Exhibit 10.43


 


AMENDMENT NO. 12 TO

LOAN AGREEMENT


 


This Amendment No.
12 to Loan Agreement (this “Amendment”), dated as of February 28, 2003, is
entered into with reference to the Loan Agreement (as amended, supplemented or
otherwise modified from time to time, the “Loan Agreement”) dated as of
November 29, 1999 currently among Apio, Inc., a Delaware corporation (successor
by merger and name change to Bush Acquisition Corporation, a Delaware
corporation) (“Borrower”), each lender from time to time a party thereto (each
a “Lender” and collectively, the “Lenders”), Bank of America, N.A., as Issuing
Lender, and Bank of America, N.A., as Administrative Agent (in such capacity,
the “Administrative Agent”). 
Capitalized terms not otherwise defined herein shall have the meanings
set forth in the Loan Agreement. 
Section references herein relate to the Loan Agreement unless otherwise
stated.


 


The parties hereto
hereby agree as follows:


 


1.             Section 1.1 –
Additional Defined Terms.  The
following defined terms are hereby added to Section 1.1 of the Loan Agreement:


 


“Overadvance”
means the amount, if any, by which the outstanding principal amount of
Revolving Usage plus reserves, if any, exceeds the Borrowing Base.


 


“Overadvance
Margin” means the interest rate margin set forth below opposite the
applicable Pricing Level:


 




	
  Pricing Level

  	
   

  	
  Overadvance
  Margin

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  3.50

  	
  %

  
	
  II

  	
   

  	
  4.25

  	
  %

  
	
  III

  	
   

  	
  4.75

  	
  %

  






 


“Pricing Fixed
Charges” means, for any period, determined on a consolidated basis for
Borrower and its Subsidiaries, (i) gross interest expense (paid or payable
in Cash, but excluding (A) accrued and unpaid interest on Indebtedness due and
owing to Landec and (B) interest paid in cash during Borrower’s 2002 Fiscal
Year with respect to the Term Loan), plus (ii) scheduled principal
payments on Indebtedness for borrowed money and Capital Leases (including
exposure for Standby Letters of Credit but excluding (A) any accrued but unpaid
Earn-Outs and (B) any scheduled principal payments with respect to the Term
Loan).


 


“Pricing Ratio”
means , as of the last day of each Fiscal Quarter, for the four Fiscal Quarter
period then ending, the ratio of:


 


(a) the sum of (i)
EBITDA for such period, minus (ii) Capital Expenditures (net of any
Indebtedness constituting purchase money incurred to finance those Capital
Expenditures) for such period, minus (iii) income taxes payable in cash for
such period, minus (iv) Tax Gross-Up’s for such period, minus (v) Management
Fee Distributions to the extent paid in cash during such period; to


 


(b) Pricing Fixed
Charges for such period.


 


1

















 


2.             Section 1.1 –
Amended Definitions.  The following
defined terms contained in Section 1.1 of the Loan Agreement are hereby amended
and restated in full to read as follows:


 


“Base Margin”
means (a) for the Initial Pricing Period, one and three-quarters  percent
(1.75%), and (b) for each subsequent Pricing Period, the interest rate
margin set forth below opposite the Pricing Level for that Pricing Period:


 




	
  Pricing Level

  	
   

  	
  Base Rate
  Margin

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  1.25

  	
  %

  
	
  II

  	
   

  	
  1.50

  	
  %

  
	
  III

  	
   

  	
  1.75

  	
  %

  






 


“Borrowing Base”
means, as of each date of determination, an amount determined by the
Administrative Agent with reference to the most recent Borrowing Base
Certificate to be equal to the sum of:


 


	
  (a)

  	
   

  	
  eighty-five percent (85%) of the aggregate book
  value of the Eligible Receivables; plus

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  twenty five percent (25%) of Eligible Inventory;
  minus

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  one hundred percent (100%) of Grower Payables; minus

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  the Letter of Credit Usage with respect to all non
  cash collateralized Standby Letters of Credit issued for the account of
  Borrower or any of its Subsidiaries.

  



 


“Commitment Fee
Rate” means (a) for the Initial Pricing Period, one-quarter of one
percent (0.25%), and (b) for each Pricing Period thereafter, the rate per
annum set forth below opposite the Pricing Level in effect during that Pricing
Period:


 


	
  Pricing
  Level

  	
   

  	
  Commitment
  Fee Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  0.15

  	
  %

  
	
  II

  	
   

  	
  0.20

  	
  %

  
	
  III

  	
   

  	
  0.25

  	
  %

  



 


“IBM Letter of Credit”
means Bank of America Irrevocable Standby Letter of Credit No. 3037380, dated
April 26, 2001, in the original stated amount of $740,000.00, for the account
of Borrower and naming IBM Credit Corporation as beneficiary, as amended,
supplemented or otherwise modified from time to time, including by (a) that
certain Amendment No. 1 to Letter of Credit, dated September 13, 2001, which
amendment increased the stated amount of the IBM Letter of Credit to $816,042,
and (b) that certain Amendment No. 2 to Letter of Credit, dated October 1,
2001, which amendment increased the stated amount of the IBM Letter of Credit
to $932,042.


 


“Initial
Pricing Period” means the period from the Effective Date of Amendment No.
12 to the Loan Agreement, dated as of February 28, 2003 to and including April
30, 2003.


 


2

















 


“Pricing Level”
means, for each Pricing Period, the level set forth below opposite the Pricing
Ratio as of the last day of the Fiscal Quarter ending two months prior to the
commencement of that Pricing Period:


 




	
  Pricing Level

  	
   

  	
  Pricing
  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  Greater than 1.25:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  Greater than or equal
  1.25:1.00, but less than or equal to 1.00:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  less than 1.00:1.00

  	
   

  






 


The
Pricing Level shall change as of the first day of each Pricing Period on the
basis of the then most recently delivered Compliance Certificate.  In the event that Borrower fails to deliver
a Compliance Certificate on a timely basis, the Pricing Level shall increase to
the highest level set forth above until such time as Borrower delivers a
Compliance Certificate.


 


“Revolver Termination
Date” means May 1,  2003, or such
later anniversary of such date as may be established pursuant to Section 2.6.


 


3.             Deleted Defined
Terms – Section 1.1.  The defined
term “Eligible Notes Receivable” is hereby deleted in its entirety from the
Loan Agreement and each of the other Loan Documents.


 


4.             Section 2.8 –
Optional Overadvances.  A new
Section 2.8 is hereby added to the Loan Agreement to read as follows:


 


“2.8         Optional Overadvances.  Any contrary provision of this Agreement
notwithstanding, so long as no Default or Event of Default shall have occurred
and be continuing, the Lenders hereby authorize Administrative Agent to, and
the Administrative Agent shall, 
continue to make Advances to Borrower notwithstanding that an
Overadvance exists or thereby would be created, so long as (a) after giving
effect to such Advances, the Revolving Usage does not exceed the Borrowing Base
by more than $1,000,000, (b) after giving effect to such Advances the
outstanding Revolving Usage does not exceed the Revolving Commitment, and (c)
at the time of the making of any such Advance, the Administrative Agent does
not believe, in its reasonable discretion, that the Overadvance created by such
Advance will be outstanding for more than 60 days. The Advances that are made
pursuant to this Section 2.8 shall be subject to the same terms and conditions
as any other Base Rate Advance except that interest with respect to such
advances shall accrue at a per annum rate of interest equal to the Base Rate plus
the applicable Overadvance Margin and such interest, to the extent accrued and
unpaid, shall be due and payable on the date that the principal portion of any
Overadvance shall be due and payable in accordance with Section 3.1(d)(ii).


 


In the event the
Administrative Agent obtains actual knowledge that the Revolving Usage exceeds
the amounts permitted by the preceding paragraph, regardless of the amount of,
or reason for, such excess, the Administrative Agent shall notify Lenders as
soon as practicable (and prior to making any (or any additional) intentional
Overadvances unless the Administrative Agent reasonably determines in its sole
discretion that prior notice would result in imminent harm to the Collateral or
its value), and the Lenders shall, together with Administrative Agent, jointly
determine the terms of arrangements that shall be implemented with Borrower and
intended to


 


3

















 


reduce, within a
reasonable time, the outstanding principal amount of the Advances to Borrower
to an amount permitted by the preceding paragraph.  In the event the Administrative Agent or any Lender disagrees
over the terms of reduction or repayment of any Overadvance, the terms of
reduction or repayment thereof shall be implemented according to the
determination of the Requisite Lenders. 
Each Lender shall be obligated to settle with the Administrative Agent
for the amount of such Lender’s Pro Rata Share of any Advances made pursuant to
this Section 2.8 in the manner required by this Agreement for any other form of
Advance.”


 


5.             Section 3.1(d) –
Payments of Principal and Interest. 
Section 3.1(d) of the Loan Agreement is hereby amended in full to read
as follows:


 


“(d)         If not sooner paid, the principal
Indebtedness under this Agreement shall be payable as follows:


 


(i)  subject to Section 2.8, the amount, if any,
by which the principal Indebtedness evidenced by the Revolving Notes at any
time exceeds the Maximum Revolving Credit Amount shall be payable immediately;


 


(ii)  the amount, if any, of any Overadvance that
has been outstanding for greater than 60 days;


 


(iii)  the principal amount of each Eurodollar Rate
Loan shall be immediately payable in cash on the last day of the related
Eurodollar Period; and


 


(iv)  the outstanding principal balance of all
Loans shall, in any event, be payable on the Revolver Termination Date.”


 


6.             Section 3.7 –
Default Rate.  Section 3.7 of the
Loan Agreement is hereby amended such that the “Default Rate”, in all circumstances,
shall be 6% per annum above the rate of interest that would otherwise be
applicable pursuant to this Agreement, to the fullest extent permitted by
applicable Laws.


 


7.             IBM Letter of
Credit; Cash Collateral.  Each of
the parties hereto agrees that (i) the IBM Letter of Credit and each of the
agreements, documents, certificates and other instruments executed in
connection therewith (collectively, the “IBM L/C Documents”) shall, subject to
the provisions of clause (iii) below, be considered to be Loan Documents for
all purposes, (ii) the obligations of Borrower, including without limitation,
the obligation of Borrower to reimburse Bank of America with respect to any
amount drawn on the IBM Letter of Credit (collectively, the “IBM Obligations”),
shall be considered  “Secured
Obligations” under the Borrower Security Agreement and the Borrower Security
Agreement shall be so amended by this reference, and (iii)  the IBM Obligations shall NOT be
secured by the Deed of Trust.  Borrower
further agrees that the cash collateral currently in the amount of
approximately $932,000 currently held by Bank of America in Deposit Account No.
1475800006 as security for the IBM Obligations (the “IBM Cash Collateral” shall
also secure the Obligations under the Loan Agreement and the IBM L/C Documents
shall be so amended by this reference. 
In the event that the IBM Letter of Credit is terminated prior to the
Revolver Termination Date, the Administrative Agent and the Lenders hereby
agree to release their Lien on the IBM Cash Collateral and, at the expense of
Borrower, to execute such documentation as the Borrower shall reasonably
request to effectuate such release.


 


8.             Delivery of
Operating Budget; Change in Fiscal Year. 
Borrower hereby covenants and agrees that, not later than April 1, 2003,
it shall deliver to the Administrative Agent, an


 


4

















 


operating budget for
Borrower and its Subsidiaries for the Borrower’s Fiscal Year ending
approximately May 31, 2004, which operating budget shall include, without
limitation, the Borrower’s monthly projected balance sheet, profit and loss
statement, cash flow statement and Borrowing Base.  Borrower further acknowledges that it has advised the Administrative
Agent of its intent to change its Fiscal Year. 
Not less than 30 days prior to such change in the Borrower’s Fiscal
Year, Borrower covenants and agrees to provide such information and financial
statements to the Administrative Agent as the Administrative Agent shall
reasonably request in connection therewith.


 


9.             Payments to
Landec, Nicholas Tompkins and Kathleen Tompkins.  Notwithstanding any provision of the Loan Agreement, the
Subordination Agreements or any other Loan Documents, unless otherwise agreed
to by the Lenders, Borrower shall not make any payments to Landec, Nicholas
Tompkins or Kathleen Tompkins, whether in respect of Distributions,
Subordinated Obligations, management fees, tax agreement amounts or any other
form of Indebtedness, whether in respect of principal, interest or otherwise; provided,
however, that Borrower shall be permitted to reimburse Landec for any and
all out-of-pocket expenses or intercompany charges incurred by Landec for the
benefit of Borrower in the ordinary course of business, which expenses and/or
charges shall include, without limitation, the purchase of insurance, legal and
payroll services, patent related costs and the like.


 


10.           Amendment to Deed
of Trust; Title Endorsement. Borrower hereby covenants and agrees that, not
later than March 14, 2003, it shall deliver to the Administrative Agent, (a) a
duly executed First Amendment to Deed of Trust (“Trust Deed Amendment”),
providing for the modification of the Borrower Deed of Trust in accordance with
the terms herein, which Borrower Deed of Trust was recorded on December 2, 1999
as Instrument No. 1999-0094502 in the real property records of the County
Recorder of Santa Barbara County, California (“Official Records”), and (b) a
duly executed Reaffirmation of Landlord Consent and Agreement by Apio Cooling
(“AP”), affirming the continuing effectiveness of the terms and provisions of
the Landlord Consent and Agreement recorded December 2, 1999 as Instrument No.
1999-0094501 in the Official Records, both in such forms as may be required by
the Administrative Agent, in its reasonable discretion.  In addition, Borrower hereby covenants and
agrees that, not later than March 21, 2003, it shall deliver to the
Administrative Agent, a duly executed Reaffirmation of Subordination Agreement
by Central Coast Federal Land Bank Association, FLCA (“CCFLBA”) and AP,
affirming the continuing effectiveness of the terms and provisions of the
Subordination Agreement recorded December 6, 1999 as Instrument No.
1999-0094903 in the Official Records, in such form as may be required by the
Administrative Agent, in its reasonable discretion.  Lastly, Borrower hereby covenants and agrees that, not later than
March 21, 2003, it shall obtain from Chicago Title Company assurances that it
is committed to cause the Trust Amendment to be recorded, and upon the
recordation thereof, to issues a CLTA Form 110.5 endorsement to provide title
insurance for the effectiveness of the Trust Deed Amendment and the continuing
priority of the lien of the Borrower Deed of Trust, as amended, in such form,
subject to such exceptions and with such additional title insurance policy
endorsements as Administrative Agent may reasonably require.


 


11.           Joint Venture
Agreements; Growing Plan and Crop Strategy.  Borrower hereby covenants and agrees that not later than April 1,
2003 it shall deliver to the Administrative Agent (a) a Certificate of a
Responsible Official of Borrower certifying that (i) attached thereto as
Exhibit A is a full, correct and complete listing of each joint venture or
similar arrangement to which Borrower or any of its Subsidiaries is a party and
(ii) with respect to each item listed on Exhibit A, attached thereto as Exhibit
B are true, complete and correct, duly executed copies of the joint venture
agreement (or similar documentation) related thereto and (b) a summary of the
Borrower’s growing plan and crop strategy for 2003, including, without
limitation, (i) a listing of all of Borrower’s growers, (iii) the percentage of
total supply, by division, that each such grower represents and (iii) a
description of the financial/economic arrangements between Borrower and such
grower.  The summary required by this
Section 11(b) shall be 


 


5

















 


substantially
in the form of Annex II attached hereto, or such other form as shall be
reasonably satisfactory to the Administrative Agent.


12.           Release.  As a material inducement to the Lenders to
enter into this Consent, the Borrower hereby fully releases and discharges
forever the Administrative Agent and each of the Lenders, their respective
subsidiaries and affiliated companies, and their respective agents, employees,
officers, directors, representatives, attorneys­, successors and assigns
(hereafter referred to collectively as the “Released Parties”), and each and
all of them, from any and all liabilities, claims, actions, causes of action,
charges, complaints, obligations, costs, losses, damages, injuries, attorneys’
fees, and other legal responsibilities, of any form whatsoever, whether known
or unknown, unforeseen, unanticipated, unsuspected or latent, which either of
them may have or hold, or have at any time heretofore have or held, arising out
of or relating to the Loan Agreement, the Loan Documents, the transactions
contemplated thereby or the relationship of the parties hereto arising out of
the Loan Agreement or the Loan Documents prior to the effective date of this
Consent.   The Borrower hereby expressly
waives all rights under Section 1542 of the California Civil Code, which reads
as follows:


 


“Section 1542. [Certain claims not affected by general
release.] A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the release,
which if known to him must have materially affected his settlement with the
debtor.”


 


Borrower hereby
agrees to indemnify and hold harmless each of the Released Parties for and
against any and all costs, losses or liability, whatsoever, including
reasonable attorneys’ fees arising out of the prosecution by Borrower, or its
successors or assigns, of any action, claim or cause of actions released
pursuant to this Section.


 


13.           Effectiveness.  This Amendment shall become effective on
such date (the “Effective Date”) as the Administrative Agent shall have received,
in form and substance satisfactory to the Administrative Agent and the Lenders,
(a) duly executed counterparts of this Amendment and (b) a duly
executed counterparts of Annex I attached hereto, signed by each Party
thereto.


 


14.           Representations
and Warranties.  Except (i) for
representations and warranties which expressly relate to a particular date or
which are no longer true and correct as a result of a change permitted by the
Loan Agreement or the other Loan Documents or (ii) as disclosed by
Borrower and approved in writing by the Requisite Lenders, the Borrower hereby
represents and warrants that each representation and warranty made by Borrower
in Article 4 of the Loan Agreement (other than Sections 4.6 (first
sentence), 4.11, and 4.18) are true and correct as of the date hereof as though
such representations and warranties were made on and as of the date
hereof.  Without in any way limiting the
foregoing, Borrower represents and warrants to the Administrative Agent and the
Lenders that no Default or Event of Default has occurred and remains continuing
or will result from the consents, waivers, amendments or transactions set forth
herein or contemplated hereby.


 


15.           Fees and Expenses.  Borrower hereby agrees to reimburse the
Administrative Agent and the Lenders for the Administrative Agents and Lenders’
reasonable costs and expenses (including reasonable attorney’s fees and
expenses) incurred in connection with the negotiation and drafting of this
Amendment and the transaction contemplated hereby together with any and all
other fees and expenses currently due and owing to the Administrative Agent
and/or the Lenders.  Borrower further
agrees that, it shall satisfy its obligations under Section 11.3 of the
Loan Agreement not later than five (5) days after receipt of an invoice with
respect thereto from the Administrative Agent. 
Each of the parties


 


6

















 


hereto hereby agrees that
the failure to satisfy the requirements of this Section 15 shall
constitute an Event of Default under the Loan Agreement.


 


16.           Amendment Fee.  On the Effective Date, or as soon thereafter
as may be agreed upon by the Lenders, the Borrower shall pay to the
Administrative Agent, for the ratable account of the Lenders, an amendment fee
of $30,000.


 


17.           Confirmation.  In all respects, the terms of the Loan
Agreement and the other Loan Documents, in each case as amended hereby or by
the documents referenced herein, are hereby confirmed.


 


 


[THIS
SPACE INTENTIONALLY LEFT


 


BLANK
SIGNATURE PAGES TO FOLLOW]


 


7

















 


IN WITNESS
WHEREOF, Borrower, the Administrative Agent and the Lenders have executed this
Agreement as of the date first set forth above by their duly authorized
representatives.


 


	
   

  	
  APIO, INC., a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK OF AMERICA,
  N.A., as Administrative Agent, Issuing Lender and sole Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Carol Clements,
  Senior Vice President

  



 


S-1

















 


ANNEX I TO
AMENDMENT NO. 12


 


CONSENT AND REAFFIRMATION
OF GUARANTOR AND PLEDGOR


 


Each of the
undersigned guarantors and pledgors hereby consents to the execution, delivery
and performance by Borrower and the Administrative Agent of the foregoing
Amendment No. 12  to Loan Agreement
(“Amendment No. 12”).  In connection
therewith, each of the undersigned expressly and knowingly reaffirms its
liability under each of the Loan Documents to which it is a Party and expressly
agrees (a) to be and remain liable under the terms of each such Loan Document,
and (b) that it has no defense, offset or counterclaim whatsoever against the
Administrative Agent or the Lenders with respect to any such Loan Document.


 


Each of the
undersigned further agrees that each Loan Document to which it is a Party shall
remain in full force and effect and is hereby ratified and confirmed.


 


Each of the
undersigned further agrees that the execution of this Consent and Reaffirmation
of Guarantor and Pledgor is not necessary for the continued validity and
enforceability of any Loan Document to which it is a Party, but is executed to
induce the Administrative Agent and the Lenders to approve of and otherwise
enter into the Amendment No. 12.


 


IN WITNESS
WHEREOF, each of the undersigned, intending to be legally bound hereby, has
caused this Consent and Reaffirmation of Guarantor and Pledgor to be executed
as of  February 28, 2003.


 


	
  LANDEC
  CORPORATION, a California corporation

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  
	
   

  
	
  CAL EX TRADING
  COMPANY, California corporation

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  



 


I-1

















 


ANNEX II


 


CROP STRATEGY 2003


Value
Added


 


	
  Grower

  	
   

  	
  %

  Supply

  	
   

  	
  Joint
  Venture

  Yes/No

  	
   

  	
  Financial/Economic
  Arrangements

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  •  Projected
  advance/investment ($$)

  •   Uses
  

  	
  •   Repayment
  terms

  •   Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
									



 


Export


 


	
  Grower

  	
   

  	
  %

  Supply

  	
   

  	
  Joint
  Venture

  Yes/No

  	
   

  	
  Financial/Economic
  Arrangements

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  •  Projected
  advance/investment ($$)

  •   Uses
  

  	
  •   Repayment
  terms

  •   Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
									



 


Etc


 


II-1