SECOND AMENDMENT AND WAIVER
This Second Amendment and Waiver (the "Second Amendment") is entered into
as of December 17, 2002, between Landec Corporation (the "Company"), Apio, Inc.
("Apio"), the Target Companies' Representative (as defined in the Agreement) and
Xxxxxxxx Xxxxxxxx and Xxxxxxxx Xxxxxxxx (collectively, the "Xxxxxxxx").
RECITALS
A. The parties hereto are each party to that certain Agreement and Plan of
Merger and Purchase Agreement, dated November 29, 1999, as amended (the
"Agreement");
B. On October 26, 2001, the parties hereto entered into an Amendment and
Waiver deferring the payment of the Earn-Out Amount (as defined below) to the
Xxxxxxxx to October 28, 2002 (the "First Amendment");
C. As of October 28, 2002, pursuant to Sections 2.5(e) and 13.11 of the
Agreement and Section 4 of the First Amendment, Apio and the Company were
obligated to pay the Xxxxxxxx the principal amount of $4,091,762 plus accrued
interest in the amount of $279,287 in Earn-Out Consideration for the First
Earn-Out Period (collectively, the "Earn-Out Amount");
D. As of the date hereof, neither Apio nor the Company have paid the
Xxxxxxxx the Earn-Out Amount;
E. Prior to the date hereof, Xxxxxxxx Xxxxxxxx issued a promissory note
(the "Xxxxxxxx Note") for the benefit of Apio due in full on December 31, 2002.
As of December 31, 2002, the total principal amount plus interest due under the
Xxxxxxxx Note will be $749,114 (the "Xxxxxxxx Note Amount"); and
F. The parties hereto desire to (i) pursuant to Section 13.1 of the
Agreement, amend the Agreement to offset the amounts owed to each other pursuant
to the Xxxxxxxx Note Amount and the Earn-Out Amount, (ii) provide for the
payment by Apio and the Company to the Xxxxxxxx of the net amount of such
payments pursuant to the terms herein, and (iii) cancel the Xxxxxxxx Note.
AGREEMENT
In consideration of the foregoing and of the mutual consideration
contained herein, the parties hereby agree as follows:
1. Initial Payment. Immediately upon the execution of this Second
Amendment by all of the parties hereto, the Company shall transfer $1,000,000 to
the Xxxxxxxx via wire transfer.
2. Offset.
(a) The Company, Apio and the Xxxxxxxx each hereby agree to set off
the amounts owed to each other pursuant to the Xxxxxxxx Note Amount and the
Earn-Out Amount
effective as of January 2, 2003, and that as a result of such set off the
Xxxxxxxx shall have no further payment obligations to Apio under the Xxxxxxxx
Note and the sole remaining payment obligation of Apio and the Company under the
Earn-Out Amount to the Xxxxxxxx shall initially be reduced to $2,621,935 (the
"Amount Due") and subject to further reduction as set forth in Section 2(b)
below.
(b) In the event that at any time after the date hereof, Apio or the
Company make any voluntary payments not otherwise required under Section 3 to
the Xxxxxxxx, the Amount Due shall automatically be reduced by the amount of
such payment amount (each a "Payment Credit") and such Payment Credit shall be
applied to satisfy the next payment(s) due by Apio or the Company pursuant to
the Payment Schedule, after the date of such payment creating the Payment
Credit.
3. Additional Payments to the Xxxxxxxx. The Company and Apio hereby agree
to pay the Xxxxxxxx the Amount Due (plus any accrued interest required to be
paid pursuant to Section 4 herein and less any Payment Credit applied pursuant
to Section 2(b) above) in accordance with the following payment schedule (the
"Payment Schedule"):
(a) Balance Sheet Adjustment Payment. Within three (3) business days of
the Company receiving amounts owed to it by The Lubrizol Corporation
("Lubrizol") pursuant to Section 1.3(d) of the Stock Purchase
Agreement, dated as of October 24, 2002, by and between the Company
and Lubrizol (the "Balance Sheet Adjustment Funds"), the Company
shall transfer all of the Balance Sheet Adjustment Funds to the
Xxxxxxxx via wire transfer.
(b) Remediation Trust Fund Payment. Within three (3) business days of
the Company's receipt, pursuant to Article II, Section 11 of the
Remediation Agreement (as defined below), of all amounts remaining
in the remediation trust fund (the "Remediation Funds") established
pursuant to the Remediation Agreement, dated as of October 18, 2002,
by and among the Company, Dock Resins Corporation and the New Jersey
Department of Environmental Protection (the "Remediation Agreement")
and the Remediation Trust Fund Agreement, dated as of October 18,
2002, by and between the Company and Xxxxx Fargo Bank Minnesota,
N.A., the Company shall transfer all Remediation Funds to the
Xxxxxxxx via wire transfer.
(c) General Payments. Apio shall pay $150,000 to the Xxxxxxxx on the
first day of each month during the period beginning May 1, 2003 and
ending on February 1, 2004. For the avoidance of doubt, ten (10)
payments shall be made to the Xxxxxxxx under this Section 3(c) in
the aggregate amount of $1,500,000. Notwithstanding anything to the
contrary set forth herein, in no event shall the total amounts paid
by the Company and Apio to the Xxxxxxxx pursuant to this Section 3
exceed the total Amount Due less the amount of any Payment Credit.
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(d) Remaining Payment. In the event that any Amount Due plus interest is
still outstanding on February 27, 2004, the Company and/or Apio
shall transfer such amount on such date to the Xxxxxxxx via wire
transfer.
4. Interest. In the event that all payments required in Section 3(c)
hereof are made by Apio in accordance with the Payment Schedule, the Xxxxxxxx
shall accrue simple interest on the Amount Due still outstanding at the rate of
eight percent (8%) per annum from January 15, 2003 to the date that the Amount
Due is paid in full; provided however, in the event that any payment required
pursuant Section 3(c) hereof is not made in accordance with the Payment
Schedule, the Xxxxxxxx shall accrue interest on the Amount Due still outstanding
at the rate of ten percent (10%) per annum from such date until such time as
such payment is paid in full, and provided further, that in the event that Apio
fails to make three (3) or more consecutive payments to the Xxxxxxxx as required
in Section 3(c) hereof, the Xxxxxxxx shall accrue interest on the Amount Due
still outstanding at the rate of twelve percent (12%) per annum from the date
such third payment was due until such time as all of such overdue payments have
been paid in full.
5. Deferred Payment and Interest. During the period beginning on October
29, 2002 and ending on the date preceding the date hereof, the Xxxxxxxx hereby
waive (a) any obligation of Apio or the Company to pay them the Amount Due, and
(b) any right to receive or accrue any interest on the outstanding Amount Due.
6. Cancellation of Xxxxxxxx Note. The Xxxxxxxx Note shall be cancelled in
its entirety on January 2, 2002 after application of the offset referenced in
Section 2(a). Apio shall at such time xxxx the Xxxxxxxx Note "Cancelled" and
promptly return it to the Xxxxxxxx.
7. Acceleration of Amount Due.
(a) The Amount Due shall be automatically accelerated and payable in
full if either the Company or Apio shall file, have filed against it
or consent to the filing of any case, petition or proceeding under
any bankruptcy, insolvency or reorganization statute or law or make
any assignment for the benefit of all or any substantial portion of
its creditors.
(b) The Amount Due shall, at the option of the Xxxxxxxx upon notice to
Apio, be accelerated and payable in full in the event that (i) Apio
or the Company sell all or substantially all of their assets or
merge with or into any other entity, (ii) more than 50% of the
outstanding stock of Apio becomes owned by any person or entity
other than the Company, or (iii) any person or entity acquires more
than 50% of the outstanding stock of the Company.
8. No Liens. Except as set forth below, until the Amount Due is paid in
full, neither the Company nor Apio shall affirmatively grant to any person or
entity any security interest, mortgage, deed of trust, pledge or other lien
(collectively, "Lien") on any of Apio's properties or assets. Notwithstanding
the foregoing, the Company or Apio may grant Liens on any of Apio's properties
or assets in connection with the incurrence of any of the following:
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(a) any existing debt obligation, capital lease obligation, equipment
line or other credit facility ("Existing Facilities") of Apio;
(b) any replacement of an Existing Facility of Apio;
(c) any new equipment line for Apio; or
(d) up to $3,000,000 in new debt obligations, capital lease obligations
or other credit facilities of Apio.
9. Effect of First Amendment. The First Amendment is hereby superseded by
this Second Amendment.
[Signature Page Follows]
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This Second Amendment and Waiver has been duly executed and delivered by
the duly authorized officers of the Target Companies' Representative, the
Company and Apio as of the date written below.
Dated :____________________
LANDEC CORPORATION
----------------------------------------
Xxxx X. Xxxxxx, President & CEO
APIO, INC.
----------------------------------------
Xxxx Xxxxxxx, Chief Financial Officer
TARGET COMPANIES'
REPRESENTATIVE:
----------------------------------------
Xxxxxxxx Xxxxxxxx
XXXXXXXX:
----------------------------------------
Xxxxxxxx Xxxxxxxx
----------------------------------------
Xxxxxxxx Xxxxxxxx
Exhibits
1. First Amendment
2. Xxxxxxxx Note
Exhibit
First Amendment
AMENDMENT AND WAIVER
This Amendment and Waiver (the "Waiver") was entered into on the date set
forth below, between Landec Corporation (the "Company"), Apio, Inc. ("Apio"),
the Target Companies' Representative (as defined in the Agreement) and Xxxxxxxx
Xxxxxxxx and Xxxxxxxx Xxxxxxxx (the "Xxxxxxxx").
RECITALS
A. The parties hereto are each party to that certain Agreement and Plan of
Merger and Purchase Agreement, dated November 29, 1999, as amended (the
"Agreement");
B. On March 1, 2001, pursuant to Section 2.5(e) of the Agreement, Apio was
obligated to pay the Xxxxxxxx $4,091,762 in Earn-Out Consideration for the First
Earn-Out Period (the "Earn-Out Amount");
C. As of the date hereof, Apio has not paid the Xxxxxxxx the Earn-Out
Amount;
D. Pursuant to Section 13.1 of the Agreement, the parties hereto desire to
amend the Agreement to provide for the payment of the Earn-Out Amount to the
Xxxxxxxx as set forth herein.
AGREEMENT
In consideration of the foregoing and of the mutual consideration
contained herein, the parties hereby agree as follows:
1. Definitions. Terms not otherwise defined herein, shall have the meaning
set forth in the Agreement.
2. Earned Interest. In consideration of the delay in payment of the
Earn-Out Amount during the period beginning on March 1, 2001 and ending on
October 28, 2001, the Xxxxxxxx shall have earned accrued interest on the
Earn-Out Amount at a rate of 10% per annum, equal in the aggregate to $279,287
("Earned Interest Amount"). The Earned Interest Amount plus the Earn-Out Amount,
equal to $4,371,049, shall be referred to herein as the ("Amount Due").
3. Deferred Payment and Interest. During the period beginning on October
29, 2001 and ending on October 27, 2002 (the "Waiver Period"), the Xxxxxxxx
hereby waive (i) any obligation of Apio to pay them the Amount Due, and (ii) any
right to receive or accrue any interest on the outstanding Amount Due.
4. Post-Waiver Period. Apio shall pay the Xxxxxxxx the Amount Due on or
before October 28, 2002; provided, however, that if Apio does not pay the full
Amount Due by such
date, the Xxxxxxxx shall accrue interest on any of the Amount Due still
outstanding at the rate of 10% per annum from such date until payment thereof.
This Waiver has been duly executed and delivered by the duly authorized
officers of the Target Companies' Representative, the Company and Apio as of the
date written below.
Dated :____________________
LANDEC CORPORATION
----------------------------------------
Xxxx X. Xxxxxx, President & CEO
APIO, INC.
----------------------------------------
Xxxxxxxx Xxxxxxxx, President
TARGET COMPANIES'
REPRESENTATIVE:
----------------------------------------
Xxxxxxxx Xxxxxxxx
----------------------------------------
Xxxxxxxx Xxxxxxxx
----------------------------------------
Xxxxxxxx Xxxxxxxx
Exhibit
Xxxxxxxx Note
SECURED PROMISSORY NOTE
Date: May 1, 2002
For value received, the borrower described below (the "BORROWER"),
promises to pay to the order of APIO, INC. (the "LENDER"), the principal amount
of all advances (the "ADVANCES") made by the LENDER to the BORROWER on the crops
(the "CROPS") to be delivered by the BORROWER to the LENDER pursuant to the
XXXXXX AGREEMENT referred to below, together with interest on the aggregate
unpaid principal amount of the ADVANCES at the Reference Rate of Bank of America
or the maximum rate permitted by law, whichever is less, from the date the
ADVANCES are made until the date the ADVANCES are paid. Payments of principal
and interest shall be made as provided herein, but in any event, all principal
and interest due hereunder shall be paid no later than December 31, 2002, and
shall be paid in lawful money of the United States in immediately available
funds at the LENDER's office at 0000 X. Xxxx Xxxxxx, X.X. Xxx 000, Xxxxxxxxx, XX
00000, or at such other address as the LENDER may notify the BORROWER in
writing.
The ADVANCES on the CROPS shall be made by the LENDER to the
BORROWER in accordance with the Projected Schedule of Advances attached hereto
as Exhibit "A", or as Exhibit "A" may be amended from time to time by written
amendment attached hereto. The LENDER shall at all times keep an account of the
date and amount of all ADVANCES made to the BORROWER, which in no event shall
exceed the total amount of Seven hundred thirty one thousand dollars
($731,000.00). Under no circumstances shall Lender be required to make any of
the advances described in Exhibit "A" if Borrower is in default or has otherwise
failed to perform, under the terms of the Xxxxxx Agreement, dated the date
hereof, between the Lender and Borrower.
The LENDER shall subtract and retain the amounts agreed to be paid
by the BORROWER to the LENDER, or any part of those sums, from the proceeds (the
"PROCEEDS") due the BORROWER from the LENDER under the terms of that certain
Xxxxxx Agreement and/or Harvesting and Xxxxxx Agreement, dated the date hereof,
by and between the LENDER and the BORROWER, as the same may be extended,
amended, or replaced by any successor agreement from time to time (collectively,
the "XXXXXX AGREEMENT"), as provided below. PROVIDED, HOWEVER, if the LENDER
shall determine, in its sole discretion, that such deductions from the PROCEEDS
will be insufficient to return to the LENDER the total principal and interest
due hereunder by October 25, 2002 the LENDER may, but shall not be obligated to,
deduct additional amounts from the PROCEEDS until all principal and interest due
hereunder has been paid.
Each payment made by the BORROWER, or deducted from the PROCEEDS due
to the BORROWER under the XXXXXX AGREEMENT, shall be credited first on interest
then due and the remainder on principal; and interest shall thereupon cease upon
the principal credited. Should interest not be paid when due, it shall
thereafter bear like interest as the principal, but such unpaid interest so
compounded shall not exceed an amount equal to simple interest on the unpaid
principal at the maximum rate permitted by law.
The BORROWER may at its election prepay without penalty all or any
part of the principal hereof at any time or from time to time.
All agreements, covenants, conditions, and provisions of this
Secured Promissory Note shall be binding upon and inure to the benefit of the
successors and assigns of each of the parties hereto.
The BORROWER hereby waives diligence, presentment, protest, and
demand, notice of protest, dishonor, and nonpayment of this Secured Promissory
Note, and expressly agrees that, without in any way affecting the liability of
the BORROWER hereunder, LENDER or any holder hereof may extend the time for
payment, accept additional security, release any payment due hereunder, release
any party liable hereunder, and release any security hereafter securing this
Secured Promissory Note. The BORROWER further waives, to the full extent
permitted by law, the right to plead any and all statutes of limitation as a
defense to any demand on this Secured Promissory Note.
This Secured Promissory Note is entitled to the benefit of the
Security Agreement between the LENDER and the BORROWER. Reference is made to the
Security Agreement for provisions regarding the acceleration of the maturity of
this Secured Promissory Note.
The BORROWER agrees that the ADVANCES made by the LENDER to BORROWER
shall only be used for purposes relating to the CROPS to be delivered to LENDER
pursuant to the Xxxxxx Agreement and shall not be used for personal, family, or
household purposes.
Each and every right, remedy, and power hereby granted to the LENDER
or allowed the LENDER by law or other agreement shall be cumulative and not
exclusive the one over the other, and may be exercised by the LENDER from time
to time.
The LENDER shall not be deemed to have waived any of its rights
hereunder or under any other agreement, instrument, or document signed by the
BORROWER or any endorser, unless such waiver is in writing and signed by the
LENDER.
This Secured Promissory Note can be modified or rescinded only by a
writing expressly referring to the Secured Promissory Note and signed by the
parties hereto.
No provision of this Secured Promissory Note or any other agreement
between LENDER and BORROWER shall alter or impair the obligation of BORROWER,
which is absolute and unconditional, to pay the principal of and interest on
this Secured Promissory Note, at the place, at the respective times, and in the
currency herein prescribed.
Every provision of this Secured Promissory Note is intended to be
severable. In the event any term or provision hereof is declared to be illegal
or invalid for any reason whatsoever by a court of competent jurisdiction, such
illegality or invalidity shall not affect the balance of the terms and
provisions hereof, which terms and provisions shall remain binding and
enforceable.
If an action is instituted on this Secured Promissory Note, the
BORROWER promises to pay all costs of enforcement and collection, including, but
not limited to, reasonable attorney's fees, as well as all other costs and
expenses incurred by the holder in the enforcement of its rights under this
Secured Promissory Note, whether such enforcement and collection includes the
filing of a lawsuit.
This Secured Promissory Note shall be construed and enforced in
accordance with, and governed by, the laws of the State of California.
"BORROWER" Xxxx Xxxxxxxx Farms
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Title:_____________________________
