Unassociated Document


    

      Execution
Copy

       

      Second
Amendment To Credit Agreement

       

      This
Second Amendment To Credit Agreement (this “Amendment”) is entered into
as of September 14, 2010, by and between Lifecore
Biomedical, LLC, a Minnesota limited liability company (“Borrower”), and Wells
Fargo Bank, National Association (“Bank”).

       

      Recitals

       

      Whereas,
Borrower is currently indebted to Bank pursuant to the terms and conditions of
that certain Credit Agreement, dated and made as of April 30, 2010, by and
between Borrower and Bank (as amended, restated, modified and/or supplemented
from time to time, the “Credit
Agreement”).

       

      Whereas,
Bank and Borrower have agreed to certain changes in the terms and conditions set
forth in the Credit Agreement and have agreed to amend the Credit Agreement to
reflect such changes.

       

      Now,
Therefore, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree that the Credit
Agreement shall be amended as follows:

       

      1.           
Definitions.  Each
capitalized term used and not otherwise defined herein has the meaning ascribed
thereto in the Credit Agreement.

       

      2.           
Amendments to Credit
Agreement.  Subject to Section 5 hereof, the Credit
Agreement is hereby as follows:

       

      (a)       
   Section 1.1 of the Credit Agreement is hereby amended by
amending and restating in their entirety each of the following definitions as
follows:

       

      “Fixed Charge Coverage Ratio”
means, as of the last day of each fiscal quarter of Borrower, the ratio of
(a) the sum of (i) Net Income After Taxes as of such fiscal quarter
end, plus
(ii) depreciation expense, amortization expense, cash capital
contributions, increases in subordinated debt and non-cash expenses associated
with the issuance of stock options of the Companies, in each case, to the extent
recognized during the period attributable to such Net Income After Taxes, minus (iii) management
fees, dividends, distributions and decreases in subordinated debt of the
Companies, in each case, to the extent recognized during the period attributable
to such Net Income After Taxes, to (b) the sum of (x) Applicable
Current Indebtedness as of such date, plus (y) the aggregate of capitalized
lease payments of the Companies recognized during the period applicable to the
computation of Net Income After Taxes referred to in the foregoing
clause (a)(i).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Net Income” means,
(i) for each fiscal quarter ending on or before May 31, 2011, fiscal
year-to-date after-tax net income from continuing operations of the Companies as
of such fiscal quarter end, as determined in accordance with GAAP, and
(ii) for each fiscal quarter ending after May 31, 2011, after-tax net
income from continuing operations of the Companies for the then ending four
fiscal quarter period, as determined in accordance with GAAP.

       

      (b)          
Section 1.1 of the Credit Agreement is hereby amended by adding the
following definition thereto in such manner as to retain proper alphabetic order
of the terms defined therein:

       

      “Applicable Current
Indebtedness” means:

       

      (a)as of
the last day of Borrower’s fiscal quarter ending August 31, 2010, the
aggregate of long-term debt and subordinated debt that, as of the last day of
Borrower’s fiscal quarter ending May 31, 2010, was scheduled to mature
during the one fiscal quarter period ending August 31, 2010;

       

      (b)as of
the last day of Borrower’s fiscal quarter ending November 30, 2010, the
aggregate of long-term debt and subordinated debt that, as of the last day of
Borrower’s fiscal quarter ending May 31, 2010, was scheduled to mature
during the two fiscal quarter period ending November 30, 2010;

       

      (c)as of
the last day of Borrower’s fiscal quarter ending February 28, 2011, the
aggregate of long-term debt and subordinated debt that, as of the last day of
Borrower’s fiscal quarter ending May 31, 2010, was scheduled to mature
during the three fiscal quarter period ending February 28, 2011;
and

       

      (d)as of
any date of determination occurring on the last day of any fiscal quarter of
Borrower ending on or after May 31, 2011, the aggregate of long-term debt
and subordinated debt that, as of the last day of Borrower’s fiscal quarter
ending one year prior to such date of determination, was scheduled to mature
during the four fiscal quarter period ending on such date of
determination.

       

      (c)          
Section 1.1 of the Credit Agreement is hereby amended by deleting the
definition of the term “Warburg Acquisition” set
forth therein in its entirety, without replacement.

       

      (d)          
Section 6.3(a)(i) of the Credit Agreement is hereby amended and restated in
its entirety as follows:


      
        
           


        

        
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      (i)        Minimum Net Income After Taxes.
(A) Borrower, together with
the other Companies, will maintain, as of the last day each fiscal quarter, Net
Income After Taxes of not less than $1.00.

       

      (B)       Borrower,
together with other Companies, will not, at any time, have Net Income After
Taxes less than or
equal to $1.00 for any two (2) consecutive fiscal quarters.

       

      For
purposes of this Section 6.3(a)(i) and Section 6.3(a)(iii), “Net Income After Taxes”
means Net Income, provided that Net Income After Taxes shall be determined for
all fiscal periods ending on or before April 30, 2010, as reported in
Borrower’s audited financial statements for such periods (i.e., since for such
periods Borrower was a “disregarded entity” for tax purposes, as if Borrower was
a C-Corporation under the IRC), and for all fiscal periods ending after
April 30, 2010, to the extent that Borrower is treated as a pass through
entity for tax purposes, by calculating Net Income before taxes as of the end of
such fiscal period minus dividends and other distributions paid during the same
period for which Net Income has been calculated to each of Holdings and any
other member of the Borrower in connection with its federal income tax liability
(and, if applicable, state income tax liability) attributable to its share of
Borrower’s taxable income (determined in accordance with the IRC) (including
estimated tax payments determined in good faith by Borrower which are required
to be made by its members with respect thereto).

       

      (e)          
“Exhibit B-1” to the Credit Agreement is hereby deleted in its entirety and
Exhibit A attached hereto is substituted therefor and shall be deemed for
all purposes the “Exhibit B-1” referred to in the Credit Agreement.

       

      3.          
Survival of Terms;
Interpretation.  Except as specifically provided herein, all
terms and conditions of the Credit Agreement remain in full force and effect,
without waiver or modification.  This Amendment and the Credit
Agreement shall be read together, as one document.  The Recitals
hereto, including the terms defined therein, are incorporated herein by this
reference and acknowledged by Borrower to be true, correct and
accurate.

       

      4.          
Representations, Warranties
and Covenants.  Borrower remakes all representations and
warranties contained in the Credit Agreement (except to the extent that such
representations and warranties relate solely to an earlier date, in which case
Borrower confirms that such representations and warranties were correct as of
the date made) and reaffirm all covenants set forth therein.  Borrower
further certifies that as of the date of this Amendment there exists no Default
or Event of Default, in each case, as defined in the Credit
Agreement.

       

      5.          
Effective
Date.  This Amendment will become effective as of the date
first set forth above (the “Effective Date”), provided
that all of the following conditions precedent have been satisfied on or before
September 30, 2010:


      
        
           


        

        
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      (a)          
Bank shall have received a duly executed original (or, if elected by Bank, an
executed facsimile copy, to be followed promptly by delivery of an executed
original) of each of the following, duly executed by each party thereto and in
form and substance satisfactory to Bank:

       

      (i)         
this Amendment;

       

      (ii)        the
General Consent and Reaffirmation attached hereto; and

       

      (iii)       such
other documents as Bank may require under any other Section of this
Amendment.

       

      (b)          
All of the representations and warranties contained herein (or incorporated
herein by reference) are true and correct as of the Effective Date.

       

      (c)          
All legal matters incidental hereto shall be reasonably satisfactory to Bank’s
counsel.

       

      6.          
Counterparts.  This
Amendment may be executed in two or more counterparts, each of which shall be
deemed to be an original but all of which together shall constitute one and the
same instrument.  Delivery of an executed counterpart of a signature
page to this Amendment by telefacsimile shall be as effective as delivery of a
manually executed counterpart of this Amendment.

       

      7.          
Severability.  If
any term or provision of this Amendment shall be deemed prohibited by or invalid
under any applicable law, such provision shall be invalidated without affecting
the remaining provisions of this Amendment or the Credit Agreement.

       

      8.          
Governing
Law.  This Amendment shall be governed by and construed in
accordance with the internal laws of the State of California.

       

      9.          
Non-Impairment.  Except
as expressly provided herein, nothing in this Agreement shall alter or affect
any provision, condition, or covenant contained in the Loan Documents or affect
or impair any rights, powers, or remedies of Bank, it being the intent of the
parties hereto that the provisions of the Loan Documents shall continue in full
force and effect except as expressly modified hereby.

       

      [Signatures
on Next Page]


      
        
           


        

        
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      In
Witness Whereof, the parties hereto have caused this Amendment to be
executed as of the day and year first written above.

      


      
        
          
            	
                    Lifecore
      Biomedical, LLC,

                      a
      Minnesota limited liability company

                  	 
      	
                    Wells
      Fargo Bank,

                     National
      Association

                  
	 
      	 
      	 
      	 
      	 
      
	
                    By:

                  	
                    /s/ Dennis
      J. Allingham

                  	 
      	
                    By:

                  	
                    /s/ Tim Palmer  

                  
	 
      	
                    Dennis
      J. Allingham

                  	 
      	
                    Name:

                  	
                    Tim
      Palmer  

                  
	 
      	
                    President
      and Chief Executive Officer

                  	 
      	
                    Title:

                  	
                    Vice-President

                  


          

        

      

       

      
        Signature
Page to Second Amendment To Credit Agreement


          
            
               


            

            
              
              

              
                

              

            

            
               


            

          

        

      

       

      General
Consent and Reaffirmation

       

      Each of
the undersigned guarantors of, and/or third party pledgors having pledged
property securing, all indebtedness of Lifecore
Biomedical, LLC hereby:  (i) consents to the foregoing
Second Amendment to Credit Agreement dated as of September 14, 2010;
(ii) reaffirms its obligations under its respective guaranty, security
agreement and/or pledge agreement; (iii) reaffirms its waivers of each and
every one of the defenses to such obligations as set forth in its respective
guaranty, security agreement and/or pledge agreement; and (iv) reaffirms
that its obligations under its respective guaranty, security agreement and/or
pledge agreement are separate and distinct from the obligations of any other
party under such Second Amendment to Credit Agreement, the Credit Agreement
referred to therein and the other Loan Documents (as defined in the Credit
Agreement).

       

      Agreed
and Acknowledged as of September 14, 2010:

      


      
        
          
            
              
                
                  
                    
                      	
                              Lifecore
      Biomedical, Inc.

                            	 
      	
                              Apio,
      Inc.

                            
	 
      	 
      	 
      	 
      	 
      
	
                              By:

                            	      
                              /s/
      Dennis J. Allingham

                            	 
      	
                              By:

                            	
                              /s/
      Gregory
      S. Skinner

                            
	 
      	
                              Dennis
      J. Allingham

                            	 
      	 
      	
                              Gregory
      S. Skinner

                            
	 
      	
                              President/Secretary

                            	 
      	 
      	
                              Vice
      President

                            
	 
      	 
      	 
      	 
      	 
      
	
                              Cal
      Ex Trading Company

                            	 
      	
                              Landec
      AG, LLC

                            
	 
      	 
      	 
      	 
      	 
      
	
                              By:

                            	      
                              /s/
      Gregory S. Skinner

                            	 
      	
                              By:

                            	      
                              /s/
      Gregory S. Skinner

                            
	 
      	
                              Gregory
      S. Skinner

                            	 
      	 
      	
                              Gregory
      S. Skinner

                            
	 
      	
                              Vice
      President

                            	 
      	 
      	
                              Treasurer/Secretary

                            
	 
      	 
      	 
      	 
      	 
      
	
                              Landec
      Corporation

                            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                              By:

                            	      
                              /s/
      Gregory S. Skinner

                            	 
      	 
      	 
      
	 
      	
                              Gregory
      S. Skinner

                            	 
      	 
      	 
      
	 
      	
                              Chief
      Financial Officer

                            	 
      	 
      	 
      


                    

                  

                

              

            

          

        

      

      


      
        Signature
Page to General Consent and Reaffirmation

      


      
        
           


        

        
          
          

          
            

          

        

        
           


        

      


      
        Exhibit
A

      

      
        to
Second Amendment to Credit Agreement

      

      


      Exhibit
B-1

      


      Form
of Compliance Certificate

      (Lifecore
Biomedical, LLC)

      


       

      To:                 
Caroline Peyton

                             
Wells Fargo Bank, National Association

       

      Date:               __________________,
201__

       

      Subject:          Lifecore
Biomedical, LLC

       

      Financial
Statements

       

      In
accordance with our Credit Agreement, dated as of April 30, 2010, as
amended (the “Credit
Agreement”), attached are the financial statements of Lifecore Biomedical
(the “Borrower”) as of
and for ________________, 20___ (the “Reporting Date”) and the
year-to-date period then ended (the “Current
Financials”).  All terms used in this certificate have the
meanings given in the Credit Agreement.

       

      I certify
that the Current Financials have been prepared in accordance with GAAP, subject
to year-end audit adjustments, and fairly present the Companies’ financial
condition as of the date thereof.

       

      Events of
Default.  (Check one):

       

      
        	
                 
      

              	
                 ̈

              	
                The
      undersigned does not have knowledge of the occurrence of a Default or
      Event of Default under the Credit Agreement except as previously reported
      in writing to Bank.

              


      

       

      
        	
                 
      

              	
                 ̈

              	
                The
      undersigned has knowledge of the occurrence of a Default or Event of
      Default under the Credit Agreement not previously reported in writing to
      Bank and attached hereto is a statement of the facts with respect to
      thereto.  Borrower acknowledges that Bank may impose the Default
      Rate at any time during the resulting Default
  Period.

              


      

       

      Financial
Covenants.  I further hereby certify as follows:

       

      1.          
Minimum Net Income After
Taxes. Pursuant to
Section 6.3(a)(i)(A) of the Credit Agreement, as of the Reporting Date, the
Companies’ Net Income After Taxes was $___________ which o satisfies o does not satisfy the
requirement that such amount be not less than $1.00 for the applicable fiscal
period then ended.


      
        
           


        

        
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      2.          
Minimum Net Income After
Taxes.  Pursuant to Section 6.3(a)(i)(B) of the Credit
Agreement, as of the Reporting Date, the Companies’ o did not have o had Net Income After
Taxes less than or equal to $1.00 for two (2) consecutive fiscal quarters then
ended.

       

      3.          
Minimum Quick
Ratio. Pursuant to
Section 6.3(a)(ii) of the Credit Agreement, as of the Reporting Date, the
Companies’ Quick Ratio was _____ : 1.0 which o satisfies o does not satisfy the
requirement that ratio must not be less than (i) 1.1 to 1.0 for each fiscal
quarter ending from the Closing Date through and including the fiscal quarter
ending May 31, 2011 and (ii) 1.25 to 1.0 for each fiscal quarter ending
thereafter.

       

      4.          
Fixed Charge Coverage
Ratio. Pursuant to
Section 6.3(a)(iii) of the Credit Agreement, the Companies’ Fixed Charge
Coverage Ratio for the applicable fiscal period ending on the Reporting Date,
was ____ : 1.0, which o satisfies o does not satisfy the
requirement that such ratio be not less than _____ : 1.0 during such period as
set forth in table below: 

       

      


      
        
          
            
              
                
                  	
                          Period(s) Ending

                        	 	
                          Fixed Charge Coverage

                          Ratio shall not be less than:

                        
	
                          Fiscal
      quarters ending November 30, 2010 through and including May 31,
      2011

                        	 	
                          1.20
      to 1.0

                        
	
                          August 31,
      2011

                        	 	
                          1.30
      to 1.0

                        
	
                          November
      30, 2011

                        	 	
                          1.40
      to 1.0

                        
	
                          February 29,
      2012 and each fiscal quarter ending thereafter

                        	 	
                          1.50
      to
1.0

                        


                

              

            

          

        

      

       

      5.          
Capital
Expenditures. Pursuant to
Section 6.3(a)(iv) of the Credit Agreement, the Companies have expended
$__________________ in the aggregate during the last full fiscal year, ending
May 31, 201___, for Capital Expenditures, which o satisfies o does not satisfy the
requirement that such expenditures not exceed $3,000,000 in the aggregate during
such year.


      
        
           


        

        
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      Attached
hereto are all relevant facts in reasonable detail to evidence, and the
computations of the financial covenants referred to above.  These
computations were made in accordance with GAAP (except for the computation of
Net Income to the extent Net Income is determined without giving effect to the
amounts deducted arriving in such Net Income as set forth in the proviso of such
definition).

      


      
        
          	
                  Lifecore
      Biomedical, LLC

                
	 
      	 
      
	
                  By

                	
                    

                
	
                  Its
      Chief Financial Officer

                


        

      

       

      
        
           


        

        
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