Exhibit 10M
FIRST AMENDING AGREEMENT
Made as of May 16th, 2003
Among
STAKE TECHNOLOGY LTD.
STAKE TECH LP
SUNRICH FOOD GROUP, INC.
as Borrowers
- and -
EACH OF THE FINANCIAL INSTITUTIONS
AND OTHER ENTITIES
FROM TIME TO TIME PARTIES HERETO
as Lenders
- and -
CERTAIN AFFILIATES OF THE BORROWERS
as Obligors
- and -
BANK OF MONTREAL
as Agent
- and -
XXXXXX TRUST AND SAVINGS BANK
as US Security Agent
FIRST AMENDING AGREEMENT
This first amending agreement is made as of the 16th day of May, 2003
AMONG
STAKE TECHNOLOGY LTD.
STAKE TECH LP
SUNRICH FOOD GROUP, INC.
as Borrowers
and
EACH OF THE FINANCIAL INSTITUTIONS
AND OTHER ENTITIES
FROM TIME TO TIME PARTIES HERETO
as Lenders
and
CERTAIN AFFILIATES OF THE BORROWERS
as Obligors
and
BANK OF MONTREAL
as Agent
and
XXXXXX TRUST AND SAVINGS BANK
as US Security Agent
WITNESSES THAT WHEREAS:
(a) the Lenders severally made credit facilities available to the
Borrowers on the terms and conditions set out in an amended and
restated credit agreement dated as of February 21, 2003 among the
Borrowers, the Lenders, certain affiliates of the Borrowers, as
Obligors, the Agent and the US Security Agent (the "Agreement"); and
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(b) the parties to the Agreement have agreed to amend the Agreement in
the manner set forth herein in order to, among other things,
increase Facility A by $2,500,000.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which is acknowledged, the parties covenant and agree
as follows:
SECTION 1
INTERPRETATION
1.1 Definitions from Agreement. Capitalized terms defined in the Agreement
have the same meanings in this first amending agreement unless otherwise
defined herein or the context expressly or by necessary implication
requires otherwise. This first amending agreement is referenced herein as
the "First Amending Agreement". For greater certainty, this First Amending
Agreement amends the Agreement and the term "Agreement", as defined in the
Agreement, includes (unless the context expressly or by necessary
implication requires otherwise) this First Amending Agreement to the
extent of such amendments. For purposes of this First Amending Agreement,
the term "First Amending Closing Date" means May 16, 2003.
1.2 New and Revised Definitions. Section 1.1 of the Agreement is hereby
amended as follows:
(a) the definition of "Commitment" is amended in clause (a) thereof with
respect to Facility A by deleting reference to "$5,000,000" and by
inserting reference to "$7,500,000";
(b) the definition of "Facility A Borrowing Base" is amended in clause
(a), (b), (c) and (d) thereof by adding the text ", Integrated,
Kettle and Kettle US" after each reference to "Canadian Harvest"
contained therein;
(c) the definition of "Landlord" is amended by deleting both references
to "a Borrower" contained therein and replacing the same with
reference to "an Obligor";
(d) the definition of "Obligor" is amended to include reference to ",
Integrated, Kettle and Kettle US" immediately after reference to
"Opta";
(e) the following definitions are inserted in the Agreement at the
appropriate alphabetical location:
"Integrated" means Integrated Drying Systems Inc., a corporation
incorporated under the laws of British Columbia and its successors
and permitted assigns;
"Kettle" means Kettle Valley Dried Fruits Ltd., a corporation
incorporated under the laws of British Columbia, and its successors
and permitted assigns; and
"Kettle US" means Kettle Valley Dried Fruit Inc., a corporation
incorporated under the laws of Washington, and its successors and
permitted assigns.
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1.3 Headings. The insertion of headings in this First Amending Agreement is
for convenience of reference only and shall not affect the interpretation
of this First Amending Agreement.
SECTION 2
THE CREDIT FACILITIES
2.1 Credit Facilities. Section 3.1(a) of the Agreement is hereby amended such
that the reference therein to "$5,000,000" is hereby deleted and replaced
with reference to "$7,500,000".
2.2 Availability of Credit Facilities. Section 3.2(a) of the Agreement is
hereby amended such that reference therein to "$5,000,000" is hereby
deleted and replaced with reference to "$7,500,000".
2.3 Purpose. Section 3.5(a) of the Agreement is hereby amended such that the
following text is added immediately after reference to the word
"divisions" contained therein:
", including without limitation refinancing the working capital and
expansionary capital needs of Integrated, Kettle and Kettle US".
SECTION 3
COVENANTS
3.1 Negative Covenants. Section 9.2(d) of the Agreement is hereby amended by
deleting the word "and" and replacing it with ";" immediately before the
reference to "(vii)" contained therein and by adding the following text
immediately after the reference to "Claridge Debenture" contained therein:
"; and (viii) unsecured Debt to the vendors of the shares of Integrated to
Stake provided that such unsecured Debt does not exceed an aggregate
principal amount of Cdn.$1,175,713.00 with interest payable thereon
calculated at a rate of 5% per annum".
SECTION 4
SCHEDULES
4.1 Schedules. Schedules B, C, E, F, G, I, J and R appended to the Credit
Agreement are deleted in their entirety and replaced, respectively, with
Schedules B, C, E, F, G, I, J and R appended to this First Amending
Agreement as Exhibit I.
SECTION 5
CONDITIONS PRECEDENT
5.1 Conditions Precedent. The effectiveness of this First Amending Agreement
and the Obligation of BMO to increase its Commitment under Facility A is
subject to and conditional upon the satisfaction of the following
conditions:
(a) Delivery of Documents. The Agent or the US Security Agent, as
applicable, shall have received Sufficient Copies, in form and
substance satisfactory to the Agent or the US Security Agent, as
applicable, of the following:
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(i) an Additional Obligor Counterpart duly executed by each of
Integrated, Kettle and Kettle US;
(ii) this Agreement duly executed by all of the parties hereto;
(iii) from Integrated: (A) Ontario law guarantee of the obligations
of all Obligors (other than Integrated) owing to the Lenders;
(B) a general security agreement creating a security interest
in all of the personal property, assets and undertaking of
Integrated, including securities (or the equivalent)
registered in every location where Integrated has assets; (C)
a general assignment of book debts; (D) an assignment of all
insurance policies, including but not limited to fire and all
perils insurance on real property and policies insuring the
assets of Integrated; and (E) an offset agreement regarding
cash balances;
(iv) from Kettle: (A) Ontario law guarantee of the obligations of
all Obligors (other than Kettle) owing to the Lenders; (B) a
general security agreement creating a security interest in all
of the personal property, assets and undertaking of Kettle,
including securities (or the equivalent) registered in every
location where Kettle has assets; (C) a general assignment of
book debts; (D) an assignment of all insurance policies,
including but not limited to fire and all perils insurance on
real property and policies insuring the assets of Kettle; and
(E) an offset agreement regarding cash balances;
(v) from Kettle US: (i) Illinois law guarantee of the obligations
of all Obligors (other than Kettle US) owing to the Lenders;
(ii) a general security agreement creating a security interest
in all of the personal property, assets and undertaking of
Kettle US, including securities (or the equivalent) registered
in every location where Kettle US has assets; (iii) a
certificate in respect of all insurance policies, including
but not limited to fire and all perils insurance on real
property and policies insuring the assets of Kettle US,
indicating the US Security Agent and/or the Lenders as loss
payee; and (iv) an offset agreement regarding cash balances;
(vi) a Certificate of each of Integrated, Kettle and Kettle US
dated as of the date hereof certifying that:
A. its constating documents and the by-laws, which shall be
attached thereto, are complete and correct copies and
are in full force and effect;
B. all resolutions and all other authorizations necessary
to authorize the execution and delivery of and the
performance by it of its obligations under the
Additional Obligor Counterpart, the Agreement, the
Security Documents and the other Documents to which it
is a party and all the transactions contemplated
thereby; and
C. all representations and warranties contained in the
Agreement are true and correct as if made on the date of
the Certificate.
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(vii) proforma consolidated financial statements of the Borrowers
and Obligors for the remainder of 2003 after giving effect to
the acquisition of Integrated, together with financial
projections for fiscal years 2004 and 2005, prepared in good
faith and based upon reasonable assumptions and consistent
with the Borrowers' due diligence review in connection with
the acquisition of Integrated;
(viii)opinions of counsel to Integrated, Kettle and Kettle US,
addressed to the Agent and each Lender and counsel to the
Agent with respect to, inter alia, due authorization,
execution, delivery and enforceability of the Documents
executed by each of Integrated, Kettle and Kettle US;
(ix) duly executed certificate(s) of insurance evidencing the
insurance required under the Agreement in respect of each of
Integrated, Kettle and Kettle US and endorsements of those
policies each showing loss payable to the Agent or US Security
Agent, as applicable;
(x) a duly completed Environmental Checklist in the Agent's
standard form in respect of each of Integrated, Kettle and
Kettle US;
(xi) the Unanimous Lenders shall have consented to (A) Stake's
acquisition of all of the shares of Integrated, and (B) the
increase in the Commitment under Facility A from $5,000,000 to
$7,500,000;
(xii) a Certificate of an officer of Stake certifying that its
purchase of all of the shares of Integrated has been
completed, on terms satisfactory to the Lenders, and providing
to the Agent a true copy of the executed share purchase
agreement entered into between Stake and the vendors of all of
the shares of Integrated.
(b) Payout and Discharge. All funds owed by Integrated, Kettle and
Kettle US to those creditors identified (based upon information
provided by Stake, Integrated, Kettle and Kettle US) by the Agent
and the US Security Agent, as applicable, shall be repaid in full
and all Liens and/or security registrations made in favour of such
creditors shall be discharged or the Agent or the US Security Agent,
as applicable, shall have received an undertaking from such
creditors to discharge all such Liens and/or security registrations
in form and substance satisfactory to the Agent or the US Security
Agent, as applicable.
(c) Registration of Security Documents. All registrations, recordings
and filings of or with respect to the Security Documents which in
the opinion of counsel to the Agent or the US Security Agent, as
applicable, are necessary to render effective the Lien intended to
be created thereby shall have been completed.
(d) Fees. All fees payable in accordance with this First Amending
Agreement on or before the First Amending Closing Date (including
legal fees and expenses of the Agent and the US Security Agent)
shall have been paid to the Agent.
(e) Due Diligence. The Agent and the Lenders shall have completed their
business, legal and accounting due diligence (including receipt of
environmental checklists from
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Integrated, Kettle and Kettle US, together with a list of the
contents of the inventory of each of Integrated, Kettle and Kettle
US) with results satisfactory to them.
(f) Market Change. No material adverse change or material disruption of
the financial, banking or capital markets shall have occurred and be
continuing, in each case, determined by the Agent in its sole and
absolute discretion.
(g) Material Adverse Change. No Material Adverse Change shall have
occurred with respect to the Obligors.
(h) Vendor Subordination. The vendors of certain of the shares of
Integrated listed in Exhibit 2 hereto shall have entered into a
subordination agreement in form and substance satisfactory to the
Agent whereby such vendors acknowledge and agree in favour of the
Agent that the Debt owed to such vendors is subordinate to the Debt
of Integrated owing to the Agent and the Lenders under an in
connection with the Agreement.
5.2 Waiver. The conditions stated in Section 5.1 are inserted for the sole
benefit of the Agent, the US Security Agent and the Lenders and may only
be waived by the Unanimous Lenders, in whole or in part, with or without
terms or conditions.
SECTION 6
ASSUMPTION AND CONFIRMATION
6.1 Continuance of Simply Organic. Stake represents and warrants to the Agent,
the US Security Agent and each Lender that Simply Organic Co. Ltd.,
previously an Ontario corporation, was continued under the Canada Business
Corporation Act as 4157648 Canada Inc. effective as of April 14, 2003 (the
"Continuance"). Attached as Exhibit 3 hereto is a true and complete copy
of the following documents in respect of 4157648 Canada Inc. (i) Articles
of Continuance with Certificate of Continuance dated April 14, 2003, and
(ii) by-laws.
6.2 Assumption and Confirmation. 4157648 Canada Inc. hereby confirms and
acknowledges that, as the continuing corporation from the Continuance, it
has succeeded, by operation of law, to all of the business, undertaking,
property, assets, rights, entitlements, franchises, licences and permits
of Simply Organic and to all of the covenants, agreements, debts,
liabilities and obligations of Simply Organic under the Agreement and all
Documents to which Simply Organic is a party. In furtherance of, and
without limiting the effect of such provisions of law, 4157648 Canada Inc.
hereby irrevocably and unconditionally (a) assumes, confirms and agrees to
perform, observe, comply with and be bound by each and every covenant,
agreement, term, condition, debt, liability, obligation, security
interest, undertaking, appointment, duty and liability of Simply Organic
contained in, existing under or created by any agreement entered into by
Simply Organic in favour of the Agent, the US Security Agent or the
Lenders and under any document or instrument executed and delivered or
furnished by Simply Organic in connection therewith (collectively, the
"Financing Agreements"), and (b) confirms and agrees that from and after
the effective time of the Continuance all references to Simply Organic in
the Financing Agreements shall be, and shall be deemed for all purposes to
be, references to 4157648 Canada Inc., all with the same force and effect
as if 4157648 Canada Inc. were a
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signatory to such Financing Agreements and the Financing Agreements are in
all respects ratified and confirmed and shall remain in full force and
effect.
SECTION 7
REPRESENTATIONS AND WARRANTIES
7.1 Representations. Each of the Borrowers and the Obligors represent and
warrant to the Agent, the US Security Agent and the Lenders that:
(a) the Agreement, as amended by this First Amending Agreement, is its
legal, valid and binding obligation, enforceable against each of the
Borrowers and the Obligors in accordance with its terms, subject to
(i) applicable bankruptcy, reorganization, moratorium or similar
laws affecting creditors' generally, (ii) the fact that specific
performance and injunctive relief may only be given at the
discretion of the courts, and (iii) the equitable or statutory
powers of the courts to stay proceedings before them and to stay the
execution of judgments.;
(b) the Agreement, as amended by this First Amending Agreement, does not
conflict with any constating document, agreement, instrument or
undertaking binding upon any Obligor or any of its properties; and
(c) no Default or Event of Default now exists under the Agreement or
will exist after giving effect to this First Amending Agreement.
SECTION 8
GENERAL
8.1 Severability. Any provision of this First Amending Agreement which is
prohibited by the laws of any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition without invalidating the
remaining terms and provisions hereof.
8.2 Costs, Expenses and Taxes. The Borrowers and the Obligors agree to pay, on
demand, all reasonable costs and expenses of the Agent, the US Security
Agent and the Lenders in connection with the preparation, execution,
delivery, operation or enforcement of this First Amending Agreement and
the Agreement including, without limitation, the reasonable fees and
out-of-pocket expenses of third parties, the Lenders' counsel and other
professionals engaged by the Lenders with respect to the preparation,
negotiation and documentation of this First Amending Agreement, the
Security Documents and the related closing documents with respect thereto
and with respect to advising the Agent, the US Security Agent and the
Lenders of their rights and responsibilities in connection with the
continuing operation of the Agreement.
8.3 Form of Documents. All documents delivered under this First Amending
Agreement or under the Agreement shall be in form and substance
satisfactory to the Agent, the US Security Agent, the Lenders and their
counsel.
8.4 Governing Law. This First Amending Agreement shall be governed by and
construed in accordance with the laws of the Province of Ontario and of
Canada applicable therein and shall be treated in all respects as an
Ontario contract. The Obligors irrevocably attorn to the non-exclusive
jurisdiction of the courts of the Province of Ontario.
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8.5 Governing Documents. The Agreement as amended by this First Amending
Agreement and all other Documents delivered pursuant to or referenced in
the Agreement as amended by this First Amending Agreement constitute the
complete agreement of the parties hereto with respect to the subject
matter hereof and supersede any other agreements or understandings between
the Borrowers, each of the Obligors, the Agent, the US Security Agent and
the Lenders. Save as expressly amended by this First Amending Agreement,
all other terms and conditions of the Agreement remain in full force and
effect unamended.
8.6 Time of the Essence. Time shall be of the essence of this First Amending
Agreement.
8.7 Acknowledgement of Obligors. By signing this First Amending Agreement,
each of the Obligors, as applicable, confirms that the guarantees given by
each of them to the Agent, the US Security Agent and the Lenders and all
Security Documents given by each of them as collateral security for their
respective obligations under their respective guarantees remains in full
force and effect and continues to support all of the Borrowers'
indebtedness and liabilities, present and future, to, the Agent, the US
Security Agent and the Lenders including, without limitation, each
Borrower's indebtedness and liabilities under the Agreement and the
Security Documents granted by each such Borrower.
8.8 Counterparts. This First Amending Agreement may be executed and delivered
in any number of counterparts, each of which when executed and delivered
is an original but all of which taken together constitute one and the same
instrument.
IN WITNESS WHEREOF the parties hereto have caused this First Amending Agreement
to be executed by their respective officers thereunto duly authorized, as of the
date first above written.
STAKE TECHNOLOGY LTD. By: "Xxxxxx Xxxxxxx"
0000 Xxx 0 ----------------------------
Xxxxxx, Xxxxxxx LOP 1KO Name: Xxxxxx Xxxxxxx
Attention: Chief Financial Officer Title: Chairman & CEO
Fax: (000) 000-0000
STAKE TECH LP By: "Xxxxxx Xxxxxxx"
----------------------------
By: 1510146 Ontario Inc., its General Name: Xxxxxx Xxxxxxx
Partner Title: Chairman & CEO
SUNRICH FOOD GROUP, INC. By: "Xxxxxx Xxxxxxx"
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman & CEO
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TEMISCA, INC. By: "Xxxxxx Xxxxxxx"
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman & CEO
OPTA FOOD INGREDIENTS CANADA, LTD. By: "Xxxxxx Xxxxxxx"
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman & CEO
1510146 ONTARIO INC. By: "Xxxxxx Xxxxxxx"
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman & CEO
3060385 NOVA SCOTIA COMPANY By: "Xxxxxx Xxxxxxx"
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman & CEO
DRIVE ORGANICS CORPORATION By: "Xxxxxx Xxxxxxx"
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman & CEO
SUNRICH, INC. By: "Xxxxxx Xxxxxxx"
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman & CEO
NORTHERN FOOD AND DAIRY INC. By: "Xxxxxx Xxxxxxx"
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman & CEO
NORDIC ASEPTIC, INC. By: "Xxxxxx Xxxxxxx"
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman & CEO
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STAKE TECHNOLOGY LLC By: "Xxxxx X. Xxxxxxx"
-----------------------------
Name: Xxxxx Xxxxxxx
Title:
VIRGINIA MATERIALS INC. By: "Xxxxxx Xxxxxxx"
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman & CEO
INTERNATIONAL MATERIALS & SUPPLIES INC. By: "Xxxxxx Xxxxxxx"
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman & CEO
4157648 CANADA INC. By: "Xxxxxx Xxxxxxx"
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman & CEO:
CANADA HARVEST PROCESS LTD. By: "Xxxxxx Xxxxxxx"
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman & CEO
632100 B.C. LTD. By: "Xxxxxx Xxxxxxx"
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman & CEO
OPTA FOOD INGREDIENTS, INC. By: "Xxxxxx Xxxxxxx"
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman & CEO
INTEGRATED DRYING SYSTEMS INC. By: "Xxxx Xxxxxxxx"
----------------------------
Name: Xxxx Xxxxxxxx
Title: VP Finance & CFO
KETTLE VALLEY DRIED FRUITS LTD. By: "Xxxx Xxxxxxxx"
----------------------------
Name: Xxxx Xxxxxxxx
Title: VP Finance & CFO
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KETTLE VALLEY DRIED FRUIT INC. By: "Xxxx Xxxxxxxx"
---------------------------
Name: Xxxx Xxxxxxxx
Title: VP Finance & CFO
BANK OF MONTREAL By: "X. X. Xxxxxxx"
in its capacity as Agent ---------------------------
Name: X. X. Xxxxxxx
Corporate Finance Title: Senior Manager, Syndications
000 Xxxx Xxxxxx Xxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Senior Manager
Fax: (000) 000-0000
XXXXXX TRUST AND SAVINGS BANK By: "Xxxxx Xxxxxx"
in its capacity as US Security Agent ---------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
By:
---------------------------
Name:
Title:
BANK OF MONTREAL By: "G. C. Card"
in its capacity as Lender ---------------------------
Name: G. C. Card
Title: Director, Corporate Finance
By:
---------------------------
Name:
Title:
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XXXX XX XXXXXXXX By: "Xxxxx Xxxxxx"
(Chicago Branch) ---------------------------
in its capacity as Lender Name: Xxxxx Xxxxxx
Title: Vice President
By:
---------------------------
Name:
Title:
XXXXXX TRUST AND SAVINGS BANK By: "Xxxxx Xxxxxx"
in its capacity as Lender --------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
By:
---------------------------
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE By: "Xxxxx Xxxxxxxx"
in its capacity as Lender ----------------------------
Name: Xxxxx Xxxxxxxx
Title: Manager, Commercial Credit
By: "Xxx Xxxxxxxx"
---------------------------
Name: Xxx Xxxxxxxx
Title: Director
CIBC New York Agency By: "Xxxxxxx Xxxxxxxx"
in its capacity as Lender ------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Executive Director
By:
---------------------------
Name:
Title:
EXHIBIT I
See the attached replacement Schedules
EXHIBIT 2
1. Xxxx X. Boot
2. Xxxxx Xxx Boot
3. Xxxxxxx Xxxxxx
EXHIBIT 3
See the attached constating documents in respect of 4157648 Canada Inc.
