Exhibit 10.2

 

FOURTHEENTH MODIFICATION TO

LOAN AND SECURITY AGREEMENT

 

 

This Fourteenth Modification to Loan and Security Agreement (this “Amendment”)
is entered into as of July 20, 2017 (the “Effective Date”) by and among THE
PRIVATEBANK AND TRUST COMPANY (the “Bank”), LIFEWAY FOODS, INC., an Illinois
corporation (“Lifeway”), FRESH MADE, INC., a Pennsylvania corporation (“FMI”),
HELIOS NUTRITION LIMITED, a Minnesota corporation (“Helios”), THE LIFEWAY KEFIR
SHOP LLC, an Illinois limited liability company formerly known as STARFRUIT, LLC
(“LKS”), and LIFEWAY WISCONSIN, INC., an Illinois corporation (“LWI” and
together with Lifeway, FMI, Helios and LKS being sometimes collectively referred
to as the “Borrowers”).

 

RECITALS

 

WHEREAS, the Bank, Pride of Main Street Dairy, LLC, a Minnesota limited
liability company (“Pride”), and the Borrowers (other than LWI which
subsequently became a Borrower) 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, by that certain Fifth Modification to Loan and Security
Agreement dated as of June 20, 2011 and by that certain Sixth Modification to
Loan and Security Agreement dated as of June 13, 2012, by that certain Seventh
Modification to Loan and Security Agreement dated as of May 14, 2013, by that
certain Eighth Modification to Loan and Security Agreement dated as of September
4, 2013, by that certain Ninth Modification to Loan and Security Agreement dated
as of June 24, 2014, by that certain Tenth Modification to Loan and Security
Agreement dated as of August 28, 2014, by that certain Eleventh Modification to
Loan and Security Agreement dated as of August 11, 2015, by that certain Twelfth
Modification to Loan and Security Agreement entered into as of September 12,
2016 with an effective date of July 31, 2016 and by that certain Thirteen
Modification to Loan and Security Agreement dated as of June 30, 2017 (as
modified, the “Loan Agreement”), pursuant to which the Bank made available to
the Borrowers a credit facility.

 

WHEREAS, an Event of Default (the “Subject Default”) has occurred under Section
8.2 and Section 11.3 of the Loan Agreement as a result of Borrowers causing
Pride to be liquidated and dissolved;

 

WHEREAS, the Bank and Borrowers desire to amend the Loan Agreement, among other
things, to (a) extend the Revolving Loan Maturity Date and (b) waive the Subject
Default, 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
meaning:

 

“Revolving Loan Maturity Date” shall mean July 31, 2018, 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.”

 

 

 

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2       Amendments.

 

(a)       The Revolving Loan is hereby extended to the Revolving Loan Maturity
Date. The Revolving Note is hereby amended by deleting all references to
February 6, 2010 (subsequently amended to July 31, 2017) and replacing such
references with July 31, 2018.

 

(b)       Except as specifically set forth herein, the Revolving Note (as hereby
amended by this Fourteenth Modification), the Term Note, 2013 Term Loan 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 Twelfth
Modification), Term Note and 2013 Term Loan Note is continuing indebtedness of
the Borrowers and nothing herein shall be deemed to constitute a payment,
settlement or novation of the Revolving Note, Term Note or 2013 Term Loan 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)       Other than the Subject Default, no Event of Default or Unmatured Event
of Default has occurred and is continuing.

 

(d)       Each Borrower has the power, and has been duly authorized by all
requisite action, to execute and deliver this Amendment. This Amendment has been
duly executed by each Borrower.

 

(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.

 

(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)       Evidence of Dissolution of Pride. Borrowers shall have delivered to
the Bank evidence of the dissolution and liquidation of Pride in form and
substance acceptable to the Bank.

 

(c)        Secretary and Manager 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 (June 26,
2013 in the case of LWI and August 19, 2016, in the case of LKS), 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
manager (or similar officer) as being in full force and effect without
modification; and

 

 

 

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(d)       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.       Waiver of Subject Default and Consent.

 

From and after the Effective Date, the Bank hereby waives (a) the occurrence of
the Subject Default, (b) its right to pursue its remedies on account of the
Subject Default, and (c) its right to charge interest at the Default Rate on
account of the Subject Default. Such waiver (a) shall not be deemed to extend to
any other Event of Default which has arisen or may hereafter arise, (b) shall
not be deemed to effect any amendment of the Loan Agreement or any of the other
Loan Documents, all of which shall remain in full force and effect in accordance
with their respective terms except as expressly amended hereby and (c) shall not
be deemed to establish a custom or course of dealing between Borrower and the
Bank. As a condition to the Bank’s waiver set forth in this Section 5, Borrowers
covenant and agree to deliver to the Bank, within ten (10) Business Days from
the Effective Date, evidence of the liquidation and dissolution of Pride. For
the avoidance of doubt, Pride shall no longer be a Borrower under the Loan
Agreement or any of the other Loan Documents.

 

6.       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. Except as expressly provided herein, the execution,
delivery and effectiveness of this Amendment shall not operate as a waiver or
forbearance of any right, power or remedy of either party 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.

 

7.       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.

 

8.       Fees and Expenses. As provided in the Loan Agreement, the Borrowers
agree to pay on demand all reasonable fees, costs and expenses incurred by the
Bank in connection with the preparation, execution and delivery of this
Amendment.

 

9.       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.

 

10.      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.

 

11.      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.

 

12.      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.

 

13.      Headings. The paragraph headings used in this Amendment are for
convenience only and shall not affect the interpretation of any of the
provisions hereof.

 

 

 

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14.      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.

 

15.      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. THE PARTIES HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT 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 PARTIES FURTHER CONSENTS TO THE
SERVICE OF PROCESS IN THE MANNER SET FORTH IN THE LOAN AGREEMENT. EACH OF THE
PARTIES 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.

 

16.      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.

 

17.      Release of Claims. In consideration for entering into this agreement,
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 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 PRIVATEBANK AND TRUST COMPANY       By:     /s/Christopher
Trimbach             Authorized Officer

 

 

 

THE BORROWERS:

 

Lifeway Foods, Inc.

 

By:     /s/Edward Smolyansky

Title:  Chief Operating Officer

 

Fresh Made, Inc.

 

By:     /s/Edward Smolyansky

Title:  Chief Operating Officer

 

Helios Nutrition Limited

 

By:     /s/Edward Smolyansky

Title:  Chief Operating Officer

 

THE LIFEWAY KEFIR SHOP LLC

 

By:     /s/Edward Smolyansky

Title:  Manager

 

LIFEWAY WISCONSIN, INC.

 

By:     /s/Edward Smolyansky

Title:  Chief Operating Officer

 

 

 

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