EXHIBIT 10.32
AMENDMENT NO. 3 TO LOAN AGREEMENT
This Amendment No. 3 to Loan Agreement (this "Amendment"), dated as of
April 26, 2001, 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 ▇▇▇▇ 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 - DEFINITION OF "BASE MARGIN". The definition of "BASE
MARGIN" contained in SECTION 1.1 of the Loan Agreement is hereby amended in full
to read as follows:
"BASE MARGIN" means, for each Pricing Period, the interest rate margin
set forth below opposite the Pricing Level for that Pricing Period:
Pricing Level Base Rate Margin
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I 0.25%
II 0.75%
III 1.25%
2. SECTION 1.1 - DEFINITION OF "BORROWING BASE AUGMENTATION AMOUNT". The
definition of "BORROWING BASE AUGMENTATION AMOUNT" contained in SECTION 1.1 is
hereby amended in full to read as follows:
"BORROWING BASE AUGMENTATION AMOUNT" means for the fiscal period from
and including April 23, 2001 to and including July 31, 2001, $4,000,000."
3. SECTION 1.1 - DEFINITION OF "EURODOLLAR MARGIN". The definition of
"EURODOLLAR MARGIN" contained in SECTION 1.1 of the Loan Agreement is hereby
amended in full to read as follows:
"EURODOLLAR MARGIN" means, for each Pricing Period, with respect to
(a) the outstanding principal amount of Term Loans and (b) the outstanding
principal amount of Revolving Loans, the interest rate margin set forth
below opposite the Pricing Level for that Pricing Period:
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Pricing Level Eurodollar Margin
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I 1.75%
II 2.50%
III 3.25%
4. SECTION 1.1 - DEFINITION OF FIXED CHARGE COVERAGE RATIO: The definition
of "FIXED CHARGE COVERAGE RATIO" contained in SECTION 1.1 of the Loan Agreement
is hereby amended in full to read as follows:
"FIXED CHARGE COVERAGE 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 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) Fixed Charges for such period, PROVIDED that as of the last day of
the Fiscal Quarters ending July 31, 2000 and October 31, 2000, the Fixed
Charge Coverage Ratio shall be calculated for the period since the Closing
Date.
5. SECTION 1.1 - DEFINITION OF "REVOLVING COMMITMENT". The definition of
"REVOLVING COMMITMENT" contained in SECTION 1.1 of the Loan Agreement is hereby
amended in full to read as follows:
"REVOLVING COMMITMENT" means the commitment by Lenders to make
Revolving Loans to Borrower in an aggregate principal amount, subject to
SECTION 2.8, not to exceed $12,000,000; PROVIDED, HOWEVER, that effective
as of August 1, 2001, the Revolving Commitment shall be permanently reduced
to $10,000,000.
6. SECTION 3.16 - BORROWING BASE AUGMENTATION FEE. A new SECTION 3.16 is
hereby added to the Loan Agreement to read as follows:
"3.16 BORROWING BASE AUGMENTATION FEE. Monthly, in arrears, commencing
on June 1, and continuing on the first day of each month thereafter until the
Borrowing Base Augmentation Amount has been reduced to zero, Borrower shall pay
to the Administrative Agent for the account of the Lenders in accordance with
their Pro Rata Shares, prorated on an annualized basis, an amount equal to one
percent (1.00%) TIMES the Borrowing Base Augmentation Amount."
7. SECTION 6.18 - MAXIMUM CAPITAL EXPENDITURES. The maximum amount of
Capital Expenditures for the Fiscal Year ending October 31, 2001, shall be
increased as follows:
(a) effective as of the date that the Borrower shall have provided to
the Agent, in form and substance satisfactory to the Requisite Lenders,
evidence that Borrower has obtained financing for its business system
upgrade,
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Borrower shall be permitted an additional $1,200,000 of Capital
Expenditures; provided, however, that such Capital Expenditures shall
only be made with respect to such business system upgrade;
(b) effective as of the date that the Borrower shall have provided to
the Agent, in form and substance satisfactory to the Requisite Lenders,
evidence that Borrower has obtained financing for its "value-added
facility", Borrower shall be permitted an additional $1,200,000 of Capital
Expenditures; provided, however, that such Capital Expenditures shall only
be made with respect to such "value-added facility";
(c) in no event shall the aggregate Capital Expenditures made in the
Fiscal Year ending October 31, 2001 exceed, inclusive of any permitted
carryover from the Fiscal Year ending October 31, 2000 (i) $4,500,000 if
only the condition set forth in paragraph (a) above is satisfied, (ii)
$4,500,000 if only the condition set forth in paragraph (b) above is
satisfied, and (iii) $5,700,000 if the conditions set forth in both
paragraph (a) and (b) above are satisfied.
8. SECTION 6.12 - LEVERAGE RATIO. SECTION 6.12 is hereby amended such that
the maximum ratio for the second Fiscal Quarter of the 2000/2001 Fiscal Year
(i.e.: the 13 week Fiscal Quarter ending nearest to April 30, 2001) shall not
exceed 3.00:1.00.
9. SECTION 6.16 - CURRENT RATIO. SECTION 6.16 is hereby amended such that
the ratio described therein for the second Fiscal Quarter of the 2000/2001
Fiscal Year (i.e.: the 13 week Fiscal Quarter ending nearest to April 30, 2001)
shall not be less than 0.75:1.00.
10. SECTION 6.17 - PROFITABILITY. The provisions of SECTION 6.17 are hereby
suspended, and the Borrower shall not be required to comply therewith, for the
first two Fiscal Quarters of the 2000/2001 Fiscal Year (i.e.: the 26 week
fiscal period ending nearest April 30, 2001); PROVIDED, HOWEVER, that Borrower
shall be required to comply with the provisions of SECTION 6.17 for the third
Fiscal Quarter of the 2000/2001 Fiscal Year (i.e.: profitability of less than
zero for the second and third Fiscal Quarters of the 2000/2001 Fiscal Year shall
constitute an Event of Default).
11. EXHIBIT B - BORROWING BASE CERTIFICATE. Each of the parties hereto
agrees that for purposes of the Borrowing Base Augmentation Amount as set forth
in the Borrowing Base Certificate, such amount shall be as set forth in SECTION
5 of this Amendment and that other than this reference, no further amendment
shall be required with respect to such Borrowing Base Certificate.
12. EXHIBIT C - COMPLIANCE CERTIFICATE. Each of the parties hereto agrees
that the Compliance Certificate set forth on EXHIBIT C to the Loan Agreement
shall be amended in full as set in ANNEX II to this Amendment.
13. EFFECTIVENESS. This Amendment shall become effective on such date (the
"Effective Date") as the Administrative Agent shall have received, in form and
substance
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satisfactory to the Administrative Agent and the Lenders, (a) duly executed
counterparts of this Amendment, (b) duly executed counterparts of ANNEX I
attached hereto, signed by each Party thereto, and (c) for the account of the
Lenders in accordance with their Pro Rata Shares, an amendment fee in the amount
of $25,000.
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. 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 PAGE TO FOLLOW]
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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 (successor
by merger and name change to ▇▇▇▇ Acquisition
Corporation, a Delaware corporation)
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Board
BANK OF AMERICA, N. A., as Administrative
Agent, Issuing Lender and sole Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, Senior Vice President
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ANNEX I TO AMENDMENT NO. 3
--------------------------
CONSENT AND REAFFIRMATION OF GUARANTOR AND PLEDGOR
The undersigned guarantor and pledgor hereby consents to the execution,
delivery and performance by Borrower and the Administrative Agent of the
foregoing Amendment No. 3 to Loan Agreement ("Amendment No. 3"). In connection
therewith, 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.
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.
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. 3.
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 April 26, 2001.
LANDEC CORPORATION, a California
corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and CEO
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ANNEX II
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EXHIBIT C
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COMPLIANCE CERTIFICATE
----------------------
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EXHIBIT C
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COMPLIANCE CERTIFICATE
----------------------
This COMPLIANCE CERTIFICATE (this "Certificate") is delivered with
reference to that certain Loan Agreement dated as of November 29, 1999 by and
among ▇▇▇▇ Acquisition Corporation, a Delaware corporation (" Borrower"), the
lenders from time to time party thereto (the "Lenders"), and Bank of America, N.
A., as Administrative Agent for the Lenders (as amended, extended, renewed,
supplemented or otherwise modified from time to time, the "Loan Agreement").
Terms defined in the Loan Agreement and not otherwise defined in this
Certificate shall have the meanings defined for them in the Loan Agreement.
Section references herein relate to the Loan Agreement unless stated otherwise.
This Certificate is delivered in accordance with Section 7.2 of the Loan
Agreement by a Senior Officer of Borrower. This Certificate is delivered with
respect to the Fiscal Quarter (the "Test Fiscal Quarter") ended ______________,
_____ (the "Determination Date").
I. SECTION 6.11 - NET WORTH. As of the Determination Date, beginning April 30,
2000, the Net Worth of Borrower and its Subsidiaries was $__________.
Minimum Required: $________ (as calculated below)
MINIMUM REQUIRED NET WORTH IS CALCULATED AS FOLLOWS:
(a) $19,125,000 $19,125,000
PLUS (b) 75% of cumulative Net Income of Borrower and
its Subsidiaries for each Fiscal Quarter which has then
ended since the Closing Date (including the stub
financial period beginning on the Closing Date and
ending on January 31, 2000) and without deduction for
any net loss during any such Fiscal Quarter and each
Fiscal Quarter thereafter $________
PLUS (c) 100% of the Net Cash Proceeds to Borrower of
the issuance of any equity securities by Borrower (or
any holding company for any capital stock of Borrower
since the Closing Date) $_________
EQUALS minimum required Net Worth [(a)+(b)+(c)] $_________
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II. SECTION 6.12 - LEVERAGE RATIO. As of the Determination Date, beginning
October 31, 2000, the Leverage Ratio (as calculated below) was ___:1.00.
MAXIMUM PERMITTED: _______:1.00(1)
THE LEVERAGE RATIO WAS COMPUTED AS FOLLOWS:
(a) Total Funded Debt of Borrower and its Subsidiaries
as of the Determination Date (as calculated below) $_________
DIVIDED BY (b) EBITDA of Borrower and its Subsidiaries
for the four Fiscal Quarter period then ended (in the
case of the four fiscal quarter period ending October
31, 2000, including the pre-merger results of Borrower
and its Subsidiaries) (the "TEST PERIOD") (as
calculated below) $_________
EQUALS LEVERAGE RATIO [(a)/(b)] ___:1.00
TOTAL FUNDED DEBT OF BORROWER AND ITS SUBSIDIARIES -- COMPONENT CALCULATIONS
In the above computation, Total Funded Debt of Borrower and its
Subsidiaries as of the Determination Date is (without duplication) the SUM OF
the following: determined on a consolidated basis for Borrower and its
Subsidiaries, (2)
(a) all outstanding principal Indebtedness for borrowed
money (INCLUDING debt securities issued by Borrower or
any of its Subsidiaries) $_________
MINUS (b) obligations with respect to the Earn Out
Payments and accumulated amounts due under the
Management Agreement and the Tax Agreement $_________
PLUS (c) all interest bearing obligations $_________
----------
(1) Insert maximum required ratio as set forth in Section 6.12 of the Loan
Agreement, as as amended.
(2) In calculating Total Funded Debt, the outstanding principal balance of
the Revolving Commitment shall be deemed to equal (y) as of October 31, 2000,
the average of the outstanding Revolving Usage as of October 31, 2000 and as of
each of the last days of the two immediately preceding Fiscal Quarters, and (z)
as of the last day of each subsequent Fiscal Quarter, the average of the
outstanding Revolving Usage as of the last days of that Fiscal Quarter and the
three immediately preceding Fiscal Quarters.
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PLUS (d) the aggregate amount of all Capital Lease
Obligations $_________
PLUS (e) all obligations in respect of letters of
credit or other similar instruments for which Borrower
or any of its Subsidiaries are account parties or are
otherwise obligated $_________
PLUS (f) the aggregate amount of all Contingent
Obligations and other similar contingent obligations of
Borrower and its Subsidiaries with respect to any of
the foregoing $_________
PLUS (g) any obligations of Borrower or any of its
Subsidiaries to the extent that the same are secured by
a Lien on any of the assets of Borrower or its
Subsidiaries $_________
EQUALS TOTAL FUNDED DEBT [(a)-(b)+(c)+(d)+(e)+(f)+(g)] $_________
EBITDA - COMPONENT CALCULATIONS
EBITDA for the Test Period was calculated (without duplication) as follows,
in each case as determined on a consolidated basis for Borrower and its
Subsidiaries, in accordance with Generally Accepted Accounting Principles:
(a) Net Income for the Test Period $_________
PLUS (b) income tax expense (if any) for the Test Period $_________
PLUS (c) gross interest expense for the Test Period $_________
PLUS (d) depreciation for the Test Period $_________
PLUS (e) non-cash amortization for the Test Period $_________
MINUS (f) extraordinary income and gains for the Test
Period (other than proceeds of crop insurance settlements) ($_________)
MINUS (g) gains (or PLUS losses) on sales of fixed assets
for the Test Period ($_________)
PLUS (h) accrued Management Fee Distributions and accrued
Tax Agreement Amounts for the Test Period $_________
EQUALS EBITDA [(a)+(b)+(c)+(d)+(e)-(f)-(g)+(h)] $_________
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III. SECTION 6.13 - MINIMUM EBITDA. As of the Determination Date, EBITDA (as
calculated in item II above) was $_______________.
MINIMUM REQUIRED: $______________ (3)
IV. SECTION 6.14 - MINIMUM EBITDA PRIOR TO FARMING LOSSES. As of the
Determination Date, the SUM OF EBITDA (as calculated in item II above) PLUS
farming losses was $_______________.
MINIMUM PERMITTED: $______________ (4)
V. SECTION 6.15 - FIXED CHARGE COVERAGE RATIO
A. As of the Determination Date, beginning July 31, 2000, the Fixed Charge
Coverage ratio (as calculated below) was ______: 1.00.
MINIMUM PERMITTED: 1.25: 1.00
THE FIXED CHARGE COVERAGE RATIO WAS COMPUTED AS FOLLOWS:
(a) the SUM OF:
(i) EBITDA for the Test Period(5)
(as calculated in item II above) $________
MINUS (ii) Capital Expenditures (net
of any Indebtedness constituting
purchase money incurred to finance
those Capital Expenditures) for the
Test Period ($________)
MINUS (iii) income taxes payable in
cash for the Test Period ($________)
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3 Insert the applicable amount from Section 6.13 of the Loan Agreement, as
amended.
4 Insert the applicable amount from Section 6.14 of the Loan Agreement, as
amended.
5 PROVIDED that as of the last day of the Fiscal Quarters ending July 31,
2000 and October 31, 2000, the Fixed Charge Coverage Ratio shall be calculated
for the period since the Closing Date.
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MINUS (iv) Tax Gross- Up's Per the
Test Period $________
MINUS (v) Management Fee Distributions
to the extent paid in cash $________
DIVIDED BY (b) Fixed Charges for the Test
Fiscal Quarter (as calculated below) $________
EQUALS Fixed Charge Coverage Ratio [a/b] ___: 1.00
FIXED CHARGES CALCULATION:
(a) gross interest expense of Borrower and its
Subsidiaries on a consolidated basis (paid or
payable in Cash) $________
PLUS (b) scheduled principal payments of Borrower
and its Subsidiaries on indebtedness for borrowed
money and Capital Leases $________
EQUALS Fixed Charges [(a)+(b)] $________
VI. SECTION 6.16 - CURRENT RATIO. As of the Determination Date, the ratio of (a)
the consolidated current assets of Borrower and its Subsidiaries as of the
Determination Date, to (b) the consolidated current liabilities of Borrower and
its Subsidiaries as of the Determination Date (excluding accrual accounts for
Earn Out Payments, Tax Agreement Amounts and Management Fee Distributions, but
in any event including the Revolving Usage) (in each case determined in
accordance with GAAP) was $_____________________.
MAXIMUM PERMITTED: ____________(6)
VII. SECTION 6.17 - PROFITABILITY. The SUM OF Net Income of Borrower and its
Subsidiaries for the Test Fiscal Quarter PLUS accrued but unpaid Management Fee
Distributions of Borrower and its Subsidiaries for the Test Fiscal Quarter was
$_____________________.
MINIMUM PERMITTED: $_______________(7)
PROFITABILITY FOR FISCAL QUARTER IMMEDIATELY
PRECEDING THE TEST FISCAL QUARTER: $_______________
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6 Insert applicable amount from Section 6.16 of the Loan Agreement, as
amended.
7 This sum shall not be less than zero for any two consecutive Fiscal
Quarters (beginning with the two Fiscal Quarters ending April 30, 2000 and July
31, 2000).
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VIII. SECTION 6.18 - MAXIMUM CAPITAL EXPENDITURES. As of the Determination Date,
the aggregate amount of Capital Expenditures made by Borrower and its
Subsidiaries during the current Fiscal Year was $_____________________.
MAXIMUM PERMITTED: $_______________(8)
IX. SECTION 6.19 - MAXIMUM RESEARCH AND DEVELOPMENT EXPENDITURES. As of the
Determination Date, the aggregate amount of research and development
expenditures made by Borrower and its Subsidiaries during the current Fiscal
Year was $_____________________.
MAXIMUM PERMITTED: $1,500,000
X. SECTION 6.8 - INDEBTEDNESS AND CONTINGENT OBLIGATIONS. As of the
Determination Date, the outstanding balance of Indebtedness and Contingent
Obligations permitted by Section 6.8 is as follows.
(a) Existing Indebtedness and Contingent
Obligations disclosed on Schedule 6.8 $______________
(b) Indebtedness and Contingent Obligations
in favor of the Creditors under the Loan
Documents $______________
(c) Indebtedness and Contingent Obligations
arising from the endorsement of instruments
for collection in the ordinary course of
Borrower's business $______________
(d) Indebtedness and Contingent Obligations
consisting of the Approved Swap Agreement $______________
(e) Purchase money Indebtedness and
obligations in connection with Capital Leases
PROVIDED that the aggregate amount of such
Indebtedness and Capital Leases incurred in
any Fiscal Year does not exceed $500,000 $______________
(f) Subordinated Obligations $______________
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8 Insert the applicable amount from Section 6.18 of the Loan Agreement.
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(g) Deferred obligations under the Management
Agreement and the Tax Agreement (subject to
the subordination provisions contained in the
Landec Guaranty) $______________
(h) Indebtedness and Contingent Obligations
under initial or successive refinancings of
any Indebtedness permitted under clauses (a)
and (f) above, provided that the principal
amount of any such refinancing does not
exceed the principal amount of the
Indebtedness being refinanced and the
material terms and provisions of any such
refinancing (including maturity, redemption,
prepayment, default and subordination
provisions) are no less favorable to the
Lenders than the Indebtedness being
refinanced $______________
(i) Indebtedness of Borrower with respect to
the Secondary Partner Deferred Payments
referred to in Section 2.6 of the Merger and
Purchase Agreement $______________
XI. A review of the activities of Borrower and its Subsidiaries during the
fiscal period covered by this Certificate has been made under the supervision of
the undersigned with a view to determining whether during such fiscal period
Borrower performed and observed all of its Obligations. To the best knowledge of
the undersigned, during the fiscal period covered by this Certificate, all
covenants and conditions have been so performed and observed and no Default or
Event of Default has occurred and is continuing, with the exceptions set forth
below in response to which Borrower has taken or proposes to take the following
actions (if none, so state).
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
XII. The undersigned a Senior Officer of Borrower certifies that the
calculations made and the information contained herein are derived from the
books and records of Borrower and its Subsidiaries, as applicable, and that each
and every matter contained herein correctly reflects those books and records.
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XIII. To the best knowledge of the undersigned no event or circumstance has
occurred that constitutes a Material Adverse Effect since the date the most
recent Compliance Certificate was executed and delivered, with the exceptions
set forth below (if none, so state).
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Dated: _______________
▇▇▇▇ ACQUISITION CORPORATION,
a Delaware corporation
By: ______________________________
Name:
Title:
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