EXHIBIT 10.12
 
SIXTH MODIFICATION TO
LOAN AND SECURITY AGREEMENT
 
This Sixth Modification to Loan and Security Agreement (this “Amendment”) is
entered into as of June 13, 2012, but effective as of May 31, 2012, by and among
THE PRIVATEBANK AND TRUST COMPANY (the “Bank”), LIFEWAY FOODS, INC., an Illinois
corporation (“Lifeway”), FRESH MADE, INC., a Pennsylvania corporation (“FMI”),
HELLOS NUTRITION LIMITED, a Minnesota corporation (“Helios”), PRIDE OF MAIN
STREET DAIRY, LLC, a Minnesota limited liability company (“Pride”), and
STARFRUIT, LLC, an Illinois limited liability company (“Starfruit” and together
with Lifeway, FMI, Helios and Pride being sometimes collectively referred to as
the “Borrowers”).
 
RECITALS
 
WHEREAS, the Bank and the Borrowers previously entered into a Loan and Security
Agreement dated February 6, 2009, as amended by that certain First Modification
to Loan and Security Agreement dated as of August 13, 2009, by that certain
Second Modification to Loan and Security Agreement dated November 12, 2009, by
that certain Third Modification to Loan and Security Agreement dated February 6,
2010, by that certain Fourth Modification to Loan and Security Agreement dated
as of April 20, 2011 and by that certain Fifth Modification to Loan and Security
Agreement dated as of June 20, 2011 (as modified, the “Loan Agreement”),
pursuant to which the Bank made available to the Borrowers a credit facility.
 
WHEREAS, the Borrowers desire, and the Bank is willing, to (a) extend the
Revolving Loan Maturity Date and (b) increase the amount of the Revolving Loan
Commitment, all upon and subject to the terms and conditions set forth in this
Amendment; and WHEREAS, this Amendment shall constitute a Loan Document and
these Recitals shall be construed as part of this Amendment.
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which hereby are acknowledged, the parties hereto hereby agree as follows:
 
1.   Definitions.
 
(a) Undefined Terms. Unless the context otherwise provides or requires,
capitalized terms used herein which are not defined herein shall have the
meanings ascribed to them in the Loan Agreement; provided, however, that all
references in the Loan Agreement to (a) “Obligations” shall, in addition to the
definition set forth in the Loan Agreement include, but not be limited to, the
duties and obligations of the Borrowers under this Amendment and (b) “Loan
Documents” shall, in addition to the definition set forth in the Loan Agreement
include, but not be limited to, this Amendment and the documents and instruments
to be delivered pursuant to this Amendment.
 
(b) Amended and Restated Defined Term. When used herein and in the Loan
Agreement, the following term shall have the following amended and restated
meanings:
 
“Revolving Loan Commitment” shall mean Three Million and 00/100 Dollars
($3,000,000.00).”
 
 
 

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“Revolving Loan Maturity Date” shall mean May 31, 2013, unless extended by the
Bank pursuant to any modification, extension or renewal note executed by the
Borrowers and accepted by the Bank in its sole and absolute discretion in
substitution for the Revolving Note.”
 
2.   Amendment to Revolving Loan and Revolving Note. The Revolving Loan is
hereby extended to the Revolving Loan Maturity Date. The Revolving Note is
hereby amended by (a) deleing all references to February 6, 2010 (subsequently
amended to May 31, 2012) and replacing such references with May 31, 2013, (b)
deleting all references to “Four Million” (subsequently amended to “Two
Million”) and replacing such references with “Three Million” and (c) deleting
all references to “$4,000,000” (subsequently amended to $2,000,000) and
replacing such references with “$3,000,000”. Except as specifically set forth
herein, the Revolving Note, the Term Note and the Loan Documents previously
delivered by the Borrowers shall remain in full force and effect and are hereby
ratified and confirmed in all respects. The indebtedness evidenced by the
Revolving Note (as hereby amended by this Sixth Modification) is continuing
indebtedness of the Borrowers and nothing herein shall be deemed to constitute a
payment, settlement or novation of the Revolving Note, or to release or
otherwise adversely affect any lien or security interest securing such
indebtedness or any rights of the Bank against any party primarily or
secondarily liable for such indebtedness.
 
3.   Representations and Warranties of Borrowers.
 
(a) The Recitals in this Amendment are true and correct in all respects.
 
(b) All representations and warranties of each Borrower in the Loan Agreement
and in the other Loan Documents to which each Borrower is a party are
incorporated herein in full by this reference and are true and correct in all
material respects as of the date hereof, except to the extent that any such
representation or warranty expressly relates to an earlier date.
 
(c) After giving effect to this Amendment, no Event of Default or Unmatured
Event of Default has occurred and is continuing.
 
(d) Each Borrower has the power, and requisite action, to execute and deliver
this Amendment. executed by each Borrower. has been duly authorized by all This
Amendment has been duly
 
(e) This Amendment is the legal, valid and binding obligation of each Borrower,
enforceable against each Borrower and each of the other Borrowers in accordance
with their respective terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium, or similar law
affecting creditors’ rights generally.
 
(f) The execution, delivery and performance of this Amendment do not and will
not (i) violate any law, rule, regulation or court order to which any of the
Borrowers is subject; (ii) conflict with or result in a breach of the
certificate of formation or incorporation, bylaws, limited liability company
agreement or other organizational documents of any of the Borrowers or any other
agreement or instrument to which it is party or by which the properties of any
of the Borrowers is bound; or (iii) result in the creation or imposition of any
Lien on any property of any of the Borrowers, whether now owned or hereafter
acquired, other than Liens in favor of the Bank.
 
 
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(g) No consent or authorization of, filing with or other act by or in respect of
any Person is required in connection with the execution, delivery or performance
by each of the Borrowers, or the validity or enforceability, of this Amendment,
or the consummation of the transactions contemplated hereby.
 
4.   Conditions Precedent to Effectiveness. This Amendment shall be effective on
the date when each of the following conditions shall have been satisfied in the
sole discretion of the Bank:
 
(a) Amendment. Each of the Borrowers and the Bank shall have delivered to the
Bank executed counterparts of this Amendment;
 
(b) Secretaries’ Certificates. With respect to each Borrower (i) good standing
certificates in its state of incorporation (or formation) and in each other
state requested by the Bank; and (ii) certification that the certificates
delivered by such Borrower on or about April 20, 2011, remain in full force and
effect (it being understood that the Bank may conclusively rely on each such
certificate until formally advised by a like certificate of any changes
therein), all certified by its secretary or an assistant secretary (or similar
officer) as being in full force and effect without modification; and
 
(c) Other Documents. The Borrowers shall have delivered to the Bank such other
agreements, certificates, instruments and other documents as the Bank may
reasonably request to accomplish the purposes of this Amendment.
 
5.   Reference to and Effect on Loan Documents.
 
(a) Ratification. Except as specifically provided in this Amendment, the Loan
Agreement and the other Loan Documents shall remain in full force and effect and
each Borrower hereby ratifies and confirms each such Loan Document.
 
(b) No Waiver. The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver or forbearance of any right, power or remedy of the Bank
under the Loan Agreement or any of the other Loan Documents, or, except as
expressly provided in herein, constitute a consent, waiver or modification with
respect to any provision of the Loan Agreement or any of the other Loan
Documents. Upon the effectiveness of this Amendment each reference in (a) the
Loan Agreement to “this Agreement,” “hereunder,” “hereof,” or words of similar
import and (b) any other Loan Document to “the Agreement” shall, in each case
and except as otherwise specifically stated therein, mean and be a reference to
the Loan Agreement as amended and modified hereby.
 
6.   Entire Agreement. This Amendment, including all annexes, exhibits,
schedules and other documents incorporated by reference herein or delivered in
connection herewith, constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other understandings,
oral or written, with respect to the subject matter hereof.
 
 
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7.   Fees and Expenses. As provided in the Loan Agreement, the Borrowers agree
to pay on demand all fees, costs and expenses incurred by the Bank in connection
with the preparation, execution and delivery of this Amendment.
 
8.   Severability. Wherever possible, each provision of this Amendment shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Amendment shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Amendment.
 
9.   Conflict of Terms. Except as otherwise provided in this Amendment, if any
provision contained in this Amendment is in conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Amendment shall govern and control.
 
10.    Successors and Assigns. This Amendment shall inure to the benefit of and
be binding upon the successors and permitted assigns of the Bank and shall be
binding upon the successors and assigns of each Borrower.
 
11.    Counterparts. This Amendment may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which taken together
shall be one and the same instrument. Signature pages may be detached from
multiple separate counterparts and attached to a single counterpart. Delivery of
an executed signature page of this Amendment by facsimile transmission or
electronic transmission (such as fax or e-mail) shall be as effective as
delivery of a manually executed counterpart thereof.
 
12.        Headings. The paragraph headings used in this Amendment are for
convenience only and shall not affect the interpretation of any of the
provisions hereof.
 
13.   Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS SET FORTH IN THE CREDIT AGREEMENT, OR, IF
NO JURISDICTION IS SET FORTH THEREIN, BY THE INTERNAL LAWS (AS OPPOSED TO
CONFLICT OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS.
 
14.         Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AMENDMENT OR ANY
OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS; PROVIDED THAT NOTHING IN THIS AMENDMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE THE BANK FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN
ANY OTHER JURISDICTION. EACH OF THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH OF THE BORROWERS FURTHER
 
 
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 IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. EACH OF
THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND
ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
 
15.        Waiver of Jury Trial. THE BANK AND EACH OF THE BORROWERS, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AMENDMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT, ANY OF THE OTHER OBLIGATIONS, THE
COLLATERAL, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR
ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE
FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE BANK AND
ANY OF THE BORROWERS ARE ADVERSE PARTIES, AND EACH AGREE THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE BANK ENTERING INTO THIS AMENDMENT.
 
16.        Release of Claims. In consideration of the execution and delivery of
this Amendment by the Bank, the sufficiency of which is acknowledged, and
excepting only the contractual obligations respecting future performance by the
Bank arising under the Loan Agreement and the Loan Documents, each of the
Borrowers hereby irrevocably releases and forever discharges the Bank and each
of its affiliates, subsidiaries, successors, assigns, directors, officers,
employees, agents, representatives and attorneys (each, a “Released Person”) of
and from all damages, losses, claims, demands, liabilities, obligations, actions
and causes of action whatsoever which such Borrowers may now have or claim to
have on and as of the date hereof against any Released Person, whether presently
known or unknown, liquidated or unliquidated, suspected or unsuspected,
contingent or non-contingent, and of every nature and extent whatsoever
(collectively, “Claims”). Each Borrower jointly and severally represents and
warrants to the Bank that it has not granted or purported to grant to any other
Person any interest whatsoever in any Claim, as security or otherwise. The
Borrowers shall jointly and severally indemnify, defend and hold harmless each
Released Person from and against any and all Claims and any loss, cost,
liability, damage or expense (including reasonable attorneys’ fees and expenses)
incurred by any Released Person in investigating, preparing for, defending
against, providing evidence or producing documents in connection with or taking
other action in respect of any commenced or threatened Claim.
 
EACH BORROWER AGREES TO ASSUME THE RISK OF ANY AND ALL UNKNOWN, UNANTICIPATED OR
MISUNDERSTOOD DEFENSES, CLAIMS, CONTRACTS, LIABILITIES, INDEBTEDNESS AND
OBLIGATIONS WHICH ARE RELEASED, WAIVED AND DISCHARGED BY THIS AMENDMENT. EACH
BORROWER
 
 
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HEREBY WAIVES AND RELINQUISHES ALL RIGHTS AND BENEFITS WHICH IT MIGHT OTHERWISE
HAVE UNDER ANY CIVIL CODE OR ANY SIMILAR LAW, TO THE EXTENT SUCH LAW MAY BE
APPLICABLE, WITH REGARD TO THE RELEASE OF SUCH UNKNOWN, UNANTICIPATED OR
MISUNDERSTOOD DEFENSES, CLAIMS, CONTRACTS, LIABILITIES, INDEBTEDNESS AND
OBLIGATIONS. TO THE EXTENT THAT SUCH LAWS MAY BE APPLICABLE, EACH BORROWER
WAIVES AND RELEASES ANY RIGHT OR DEFENSE WHICH IT MIGHT OTHERWISE HAVE UNDER ANY
OTHER LAW OR ANY APPLICABLE JURISDICTION WHICH MIGHT LIMIT OR RESTRICT THE
EFFECTIVENESS OR SCOPE OF ANY OF THEIR WAIVERS OR RELEASES HEREUNDER.
 
[Signature page follows]
 

 
 
 
 
 
 
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as of the date first written above.
 
THE BANK:
 
THE PRIVATE BANK AND TRUST COMPANY
 
By:   /s/ Douglas W. Buehl___________________
        Authorized Officer
 
THE BORROWERS:
 
LIFEWAY FOODS, INC.

By:   /s/ Julie Smolyansky                              
                                                                
Title  President & CEO                                  
                                                                

FRESH MADE, INC.

By:   /s/ Edward
Smolyansky                                                                                           
Title:  Secretary                                              
                                                                

HELIOS NUTRITION LIMITED

By:   /s/ Edward Smolyansky                          
                                                                
Title:  Secretary                                              
                                                                

PRIDE OF MAIN STREET DAIRY, LLC

By:   /s/ Edward
Smolyansky                                                                                           
Title: Manager                                                 
                                                                

STARFRUIT, LLC

By:   /s/ Edward Smolyansky                         
                                                                
Title: Manager                                                 
                                                                

 
 
 

 
 

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CERTIFICATE OF THE SECRETARY OF
FRESH MADE, INC.
(a Pennsylvania Corporation)
 
The undersigned, hereby certifies that she is the duly elected and qualified
Secretary of Fresh Made, Inc., a Pennsylvania corporation (the “Company”), and
that, as such, is authorized to execute this Certificate on behalf of the
Company, and further certifies that:
 
 
1.
The Certificate of the Secretary of the Company dated on or about April 20, 2011
and delivered to The PrivateBank and Trust Company in connection with the Loan
and Security Agreement dated February 6, 2009, as amended, is hereby reaffirmed
as true and correct as of the date hereof; and

 
 
2.
Attached hereto as Exhibit A is a true and complete copy of the Certificate of
Good Standing of the Company issued by the Pennsylvania Secretary of State and
remains in full force and effect as of the date hereof.

 
IN WITNESS WHEREOF, I have set my hand this 13th day of June, 2012.
 

 
By:   /s/ Edward Smolyansky                                
            Edward Smolyansky, Secretary

 

 
 
 
 
 
 
 

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EXHIBIT A
 
CERTIFICATE OF GOOD STANDING
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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CERTIFICATE OF THE SECRETARY OF
LIFEWAY FOODS, INC.
(an Illinois Corporation)
 
The undersigned, hereby certifies that he is the duly elected and qualified
Secretary of Lifeway Foods, Inc., an Illinois corporation (the “Company”), and
that, as such, is authorized to execute this Certificate on behalf of the
Company, and further certifies that:
 
 
1.
The Certificate of the Secretary of the Company dated on or about April 20, 2011
and delivered to The PrivateBank and Trust Company in connection with the Loan
and Security Agreement dated February 6, 2009, as amended, is hereby reaffirmed
as true and correct as of the date hereof; and

 
 
2.
Attached hereto as Exhibit A is a true and complete copy of the Certificate of
Good Standing of the Company issued by the Illinois Secretary of State and
remains in full force and effect as of the date hereof.

 
IN WITNESS WHEREOF, I have set my hand this 13th day of June, 2012.
 
 
 
 
By:   /s/ Edward Smolyansky                       
            Edward Smolyansky, Secretary

 
 
 
 
 

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EXHIBIT A
 
CERTIFICATE OF GOOD STANDING
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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CERTIFICATE OF THE MANAGER OF
STARFRUIT, LLC
(an Illinois Limited Liability Company)
 
The undersigned, hereby certifies that he is the duly elected and qualified
Manager of Starfruit, LLC, an Illinois limited liability company (the
“Company”), and that, as such, is authorized to execute this Certificate on
behalf of the Company, and further certifies that:
 
 
1.
The Certificate of the Manager of the Company dated on or about April 20, 2011
and delivered to The PrivateBank and Trust Company in connection with the Loan
and Security Agreement dated February 6, 2009, as amended, is hereby reaffirmed
as true and correct as of the date hereof; and

 
 
2.
Attached hereto as Exhibit A is a true and complete copy of the Certificate of
Good Standing of the Company issued by the Illinois Secretary of State and
remains in full force and effect as of the date hereof.

 
IN WITNESS WHEREOF, I have set my hand this 13th day of June, 2012.
 

 
By:   /s/ Edward Smolyansky                   
            Edward Smolyansky, Manager

 

 
 
 

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EXHIBIT A
 
CERTIFICATE OF GOOD STANDING
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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CERTIFICATE OF THE SECRETARY OF
HELLOS NUTRITION LIMITED
(a Minnesota Corporation)
 
The undersigned, hereby certifies that he is the duly elected and qualified
Secretary of Helios Nutrition Limited, a Minnesota corporation (the “Company”),
and that, as such, is authorized to execute this Certificate on behalf of the
Company, and further certifies that:
 
 
1.
The Certificate of the Secretary of the Company dated on or about April 20, 2011
and delivered to The PrivateBank and Trust Company in connection with the Loan
and Security Agreement dated February 6, 2009, as amended, is hereby reaffirmed
as true and correct as of the date hereof; and

 
 
2.
Attached hereto as Exhibit A is a true and complete copy of the Certificate of
Good Standing of the Company issued by the Minnesota Secretary of State and
remains in full force and effect as of the date hereof.

 
IN WITNESS WHEREOF, I have set my hand this 13th day of June, 2012.
 

 
By:   /s/ Edward Smolyansky                           
            Edward Smolyansky, Secretary

 
 
 

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EXHIBIT A
 
CERTIFICATE OF GOOD STANDING
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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CERTIFICATE OF THE MANAGER OF
PRIDE OF MAIN STREET DAIRY, LLC
(a Minnesota Limited Liability Company)
 
The undersigned, hereby certifies that he is the duly elected and qualified
Manager of Pride of Main Street Dairy, LLC, a Minnesota limited liability
company (the “Company”), and that, as such, is authorized to execute this
Certificate on behalf of the Company, and further certifies that:
 
 
1.
The Certificate of the Chief Manager of the Company dated on or about April 20,
2011 and delivered to The PrivateBank and Trust Company in connection with the
Loan and Security Agreement dated February 6, 2009, as amended, is hereby
reaffirmed as true and correct as of the date hereof; and

 
 
2.
Attached hereto as Exhibit A is a true and complete copy of the Certificate of
Good Standing of the Company issued by the Minnesota Secretary of State and
remains in full force and effect as of the date hereof.

 
IN WITNESS WHEREOF, I have set my hand this 13th day of June, 2012.
 

 
By:   /s/ Edward Smolyansky                      
            Edward Smolyansky, Manager

 
 
 
 
 
 

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EXHIBIT A
 
CERTIFICATE OF GOOD STANDING