ANNIE'S HOMEGROWN, INC.
000 XXXX XXXXXX
XXXXXXXXX, XX 00000
August 25, 1998
Fremont Financial Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Re: First Amendment to Loan Agreement
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Gentlemen:
Reference is made to the Loan and Security Agreement, dated February 3,
1998, (the "Loan Agreement") and all supplements, agreements, documents and
instruments entered into by Annie's Homegrown, Inc. ("Borrower") pursuant
thereto, (collectively, as defined in the Loan Agreement, the "Loan Documents").
Capitalized terms used herein shall have the meanings given them in the Loan
Documents.
Borrower has determined that it would be in its best interest to acquire
certain assets (the "Purchased Assets") comprising the "Tamarind Tree" line of
food products from The Tamarind Tree Ltd. ("Seller") pursuant to an Asset
Purchase Agreement dated July 13, 1998, as amended (the "Purchase Agreement").
In connection with this acquisition, Borrower has requested that Fremont provide
additional financing through a $300,000 term loan and a $300,000 increase to the
Revolving Advance Limit to facilitate the acquisition of the Purchased Assets,
and modify certain provisions of the Loan Agreement in connection therewith.
Subject to the terms hereof, Fremont and Borrower agree as follows:
1. Consent and Waiver. Fremont hereby consents to Borrower's purchase of
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the Purchased Assets pursuant to the terms of the Purchase Agreement and waives
any Event of Default under the Loan Agreement arising solely from the Borrower's
purchase of the Purchased Assets as provided herein.
2. Amendments to Loan Agreement.
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(a) Section 1.1. Section 1.1 is amended to add the following definition at
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the end thereof after the definition of "Reference Rate":
"Term Loan means the $300,000 term loan made by Fremont to Borrower
pursuant to the terms of the First Amendment, evidenced by and
repayable in accordance with the terms and conditions of the Secured
Promissory Note delivered by Borrower pursuant to the First Amendment.
Fremont Financial Corporation
August 25, 1998
Page 2
(b) Section 2.1. Section 2.1 is deleted in its entirety and the following
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is substituted in place thereof:
"A. REVOLVING ADVANCES; REVOLVING ADVANCE LIMIT. Upon the request of an
Authorized Representative, made at any time or from time to time during the
term hereof, and so long as no Event of Default has occurred and is
continuing, Fremont shall, in its sole and absolute discretion, make
advances (the Revolving Advances) to Borrower in an amount up to (a) the
lesser of Nine Hundred Thousand Dollars ($900,000.00) or ninety percent
(90%) of (i) the aggregate outstanding amount of Liberty Eligible Accounts
or (ii) the undrawn amount of the Letter of Credit, plus (b) the lesser of
(1) seventy-five (75%) of the aggregate outstanding amount of Eligible
Accounts owing from Account Debtors other than Liberty Xxxxxxx or (2) One
Hundred Fifty Thousand Dollars ($150,000.00), plus, subject to Section 2.1C
hereof, (c) the lesser of (1) fifty percent (50%) of the aggregate value of
the Eligible Inventory or (2) Two Hundred Thousand Dollars ($200,000.00);
provided, however, that in no event shall the aggregate amount of the
outstanding Revolving Advances be greater than, at any time, the sum of
Nine Hundred Thousand Dollars ($900,000.00) (the Revolving Advance Limit).
Fremont may reduce its advance rates on Eligible Accounts or Eligible
Inventory, reduce the Revolving Advance Limit or establish reserves with
respect to borrowing availability if Fremont determines, in its sole
discretion, that there has occurred, or is likely to occur, an impairment
of the prospect of repayment of all or any portion of the Obligations, the
value of the Collateral or the validity or priority of Fremont's security
interests in the Collateral. Fremont will endeavor to promptly notify
Borrower of any such reduction in advance rates and/or additional reserves
against Eligible Accounts or Eligible Inventory provided that the failure
of Fremont to furnish any such notice shall not affect such action by
Fremont, any of its rights and remedies hereunder or give rise to a cause
of action or claim against Fremont by Borrower.
B. TERM LOAN. Concurrently with satisfaction of the conditions precedent
under the First Amendment, Fremont will make a Term Loan to Borrower in the
original principal amount of Three Hundred Thousand Dollars ($300,000.00)
to be evidenced by and repayable in accordance with the terms and
conditions of a Note dated August __, 1998. Such Term Loan and any other
Term Loan subsequently made by Fremont to Borrower shall constitute
Obligations and shall be secured by the Collateral. The occurrence of a
default under such Note or under any Note made in respect of any subsequent
Term Loan shall constitute an Event of Default hereunder.
C. ADVANCE LIMIT. The Revolving Advance Limit plus the principal amount of
all Term Loans outstanding from time to time is referred to herein as the
Advance Limit.
D. INVENTORY REVOLVING ADVANCES. The Borrower acknowledges and agrees that
until such time as VJI and each other Person that leases or controls the
premises where Borrower's inventory is located has entered into lien waiver
and access agreements
Fremont Financial Corporation
August 25, 1998
Page 3
with Lender satisfactory to Lender in its sole discretion, relating to
inventory located on such Person's premises, no Revolving Advances shall be
made or available to Borrower pursuant to Section 2.1A(c) hereof."
(c) Section 2.8. Section 2.8 is amended to delete the first sentence
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thereof and the following is substituted in place thereof:
"Borrower shall pay Fremont an annual fee (the Annual Facility Fee) in
the sum of Nine Thousand Dollars ($9,000) plus one percent (1%) of the
outstanding principal balance of the Term Loan."
(d) Section 5.4. Section 5.4 is amended to add the following location to
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the locations listed therein: Xxxxxx Bros., Inc., 0000 Xxxxx Xxxxxx, X.X.,
Xxxxx, Xxxxxx 00000.
(e) Section 5.6. Section 5.6 is stricken in its entirety and replaced with
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the following: "The chief executive offices of Borrower is located at 000 Xxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000".
(f) Section 5.8. Section 5.8 is amended to add the following fictitious
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name: Tamarind Tree.
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(g) Section 6.18. Section 6.18 is amended to delete the amount
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"$500,000.00" and to substitute in place thereof "$1,000,000.00".
(h) Section 12. Section 12 is hereby amended to change the address of
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Borrower to Annie's Homegrown, Inc., 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx
00000.
3. Conditions Precedent. As conditions precedent to the effectiveness of
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this First Amendment, each of the following conditions shall be satisfied to the
satisfaction of Fremont unless waived by Fremont in writing:
(a) No Event of Default shall exist;
(b) Borrower shall have executed and delivered to Fremont this First
Amendment, the Term Note, the Trademark Security Agreement and all other
instruments, documents, agreements, waivers, financing statements, assignments
and subordination agreements as in the opinion of Fremont may be necessary to
give effect to the First Amendment, the transactions contemplated thereby or the
perfection of Fremont's security interest in the Purchased Assets;
(c) Borrower shall have delivered to Fremont and its counsel true and
complete certified copies of the Purchase Agreement and all instruments,
documents and agreements entered into pursuant or relating thereto and all
conditions precedent to the effectiveness of the Purchase Agreement shall have
been satisfied and not waived or, if waived Fremont shall have consented to such
waiver in writing;
Fremont Financial Corporation
August 25, 1998
Page 4
(d) Borrower shall have delivered evidence satisfactory to Fremont that all
Purchased Assets will be, effective on the closing under the Purchase Agreement,
free and clear of all liens, security interest, encumbrances and claims of any
kind, except in favor of Fremont and as permitted under the Loan Documents.
(e) Borrower shall have executed, and Fremont shall have filed, all
financing statements and other instruments deemed necessary or desirable to
Fremont to perfect Fremont's security interest in the Purchase Assets, and
Fremont shall have received assurances satisfactory to it that such security
interests are duly perfected, first priority security interests;
(f) Borrower shall have delivered to Fremont evidence satisfactory to
Fremont that the Purchased Assets have been insured under the Borrower's
insurance policies;
(g) Borrower shall have delivered to Fremont a disbursement letter
authorizing Fremont to pay all or a portion of the advances under the Loan
Documents in connection with the Purchase Agreement to the persons and in the
amount set forth in such letter;
(h) The Letter of Credit shall be amended in a manner satisfactory to
Fremont to increase the amount thereof to $1,000,000.00; and
(i) Since March 31, 1998 there shall not have occurred any material adverse
change in the business, financial condition or results of operation of Borrower
or to the existence or value of the Collateral or Purchased Assets.
Borrower's failure to fulfill, or to cause to be fulfilled, each of the
foregoing conditions precedent to the satisfaction of Fremont on or before
August 31, 1998, shall relieve Fremont of any responsibility to consummate the
transactions contemplated by the First Amendment.
4. Borrower shall pay a $6,000 amendment fee in connection with this First
Amendment, which fee shall be fully earned and due and payable on the date
hereof.
5. Borrower confirms that all representations and warranties set forth in
the Loan Agreement are and remain on the date hereof, true, accurate and
complete in all respects, except as to those modifications thereto set forth
herein arising out of the transactions contemplated by the Purchase Agreement.
6. Borrower acknowledges that it is unconditionally liable for the
punctual and full payment of all Obligations, including, without limitation, all
charges, fees, expenses and costs (including attorneys' fees and expenses) under
the Loan Agreement and other Loan Documents, and that Borrower has no defenses,
counterclaims or setoffs with respect to full, complete and timely payment of
all Obligations.
Fremont Financial Corporation
August 25, 1998
Page 5
7. Borrower acknowledges, confirms and agrees that under Section 4.1 of
the Loan Agreement and under certain of the other Loan Documents the Borrower
has granted to Lender security interests and liens in the Collateral described
therein and that Borrower has good and indefeasible title to all of the
Collateral, including without limitation all assets acquired pursuant to the
Purchase Agreement, free and clear of liens, security interests or encumbrances
except those permitted under Section 7.2 of the Loan Agreement. Borrower
further acknowledges and agrees that the security interests and liens granted by
Borrower in the Collateral secure the payment of all Obligations.
8. Each of the Guarantors consents to the terms and conditions of this
First Amendment and ratify and confirm the terms of their respective Continuing
Guaranties.
9. Except as set forth herein, the undersigned confirm that the Loan
Agreement and other Loan Documents remain in full force and effect without
amendment or modification of any kind. The undersigned further confirm that no
Event of Default or events which with notice or the passage of time or both
would constitute an Event of Default have occurred and are continuing except as
waived under paragraph 1 hereof. The execution and delivery of this Amendment
by Fremont shall not be construed as a waiver by Fremont of any Event of Default
existing on the date hereof under the Loan Agreement. This Amendment, together
with the Loan Documents, constitute the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior dealings,
correspondence, conversations or communications between the parties with respect
to the subject matter hereof.
Fremont Financial Corporation
August 25, 1998
Page 6
Executed under seal on the date set forth above.
ANNIE'S HOMEGROWN, INC.
By:
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Name: Xxxx X. Xxxxxxx
Title: President
Accepted in New York, New York
on August ___, 1998
FREMONT FINANCIAL CORPORATION
By:
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Name:
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Title:
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COMMONWEALTH OF MASSACHUSETTS
COUNTY OF ____________________ August 25, 1998
Then personally appeared the above-named Xxxx X. Xxxxxxx and stated that he
is a duly authorized officer of Annie's Homegrown, Inc. (the "Corporation"), and
acknowledged the foregoing to be his free act and deed and the free act and deed
of said corporation, before me,
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, Notary Public
My Commission Expires:
Fremont Financial Corporation
August 25, 1998
Page 7
Acknowledged and Agreed:
Executed under seal on the date set forth above.
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Xxx X. Xxxxxx, Guarantor
STATE OF ______________________
COUNTY OF ____________________ August __, 1998
Then personally appeared the above-named Xxx X. Xxxxxx and acknowledged the
foregoing to be her free act and deed and the free act before me,
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, Notary Public
My Commission Expires:
Fremont Financial Corporation
August 25, 1998
Page 8
Acknowledged and Agreed:
Executed under seal on the date set forth above.
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Xxxxxx Xxxxxx, Guarantor
STATE OF ______________________
COUNTY OF ____________________ August __, 1998
Then personally appeared the above-named Xxxxxx Xxxxxx and acknowledged the
foregoing to be his free act and deed and the free act before me,
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, Notary Public
My Commission Expires:
