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EXHIBIT 10.17
AMENDMENT NO. 3
TO
CREDIT AND SECURITY AGREEMENT
THIS AMENDMENT NO. 3 TO CREDIT AND SECURITY AGREEMENT
("Amendment") is made and entered into this 21st day of August 2001, by and
between LIFECORE BIOMEDICAL, INC., a Minnesota corporation (the "Borrower"), and
U.S. BANK NATIONAL ASSOCIATION, a national banking association (the "Lender").
RECITALS:
A. The Borrower and the Lender are parties to that certain
Credit and Security Agreement dated as of December 29, 1998, as amended by that
certain Amendment No. 1 to Credit and Security Agreement dated as of February 7,
2000 and as further amended by that certain Amendment No. 2 to Credit and
Security Agreement dated as of July 21, 2000 (as so amended, and as may be
hereafter amended from time to time, the "Credit Agreement").
B. The Borrower and the Lender desire to amend certain
provisions of the Credit Agreement, to provide for waivers of certain financial
covenant defaults that has occurred under the Credit Agreement, and to provide
for a waiver of certain financial covenants under the Credit Agreement, all on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereby agree as follows:
1. Definitions. All capitalized terms used herein shall have
the meanings given such terms in the Credit Agreement.
2. Waiver.
(a) The Borrower agreed, pursuant to Section 7.1 of
Supplement A to the Credit Agreement, not to permit the Net
Worth of Borrower to be less than: (i) as of April 30, 2001,
$52,933,000, and (ii) as of May 31, 2001, $51,000,000, plus
50% of the Borrower's cumulative after-tax net income (without
deduction for losses) earned on or after July 1, 1998, plus
100% of the book value increase resulting from the issuance of
any capital stock including, without limitation, any increase
in paid-in capital resulting from such issuance. The Borrower
has advised the Lender that the Net Worth of the Borrower on
such dates was less than the minimum Net Worth requirement for
the periods ending on such dates.
(b) The Borrower has requested that the Lender waive
the Borrower's noncompliance with Section 7.1 of Supplement A
to the Credit Agreement by reason of the events and
circumstances described in subparagraph 2(a) above and, in
reliance upon the accuracy of the description set forth in
subparagraph 2(a)
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above of the events and circumstances necessitating the
requested waiver, the Lender hereby waives the Borrower's
noncompliance with Section 7.1 of the Credit Agreement by
reason of the events and circumstances described in
subparagraph 2(a) above.
(c) The Borrower agreed, pursuant to Section 7.6 of
Supplement A to the Credit Agreement, not to permit the FCC
Ratio of the Borrower to be less than 1.10 to 1.0 for the
period of nine (9) consecutive months ending on March 31,
2001. The Borrower has advised the Lender that the FCC Ratio
of the Borrower on such date for such period was 1.05 to 1.0.
(d) The Borrower has requested that the Lender waive
the Borrower's noncompliance with Section 7.6 of Supplement A
to the Credit Agreement by reason of the events and
circumstances described in subparagraph 2(c) above and, in
reliance upon the accuracy of the description set forth in
subparagraph 2(c) above of the events and circumstances
necessitating the requested waiver, the Lender hereby waives
the Borrower's noncompliance with Section 7.6 of the Credit
Agreement by reason of the events and circumstances described
in subparagraph 2(a) above.
(e) The Borrower agreed, pursuant to Section 6.3 of
the Credit Agreement, not to purchase or lease or otherwise
acquire all or substantially all the assets of any Person
except for Investments permitted by Section 6.11. The Borrower
has advised Lender that it desires to acquire a joint venture
in Scandinavia known as Lifecore Biomedical AB ("Joint
Venture") for a total amount of $375,000.
(f) The Borrower has requested that the Lender waive
this covenant with respect to Borrower's proposed acquisition
of the Joint Venture. By reason of the events and
circumstances described in subparagraph 2(e) above and, in
reliance upon the accuracy of the description set forth in
subparagraph 2(e) above of the events and circumstances
necessitating the requested waiver, the Lender hereby waives
the covenant set forth in Section 6.3 only with respect to the
acquisition of the Joint Venture specifically described in
subparagraph 2(e) above.
(g) In consideration of the waivers provided for in
Subparagraphs 2(b), 2(d) and 2(f) above, the Borrower
acknowledges and agrees that (i) except as expressly provided
herein, the Credit Agreement and the other Loan Documents
remain in full force and effect, (ii) the obligations of the
Borrower and the other Obligors to the Lender under the Credit
Agreement and the other Loan Documents are not, as of the date
hereof, subject to any offset, counterclaim or defense of any
type or kind, (iii) the waivers provided for herein extend and
apply only to the provisions of the Credit Agreement
specifically referred to above, and such waiver does not
extend or apply to any other term, covenant or provision of
the Credit Agreement or any other Loan Document, or any
document, instrument, agreement or certificate relating
thereto, (iv) the waivers provided for herein extends and
applies only to the events and/or circumstances specifically
described
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herein, and such waiver does not extend or apply to ' any
other event or circumstance, whether known or unknown to the
Lender and whether now existing or hereafter arising or
occurring, and (v) no failure or delay on the part of the
Lender in exercising any right or power or privilege under the
Credit Agreement or any other Loan Document shall operate as a
waiver thereof.
3. Amendments.
(a) Section 1.1 of the Credit Agreement is hereby
amended by deleting the defined terms "Business Day,"
"Reference Rate," as they appear therein, and substituting in
lieu thereof the following definitions:
"Business Day" means any day (other than a
Saturday, Sunday or legal holiday in the State of
Minnesota) on which national banks are permitted to
be open in Minneapolis, Minnesota and New York, New
York.
"Prime Rate" means the rate of interest from
time to time announced by the Lender as its "prime
rate." For purposes of determining any interest rate
which is based on the Prime Rate, such interest rate
shall be adjusted each time that the prime rate
changes.
In addition, all references in the Credit Agreement and in any
of the Loan Documents to the term "Reference Rate" are hereby
amended to refer to the "Prime Rate".
(b) The following definitions are hereby added to the
Credit Agreement:
"Annual Line Fee" shall have the meaning
given such term in Supplement A.
(c) A new paragraph 2.4(e) is added to the Credit
Agreement as follows:
(e) ANNUAL LINE FEE. The Borrower shall pay
to Lender an Annual Line Fee in the amount indicated
on Supplement A.
(d) Supplement A to the Credit Agreement is hereby amended and
restated in its entirety to conform to Supplement A (Amended 8/2001)
attached hereto.
(e) The Borrowing Base Certificate attached as Exhibit A to
the Credit Agreement is hereby amended and restated in its entirety to
conform to the Borrowing Base Certificate attached to this Amendment as
Exhibit A.
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(f) Attachment No. 1 to the Compliance Certificate attached as
Exhibit B to the Credit Agreement is hereby amended and restated in its
entirety to conform to Attachment No. 1 to Compliance Certificate
attached to this Amendment as Exhibit B.
4. Conditions Precedent. The amendments contained in this
Amendment shall become effective upon delivery by the Borrower of the following:
(a) This Amendment duly executed by the Borrower.
(b) A copy of the resolutions of the Board of Directors of the
Borrower authorizing the execution, delivery and performance of this
Amendment certified as true and accurate by its Secretary or Assistant
Secretary, along with a certificate of such Secretary or Assistant
Secretary which (i) certifies that there has been no amendment to the
Articles of Incorporation or Bylaws of the Borrower since true and
accurate copies of the same were delivered to the Lender with a
certificate of the Secretary of the Borrower dated December 29, 1998,
(ii) identifies each officer of the Borrower authorized to execute this
Amendment and any other instrument or agreement executed by the
Borrower in connection with this Amendment, and (iii) sets forth
specimen signatures of each officer of the Borrower referred to above
and identifies the office or offices held by such officer.
(c) Such other documents, instruments and agreements as the
Lender may require, and payment of all unpaid legal fees and expenses
incurred by the Lender through the date of this Amendment in connection
with the Credit Agreement and this Amendment.
5. Representations; No Default. The Borrower represents and
warrants that: (a) the Borrower has the power and legal right and authority to
enter into this Amendment and has duly authorized the execution and delivery of
this Amendment and other agreements and documents executed and delivered by the
Borrower in connection herewith, (b) neither this Amendment nor the agreements
contained herein contravene or constitute a default under any agreement,
instrument or indenture to which the Borrower is a party or a signatory, or any
provision of the Borrower's Articles of Incorporation, Bylaws or, to the best of
the Borrower's knowledge, any other agreement or requirement of law, or result
in the imposition of any lien or other encumbrance on any of its property under
any agreement binding on or applicable to the Borrower or any of its property
except, if any, in favor of the Lender, (c) no consent, approval or
authorization of or registration or declaration with any party, including but
not limited to any governmental authority, is required in connection with the
execution and delivery by the Borrower of this Amendment or other agreements and
documents executed and delivered by the Borrower in connection herewith or the
performance of obligations of the Borrower herein described, except for those
which the Borrower has obtained or provided and as to which the Borrower has
delivered certified copies of documents evidencing each such action to the
Lender, and (d) no events have been taken place and no circumstances exist at
the date hereof which would give the Borrower grounds to assert a
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defense, offset or counterclaim to the obligations of the Borrower under the
Credit Agreement or the other Loan Documents.
6. Affirmation, Further References. The Lender and the
Borrower each acknowledge and affirm that the Credit Agreement, as hereby
amended, is hereby ratified and confirmed in all respects and all terms,
conditions and provisions of the Credit Agreement, except as amended by this
Amendment, shall remain unmodified and in full force and effect. All references
in any document or instrument to the Credit Agreement are hereby amended and
shall refer to the Credit Agreement as amended by this Amendment.
7. Merger and Integration, Superseding Effect. This Amendment,
from and after the date hereof, embodies the entire agreement and understanding
between the parties hereto and supersede and have merged into them all prior
oral and written agreements on the same subjects by and between the parties
hereto with the effect that this Amendment, shall control with respect to the
specific subjects hereof and thereof.
8. Severability. Whenever possible, each provision of this
Amendment and any other statement, instrument or transaction contemplated hereby
or thereby or relating hereto or thereto shall be interpreted in such manner as
to be effective, valid and enforceable under the applicable law of any
jurisdiction, but, if any provision of this Amendment or any other statement,
instrument or transaction contemplated hereby or thereby or relating hereto or
thereto shall be held to be prohibited, invalid or unenforceable under the
applicable law, such provision shall be ineffective in such jurisdiction only to
the extent of such prohibition, invalidity or unenforceability, without
invalidating or rendering unenforceable the remainder of such provision or the
remaining provisions of this Amendment or any other statement, instrument or
transaction contemplated hereby or thereby or relating hereto or thereto in such
jurisdiction, or affecting the effectiveness, validity or enforceability of such
provision in any other jurisdiction.
9. Successors. This Amendment shall be binding upon the
Borrower and the Lender and their respective successors and assigns, and shall
inure to the benefit of the Borrower and the Lender and the successors and
assigns of the Lender.
10. Legal Expenses. The Borrower agrees to reimburse the
Lender, upon execution of this Amendment, for all reasonable out-of-pocket
expenses (including attorneys' fees and legal expenses of Xxxxxx and Xxxxxx,
P.A., counsel for the Lender) incurred in connection with the Credit Agreement,
including in connection with the negotiation, preparation and execution of this
Amendment and all other documents negotiated, prepared and executed in
connection with this Amendment, and in enforcing the obligations of the Borrower
under this Amendment, and to pay and save the Lender harmless from all liability
for, any stamp or other taxes which may be payable with respect to the execution
or delivery of this Amendment, which obligations of the Borrower shall survive
any termination of the Credit Agreement.
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11. Headings. The headings of various sections of this
Amendment have been inserted for reference only and shall not be deemed to be a
part of this Amendment.
12. Counterparts. This Amendment may be executed in several
counterparts as deemed necessary or convenient, each of which, when so executed,
shall be deemed an original, provided that all such counterparts shall be
regarded as one and the same document, and either party to this Amendment may
execute any such agreement by executing a counterpart of such agreement.
13. Governing Law. This Amendment shall be governed by the
internal laws of the State of Minnesota, without giving effect to conflict of
law principles thereof.
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IN WITNESS WHEREOF, the parties hereto have entered into this
Amendment as of the date first above written.
U.S. BANK NATIONAL ASSOCIATION,
a national banking association
By /s/ Xxxxx Xxxxxx
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Its RM
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LIFECORE BIOMEDICAL, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxx
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Its President & CEO
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