Exhibit 10.26
FIRST AMENDMENT TO
CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT ("Agreement") is made and entered
into to be effective as of June 30, 1998, by and between LIFECORE BIOMEDICAL,
INC., a Minnesota corporation ("Borrower") and U.S. BANK NATIONAL ASSOCIATION, a
national banking association formerly known as First Bank National Association
(the "Lender"), whose address is 300 Prairie Center Drive, Eden Prairie,
Minnesota 55344.
RECITALS
FIRST: The Lender and the Borrower are parties to a Credit Agreement dated
January 15, 1998 (the "Credit Agreement"), pursuant to which Borrower is
indebted to Lender under a revolving line of credit evidenced by that certain
Revolving Credit Note (the "Note") dated January 15, 1998, delivered by the
Borrower to the Lender pursuant to the terms of the Credit Agreement in the
original principal amount of Five Million Dollars ($5,000,000) (the "Revolving
Credit Loan").
SECOND: All indebtedness, liabilities and other obligations of the
Borrower to the Lender, including without limitation the Credit Agreement and
the Revolving Credit Loan are secured by (i) security interests in assets of the
Borrower granted pursuant to a Security Agreement dated January 15, 1998
executed by the Borrower in favor of the Lender (the "Security Agreement"), (ii)
a Custodial Pledge and Security Agreement dated January 15, 1998 executed by the
Borrower in favor of the Lender.
THIRD: The Borrower and Lender have agreed to amend certain of the
covenants in the Credit Agreement.
NOW THEREFORE, in consideration of the loans and advances made pursuant to
the Credit Agreement and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged by each of the parties hereto, it is
agreed as follows:
1. AMENDMENT TO CREDIT AGREEMENT.
A. The Credit Agreement is amended as follows:
(1) THE DEFINITION OF THE TERM "BORROWING BASE" SET FORTH IN SECTION
1 OF THE CREDIT AGREEMENT IS HEREBY DELETED AND REPLACED TO READ
IN ITS ENTIRETY AS FOLLOWS:
"BORROWING BASE" means, at any time, the lesser of (a) Five
Million Dollars ($5,000,000) or (b) seventy-five to ninety
percent (75%-90%) of the Borrower's Eligible Securities, as
determined by Lender based on the type of Eligible Securities as
detailed in EXHIBIT A hereto, plus, after March 31, 1999, so long
as the Borrower has achieved pre-tax net income of $1,000,000 for
the nine months of the Borrower ended as of such date, eighty
percent (80%) of the Borrower's Eligible Accounts.
(2) SECTION 5.11 OF THE CREDIT AGREEMENT IS HEREBY DELETED IN ITS
ENTIRETY AND REPLACED WITH THE FOLLOWING:
5.11 "MINIMUM PRE-TAX NET INCOME. For the nine months ending
March 31, 1999, achieve pre-tax net income, less interest income
and extraordinary income, of not less than $1,000,000, as
determined in accordance with GAAP."
B. Except as amended hereby, the Credit Agreement shall remain in full
force and effect.
2. NO NOVATION.
Nothing herein shall be construed to be a novation of the indebtedness
evidenced by the Credit Agreement, as amended hereby or by the Note.
3. REAFFIRMATION OF SECURITY AGREEMENT AND CUSTODIAL PLEDGE AND SECURITY
AGREEMENT.
The Borrower reaffirms that the Security Agreement and the Custodial Pledge
and Security Agreement shall continue in full force and effect and shall be
entitled to all priorities existing under the Security Agreement and the
Custodial Pledge and Security Agreement as of the date first executed and
delivered and the security interests created thereby are hereby renewed and
extended to secure payment of the Obligations (as defined therein),
expressly including, but not limited to, the Credit Agreement as amended
hereby, and the Note, as defined in the Credit Agreement as so amended.
4. CONDITIONS TO EFFECTIVENESS.
The effectiveness of this Agreement is subject to the receipt by the Lender
of the following in form and substance satisfactory to the Lender in its
sole discretion, unless waived in writing by the Lender:
A. This Agreement duly executed by the Borrower;
B. Evidence of authorization by the Borrower's Board of Directors of the
Borrower's execution of and performance under this Agreement; and
C. Such other items as the Lender may reasonably request.
5. MISCELLANEOUS.
A. All capitalized terms used herein and defined in the Credit Agreement
but not otherwise defined herein shall have the meanings ascribed to
such terms in the Credit Agreement.
B. All references in the Credit Agreement or any other of the Loan
Documents to the Credit Agreement shall hereafter be deemed to refer
to the Credit Agreement as amended by this Agreement and as may be
further amended, modified, restated or replaced pursuant to written
agreement signed by the Lender.
C. The parties acknowledge that the security interests created and
evidenced by the Security Agreement and the Custodial Pledge and
Security Agreement are valid and subsisting and further acknowledge
and agree that there are no offsets, claims or defenses to the Note,
the Credit Agreement, the Security Agreement or the Custodial Pledge
and Security Agreement.
D. This Agreement is delivered in and shall in all respects be construed
according to the laws of the State of Minnesota.
E. This Agreement and each and every part hereof shall be binding upon
the parties hereto and their successors and assigns and shall inure to
the benefit of each and every future holder of the Notes including any
successors and assigns of the Lender.
F. This Agreement may be executed in any number of counterparts with the
same effect as if all parties hereto had signed the same document.
All such counterparts shall be construed together and shall constitute
one instrument, but in making proof hereof it shall only be necessary
to produce one such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed effective as of the date and year first above written.
LIFECORE BIOMEDICAL, INC.,
a Minnesota corporation
By: /s/ Dennis J. Allingham
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Name: Dennis J. Allingham
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Title: Executive Vice President and CFO
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U.S. BANK NATIONAL ASSOCIATION,
a national banking association
By: /s/ Therese L. Knutson
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Name: Therese L. Knutson
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Title: Vice President
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