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Exhibit 10.2
CREDIT AND SECURITY AGREEMENT
BY AND BETWEEN
GARDENBURGER, INC.
AND
GB RETAIL FUNDING, LLC
November 22, 2005
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CREDIT AND SECURITY AGREEMENT
Dated as of November 22, 2005
GARDENBURGER, INC., an Oregon corporation (the “Borrower”), and GB RETAIL FUNDING, LLC, a Delaware limited liability company (together with its successors and assigns, the “Lender”) each hereby agree as follows:
Section 1.1 Definitions . Except as otherwise expressly provided in this Agreement, the following terms shall have the meanings given them in this Section:
“Accounts” shall have the meaning given it under the UCC.
“Affiliate” or “Affiliates” means any other Person controlled by, controlling or under common control with the Borrower, including any Subsidiary of the Borrower. For purposes of this definition, “control,” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.
“Agreement” means this Credit and Security Agreement.
“Annex Convertible Senior Subordinated Note” means the Convertible Senior Subordinated Note, as amended and restated, currently held by Annex Holdings I LP.
“Approved Plan of Reorganization” means a plan of reorganization that is acceptable to the Lender in its sole discretion, given all material changes in the Borrower’s operations and providing for Exit Financing by the Lender and Wells Fargo, which plan of reorganization is confirmed by the Bankruptcy Court within six months after the Funding Date.
“Availability” means the “Availability” as defined in the Wells Fargo Credit Agreement as in effect as of the date hereof.
“Bankruptcy Case” means the chapter 11 bankruptcy case in which the Borrower is a debtor and debtor-in-possession, pending before the United States Bankruptcy Court for the Central District of California, bearing case number 05-19539-JB.
“Bankruptcy Code” means Title 11 United States Code and the Federal Rules of Bankruptcy Procedure, as amended from time to time.
“Bankruptcy Court” means the United States Bankruptcy Court for the Central District of California, in which the Borrower’s Bankruptcy Case is pending.
“Business Day” means a day on which the Federal Reserve Bank of New York is open for business.
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“Capital Expenditures” means for a period, any expenditure of money during such period for the purchase or construction of assets, or for improvements or additions thereto, which are capitalized on the Borrower’s balance sheet.
“Change of Control” means that either Scott C. Wallace, James W. Linford or Richard D. Werblin shall cease to actively manage the Borrower’s day-to-day business activities.
“Collateral” means all of the Borrower’s Accounts, chattel paper and electronic chattel paper, commercial tort claims, deposit accounts, documents, Equipment, General Intangibles (including payment intangibles), goods, instruments, Inventory, Investment Property, letter-of-credit rights, letters of credit, software, supporting obligations, and all sums on deposit in any Collateral Account, and any items in any Lockbox; together with (i) all substitutions and replacements for and products of any of the foregoing; (ii) in the case of all goods, all accessions; (iii) all accessories, attachments, parts, equipment and repairs now or hereafter attached or affixed to or used in connection with any goods; (iv) all warehouse receipts, bills of lading and other documents of title now or hereafter covering such goods; (v) all collateral subject to the Lien of any Security Document; (vi) any money, or other assets of the Borrower that now or hereafter come into the possession, custody, or control of the Lender; (vii) proceeds of any and all of the foregoing; (viii) books and records of the Borrower, including all mail or electronic mail addressed to the Borrower; and all rights of access to such books, records, and information, and all property in which such books, records, and information are stored, recorded and maintained, (ix) all liens, guaranties, rights, remedies, and privileges pertaining to any of the foregoing ((i) through (viii)), including the right of stoppage in transit, and (x) all of the foregoing, whether now owned or existing or hereafter acquired or arising or in which the Borrower now has or hereafter acquires any.
“Collateral Account” means the “Lender Account” as defined in the Wholesale Lockbox and Collection Account Agreement.
“Commitment” means the Lender’s commitment to make the Term Loan for the account of the Borrower.
“Constituent Documents” means with respect to any Person, as applicable, such Person’s certificate of incorporation, articles of incorporation, by-laws, certificate of formation, articles of organization, limited liability company agreement, management agreement, operating agreement, shareholder agreement, partnership agreement or similar document or agreement governing such Person’s existence, organization or management or concerning disposition of ownership interests of such Person or voting rights among such Person’s owners.
“Credit Facility” means the credit facility under which the Term Loan is made available to the Borrower by the Lender under Article II.
“Debt” means of a Person as of a given date, all items of indebtedness or liability which in accordance with GAAP would be included in determining total liabilities as shown on the liabilities side of a balance sheet for such Person and shall also include the aggregate payments
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required to be made by such Person at any time under any lease that is considered a capitalized lease under GAAP.
“Default” means an event that, with giving of notice or passage of time or both, would constitute an Event of Default.
“Default Period” means any period of time beginning on the day a Default or Event of Default occurs and ending on the date identified by the Lender in writing as the date that such Default or Event of Default has been cured or waived.
“Default Rate” means an annual interest rate in effect during a Default Period or following the Termination Date, which interest rate shall be equal to three percent (3%) over the applicable Floating Rate, as such rate may change from time to time.
“Designated Account” shall mean the account held by the Lender at Bank of America, N.A. with the following wiring instructions: Bank of America – Boston, MA; Account #942-9428385133; ABA #026 009 593; Re: Gardenburger.
“Director” means a director if the Borrower is a corporation, a governor or manager if the Borrower is a limited liability company, or a general partner if the Borrower is a partnership.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that is a member of a group which includes the Borrower and which is treated as a single employer under Section 414 of the IRC.
“Environmental Law” means any federal, state, local or other governmental statute, regulation, law or ordinance dealing with the protection of human health and the environment.
“Equipment” means all of the Borrower’s equipment, as such term is defined in the UCC, whether now owned or hereafter acquired, including all present and future machinery, vehicles, furniture, fixtures, manufacturing equipment, shop equipment, office and recordkeeping equipment, parts, tools, supplies, and including specifically the goods described in any equipment schedule or list herewith or hereafter furnished to the Lender by the Borrower.
“Event of Default” is defined in Section 7.1.
“Existing Credit Facility” means that certain Revolving Credit and Term Loan Agreement dated as of January 10, 2002, as amended, between the Borrower and CapitalSource Finance LLC, as agent and lender.
“Exit Financing” means the credit facility to be provided by the Lender to the Borrower after the Bankruptcy Court confirms an Approved Plan of Reorganization and pursuant to such Approved Plan of Reorganization the terms of such credit facility to be substantially similar to
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the terms set forth in this Agreement as modified by the Exit Financing Commitment Letter attached hereto as Exhibit D.
“Filing Date” means October 14, 2005, the date of commencement of the Bankruptcy Case.
“Financial Covenants” means the covenants set forth in Section 6.2.
“Final Financing Order” means the order defined in Section 4.1(s).
“Floating Rate” means an annual interest rate equal to the sum of the Prime Rate plus six and three quarters percent (6.75%), which interest rate shall, in each case, change when and as the Prime Rate changes.
“Funding Date” is the date that all of the conditions set forth in Section 4.1 are satisfied.
“GAAP” means generally accepted accounting principles, applied on a basis consistent with the accounting practices applied in the financial statements described in Section 5.6.
“General Intangibles” shall have the meaning given it under the UCC.
“Hazardous Substances” means pollutants, contaminants, hazardous substances, hazardous wastes, petroleum and fractions thereof, and all other chemicals, wastes, substances and materials listed in, regulated by or identified in any Environmental Law.
“Indemnified Liabilities” is defined in Section 8.6.
“Indemnitees” is defined in Section 8.6.
“Infringement” or “Infringing” when used with respect to Intellectual Property Rights means any infringement or other violation of Intellectual Property Rights.
“Intellectual Property Rights” means all actual or prospective rights arising in connection with any intellectual property or other proprietary rights, including all rights arising in connection with copyrights, patents, service marks, trade dress, trade secrets, trademarks, trade names or mask works.
“Intellectual Property Security Agreement” means each and every Intellectual Property Security Agreement now or hereafter executed by the Borrower in favor of the Lender dated the same date as this Agreement.
“Intercreditor Agreement” means an intercreditor agreement between the Lender and Wells Fargo in form and substance satisfactory to the Lender, which intercreditor agreement shall include provisions for subordination of Wells Fargo’s Liens on the IP Collateral to the Security Interest and such other provisions as the Lender shall require in order to protect its rights with respect to the IP Collateral.
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“Interest Expense” means for any period, the Borrower’s total gross interest expense during such period (excluding interest income), and shall in any event include (i) interest expensed (whether or not paid) on all Debt and (ii) the portion of any capitalized lease obligation allocable to interest expense.
“Interest Payment Date” is defined in Section 2.5(a).
“Inventory” shall have the meaning given it under the UCC.
“Investment Property” shall have the meaning given it under the UCC.
“IP Collateral” such portion of the Collateral consisting of, without limitation, copyrights, copyright licenses, licenses, patents, patent licenses, trademarks, trademark licenses, all renewals of the foregoing, all General Intangibles (except payment intangibles and proceeds therefrom), all income, all goodwill, recipes, customer lists, Licensed Intellectual Property, Owned Intellectual Property, royalties, damages and payments now and hereafter due and/or payable under and with respect to any of the foregoing, including, without limitation, payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof; and the right to sue for past, present and future infringements and dilutions of any of the foregoing; and all of the Borrower’s rights corresponding to any of the foregoing throughout the world.
“IRC” means the Internal Revenue Code of 1986, as amended from time to time.
“Licensed Intellectual Property” is defined in Section 5.11(c).
“Lien” means any security interest, mortgage, deed of trust, pledge, lien, charge, encumbrance, title retention agreement or analogous instrument or device, including the interest of each lessor under any capitalized lease and the interest of any bondsman under any payment or performance bond, in, of or on any assets or properties of a Person, whether now owned or subsequently acquired and whether arising by agreement or operation of law.
“Loan Documents” means this Agreement, the Note, the Intercreditor Agreement, and the Security Documents, together with every other agreement, note, document, contract or instrument to which the Borrower now or in the future may be a party and which is required by the Lender.
“Lockbox” means “Lockbox” as defined in the Wholesale Lockbox and Collection Account Agreement.
“Maturity Date” means the earliest to occur of (a) July 31, 2006, or (b) the date on which the credit facilities under the Exit Financing are effective. Upon the effective date of an Approved Plan of Reorganization in the Bankruptcy Case, the Maturity Date shall mean 36 months from the Funding Date.
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“Multiemployer Plan” means a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) to which the Borrower or any ERISA Affiliate contributes or is obligated to contribute.
“Net Cash Flow” means, for any period, (a) Borrower’s cash collections from account debtors received during such period, minus (b) Borrower’s operating disbursements made during such period, minus (c) all principal payments on Borrower’s Debt paid or payable during such period, minus (d) Interest Expense for such period.
“Net Cash Proceeds” means in connection with any asset sale, the cash proceeds (including any cash payments received by way of deferred payment whether pursuant to a note, installment receivable or otherwise, but only as and when actually received) from such asset sale, net of (i) attorneys’ fees, accountants’ fees, investment banking fees, brokerage commissions and amounts required to be applied to the repayment of any portion of the Debt secured by a Lien not prohibited hereunder on the asset which is the subject of such sale, and (ii) taxes paid or reasonably estimated to be payable as a result of such asset sale.
“Net Forced Liquidation Value” means a professional opinion of the estimated most probable Net Cash Proceeds which could typically be realized at a properly advertised and conducted public auction sale without reserve, held under forced sale conditions and under economic trends current within 60 days of the appraisal. The opinion may consider physical location, difficulty of removal, adaptability, specialization, marketability, physical condition, overall appearance and psychological appeal.
“Net Income” means fiscal year-to-date after-tax net income from continuing operations, including extraordinary losses but excluding extraordinary gains, all as determined in accordance with GAAP.
“Net Loss” means fiscal year-to-date after-tax net loss from continuing operations as determined in accordance with GAAP.
“Net Sales” means, for any period, (a) Borrower’s gross sales, minus (b) Borrower’s slotting distributions, minus (c) contractual customer payments made by the Borrower, minus , (d) trade allowances made by the Borrower, minus (e) coupon redemptions, minus (f) all other offsets made or attributable to the Borrower’s gross sales.
“Obligations” means the Term 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 all indebtedness of the Borrower arising under any Loan Document or guaranty between the Borrower and the Lender, whether now in effect or subsequently entered into.
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“Officer” means with respect to the Borrower, an officer if the Borrower is a corporation, a manager if the Borrower is a limited liability company, or a partner if the Borrower is a partnership.
“OFAC” is defined in Section 6.11(c).
“Owned Intellectual Property” is defined in Section 5.11(a).
“Owner” means with respect to the Borrower, each Person having legal or beneficial title to an ownership interest in the Borrower or a right to acquire such an interest.
“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA) maintained for employees of the Borrower or any ERISA Affiliate and covered by Title IV of ERISA.
“Permitted Lien” and “Permitted Liens” are defined in Section 6.3(a).
“Person” means any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) maintained for employees of the Borrower or any ERISA Affiliate.
“Premises” means all locations where the Borrower conducts its business or has any rights of possession, including the locations legally described in Exhibit C attached hereto.
“Prime Rate” means at any time the rate of interest most recently announced by Wells Fargo Bank, National Association at its principal office as its Prime Rate, with the understanding that the Prime Rate is one of Wells Fargo Bank, National Association’s base rates, and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof in such internal publication or publications as the Lender may designate. Each change in the rate of interest shall become effective on the date each Prime Rate change is announced by Wells Fargo Bank, National Association.
“Reportable Event” means a reportable event (as defined in Section 4043 of ERISA), other than an event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the Pension Benefit Guaranty Corporation.
“Security Documents” means this Agreement, the Wholesale Lockbox and Collection Account Agreement, the Intellectual Property Security Agreement and any other document delivered to the Lender from time to time to secure the Obligations.
“Security Interest” is defined in Section 3.1.
“Subsidiary” means any Person of which more than 50% of the outstanding ownership interests having general voting power under ordinary circumstances to elect a majority of the
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board of directors or the equivalent of such Person, regardless of whether or not at the time ownership interests of any other class or classes shall have or might have voting power by reason of the happening of any contingency, is at the time directly or indirectly owned by the Borrower, by the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries.
“Term Advance” is defined in Section 2.1.
“Term Loan Amount” is $5,000,000.00.
“Term Note” means the Borrower’s promissory note, payable to the order of the Lender in substantially the form of Exhibit A hereto, as same may be renewed and amended from time to time, and all replacements thereto.
“Termination Date” means the earliest of (i) the Maturity Date, (ii) the date the Borrower terminates the Credit Facility, (iii) the date of the sale of all or substantially all of the Borrower’s assets pursuant to a sale under 11 U.S.C. Section 363, 1123 or 1129 or otherwise, (iv) the effective date of a plan of reorganization in the Bankruptcy Case that is not an Approved Plan of Reorganization, (v) conversion or dismissal of the Bankruptcy Case, (vi) appointment of a trustee or examiner in the Bankruptcy Case or (vii) the date the Lender demands payment of the Obligations, following an Event of Default, pursuant to Section 7.2.
“UCC” means the Uniform Commercial Code as in effect in the state designated in this Agreement as the state whose laws shall govern this Agreement, or in any other state whose laws are held to govern this Agreement or any portion of this Agreement.
“Wells Fargo” means Wells Fargo Bank, National Association acting through its Wells Fargo Business Credit operating division.
“Wells Fargo Credit Agreement” means that certain Credit and Security agreement of even date herewith by and between Borrower as borrower thereunder and Wells Fargo as lender thereunder.
“Wells Fargo Credit Facility” consists of the Wells Fargo Revolving Loan and the Wells Fargo Term Loan.
“Wells Fargo Revolving Loan” means the revolving loan in an aggregate principal amount not to exceed $7,500,000 made by Wells Fargo to the Borrower concurrently with the closing of this Agreement.
“Wells Fargo Revolving Note” means the Borrower’s revolving promissory note, payable to the order of Wells Fargo of even date herewith.
“Wells Fargo Term Loan” means the term loan in the amount of $2,238,000.00 made by Wells Fargo to the Borrower concurrently with the closing of this Agreement.
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“Wells Fargo Term Loan Note” means the Borrower’s term loan note, payable to the order of Wells Fargo of even date herewith
“Wholesale Lockbox and Collection Account Agreement” means the Wholesale Lockbox and Collection Account Agreement by and among the Borrower, Lender, and Wells Fargo, dated the same date as this Agreement.
“Yield Maintenance Fee” is a fee equal to the difference between the total amount of interest and fees payable to the Lender on the principal amount of the Term Advance being prepaid from the date of such prepayment through the first anniversary of the date of this Agreement, minus the total amount of interest and fees theretofor actually received by Lender on the date of such prepayment.
Section 1.2 Other Definitional Terms; Rules of Interpretation . The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP. All terms defined in the UCC and not otherwise defined herein have the meanings assigned to them in the UCC. References to Articles, Sections, subsections, Exhibits, Schedules and the like, are to Articles, Sections and subsections of, or Exhibits or Schedules attached to, this Agreement unless otherwise expressly provided. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. Unless the context in which used herein otherwise clearly requires, “or” has the inclusive meaning represented by the phrase “and/or”. Defined terms include in the singular number the plural and in the plural number the singular. Reference to any agreement (including the Loan Documents), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof (and, if applicable, in accordance with the terms hereof and the other Loan Documents), except where otherwise explicitly provided, and reference to any promissory note includes any promissory note which is an extension or renewal thereof or a substitute or replacement therefor. Reference to any law, rule, regulation, order, decree, requirement, policy, guideline, directive or interpretation means as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect on the determination date, including rules and regulations promulgated thereunder.
ARTICLE II.
(a) The Lender agrees, subject to the terms and conditions of this Agreement, to make a single advance to the Borrower on the Funding Date (the “Term Advance”) in an amount equal to the Term Loan Amount. The Borrower’s obligation to pay the Term Advance shall be evidenced by the Term Note and shall be secured by the Collateral as provided in Article III.
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(b) Upon fulfillment of the applicable conditions set forth in Article IV, the Lender shall deposit the proceeds of the Term Advance in the manner agreed to in writing by the Lender and the Borrower.Section 2.2 Payment of Term Note . The outstanding principal balance of the Term Note shall be due and payable as follows:
(a) In equal monthly installments of $100,000.00, payable monthly in arrears, beginning on November 30, 2005, and on the last day of each month thereafter.(b) All prepayments of principal with respect to the Term Note shall be applied to the most remote principal installment or installments then unpaid.(c) On the Termination Date, the entire unpaid principal balance of the Term Note, and all unpaid interest accrued thereon, shall in any event be due and payable.Section 2.3 Interest; Default Interest Rate; Application of Payments; Participations; Usury.
(a) Interest . Except as provided in Section 2.3(b) and Section 2.3(e), all Obligations shall bear interest at the Floating Rate.(b) Default Interest Rate . At any time during any Default Period or following the Termination Date, in the Lender’s sole discretion and without waiving any of its other rights or remedies, the principal of the Term Note shall bear interest at the Default Rate or such lesser rate as the Lender may determine, effective as of the first day of the month in which any Default Period begins through the last day of such Default Period, or any shorter time period that the Lender may determine. The decision of the Lender to impose a rate that is less than the Default Rate or to not impose the Default Rate for the entire duration of the Default Period shall be made by the Lender in its sole discretion and shall not be a waiver of any of its other rights and remedies, including its right to retroactively impose the full Default Rate for the entirety of any such Default Period or following the Termination Date.(c) Application of Payments. Payments shall be applied to the Obligations on the Business Day of receipt by the Lender in the Lender’s general account, but the amount of principal paid shall continue to accrue interest at the interest rate applicable under the terms of this Agreement from the calendar day the Lender receives the payment, and continuing through the end of the first Business Day following receipt of the payment.(d) Participations . If any Person shall acquire a participation in the Term Loan Advance, the Borrower shall be obligated to the Lender to pay the full amount of all interest calculated under this Section 2.3, along with all other fees, charges and other amounts due under this Agreement, regardless if such Person elects to accept interest with respect to its participation at a lower rate than that calculated under this Section 2.3, or otherwise elects to accept less than its pro rata share of such fees, charges and other amounts due under this Agreement.
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(e) Usury . In any event no rate change shall be put into effect which would result in a rate greater than the highest rate permitted by law. Notwithstanding anything to the contrary contained in any Loan Document, all agreements which either now are or which shall become agreements between the Borrower and the Lender are hereby limited so that in no contingency or event whatsoever shall the total liability for payments in the nature of interest, additional interest and other charges exceed the applicable limits imposed by any applicable usury laws. If any payments in the nature of interest, additional interest and other charges made under any Loan Document are held to be in excess of the limits imposed by any applicable usury laws, it is agreed that any such amount held to be in excess shall be considered payment of principal hereunder, and the indebtedness evidenced hereby shall be reduced by such amount so that the total liability for payments in the nature of interest, additional interest and other charges shall not exceed the applicable limits imposed by any applicable usury laws, in compliance with the desires of the Borrower and the Lender. This provision shall never be superseded or waived and shall control every other provision of the Loan Documents and all agreements between the Borrower and the Lender, or their successors and assigns.
(a) Origination Fee . The Borrower shall pay the Lender a fully earned and non-refundable origination fee of $100,000, due and payable immediately upon the making of the Term Advance.(b) Prepayment Fees . The Borrower may prepay the principal amount of the Term Note at any time, whether voluntarily or by acceleration, subject to the payment of fees as follows:(i) If the Term Note is prepaid for any reason prior to the first anniversary of the date of this Agreement, the Borrower shall pay to the Lender the Yield Maintenance Fee.The Borrower acknowledges that a prepayment may result in the Lender incurring additional costs, expenses or liabilities, and that it is difficult to ascertain the full extent of such costs, expenses or liabilities. The Borrower therefore agrees to pay the above-described prepayment fee and agrees that said prepayment fee represents a reasonable estimate of the prepayment costs, expenses or liabilities of the Lender.
(c) Waiver of Prepayment Fees . The Borrower, at the Lender’s discretion, will be excused from the payment of prepayment fees if the prepayment is made because of refinancing through another division of Lender.(d) Other Fees and Charges; Payment of Fees . The Lender may from time to time impose additional fees and charges for other events that constitute an Event of Default or a Default hereunder, including fees and charges for the administration of Collateral by the Lender, and fees and charges for the late delivery of reports, which may be assessed in the
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Lender’s sole discretion on either an hourly, periodic, or flat fee basis, and in lieu of or in addition to imposing interest at the Default Rate.Section 2.5 Time for Interest Payments; Payment on Non-Business Days; Computation of Interest and Fees.
(a) Time For Interest Payments . Accrued and unpaid interest accruing on the Term Advance shall be due and payable in arrears on the last day of each month and on the Termination Date (each an “Interest Payment Date”), or if any such day is not a Business Day, on the next succeeding Business Day. Interest will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of advance to the Interest Payment Date. If an Interest Payment Date is not a Business Day, payment shall be made on the next succeeding Business Day.(b) Payment on Non-Business Days . Whenever any payment to be made hereunder shall be stated to be due on a day which is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest on the Term Advance or the fees hereunder, as the case may be.(c) Computation of Interest and Fees . Interest accruing on the outstanding principal balance of the Term Advance and fees hereunder outstanding from time to time shall be computed on the basis of actual number of days elapsed in a year of 360 days.Section 2.6 Lockbox and Collateral Account; Sweep of Funds.
(a) Lockbox and Collateral Account .(i) The Borrower shall instruct all account debtors to pay all Accounts directly to the Lockbox. If, notwithstanding such instructions, the Borrower receives any payments on Accounts, the Borrower shall deposit such payments into the Collateral Account. The Borrower shall also deposit all other cash proceeds of Collateral regardless of source or nature directly into the Collateral Account. Until so deposited, the Borrower shall hold all such payments and cash proceeds in trust for and as the property of the Lender and shall not commingle such property with any of its other funds or property. All deposits in the Collateral Account shall constitute proceeds of Collateral and shall not constitute payment of the Obligations.(ii) All items deposited in the Collateral Account shall be subject to final payment. If any such item is returned uncollected, the Borrower will immediately pay to Wells Fargo, (or upon the termination of the Wells Fargo Credit Facility, to Lender) or, for items deposited in the Collateral Account, the bank maintaining such account, the amount of that item, or such bank at its discretion may charge any uncollected item to the Borrower’s commercial account or other account. The Borrower shall be liable as an endorser on all items deposited in the Collateral Account, whether or not in fact endorsed by the Borrower.
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(b) Sweep of Funds . Wells Fargo, (or, upon termination of the Wells Fargo Facility, the Lender) shall daily, in accordance with the Wholesale Lockbox and Collection Account Agreement, cause funds in the Collateral Account to be transferred to Wells Fargo’s (or the Lender’s as applicable) general account for payment of the Obligations. Amounts deposited in the Collateral Account shall not be subject to withdrawal by the Borrower, except after payment in full and discharge of all Obligations.Section 2.7 Voluntary Prepayment; Termination of the Credit Facility by the Borrower . Except as otherwise provided herein, the Borrower may prepay the Term Advance in whole at any time or from time to time in part. The Borrower may terminate the Credit Facility at any time if it (i) gives the Lender at least 90 days advance written notice prior to the proposed Termination Date, and (ii) pays the Lender applicable termination and prepayment in accordance with Section 2.4(b) and Section 2.4(c). If the Borrower terminates the Credit Facility, all Obligations shall be immediately due and payable, and if the Borrower gives the Lender less than the required 90 days advance written notice, then the interest rate applicable to the borrowing evidenced by the Term Note shall be the Default Rate for the period of time commencing 90 days prior to the proposed Termination Date through the date that the Lender actually receives such written notice. If the Borrower does not wish the Lender to consider renewal of the Credit Facility on the next Maturity Date, then the Borrower shall give the Lender at least 90 days written notice prior to the Maturity Date that it will not be requesting renewal. If the Borrower fails to give the Lender such timely notice, then the interest rate applicable to the borrowing evidenced by the Term Note shall be the Default Rate for the period of time commencing 90 days prior to the Maturity Date through the date that the Lender actually receives such written notice
Section 2.8 Use of Proceeds . The Borrower shall use the proceeds of the Term Advance to refinance the Existing Credit Facility, pay bankruptcy administrative claims and professional fees, pay closing costs in connection with the Credit Facility and the Wells Fargo Revolving Loan, and for ordinary working capital purposes.
Section 2.9 Liability Records . The Lender may maintain from time to time, at its discretion, records as to the Obligations. All entries made on any such record shall be presumed correct until the Borrower establishes the contrary. Upon the Lender’s demand, the Borrower will admit and certify in writing the exact principal balance of the Obligations that the Borrower then asserts to be outstanding. Any billing statement or accounting rendered by the Lender shall be conclusive and fully binding on the Borrower unless the Borrower gives the Lender specific written notice of exception within 30 days after receipt.
Section 2.10 Payments to Lender . All payments to Lender shall be transferred by Borrower to the Designated Account.
Section 2.11 Sale of IP Collateral . All proceeds from the sale of any of the IP Collateral shall be immediately deposited into the Designated Account.
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ARTICLE III.
Section 3.1 Grant of Security Interest . The Borrower hereby pledges, assigns and grants to the Lender a lien and security interest (collectively referred to as the “Security Interest”) in the Collateral, as security for the payment and performance of the Obligations. Upon request by the Lender, the Borrower will grant the Lender a security interest in all commercial tort claims that the Borrower may have against any Person.
Section 3.2 Notification of Account Debtors and Other Obligors . The Lender may at any time (whether or not a Default Period then exists) notify any account debtor or other Person obligated to pay the amount due that such right to payment has been assigned or transferred to the Lender for security and shall be paid directly to the Lender. The Borrower will join in giving such notice if the Lender so requests. At any time after the Borrower or the Lender gives such notice to an account debtor or other obligor, the Lender may, but need not, in the Lender’s name or in the Borrower’s name, demand, sue for, collect or receive any money or property at any time payable or receivable on account of, or securing, any such right to payment, or grant any extension to, make any compromise or settlement with or otherwise agree to waive, modify, amend or change the obligations (including collateral obligations) of any such account debtor or other obligor. The Lender may, in the Lender’s name or in the Borrower’s name, as the Borrower’s agent and attorney-in-fact, notify the United States Postal Service to change the address for delivery of the Borrower’s mail to any address designated by the Lender, otherwise intercept the Borrower’s mail, and receive, open and dispose of the Borrower’s mail, applying all Collateral as permitted under this Agreement and holding all other mail for the Borrower’s account or forwarding such mail to the Borrower’s last known address.
Section 3.3 Assignment of Insurance . As additional security for the payment and performance of the Obligations, the Borrower hereby assigns to the Lender any and all monies (including proceeds of insurance and refunds of unearned premiums) due or to become due under, and all other rights of the Borrower with respect to, any and all policies of insurance now or at any time hereafter covering the Collateral or any evidence thereof or any business records or valuable papers pertaining thereto, and the Borrower hereby directs the issuer of any such policy to pay all such monies directly to the Lender. At any time, whether or not a Default Period then exists, the Lender may (but need not), in the Lender’s name or in the Borrower’s name, execute and deliver proof of claim, receive all such monies, endorse checks and other instruments representing payment of such monies, and adjust, litigate, compromise or release any claim against the issuer of any such policy. Any monies received as payment for any loss under any insurance policy mentioned above (other than liability insurance policies) or as payment of any award or compensation for condemnation or taking by eminent domain, shall be paid over to the Lender to be applied, at the option of the Lender, either to the prepayment of the Obligations or shall be disbursed to the Borrower under staged payment terms reasonably satisfactory to the Lender for application to the cost of repairs, replacements, or restorations. Any such repairs, replacements, or restorations shall be effected with reasonable promptness and shall be of a value at least equal to the value of the items or property destroyed prior to such damage or destruction.
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(a) The Borrower hereby irrevocably grants to the Lender the right to take exclusive possession of the Premises at any time during a Default Period without notice or consent.(b) The Lender may use the Premises only to hold, process, manufacture, sell, use, store, liquidate, realize upon or otherwise dispose of goods that are Collateral and for other purposes that the Lender may in good faith deem to be related or incidental purposes.(c) The Lender’s right to hold the Premises shall cease and terminate upon the earlier of (i) payment in full and discharge of all Obligations and termination of the Credit Facility, and (ii) final sale or disposition of all goods constituting Collateral and delivery of all such goods to purchasers.(d) The Lender shall not be obligated to pay or account for any rent or other compensation for the possession, occupancy or use of any of the Premises; provided , however , that if the Lender does pay or account for any rent or other compensation for the possession, occupancy or use of any of the Premises, the Borrower shall reimburse the Lender promptly for the full amount thereof. In addition, the Borrower will pay, or reimburse the Lender for, all taxes, fees, duties, imposts, charges and expenses at any time incurred by or imposed upon the Lender by reason of the execution, delivery, existence, recordation, performance or enforcement of this Agreement or the provisions of this Section 3.4.
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Section 3.5 Financing Statement . The Borrower authorizes the Lender to file from time to time, such financing statements against collateral described as “all personal property” or “all assets” or describing specific items of collateral including commercial tort claims as the Lender deems necessary or useful to perfect the Security Interest. All financing statements filed before the date hereof to perfect the Security Interest were authorized by the Borrower and are hereby re-authorized. A carbon, photographic or other reproduction of this Agreement or of any financing statements signed by the Borrower is sufficient as a financing statement and may be filed as a financing statement in any state to perfect the security interests granted hereby. For this purpose, the Borrower represents and warrants that the following information is true and correct:
Name and address of Debtor:
Gardenburger, Inc. 15615 Alton Parkway, Suite 350 Irvine, California 92618 Federal Employer Identification No. 93-0886359 Organizational Identification No. 208236-13
Name and address of Secured Party:
GB Retail Funding, LLC 40 Broad Street, Boston, MA 02109 Attn: Lawrence E. Klaff, Managing Director Fax No.: (617) 210-7141
Section 3.6 Setoff. The Lender may at any time or from time to time, at its sole discretion and without demand and without notice to anyone, setoff any liability owed to the Borrower by the Lender, whether or not due, against any Obligation, whether or not due. In addition, each other Person holding a participating interest in any Obligations shall have the right to appropriate or setoff any deposit or other liability then owed by such Person to the Borrower, whether or not due, and apply the same to the payment of said participating interest, as fully as if such Person had lent directly to the Borrower the amount of such participating interest.
Section 3.7 Collateral . This Agreement does not contemplate a sale of accounts, contract rights or chattel paper, and, as provided by law, the Borrower is entitled to any surplus and shall remain liable for any deficiency. The Lender’s duty of care with respect to Collateral in its possession (as imposed by law) shall be deemed fulfilled if it exercises reasonable care in physically keeping such Collateral, or in the case of Collateral in the custody or possession of a bailee or other third Person, exercises reasonable care in the selection of the bailee or other third Person, and the Lender need not otherwise preserve, protect, insure or care for any Collateral. The Lender shall not be obligated to preserve any rights the Borrower may have against prior parties, to realize on the Collateral at all or in any particular manner or order or to apply any cash proceeds of the Collateral in any particular order of application. The Lender has no obligation to
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clean-up or otherwise prepare the Collateral for sale. The Borrower waives any right it may have to require the Lender to pursue any third Person for any of the Obligations.
ARTICLE IV.
Section 4.1 Conditions Precedent to the Issuance of the Term Advance . The Lender’s obligation to make the Term Advance shall be subject to the condition precedent that the Lender shall have received all of the following, each properly executed by the appropriate party and in form and substance satisfactory to the Lender:
(a) This Agreement.(b) The Term Note.(c) A true and correct copy of any and all leases pursuant to which the Borrower is leasing the Premises, together with a landlord’s disclaimer and consent with respect to each such lease.(d) A true and correct copy of any and all agreements pursuant to which the Borrower’s property is in the possession of any Person other than the Borrower, together with, in the case of any goods held by such Person for resale, (i) a consignee’s acknowledgment and waiver of Liens, (ii) UCC financing statements sufficient to protect the Borrower’s and the Lender’s interests in such goods, and (iii) UCC searches showing that no other secured party has filed a financing statement against such Person and covering property similar to the Borrower’s other than the Borrower, or if there exists any such secured party, evidence that each such secured party has received notice from the Borrower and the Lender sufficient to protect the Borrower’s and the Lender’s interests in the Borrower’s goods from any claim by such secured party.(e) An acknowledgment and waiver of Liens from each warehouse in which the Borrower is storing Inventory.(f) A true and correct copy of any and all agreements pursuant to which the Borrower’s property is in the possession of any Person other than the Borrower, together with, (i) an acknowledgment and waiver of Liens from each subcontractor who has possession of the Borrower’s goods from time to time, (ii) UCC financing statements sufficient to protect the Borrower’s and the Lender’s interests in such goods, and (iii) UCC searches showing that no other secured party has filed a financing statement covering such Person’s property other than the Borrower, or if there exists any such secured party, evidence that each such secured party has received notice from the Borrower and the Lender sufficient to protect the Borrower’s and the Lender’s interests in the Borrower’s goods from any claim by such secured party.(g) The Wholesale Lockbox and Collection Agreement.17(h) The Intellectual Property Security Agreement.(i) The Intercreditor Agreement.(j) Current searches of appropriate filing offices showing that (i) no Liens have been filed and remain in effect against the Borrower except Permitted Liens or Liens held by Persons who have agreed in writing that upon receipt of proceeds of the Term Advance, they will satisfy, release or terminate such Liens in a manner satisfactory to the Lender, and (ii) the Lender has duly filed all financing statements necessary to perfect the Security Interest, to the extent the Security Interest is capable of being perfected by filing.(k) The Lender’s Security Interest must have been perfected to the satisfaction of the Lender and its counsel. The Final Financing Order from the Bankruptcy Court shall provide that the Security Interests granted to the Lender as security for all of the Obligations shall be effective and perfected upon the date of the Final Financing Order and without the necessity of the execution or recordation of mortgages, security agreements, financing statements, notices of lien or similar instruments in any jurisdiction or of the taking of any other action.(l) A certificate of the Borrower’s President, Secretary or Assistant Secretary certifying that attached to such certificate are (i) the resolutions of the Borrower’s Directors and, if required, Owners, authorizing the execution, delivery and performance of the Loan Documents, (ii) true, correct and complete copies of the Borrower’s Constituent Documents, and (iii) examples of the signatures of the Borrower’s Officers or agents authorized to execute and deliver the Loan Documents and other instruments, agreements and certificates on the Borrower’s behalf.(m) A current certificate issued by the Secretary of State of Oregon , certifying that the Borrower is in compliance with all applicable organizational requirements of the State of Oregon.(n) Evidence that the Borrower is duly licensed or qualified to transact business in all jurisdictions where the character of the property owned or leased or the nature of the business transacted by it makes such licensing or qualification necessary.(o) A certificate of an Officer of the Borrower confirming, in his personal capacity, the representations and warranties set forth in Article V.(p) Certificates of the insurance required hereunder, with all hazard insurance containing a lender’s loss payable endorsement in the Lender’s favor and with all liability insurance naming the Lender as an additional insured.(q) Payment of the fees and commissions due under Section 2.4 and expenses incurred by the Lender through such date and required to be paid by the Borrower under Section 8.5, including all legal expenses incurred through the date of this Agreement.18(r) Approval of the Wells Fargo commitment letter in respect to the amendment or extension of the Wells Fargo Credit Facility upon the effective date of an Approved Plan of Reorgan | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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