfers thereof and all other activity
with respect to the Letters of Credit at the then-current
rates published by the Issuer for such services rendered on
behalf of customers of the Issuer generally."
"2.9(e)L/C Rule' means any law, rule, regulation, guideline,
directive, requirement or request regarding letters of
credit, or the interpretation or administration thereof by
any governmental or regulatory authority, central bank or
comparable agency, whether or not having the force of law,
that applies to any Related Lender. Such rules include rules
imposing taxes, duties or other similar charges, or
mandating reserves, special deposit or similar requirements
against assets of, deposits with or for the account of, or
credit extended by any Related Lender, on letters of
credits"
"Section 2.18 Letters of Credit.
(a) The Lender agrees, on the terms and subject to the
conditions herein set forth, to cause an Issuer to issue,
from the Funding Date to the Termination Date, one or more
irrevocable standby or documentary letters of credit (each,
a "Letter of Credit") for the Borrower's account to be drawn
at sight for the importation of organic foods and
ingredients. The Lender shall have no obligation to cause an
Issuer to issue any Letter of Credit if the face amount of
the Letter of Credit to be issued, would exceed the lesser
of:
(i) $500,000 less the L/C Amount, or
(ii) the Borrowing Base less the sum of (A) all
outstanding and unpaid Revolving Advances and (B) the
L/C Amount.
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Each Letter of Credit, if any, shall be issued pursuant to a
separate L/C Application entered into by the Borrower and
the Lender for the benefit of the Issuer, completed in a
manner satisfactory to the Lender and the Issuer. The terms
and conditions set forth in each such L/C Application shall
supplement the terms and conditions hereof, but if the terms
of any such L/C Application and the terms of this Agreement
are inconsistent, the terms hereof shall control.
(b) No Letter of Credit shall be issued more than
ninety (90) days prior to the negotiating date or have an
expiry date later than the Termination Date in effect as of
the date of issuance.
(c) Any request to cause an Issuer to issue a Letter of
Credit under this Section 2.18 shall be deemed to be a
representation by the Borrower that the conditions set forth
in Section 4.2 have been satisfied as of the date of the
request"
"Section 2.19 Payment of Amounts Drawn Under Letters of
Credit. The Borrower acknowledges that the Lender will be
liable to the Issuer for reimbursement of any and all draws
under Letters of Credit and for all other amounts required
to be paid under the applicable tiC Application.
Accordingly, the Borrower agrees to pay to the Lender any
and all amounts required to be paid under the applicable L/C
Application, when and as required to be paid thereby, and
the amounts designated below, when and as designated:
(a) The Borrower hereby agrees to pay the Lender on the
day a draft is honored under any Letter of Credit a sum
equal to all amounts drawn under such Letter of Credit plus
any and all reasonable charges and expenses that the Issuer
or the Lender may pay or incur relative to such draw and the
applicable L/C Application, plus interest on all such
amounts, charges and expenses as set forth below (the
Borrower's obligation to pay all such amounts is herein
referred to as the "Obligation of Reimbursement").
(b) Whenever a draft is submitted under a Letter of
Credit, the Lender shall debit the amount of the draft
against the Borrower's operating account. If there are
insufficient funds in the operating account to meet the full
amount of the draft, the Lender shall make a Revolving
Advance in the amount of the Obligation of Reimbursement and
shall apply the proceeds of such Revolving Advance thereto.
Such Revolving Advance shall be repayable in accordance with
and, be treated in all other respects as a Revolving
Advance hereunder.
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(c) If a draft is submitted under a Letter of Credit
when the Borrower is unable, because a Default Period then
exists or for any other reason, to obtain a Revolving
Advance to pay the Obligation of Reimbursement, the Borrower
shall pay to the Lender on demand and in immediately
available funds, the amount of the Obligation of
Reimbursement together with interest, accrued from the date
of the draft until payment in full at the Default Rate.
Notwithstanding the Borrower's inability to obtain a
Revolving Advance for any reason, the Lender is irrevocably
authorized, in its sole discretion, to make a Revolving
Advance in an amount sufficient to discharge the Obligation
of Reimbursement and all accrued but unpaid interest
thereon.
The Borrower's obligation to pay any Revolving Advance made
under this Section 2.19, shall be evidenced by the Revolving
Note and shall bear interest as provided in Section 2.6."
"Section 2.20 Special Account. If the Credit Facility is
terminated for any reason whatsoever while any Letter of
Credit is outstanding, the Borrower shall thereupon pay the
Lender in immediately available funds for deposit in the
Special Account an amount equal to the L/C Amount. The
Special Account shall be an interest bearing account
maintained for the Lender by any financial institution
acceptable to the Lender. Any interest earned on amounts
deposited in the Special Account shall be credited to the
Special Account. Amounts on deposit in the Special Account
may be applied by the Lender at any time or from time to
time to the Obligations in the Lender's sole discretion, and
shall not be subject to withdrawal by the Borrower so long
as the Lender maintains a security interest therein. The
Lender agrees to transfer any balance in the Special Account
to the Borrower at such time as the Lender is required to
release its security interest in the Special Account under
applicable law."
"Section 2.21 Obligations Absolute. The Borrower's
obligations arising under Section 2.19 shall be absolute,
unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of Section 2.19, under all
circumstances whatsoever, including (without limitation)
the following circumstances:
(a) any lack of validity or enforceability of any
Letter of Credit or any other agreement or instrument
relating to any Letter of Credit (collectively the "Related
Documents");
(b) any amendment or waiver of or any consent to
departure from all or any of the Related Documents;
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(c) the existence of any claim, setoff, defense or
other right which the Borrower may have at any time, against
any beneficiary `or any transferee of any Letter of Credit
(or any persons or entities for whom any such beneficiary or
any such transferee may be acting), or other person or
entity, whether in connection with this Agreement, the
transactions contemplated herein or in the Related Documents
or any unrelated transactions;
(d) any statement or any other document presented under
any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect
whatsoever,
(e) payment by or on behalf of the Issuer or the Lender
under any Letter of Credit against presentation of a draft
or certificate which does not strictly comply with the terms
of such Letter of Credit; or
(f) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing."
4. Amendments to Article VI.
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(a) Reporting Requirements. Section 6.1(e) of the Credit Agreement is
hereby amended and restated to read as follows;
"(e) on or before December 31 of each year, the projected
balance sheets and income statements for each month of the
successive year, each in reasonable detail, representing the
Borrower's good faith projections and certified by the
Borrower's chief financial officer as being the most
accurate projections available and identical to the
projections used by the Borrower for internal planning
purposes, together with such supporting schedules and
information as the Lender may in its discretion require;"
(b) 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 restructuring charges, adjustments to reflect the
impairment of assets or sale of significant assets and any
income recorded by Borrower from escrow proceeds of the sale
of Borrower's tomato based business to Acirca, Inc. shall
not be included in determining whether or not Borrower has
met the covenant set forth in this Section 6.15, so long as
at the end of each month Borrower maintains a Book Net Worth
of at least One Million Dollars ($1,000,000) before taking
such exclusions into consideration.
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At the End of: Minimum Book Net Worth
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August 2001 $2,120,000
September 2001 $2,236,000
October 2001 $2,325,000
November 2001 $2,398,000
December 2001, $2,501,000
And each month end thereafter
(c) Minimum Senior Debt Service Coverage Ratio. Section 6.13 of the
Credit Agreement is hereby amended and restated to read as follows:
"The Borrower will maintain, for each period described
below, its Senior Debt Coverage Ratio, determined as at the
end of each period, at not less than the ratio set forth
opposite such period:
Period Minimum Senior Debt
------
Service Coverage Ratio
----------------------
Nine Months Ending September 1.20 to 1.00
30, 2001
Twelve Months Ending December 1.25 to 1.00
31, 2001
Thereafter, the Borrower will maintain its Senior Debt
Service Coverage Ratio at not less than 1.30 to 1.00,
measured at the end of each fiscal quarter, calculated for
the prior four (4) quarters as of March 31, 2002 and for the
prior four (4) quarters at the end of each successive fiscal
quarter."
(d) Minimum Total Debt Service Coverage Ratio. Section 6.14 of the
Credit Agreement is hereby amended and restated to read as follows:
"The Borrower will maintain, for each period described
below, its, Total Debt Service Coverage Ratio, determined as
at the end of each period, at an amount not less than the
amount set forth opposite such period:
Period Minimum Senior Debt
------
Service Coverage Ratio
----------------------
Nine Months Ending September 1.00 to 1.00
30, 2001
Twelve Months Ending December 1.10 to 1.00
31, 2001
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Thereafter, the Borrower will maintain its Total Debt
Service Coverage Ratio at not less than 1.10 to 1.00,
measured at the end of each fiscal quarter, calculated for
the prior four (4) quarters as of March 31, 2002 and for the
prior four (4) quarters at the end of each successive fiscal
quarter."
(e) New Covenants, Section 6.16 of the Credit Agreement is hereby
amended restated in its entirety to read as follows:
"6.16 New Covenants. On or before June 30, 2002, 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 Borrow's projections for such periods
received by Lender pursuant to Section 6.1(e) and shall be
no less stringent than the present levels."
5. 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. Commencing with the
fiscal year ending December 31, 2001, Borrower may incur
Capital Expenditures provided that the portion of any
Capital Expenditures that is not financed by a lender shall
not exceed Two Hundred Thousand Dollars ($200,000) in the
aggregate for any fiscal year.
6. Amendments to Article VIII.
(a) The following is hereby added to the Credit Agreement as Section
8.1(s) entirety as follows:
"(s) Failure to pay when due any amount specified in Section
2.19 relating to the Borrower's Obligation of Reimbursement,
or failure to pay immediately when due or upon termination
of the Credit Facility any amount required to be paid for
deposit in. the Special Account under Section 2.20."
(b The following is hereby added to the Credit Agreement as Section
8.1 (s) and reads in its entirety as follows:
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"the Lender may make demand upon the Borrower and, forthwith
upon such demand, the Borrower will pay to the Lender in
immediately available funds for deposit in the Special
Account pursuant to Section 2.20 an amount equal to the
aggregate maximum amount available to be drawn under all
Letters of Credit then outstanding, assuming compliance with
all conditions for drawing thereunder."
7. Amendments to Article X.
(a) Section 10.6 is hereby amended and restated in its entirety to
read as follows:
"10.6 Cost and Expenses. The Borrower agrees to pay on
demand all costs and expenses, including (without
limitation) attorneys' fees, incurred by the Lender in
connection with the Obligations, this Agreement, the Loan
Documents, any Letters of Credit and any other document or
agreement related hereto or thereto, and the transactions
contemplated hereby, including without limitation all such
costs, expenses and fees incurred in connection with the
negotiation, preparation, execution, amendment,
administration, performance, collection and enforcement of
the Obligations and all such documents and agreements and
the creation, perfection, protection, satisfaction,
foreclosure or enforcement of the Security Interest"
8. Amendments to Schedu1es.
(a) Trade Names, Chief Executive Office and Other Locations. Schedule
5.1 is hereby amended and restated in its entirety to read as set forth in
Exhibit B, attached hereto.
(b) Subsidiaries. Schedule 5.4 is hereby amended and restated in its
entirety to read as set forth in Exhibit C, attached hereto.
(c) Permitted Liens. Schedule 7.1 is hereby amended and restated in
its entirety to read as set forth in Exhibit D, attached hereto.
(d) Permitted Indebtedness and Guaranties. Schedule 7.2 is hereby
amended and restated in its entirety to read as set forth in Exhibit E, attached
hereto.
9. Capital Expenditure Advance. No further Capital Expenditure Advances
will be made by Lender pursuant to Section 2.4 of the Credit Agreement.
10. Guaranty of Xxxxxxx Xxxxxxxx. Lender agrees that upon Lender's receipt
of Borrower's December 31, 2001 unqualified financial statement reflecting that
Borrower has satisfied all financial covenants and that no Events of Default
exist, the Guaranty of Xxxxxxx Xxxxxxxx shall be released.
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11. Inventory Appraisal. Borrower agrees to allow an appraisal of its
Inventory to be conducted by an appraiser chosen by Lender within forty-five
(45) days of the date of the approval of the terms of this Amendment by lender's
senior credit management. The cost of such appraisal shall be paid by Borrower.
12. Term Loan C. The Lender agrees, on the terms and subject to the
conditions set forth in the Credit Agreement to make a one time advance in an
amount not to exceed the lesser of (A) One Hundred Thousand Dollars ($100,000),
or (B) eighty-five percent (85%) of the invoiced purchase price of new Equipment
(exclusive of installation and other soft costs) ("Term C Advances") (the
definition of "Term Advances" as set forth in the Credit Agreement shall include
the Term C Advances). The Borrower's obligation to pay the Term C Advances shall
be evidenced by the Term Note C, a form of which is attached hereto as Exhibit A
("Term Note Q") (the definition of "Note" as set forth in the Credit Agreement
shall include Term Note C) and shall be secured by the Collateral. The Lender
will make advances to the Borrower under this paragraph upon Borrower presenting
to Lender, in form and substance reasonably satisfactory to Lender, (i) invoices
for the specific items of Equipment to be acquired and financed hereunder, which
Equipment shall be acceptable to Lender and the purchase price thereof may, at
Lender's option, be confirmed by Lender, and (ii) evidence satisfactory to the
Lender of delivery of such Equipment to the Borrower. Generally, to be eligible,
Equipment must be subject to Lender's perfected security interest and must be
used or usable in the ordinary course of Borrower's business, and must
constitute collateral acceptable for lending purposes pursuant to criteria
established by Lender.
(a.) The outstanding principal balance of the Term Note C shall be due
and payable as follows:
(i) Beginning on January 1, 2002, and on the first day of each
month thereafter, in thirty-six (36) substantially equal monthly
installments; and
(ii) On the Termination Date, the entire unpaid principal balance
of the Term Note C, and all unpaid interest accrued thereon, shall in
any event be due and payable.
(b) Except as set forth in Sections 2.6 (d) and 2.6(e) of the Credit
Agreement, the outstanding principal balance of the Tenn Note C shall bear
interest at the Term Floating Rate, and interest shall be payable monthly in
arrears.
(c) Term Note C shall be subject to the prepayment fees set forth in
Section 2.12 of the Credit Agreement.
-14-
13. Consent to Payment of Various Notes. Lender hereby consents to the full
repayment of the indebtedness to Xxxxxxxx Xxxxxx as evidenced by that certain
Unsecured Subordinated Promissory Note dated as of January 1, 2001 in the face
amount of $25,000 Lender Further consents to Borrower's payment of interest
only through December 31, 2001 and quarterly payments of principal and interest
thereafter on the promissory notes set forth below:
Note Holder Face Amount Dated
----------- ----------- -----
Xxxxxxx X. Xxxxxx $105,000.00 January 1, 2001
Xxxxxx X. Xxxxx-XXX $26,250 January 1, 2001
Xxxxxx Xxxxxx-XXX $26,250 January 1, 2001
Xxxx Xxxx $13,125 January 1, 2001
Xxxxxx X. Xxxxxx $13,125 January 1, 0000
Xxxx Xxxxx-XXX $26,250 January 1, 0000
Xxxxxxx Xxxxxx-XXX $26,250 January 1, 2001
Borrower may make such payments so long as no Event of Default has occurred and
is continuing or will occur as a result of such payments and Lender has notified
Borrower in writing that such payments are not permitted.
14. Amendment Fee. The Borrower shall pay Lender an amendment fee in the
amount of Twenty Thousand Dollars ($20,000) for the preparation and execution of
this Amendment. Such fee shall be fully earned and non-refundable upon the
execution of this Amendment and shall be paid in two equal installments of Ten
Thousand Dollars ($10,000) with the first installment due a November 1, 2001 and
the second due on December 1, 2001.
15. 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.
16. Conditions Precedent. This Amendment, shall be effective when the
Lender shall have received an executed original hereof, together with each of
the following, each in substance and form acceptable to the Lender in its sole
discretion:
(a) A Certificate of Authority of the Borrower certifying as to (i)
the resolutions directors of the Borrower approving the execution and delivery
of this Amendment (ii) the fact that the articles of incorporation and bylaws of
the Borrower, which were delivered to the Lender pursuant to the Certificate of
Authority of the Borrow's Secretary or assistant secretary dated as of October
5, 1999 in connection with the delivery of the Credit Agreement continue in full
force and effect and have not been amemded or otherwise modified except as
necessary for the Merger as set forth in the Certificate of Authority to be
-15-
delivered, and (iii) certifying that the officers and agents of the Borrower who
have been certified to the Lender) pursuant to the Certificate of Authority of
the Borrower's secretary or assistant secretary dated as of October 5, 1999, as
being authorized to sign and to act on behalf of the Borrower continue to be so
authorized or setting forth the sample signatures of each of the officers and
agents of the Borrower authorized to execute and deliver this Amendment and all
other documents, agreements and certificates on behalf of the Borrower.
(b) The amendment fee set forth in Paragraph 14 above.
(c) Such other matters as the Lender may require.
17. 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
(1) 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.
18. 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.
19. 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.
20. 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
-16-
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.
21. 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.
-17-
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, SPECTRUM ORGANIC PRODUCTS,
INC. Inc.
By: /s/ Xxxxxx Xxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------- -------------------------------
Xxxxxx Xxxxxxxxx Xxxxxxx X. Xxxxxxxx
Vice President CEO/Chairman
-18-
EXHIBIT A
TERM NOTE C
$_______________ Pasadena, California
October_, 2001
For value received, the undersigned, SPECTRUM ORGANIC PRODUCTS, INC., a
California corporation (the "Borrower"), hereby promises to pay on the
Termination Date under the Credit Agreement (defined below), to the order of
XXXXX FARGO BUSINESS CREDIT, INC., a Minnesota corporation (the "Lender"), at
its main office in Pasadena, California, or at any other place designated at any
time by the holder hereof;, in lawful money of the United States of America and
in immediately available funds, the principal sum of_________________
($_____________________) or, if less, the aggregate unpaid principal amount of
the Term Advance made by the Lender to the Borrower under the Credit Agreement
(defined below) together with interest on the principal amount hereunder
remaining unpaid from time to time, computed on the basis of the actual number
of days elapsed and a 360-day year, from the date hereof until this Note is
fully paid at the rate from time to time in effect under the Credit and Security
Agreement by and between the Lender and the Borrower, dated as of October 6,
1999 as amended by that certain First Amendment to Credit and Security Agreement
of even date herewith and as may hereafter be amended, supplemented or restated
from time to time (the "Credit Agreement"). The principal hereof and interest
accruing thereon shall be due and payable as provided ill the Credit Agreement.
This Note may be prepaid only in accordance with the Credit Agreement.
This Note is issued pursuant, and is subject to the Credit Agreement, which
provides, among other things, for acceleration hereof. This Note is the Term
Note referred to in the Credit Agreement. This Note is secured, among other
things, pursuant to the Credit Agreement and the Security Documents as therein
defined, and may now or hereafter be secured by one or more other security
agreements, mortgages, deeds of trust, assignments or other instruments or
agreements.
The Borrower hereby agrees to pay all costs of collection, including
attorneys' fees and legal expenses in the event this Note is not paid when due,
whether or not legal proceedings are commenced.
Presentment or other demand for payment, notice of dishonor and protest are
expressly waived. -
SPECTRUM ORGANIC PRODUCTS, INC.,
a California corporation
By: /s/_________________________
Name:____________________________
Title:___________________________
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EXHIBIT B
Schedule 5.1 to Credit and Security Agreement
TRADE NAMES, CHIEF EXECUTIVE OFFICE, PRINCIPAL PLACE OF
BUSINESS, AND LOCATIONS OF COLLATERAL
Trade Names
-----------
Cinagro
Napa Valley Springs Water
Spectrum Naturals
Spectrum Essentials
Community Mayonnaise
Veg-Omega3
Blue Banner
World Cuisine
Spectrum Spread
Chief Executive Office/Principal Place of Business
--------------------------------------------------
0000 Xxxxx Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Other Inventory and Equipment Locations
Inventory
---------
[per attached Listing]
Equipment
---------
1) Organic Ingredients, Inc., 000 Xxxxxxxxx Xxxxx, Xxxxx X, Xxxxx, Xxxxxxxxxx
00000
2) OI R&D Lab, 000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxxx, Xxxxxxxxxx 00000
3) Spectrum Organic Products, Inc., 000 Xxxxxxxx Xx., Xxxxxxxx XX 00000
-20-
EXHIBIT C
Schedule 5.4 to Credit and Security Agreement
SUBSIDIARIES
None
-21-
EXHIBIT D
Schedule 7.1 to Credit and Security Agreement
PERMITTED LIENS
Creditor Collateral Jurisdiction Filing Date Filing No.
-------- ---------- ------------ ----------- ----------
Safeco Credit Co., Inc Leased Forklift California 12/09/96 9634561027
Colonial Pacific Leased Equipment California 01/13/97 9701460821
Leaseing specified in UCC
Heritage Financial Leased Equipment California 10/14/97 9729360015
Services specified in UCC
Heritage Financial Leased Equipment California 02/05/98 9804260357
Services specified in UCC
Safeco Credit Co. Leased Forklift California 03/26/98 9808660068
Green Tree Vendor Leased Telephone California 09/30/99 9928060784
Services Corporation System
Xxxxxx Xxxxxxxx Trans America California
Insurance Policy
# 41880210
Spectrum Organic Products, Inc.
-------------------------------
Creditor Collateral Jurisdiction Filing Date Filing No.
-------- ---------- ------------ ----------- ----------
Trinity Capital Leased Equipment California 01/04/00 0001160618
Corporation specified in UCC
GE Capital Colonial Leased Equipment California 03/28/01 0109360528
Pacific Leasing specified in UCC
SFC Capital Group Leased Equipment California 10/03/00 0000000000
Corporation specified in UCC
-22-
EXHIBIT E
Schedule 7.2 to Credit and Security Agreement
PERMITTED INDEBTEDNESS AND GUARANTEES
Indebtedness
Creditor Original Amt. Maturity Date Monthly Payment Collateral
Xxxx X.
Xxxxxxxxxxx $ 102,243.47 10/01/01 $2,170.35 None
Xxxxxx X. Xxxxx $ 110,423.32 10/01/04 $2,343.99 None
Xxxxxx X. Term Life
Xxxxxxxx $1,621,716.00 03/20/04 Varies Ins. Policy
Xxxxxx X.
Xxxxxxxx $ 613,284.00 12/31/09 None None
Xxxx
Xxxxxxxxx $ 190,000.00 10/06/02 $4,374.14 None
Xxxxx Xxxxx $ 265,000.00 10/06/05 $4,259.04 None
Xxxxxxx X.
Xxxxxx $ 105,000.00 12/31/03 Varies None
Xxxxxx X.
Xxxxx-XXX $ 26,250.00 12/31/03 Varies None
Xxxxxx
Xxxxxx-XXX $ 26,250.00 12/31/03 Varies None
Xxxx Xxxxx-
XXX $ 26,250.00 12/31/03 Varies None
Xxxxxxx
Xxxxxx-XXX $ 26,250.00 12/31/03 Varies None
Xxxxxx X.
Xxxxxx $ 13,125.00 12/31/03 Varies None
Xxxx Xxxx $ 13,125.00 12/31/03 Varies None
Guaranties
Primary Obligor Amt & Desc. of Guarantee Beneficiary
of Guaranty
Working capital guaranty, not Sonoma Valley Bank
The Olive Press, LLC to exceed $30,000 at any time Sonoma, CA
-23-
