Exhibit 10.2
FIRST AMENDMENT AND WAIVER TO LOAN AND SECURITY AGREEMENT
This First Amendment and Waiver to Loan and Security Agreement
("AMENDMENT") is made this 14th day of February, 2005 by and among LASALLE
BUSINESS CREDIT, LLC, a Delaware limited liability company, with an office at
Two Commerce Square, Suite 2610, 2001 Market Street, Philadelphia, Pennsylvania
19103("LENDER"), LUCILLE FARMS, INC., a Delaware corporation, with its principal
office at 150 River Road, Montville, New Jersey 07045 ("Lucille"), and LUCILLE
FARMS OF VERMONT, INC., a Vermont corporation, with its principal office at
Swanton Industrial Park, Jonergin Drive, Swanton, Vermont 05488 ("LUCILLE
VERMONT") (Lucille and Lucille Vermont are referred to herein, individually, as
"BORROWER"), and collectively, as "BORROWERS").
BACKGROUND
A. Borrowers and Lender are parties to a certain Loan and Security
Agreement dated as of December 2, 2004 (as it may otherwise heretofore have been
and may hereafter be modified and amended from time to time, the "LOAN
AGREEMENT") pursuant to which Borrowers established certain financing
arrangements with Lender, including a Revolving Loan facility, certain Term Loan
facilities, and a Letter of Credit facility. All capitalized terms not otherwise
defined herein shall have the meaning ascribed thereto in the Loan Agreement.
B. As of the date hereof, Borrowers are in default under the Loan
Agreement as more particularly described below and such Existing Defaults
(defined below) constitute Events of Default under the Loan Agreement. Borrowers
have requested that Lender waive such Existing Defaults and make certain
amendments to the Loan Agreement, and Lender has agreed to do so on the terms
and conditions set forth in this Amendment.
NOW, THEREFORE, in consideration of the foregoing Background which is
incorporated herein by reference and made a part hereof, the mutual covenants
and agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound, the parties agree as follows:
1. Waiver of Existing Defaults. Lender hereby waives the following
Events of Default (the "EXISTING DEFAULTS") arising solely out of the failure by
Borrowers, on a consolidated basis, to (a) maintain a Tangible Net Worth of not
less than 90% of Tangible Net Worth for September 30, 2004 for the test period
ended December 31, 2004 as required by Section 14(a) of the Loan Agreement, and
(b) maintain a Fixed Charge Coverage Ratio of not less than 1.00 to 1.00 for the
test period ended December 31, 2004 as required by Section 14(b) of the Loan
Agreement.
2. No Other Waivers; Reservation of Rights. Lender has not waived, and
is not by this Amendment waiving, any Events of Default that may be continuing
on the date hereof other than the Existing Defaults, or any defaults that may
occur after the date hereof. Lender reserves the right, in its discretion, to
exercise any or all of its rights and remedies under the Loan Agreement and the
Other Agreements as a result of any Events of Default (other than the Existing
Defaults) which may be continuing on the date hereof or any Event of Default
which may occur after the date hereof, and Lender has not waived any of such
rights or remedies, and nothing in this Amendment, and no delay on its part in
exercising any such rights or remedies, should be construed as a waiver of any
such rights or remedies.
3. Amendments to Loan Agreement. Upon the satisfaction of the
Effectiveness Conditions, the Loan Agreement shall be amended as follows:
(a) Section 14(a) - Tangible Net Worth. For each of the test
periods ended January 2005, February 2005 and March 2005, Borrowers, on
a consolidated basis, will maintain a Tangible Net Worth of not less
than $2,500,000. All other provisions of Section 14(a) shall remain
unchanged.
(b) Section 14(b) - Fixed Charge Coverage. Lender hereby
waives Borrowers' compliance with the Fixed Charge Coverage test for
the seven-month period ended January 31, 2005, and for the eight-month
period ending February 28, 2005. In addition, for the test period
ending March 31, 2005, Borrowers, on a consolidated basis, will
maintain a ratio of their FC Numerator to Fixed Charges of not less
than 1.00 to 1.00 with respect to the three (3) month period then
ended. All other provisions of Section 14(b) shall remain unchanged.
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4. Suspension of Capital Expenditure Loans. Lender hereby suspends all
Capital Expenditure Loans to Borrowers. Lender shall not resume such Capital
Expenditure Loans unless and until, (a) on or before February 15, 2006, Lender
shall have received Borrowers' internally-prepared quarterly financial
statements for the fiscal quarter ended December 31, 2005, and (b) Borrowers
shall have maintained a ratio of their FC Numerator to Fixed Charges of not less
than 1.20 to 1.00 with respect to the twelve (12) month period then ended.
5. Suspension of Interest Rate Reduction. Borrowers shall not be
entitled to the one-time interest rate reduction of twenty-five (25) basis
points as described in Section 4(a) of the Loan Agreement until such time as
Lender has received Borrowers' audited annual financial statements for the
Fiscal Year ended March 31, 2006 in accordance with Section 9(c) of the Loan
Agreement, and Borrowers have complied with all other conditions required for
such interest rate reduction.
6. Representations and Warranties. Each Borrower represents and
warrants to Lender that:
(i) All warranties and representations made to Lender under
the Loan Agreement and the Other Agreements are true and correct as to
the date hereof.
(ii) The execution and delivery by such Borrower of this
Amendment and the performance by them of the transactions herein
contemplated (i) are and will be within its power, (ii) has been
authorized by all necessary corporate or limited liability company
action and will not contravene any provision of the certificate or
articles of incorporation or bylaws or certificate of formation or
operating agreement or other similar entity governance documents of
such Borrower, and (iii) are not and will not be in contravention of
any order of any court or other agency of government, of law or any
other indenture, agreement or undertaking to which such Borrower is a
party or by which the property of such Borrower is bound, or be in
conflict with, result in a breach of, or constitute (with due notice
and/or lapse of time, if applicable) a default under any such
indenture, agreement or undertaking or result in the imposition of any
lien, charge or encumbrance of any nature on any of the properties of
such Borrower.
(iii) This Amendment and any assignment, instrument, document,
or agreement executed and delivered in connection herewith, will be
valid and binding on and enforceable against such Borrower in
accordance with its respective terms.
(iv) No Event of Default other than the Existing Defaults, or
event or circumstance that with the giving of notice or passage of time
or both would become an Event of Default, has occurred under the Loan
Agreement or any of the Other Agreements.
(v) The name, office and signature of the officer of such
Borrower signing this Amendment has previously been certified to Lender
in the incumbency and signature certificates of Borrower heretofore
delivered to Lender.
7. Confirmation of Security Interest. As security for the payment of
all Loans now or in the future made by Lender to Borrowers hereunder and for the
payment or other satisfaction of all other Liabilities, each Borrower hereby
reconfirms the assignment and grant of a continuing perfected first priority
(subject only to Permitted Liens which Lender has expressly agreed may be senior
to the security interests of Lender) lien, charge and security interest in and
to the Collateral, whether now owned or hereafter acquired, created or arising
and wherever located, granted to Lender by such Borrower under the Loan
Agreement and the Other Agreements. Each Borrower hereby confirms and agrees
that all such security interests and liens granted to Lender under the Loan
Agreement and the Other Agreements continue in full force and effect and shall
continue to secure the Liabilities. The Collateral remains free and clear of any
liens other than liens in favor of Lender, except for Permitted Liens. Nothing
herein contained is intended to in any way impair or limit the validity,
priority and extent of Lender's existing security interest in and liens upon the
Collateral.
8. Conditions Precedent. This Amendment shall be effective upon
completion of the following conditions precedent (the "EFFECTIVENESS
CONDITIONS"):
(i) Execution and delivery of this Amendment by all parties
hereto;
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(ii) To the extent that the name, office and signature of the
officer(s) of each Borrower signing this Amendment or any of the
certificates or other documents contemplated hereby do not currently
appear in the incumbency and signature certificates of such Borrower
heretofore delivered to Lender, Lender shall have received, in form and
substance satisfactory to it, certificates as to the incumbency and
signature of such officer(s); and
(iii) Lender shall have received an amendment fee of $25,000.
9. Ratification of Existing Loan Documents. Except as expressly set
forth herein, all of the terms and conditions of the Loan Agreement and the
Other Agreements are hereby ratified and confirmed and continue unchanged and in
full force and effect, including without limitation Section 28 of the Loan
Agreement dealing with judgment by confession. All references to the Loan
Agreement shall mean the Loan Agreement as modified by this Amendment.
10. Governing Law. THIS AMENDMENT SHALL BE GOVERNED AND CONTROLLED BY
THE INTERNAL LAWS OF THE COMMONWEALTH OF PENNSYLVANIA AS TO INTERPRETATION,
ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER RESPECTS,
INCLUDING, WITHOUT LIMITATION, THE LEGALITY OF THE INTEREST RATE AND OTHER
CHARGES, BUT EXCLUDING PERFECTION OF THE SECURITY INTERESTS IN THE COLLATERAL,
WHICH SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE RELEVANT JURISDICTION.
11. Successors and Assigns. This Amendment, along with the Loan
Agreement and each of the Other Agreements, shall be binding upon and shall
benefit Borrowers and Lender and their respective successors and permitted
assigns (as permitted under the Loan Agreement).
12. Counterparts. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts together shall constitute one and the same respective
agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the date first written above.
LENDER:
LASALLE BUSINESS CREDIT, LLC
By: /s/ William H. Moul, Jr.
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Name: William H. Moul, Jr.
Title: Vice President
BORROWERS:
LUCILLE FARMS, INC.
By: /s/ Jay Rosengarten
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Name: Jay Rosengarten
Title: Chief Executive Officer
LUCILLE FARMS OF VERMONT, INC.
By: /s/ Jay Rosengarten
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Name: Jay Rosengarten
Title: Chief Executive Officer
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