AMENDMENT TO CREDIT AND SECURITY
AGREEMENT
This Amendment, dated as of September 28, 2000, is made by and
between OUR FOOD PRODUCTS GROUP, INC., a Texas corporation (the "Borrower"),
XXXXX FARGO BUSINESS CREDIT, INC., a Minnesota corporation (the "Lender") and
GOURMET GROUP, INC., f/k/a Seair Group, Inc., a Nevada corporation ("Gourmet").
RECITALS
WHEREAS, the Borrower and the Lender have entered into a Credit and
Security Agreement dated as of May 31, 2000 (the "Credit Agreement").
Capitalized terms used in these recitals have the meanings given to them in the
Credit Agreement unless otherwise specified.
WHEREAS, Gourmet, the Borrower and the shareholders of the Borrower
have entered into an Agreement and Plan of Share Exchange dated as of September
28, 2000 (the "Share Exchange Agreement") wherein Gourmet has acquired all of
the outstanding capital stock of the Borrower from the Borrower's shareholders
solely in exchange for restricted common stock of Gourmet, making Borrower a
wholly-owned subsidiary of Gourmet (the "Share Exchange Transaction");
WHEREAS, the Borrower and Gourmet have requested that Lender consent
to the Share Exchange Transaction, waive certain covenant defaults and make
certain amendments to the Credit Agreement.
NOW, THEREFORE, in consideration of the agreements herein contained,
it is agreed as follows:
1. DEFINED TERMS. Capitalized terms used in this Amendment which are
defined in the Credit Agreement shall have the same meanings as defined therein,
unless otherwise defined herein. In addition, Section 1.1 of the Credit
Agreement is amended by adding or amending, as the case may be, the following
definitions:
"Affiliate" or "Affiliates" means the Parent, Xxxxxx Xxxx Group, Inc.
and any other Person controlled by, controlling or under common control
with the Borrower, including (without limitation) any Subsidiary of the
Borrower. For purposes of this definition, "control," when used with
respect to any specified Person, means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise.
"GAAP" means generally accepted accounting principles, applied on a
basis consistent with the accounting practices applied in the financial
statements described in Section 5.5,
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except for any change in accounting practices to the extent that, due to a
promulgation of the Financial Accounting Standards Board changing or
implementing any new accounting standard, the Borrower or Parent, as
applicable, either (i) is required to implement such change, or (ii) for
future periods will be required to and for the current period may in
accordance with generally accepted accounting principles implement such
change, for its financial statements to be in conformity with generally
accepted accounting principles (any such change is herein referred to as a
"Required GAAP Change"), provided that (1) the Borrower or Parent, as
applicable, shall fully disclose in such financial statements any such
Required GAAP Change and the effects of the Required GAAP Change on the
Borrower's or Parent's income, retained earnings or other accounts, as
applicable, and (2) the Borrower's financial covenants set forth in
Sections 6.13, 6.14, 6.15, 6.16, 6.17, 6.18, 6.19, 6.20, 6.21, and 7.10
shall be adjusted as necessary to reflect the effects of such Required GAAP
Change.
"Guarantor(s) " means Gourmet Group, Inc., f/k/a Seair Group, Inc., a
Nevada corporation, and any other Person who now or hereafter guaranties
the Obligations.
"Guaranty" means any guaranty executed in favor of the Lender by
Guarantor with respect to the Obligations, as the same may hereafter be
amended, supplemented or restated from time to time.
"Parent" shall mean Gourmet Group, Inc., f/k/a Seair Group, Inc., a
Nevada corporation.
"Security Documents" means this Agreement, the Lockbox and Collection
Account Agreement, the Deed of Trust, the Assignment of Rents, the
Trademark Security Agreement, the Copyright Security Agreement, the Keep
Well Agreement, the Guaranty, the Subordination Agreement and any other
document delivered to the Lender from time to time to secure the
Obligations, as the same may hereafter be amended, supplemented or restated
from time to time.
2. LENDER CONSENT. On the effective date of this Amendment, the Lender
consents to the Share Exchange Transaction, but solely on the terms and
conditions set forth in the Share Exchange Agreement as disclosed to the Lender.
3. TRANSACTION REPRESENTATION AND WARRANTIES: Gourmet and the Borrower
each jointly and severally represents and warrants the following:
(1) That (i) the Share Exchange Transaction has been completed in
all respects as of the date hereof in accordance with the terms and
provisions set forth in Share Exchange Agreement and applicable law;
(ii) the Borrower currently constitutes a wholly owned subsidiary of
Gourmet, and (iii) the Share Exchange
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Agreement has not been amended or modified in any manner and continues
in full force and effect.
(2) That attached hereto as Schedule 3(b) is a listing of the
following, each as in existence as of the date hereof and as in effect
after completion of the Share Exchange Transaction: (a) the
outstanding classes of stock of Gourmet and the Borrower, (b) the
total amount of issued and outstanding share of capital stock of
Gourmet and the Borrower, and (c) a listing of any and all warrants,
options, convertible debt and other rights and interests relating to
the issuance of any capital stock of Gourmet, together with a
calculation of the number of shares to be issued upon conversion or
exercise; and as of the date hereof no warrants, options, convertible
debt or similar interest for the issuance of any capital stock of the
Borrower continue to exist.
(3) That Xxxxxx Xxxx Group, Inc. ("MKGI") owns not less than 60%
of the outstanding voting capital stock of Gourmet.
(4) That the chief executive office and principal place of
business of both Gourmet and Borrower is located at #0 Xxxxxxxx Xxxxx,
Xxxx, Xxxxx 00000.
(5) That there has been no change in the senior management of the
Borrower referred to in Section 7.19 of the Credit Agreement and that
the current chief executive officer, chief financial officer and chief
operating officer for Gourmet is Xxxxxxxx Xxxxxxxx, Xxxxxxxx Xxxxxx,
and Xxxxx Xxxx Xxxxx respectively.
4. AMENDMENTS TO REPRESENTATIONS AND WARRANTIES.
1. The following sections of Article V of the Credit Agreement
are hereby deleted in their entirety and replaced with the following:
Section 5.1 CORPORATE EXISTENCE AND POWER; NAME; CHIEF
EXECUTIVE OFFICE; INVENTORY AND EQUIPMENT LOCATIONS; TAX
IDENTIFICATION NUMBER. The Borrower is a corporation, duly organized,
validly existing and in good standing under the laws of the State of
Texas and is duly licensed or qualified to transact business in all
jurisdictions where the character of the property owned or leased or
the nature of the business transacted by it makes such licensing or
qualification necessary. The Borrower has all requisite power and
authority, corporate or otherwise, to conduct its business, to own its
properties and to execute and deliver, and to perform all of its
obligations under, the Loan Documents. During its existence, the
Borrower has done business solely under the names set forth in
Schedule 5.1 hereto. The chief executive office and principal place of
business of the Borrower and the Parent is located at the address set
forth in Schedule 5.1 hereto, and all of their respective records
relating to its business or the Collateral are kept at that location.
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All Inventory and Equipment is located at that location or at one of
the other locations set forth in Schedule 5.1 hereto. The Borrower's
tax identification number is correctly set forth in Section 3.6
hereto.
Section 5.4 SUBSIDIARIES. Except as set forth in Schedule
5.4 hereto, neither the Borrower nor the Parent has any Subsidiaries.
Section 5.5 FINANCIAL CONDITION; NO ADVERSE CHANGE. The
Borrower has heretofore furnished to the Lender its audited financial
statements for its fiscal year ended December 31, 1999 and its
unaudited financial statements for the fiscal year-to-date period
ended July 31, 2000 for the Borrower and the August 31, 2000 balance
sheet for the Parent, together with the audited financial statements
of the Parent for fiscal year ended December 31, 1999 and those
statements fairly present the respective financial condition of the
Borrower and the Parent, as applicable, on the dates thereof and the
results of their respective operations and cash flows for the periods
then ended and were prepared in accordance with generally accepted
accounting principles. Since the date of the most recent financial
statements of the Borrower and the Parent, there has been no material
adverse change in the business, properties or condition (financial or
otherwise) of the Parent or the Borrower.
Section 5.11 DEFAULT. Each of the Borrower and the Parent is
in compliance with all provisions of all agreements, instruments,
decrees and orders to which it is a party or by which it or its
property is bound or affected, the breach or default of which could
have a material adverse effect on the financial condition, properties
or operations of either the Borrower or the Parent.
Section 5.13 SUBMISSIONS TO LENDER. All financial and other
information provided to the Lender by or on behalf of the Borrower or
the Parent in connection with the Borrower's request for the credit
facilities contemplated hereby is true and correct in all material
respects and, as to projections, valuations or proforma financial
statements, present a good faith opinion as to such projections,
valuations and proforma condition and results.
5. AMENDMENTS TO REPORTING REQUIREMENTS.
1. Subsections 6.1(a), (f), (k), (l), (m) and (n) of the Credit
Agreement are hereby deleted in their entirety and replaced with the following:
Section 6.1 REPORTING REQUIREMENTS. The Borrower will and
will cause the Parent to deliver, or cause to be delivered, to the
Lender each of the following, as applicable, which shall be in form
and detail acceptable to the Lender:
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(a) (i ) as soon as available, and in any event within 120 days
after the end of each fiscal year of the Borrower and Parent, the
Borrower's and Parent's audited financial statements for such fiscal
year, each of such audited financial statements with the unqualified
opinion of independent certified public accountants selected by the
Borrower and Parent and acceptable to the Lender, and which shall
include the Borrower's and Parent's balance sheet as at the end of
such fiscal year and the related statements of the Borrower's and
Parent's income, retained earnings and cash flows for the fiscal year
then ended, prepared, if the Lender so requests, on a consolidating
and consolidated basis to include any Affiliates, all in reasonable
detail and prepared in accordance with GAAP, and (ii) as soon as
available and in any event within 45 days after the end of each fiscal
quarter, an unaudited/internal balance sheet and statements of income
and retained earnings of the Borrower and Parent as at the end of and
for such quarter and for the year to date period then ended; each
together with (x) copies of all management letters prepared by such
accountants; (y) a report signed by such accountants stating that in
making the investigations necessary for said opinion they obtained no
knowledge, except as specifically stated, of any Default or Event of
Default hereunder and all relevant facts in reasonable detail to
evidence, and the computations as to, whether or not the Borrower is
in compliance with the requirements set forth in Sections 6.13, 6.14,
6.15, 6.16, 6.17, 6.18, 6.19, 6.20, 6.21, and 7.10; and (z) a
certificate of the Borrower's and Parent's chief financial officers
stating that such financial statements have been prepared in
accordance with GAAP and whether or not such officer has knowledge of
the occurrence of any Default or Event of Default hereunder and, if
so, stating in reasonable detail the facts with respect thereto;
(f) as promptly as practicable (but in any event not later than
five business days) after an officer of the Borrower obtains knowledge
of the occurrence of any breach, default or event of default under any
Security Document or any event which constitutes a Default or Event of
Default hereunder, notice of such occurrence, together with a detailed
statement by a responsible officer of the Borrower of the steps being
taken by the Borrower to cure the effect of such breach, default or
event;
. . .
(k) promptly upon their distribution, copies of all financial
statements, reports and proxy statements which the Borrower and/or the
Parent shall have sent to its stockholders;
(l) promptly after the sending or filing thereof, copies of all
regular and periodic reports which the Borrower and/or the Parent
shall file with the Securities and Exchange Commission or any national
securities exchange;
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(m) promptly upon knowledge thereof, notice of the Borrower's
violation of any law, rule or regulation, the non-compliance with
which could materially and adversely affect either the Borrower's or
the Parent's business or financial condition; and
(n) from time to time, with reasonable promptness, any and all
receivables schedules, collection reports, deposit records, equipment
schedules, copies of invoices to account debtors, shipment documents
and delivery receipts for goods sold of or by the Borrower, and such
other material, reports, records or information of either the Borrower
or the Parent as the Lender may request.
2. Sections 6.2, 6.5, 6.19, 6.20 and 6.21 of the Credit Agreement
are hereby deleted in their entirety and replaced with the following:
Section 6.2 BOOKS AND RECORDS; INSPECTION AND EXAMINATION. The
Borrower will and will cause the Parent to respectively keep accurate
books of record and account for the Borrower pertaining to the
Collateral and pertaining to the respective business and financial
condition of the Borrower and the Parent and such other matters as the
Lender may from time to time request in which true and complete
entries will be made in accordance with GAAP and, upon the Lender's
request, will permit any officer, employee, attorney or accountant for
the Lender to audit, review, make extracts from or copy any and all
corporate and financial books and records of the Borrower and/or the
Parent at all times during ordinary business hours, to send and
discuss with account debtors and other obligors requests for
verification of amounts owed to the Borrower, and to discuss the
Borrower's or Parent's affairs with any of its respective directors,
officers, employees or agents. The Borrower will and will cause the
Parent to respectively permit the Lender, or its employees,
accountants, attorneys or agents, to examine and inspect any
Collateral, other collateral covered by the Security Documents or any
other property of the Borrower or the Parent at any time during
ordinary business hours.
Section 6.5 PAYMENT OF TAXES AND OTHER CLAIMS. The Borrower and
Parent will pay or discharge, when due, (a) all taxes, assessments and
governmental charges levied or imposed upon it or upon its income or
profits, upon any properties belonging to it (including, without
limitation, the Collateral) or upon or against the creation,
perfection or continuance of the Security Interest, prior to the date
on which penalties attach thereto, (b) all federal, state and local
taxes required to be withheld by it, and (c) all lawful claims for
labor, materials and supplies which, if unpaid, might by law become a
lien or charge upon any properties of the Borrower; provided, that the
Borrower and Parent shall not be required to pay any such tax,
assessment, charge
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or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which proper reserves
have been made.
Section 6.19 MAXIMUM MONTHLY NET LOSS. The Borrower will not
incur during any calendar month a net loss, i.e. negative Net Income,
in excess of ($50,000) determined as of each calendar month end,
except during the calendar months of January and February of each
fiscal year for which such loss shall not exceed ($100,000) and
($75,000), respectively.
Section 6.20 MINIMUM QUARTERLY NET INCOME. The Borrower will
achieve as of the end of each fiscal quarter, a minimum Net Income of
not less than $0 for such quarter; provided however that for the first
fiscal quarter ending March 31st of each fiscal year, the Borrower
shall be permitted to incur a net loss, i.e. negative Net Income, up
to but not in excess of ($175,000).
Section 6.21 MINIMUM ANNUAL NET INCOME. The Borrower will achieve
as of each fiscal year end described below, Net Income of not less
than the amount set forth opposite such year end:
FYE MINIMUM NET INCOME
--- ------------------
6/30/01 $50,000
6/30/02 $150,000
6/30/03 $200,000
6. NEGATIVE COVENANTS. Sections 7.1, 7.2, 7.3, 7.4, 7.6, 7.7, 7.8,
7.11, 7.13, 7.14, 7.15, 7.16, 7.18 and 7.19 of Article VII of the Credit
Agreement are hereby deleted in their entirety and replaced with the following:
Section 7.1 LIENS. Neither the Borrower nor the Parent will
create, incur or suffer to exist any mortgage, deed of trust, pledge,
lien, security interest, assignment or transfer upon or of any of its
assets, now owned or hereafter acquired, to secure any indebtedness;
EXCLUDING, HOWEVER, from the operation of the foregoing, the following
(collectively, "Permitted Liens"):
(a) in the case of any of the Borrower's property which is
not Collateral or other collateral described in the Security
Documents, covenants, restrictions, rights, easements and minor
irregularities in title which do not materially interfere with
the Borrower's business or operations as presently conducted;
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(b) mortgages, deeds of trust, pledges, liens, security
interests and assignments in existence on the date hereof and
listed in SCHEDULE 7.1 hereto, securing indebtedness for borrowed
money permitted under Section 7.2; provided, however, that with
respect to the indebtedness of the Borrower owing to KBK
Financial, Inc., such indebtedness and all deeds of trust,
mortgages and other liens granted by the Borrower and securing
such indebtedness, together with the indebtedness secured
thereby, shall at all times remain subject and subordinate to the
Obligations and the Security Interest, the Deed of Trust and all
other liens and security interests created by the Security
Documents, each pursuant to the terms and conditions set forth in
the Subordination Agreement;
(c) the Security Interest and liens and security interests
created by the Security Documents or liens and security interests
expressly consented to by the Lender; and
(d) purchase money security interests relating to the
acquisition of machinery and equipment of the Borrower not
exceeding the lesser of cost or fair market value thereof, not
exceeding $25,000 for any one purchase or $100,000 in the
aggregate during any fiscal year and so long as no Default Period
is then in existence and none would exist immediately after such
acquisition.
Section 7.2 INDEBTEDNESS. Neither the Borrower nor the Parent
will incur, create, assume or permit to exist any indebtedness or
liability on account of deposits or advances or any indebtedness for
borrowed money or letters of credit issued on the Borrower's or
Parent's behalf, or any other indebtedness or liability evidenced by
notes, bonds, debentures or similar obligations, except:
(a) indebtedness arising hereunder or the Guaranty;
(b) indebtedness of the Borrower in existence on the date
hereof and listed in SCHEDULE 7.2 hereto or indebtedness of the
Parent as set forth in its August 31, 2000 balance sheet;
provided, however, that with respect to the indebtedness of the
Borrower owing to KBK Financial, Inc., such indebtedness and all
deeds of trust, mortgages and other liens granted by the Borrower
and securing such indebtedness, together with the indebtedness
secured thereby, shall at all times remain subject and
subordinate to the Obligations and the Security Interest, the
Deed of Trust and all other liens and security interests created
by the Security Documents, each pursuant to the terms and
conditions set forth in the Subordination Agreement;
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(c) indebtedness relating to liens permitted in accordance
with Section 7.1; and
(d) indebtedness of the Parent incurred in connection with
(i) the issuance of convertible indebtedness, or (ii) any
acquisition or in connection with any secondary equity offering
or equity private placement.
Section 7.3 GUARANTIES. Neither the Borrower nor the Parent will
assume, guarantee, endorse or otherwise become directly or
contingently liable in connection with any obligations of any other
Person, except:
(a) the endorsement of negotiable instruments by the
Borrower for deposit or collection or similar transactions in the
ordinary course of business; and
(b) the Guaranty or guaranties, endorsements and other
direct or contingent liabilities in connection with the
obligations of other Persons, in existence on the date hereof and
listed in SCHEDULE 7.2 hereto.
Section 7.4 INVESTMENTS AND SUBSIDIARIES.
(a) Neither the Borrower nor the Parent will purchase or
hold beneficially any stock or other securities or evidences of
indebtedness of, make or permit to exist any loans or advances
to, or make any investment or acquire any interest whatsoever in,
any other Person, including specifically but without limitation
any partnership or joint venture, except:
(i) investments by the Parent in any Subsidiary and
investments in direct obligations of the United States of
America or any agency or instrumentality thereof whose
obligations constitute full faith and credit obligations of
the United States of America having a maturity of one year
or less, commercial paper issued by U.S. corporations rated
"A-1" or "A-2" by Standard & Poors Corporation or "P-1" or
"P-2" by Xxxxx'x Investors Service or certificates of
deposit or bankers' acceptances having a maturity of one
year or less issued by members of the Federal Reserve System
having deposits in excess of $100,000,000 (which
certificates of deposit or bankers' acceptances are fully
insured by the Federal Deposit Insurance Corporation);
(ii) travel advances or loans to the officers and
employees of the Borrower or the Parent not exceeding at any
one time an aggregate of $10,000; and
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(iii) advances in the form of progress payments,
prepaid rent not exceeding three (3) months or security
deposits.
(b) Neither the Borrower nor the Parent will create or
permit to exist any Subsidiary, other than the Subsidiar(y)(ies)
in existence on the date hereof and listed in Schedule 5.4.
. . .
Section 7.6 SALE OR TRANSFER OF ASSETS; SUSPENSION OF BUSINESS
OPERATIONS. Neither the Borrower nor the Parent will sell, lease,
assign, transfer or otherwise dispose of (i) the stock of any
Subsidiary, (ii) all or a substantial part of its assets, or (iii) any
Collateral or any interest therein (whether in one transaction or in a
series of transactions) to any other Person other than the sale of
Inventory in the ordinary course of business and will not liquidate,
dissolve or suspend business operations. The Borrower will not in any
manner transfer any property without prior or present receipt of full
and adequate consideration.
Section 7.7 CONSOLIDATION AND MERGER; ASSET ACQUISITIONS. Neither
the Borrower nor the Parent will consolidate with or merge into any
Person, or permit any other Person to merge into it, or acquire (in a
transaction analogous in purpose or effect to a consolidation or
merger) all or substantially all the assets of any other Person.
Section 7.8 SALE AND LEASEBACK. Neither the Borrower nor the
Parent will enter into any arrangement, directly or indirectly, with
any other Person whereby it shall sell or transfer any real or
personal property, whether now owned or hereafter acquired, and then
or thereafter rent or lease as lessee such property or any part
thereof or any other property which it intends to use for
substantially the same purpose or purposes as the property being sold
or transferred.
. . .
Section 7.11 ACCOUNTING. Neither the Borrower nor the Parent will
(i) adopt any material change in accounting principles other than as
required by GAAP, nor (ii) adopt, permit or consent to any change in
its fiscal year.
. . .
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Section 7.13 DEFINED BENEFIT PENSION PLANS. Neither the Borrower
nor the Parent will adopt, create, assume or become a party to any
defined benefit pension plan, unless disclosed to the Lender pursuant
to Section 5.10.
Section 7.14 OTHER DEFAULTS. Neither the Borrower nor the Parent
will permit any breach, default or event of default to occur under any
note, loan agreement, indenture, lease, mortgage, contract for deed,
security agreement or other contractual obligation binding upon such
parties.
Section 7.15 PLACE OF BUSINESS; NAME. Neither the Borrower nor
the Parent will transfer its chief executive office or principal place
of business, or move, relocate, close or sell any business location.
The Borrower will not permit any tangible Collateral or any records
pertaining to the Collateral to be located in any state or area in
which, in the event of such location, a financing statement covering
such Collateral would be required to be, but has not in fact been,
filed in order to perfect the Security Interest. Neither the Borrower
nor the Parent will change its name, except the change of the Parent's
name to Gourmet Group, Inc.
Section 7.16 ORGANIZATIONAL DOCUMENTS; S CORPORATION STATUS.
Neither the Borrower nor the Parent will amend its certificate of
incorporation, articles of incorporation or bylaws nor change its
state of organization. Neither the Borrower nor the Parent will become
an S Corporation within the meaning of the Internal Revenue Code of
1986, as amended.
. . .
Section 7.18 CHANGE IN OWNERSHIP. Neither the Borrower nor the
Parent will issue or sell any stock, or any options, warrants or
convertible indebtedness for the issuance of any stock, of the
Borrower or Parent so as to change the percentage of voting and
non-voting stock owned by each of the Borrower's and Parent's
shareholders, and the Borrower and Parent will not permit or suffer to
occur the sale, transfer, assignment, pledge or other disposition of
any or all of the issued and outstanding shares of stock, or any
options, warrants or convertible indebtedness for the issuance of any
stock, of the Borrower and Parent; provided, however, (a) MKGI may
purchase the capital stock of any other shareholder of the Parent, (b)
the Parent may issue common stock in any amounts and for any purpose
provided that at all times MKGI shall own with the power to vote at
least fifty one percent (51%) of the outstanding voting stock of the
Parent.
Section 7.19 CHANGE IN SENIOR MANAGEMENT. The Borrower represents
and warrants to Lender that the current chief executive officer, chief
financial officer and chief operating officer for the Borrower are
Xxxxxxxx Xxxxxxxx, Xxxxxxxx Xxxxxx and
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Xxxxx X. Xxxxx, respectively, and that the current chief executive
officer, chief financial officer, chief operating officer for the
Parent are Xxxxxxxx Xxxxxxxx, Xxxxxxxx Xxxxxx and Xxxxx X. Xxxxx
respectively. Neither the Borrower nor the Parent shall make any
change in such senior management positions or terminate any such
senior manager without the prior written consent of the Lender.
7. RESTRICTIONS ON TRANSACTION WITH AFFILIATES. The following
provision is added as Section 7.20 of the
Section 7.20 RESTRICTIONS ON TRANSACTION WITH AFFILIATES. The
Borrower shall not enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of property, the
rendering of any service or the payment of any management, advisory or
similar fees, with any Affiliate unless consented to by the Lender.
8. WAIVER OF COVENANT DEFAULTS. Borrower acknowledges that Defaults
have occurred as follows: (a) as of June 30, 2000, the Borrower was in default
of the monthly net income covenant and the quarterly net income covenant under
the Credit Agreement, together with the failure by MKGI to make the Keep Well
Payment required by MKGI under and pursuant to the Keep Well Agreement for the
month of June 2000, and (b) as of July 31, 2000, the failure by MKGI to make the
Keep Well Payment required under the Keep Well Agreement for the month of July
2000. On the effective date of this Amendment, the Lender agrees to waive such
Defaults, subject however to the condition that MKGI shall have cured and made
the Keep Well Payments to the Borrower required under the Keep Well Agreement
for June and July 2000 as referenced above, which payments shall in any event
have been made on or before September ___, 2000. This waiver shall be effective
only in this specific instance and for the specific purpose for which it is
given, and this wavier shall not entitle the Borrower to any other or further
waiver in any similar or other circumstances.
9. AMENDMENT OF EVENTS OF DEFAULT. Subsections 8.1 (c), (g), (h), (i),
(j), (l), (m), (n), (q) and (s) of the Credit Agreement are deleted in their
entirety and replaced with the following:
(c) Default in the performance, or breach, of any covenant
or agreement of the Borrower or Parent contained in this
Agreement or the Guaranty;
. . .
(g) Any representation or warranty made by or on behalf of
the Borrower or Parent in this Agreement or the Guaranty, by any
Guarantor in any guaranty delivered to the Lender, or by the
Borrower (or any of its officers), Parent (or any of its
officers) or any Guarantor in any agreement, certificate,
instrument or financial statement or other statement contemplated
by or made or delivered pursuant to or in
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connection with this Agreement or any such guaranty shall prove
to have been incorrect in any material respect when deemed to be
effective;
(h) The rendering against the Borrower or Parent of a final
judgment, decree or order for the payment of money in excess of
$25,000 and the continuance of such judgment, decree or order
unsatisfied and in effect for any period of 30 consecutive days
without a stay of execution;
(i) A default under any bond, debenture, note or other
evidence of indebtedness of the Borrower or Parent owed to any
Person other than the Lender, or under any indenture or other
instrument under which any such evidence of indebtedness has been
issued or by which it is governed, or under any lease of any of
the Premises, and the expiration of the applicable period of
grace, if any, specified in such evidence of indebtedness,
indenture, other instrument or lease;
(j) Any Reportable Event, which the Lender determines in
good faith might constitute grounds for the termination of any
Plan of either the Borrower or the Parent or for the appointment
by the appropriate United States District Court of a trustee to
administer any such Plan, shall have occurred and be continuing
30 days after written notice to such effect shall have been given
to the Borrower by the Lender; or a trustee shall have been
appointed by an appropriate United States District Court to
administer any such Plan; or the Pension Benefit Guaranty
Corporation shall have instituted proceedings to terminate any
such Plan or to appoint a trustee to administer any such Plan; or
the Borrower or Parent shall have filed for a distress
termination of any Plan under Title IV of ERISA; or the Borrower
or Parent shall have failed to make any quarterly contribution
required with respect to any Plan under Section 412(m) of the
Internal Revenue Code of 1986, as amended, which the Lender
determines in good faith may by itself, or in combination with
any such failures that the Lender may determine are likely to
occur in the future, result in the imposition of a lien on the
Borrower's and/or Parent's assets in favor of the Plan;
. . .
(l) Either the Borrower or Parent shall liquidate, dissolve,
terminate or suspend any material portion of its business
operations or otherwise fail to operate its business in the
ordinary course, or sell all or substantially all of its assets,
without the Lender's prior written consent;
(m) The Borrower or Parent shall fail to pay, withhold,
collect or remit any tax or tax deficiency when assessed or due
(other than any tax deficiency which is being contested in good
faith and by proper proceedings and for which it shall have set
aside on its books adequate reserves therefor) or notice of any
state or federal tax liens shall be filed or issued;
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(n) Default in the payment of any amount owed by the
Borrower or Parent to the Lender other than any indebtedness
arising hereunder or under the Guaranty;
. . .
(q) Any event or circumstance with respect to the Borrower
or Parent shall occur such that the Lender shall believe in good
faith that the prospect of payment of all or any part of the
Obligations or the performance by the Borrower or Parent under
the Loan Documents is impaired or any material adverse change in
the business or financial condition of the Borrower or Parent
shall occur;
. . .
(s) Any breach by the Borrower or Parent of the terms under
Section 7.19 hereof or the chief executive officer, chief
financial officer or chief operating officer of the Borrower and
Parent shall resign and the Borrower and Parent shall fail within
90 calendar days thereafter to engage and appoint a qualified
successor acceptable to the Lender in its sole and absolute
discretion.
10. CONSENT TO CHANGE OF FISCAL YEAR. Borrower desires to change its
fiscal year end from December 31 to June 30 of each calendar year. Pursuant to
Section 7.11, the Lender consents to the change of the fiscal year from December
31 to June 30.
11. CONSENT TO CHANGE OF CFO. The Borrower has notified the Lender
that effective as of September __, 2000, Xxxxx Xxxxxxx has resigned as the Chief
Financial Officer of the Borrower and Xxxxxxxx Xxxxxx has assumed such position
and duties. The Lender hereby consents to such change.
12. NO OTHER CHANGES. Except as explicitly amended by this Amendment,
all of the terms and conditions of the Credit Agreement shall remain in full
force and effect and shall apply to any advance or letter of credit thereunder.
13. AMENDMENT FEE. The Borrower shall pay the Lender as of the date
hereof a fully earned, non-refundable fee in the amount of $7,500 in
consideration of the Lender's execution of this Amendment.
14. CONDITIONS PRECEDENT. This Amendment shall be effective when the
Lender shall have received an executed original hereof, together with each of
the following, each in substance and form acceptable to the Lender in its sole
discretion:
(1) A Certificate of the Secretary of the Borrower certifying as
to (i) the resolutions of the board of directors of the Borrower
approving the execution and delivery of this Amendment and the Share
Exchange Agreement, together with the performance of the terms,
provisions and transactions contemplated therein, (ii) the
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fact that the articles of incorporation and bylaws of the Borrower,
which were certified and delivered to the Lender pursuant to the
Certificate of Authority of the Borrower's secretary or assistant
secretary dated as of May 31, 2000 continue in full force and effect
and have not been amended or otherwise modified except as set forth in
the Certificate to be delivered, and (iii) certifying that the
officers and agents of the Borrower who have been certified to the
Lender, pursuant to the Certificate of Authority of the Borrower's
secretary or assistant secretary dated as of May 31, 2000, as being
authorized to sign and to act on behalf of the Borrower continue to be
so authorized or setting forth the sample signatures of each of the
officers and agents of the Borrower authorized to execute and deliver
this Amendment and all other documents, agreements and certificates on
behalf of the Borrower.
(2) Execution and delivery by Gourmet of a Guaranty in favor of
the Lender pursuant to which Gourmet shall have guaranteed repayment
of all Obligations (the "Guaranty").
(3) A Certificate of the Secretary of Gourmet certifying as to
(i) the resolutions of the Board of Directors of Gourmet approving the
execution and delivery of this Amendment, the Guaranty and the Share
Exchange Agreement and the performance of all terms, provisions and
transactions contemplated thereby, (ii) the Articles of Incorporation
and Bylaws, as amended, of Gourmet, together with a Certificate of
Good Standing from its state of incorporation, each as attached to
such certificate and (iii) certifying as to the officers and agents of
Gourmet who are authorized on behalf of Gourmet to take all actions
and execute any and all documents necessary or related to the
above-referenced documents and transactions, including, without
limitation, this Amendment, the Guaranty, the Share Exchange Agreement
and all other documents, agreements and certificates to be issued for
and on behalf of Gourmet, and (iv) the Share Exchange Agreement which
shall be attached thereto as an exhibit, together with all related
amendments.
(4) Opinions of Counsel of each of the Borrower and Gourmet
containing opinions on behalf of the Borrower and Gourmet in favor of
the Lender with respect to this Amendment, the Guaranty, the Share
Exchange Agreement and the documents and transactions related thereto
and to such other matters and in such form as the Lender may require.
(5) Payment of the fee described in Paragraph 12 above.
(6) Such other matters as the Lender may require.
Notwithstanding the foregoing, the Borrower agrees to cause to be
delivered to the Lender within ten (10) business days after the date
hereof, a Certificate of the Secretary of Gourmet certifying as to the
good standing of Gourmet in the State of
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Texas, together with a Certificate of Authority to do business in the
State of Texas, each as attached to such certificate
15. GENERAL REPRESENTATIONS AND WARRANTIES. The Borrower and Gourmet
hereby represent and warrant to the Lender as follows:
(1) The Borrower and Parent have all requisite power and
authority to execute this Amendment, the Guaranty the Share Exchange
Agreement and each of the other documents and agreements related
hereto or referenced herein (collectively, the Amendment Documents"),
each to the extent a party thereto, and to perform all of its
obligations hereunder and thereunder, and each of the Amendment
Documents has been duly executed and delivered by the Borrower and
Parent, and constitute the legal, valid and binding obligation of the
Borrower and Parent, to the extent a party thereto, enforceable in
accordance with its terms.
(2) The execution, delivery and performance by the Borrower and
Parent of the Amendment Documents have been duly authorized by all
necessary corporate action and do not (i) require any authorization,
consent or approval by any governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, (ii) violate
any provision of any law, rule or regulation or of any order, writ,
injunction or decree presently in effect, having applicability to the
Borrower or Parent, or the articles of incorporation or by-laws of the
Borrower or Parent, or (iii) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other
agreement, lease or instrument to which the Borrower or Parent is a
party or by which it or its properties may be bound or affected.
(3) All of the representations and warranties contained in the
Credit Agreement, as amended by this Amendment, are correct on and as
of the date hereof as though made on and as of such date, except to
the extent that such representations and warranties relate solely to
an earlier date.
16. REFERENCES. All references in the Credit Agreement shall be deemed
to refer to the Credit Agreement as amended hereby; and any and all references
in the Security Documents to the Credit Agreement shall be deemed to refer to
the Credit Agreement as amended hereby.
17. NO WAIVER. The execution of this Amendment and acceptance of any
documents related hereto shall not be deemed to be a waiver of any under the
Credit Agreement or breach, default or event of default under any Security
Document or other document held by the Lender, whether or not known to the
Lender and whether or not existing on the date of this Amendment.
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18. RELEASE. The Borrower and Parent hereby absolutely and
unconditionally releases and forever discharges the Lender, and any and all
participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents and employees of
any of the foregoing, from any and all claims, demands or causes of action of
any kind, nature or description, whether arising in law or equity or upon
contract or tort or under any state or federal law or otherwise, which the
Borrower or Parent has had, now has or has made claim to have against any such
person for or by reason of any act, omission, matter, cause or thing whatsoever
arising from the beginning of time to and including the date of this Amendment,
whether such claims, demands and causes of action are matured or unmatured or
known or unknown.
19. COSTS AND EXPENSES. The Borrower hereby reaffirms its agreement
under the Credit Agreement to pay or reimburse the Lender on demand for all
costs and expenses incurred by the Lender in connection with the Credit
Agreement, the Security Documents and all other documents contemplated thereby,
including without limitation all reasonable fees and disbursements of legal
counsel. Without limiting the generality of the foregoing, the Borrower
specifically agrees to pay all fees and disbursements of counsel to the Lender
for the services performed by such counsel in connection with the preparation of
this Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by the Borrower, make a loan to the
Borrower under the Credit Agreement, or apply the proceeds of any loan, for the
purpose of paying any such fees, disbursements, costs and expenses.
20. MISCELLANEOUS. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute one and
the same instrument.
21. NON-PARTY STATUS. Gourmet acknowledges and agrees that by
executing this Amendment and each of the other Amendment Documents it is not
becoming a party under the Credit Agreement or otherwise entitled to any rights,
benefits or notices with respect to the Credit Agreement, nor shall in any way
modify the express terms and provisions of the Guaranty and is not intended to
be a third party beneficiary under the Credit Agreement.
[The remainder of this page has been intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first written above.
XXXXX FARGO BUSINESS CREDIT, INC. OUR FOOD PRODUCTS GROUP, INC.
--------------------------------- -----------------------------
BY /s/ XXXXXXXX XXXXXXXXX BY /s/ XXXXXXXX XXXXXXXX
------------------------------- ----------------------------------
XXXXXXXX XXXXXXXXX XXXXXXXX XXXXXXXX
ITS VICE PRESIDENT ITS PRESIDENT
GOURMET GROUP, INC.
BY /s/ XXXXXXXX XXXXXXXX
---------------------------------
XXXXXXXX XXXXXXXX
ITS PRESIDENT
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SCHEDULE 3(B)
GOURMET GROUP, INC.
[Intentionally Left Blank.]
Total Capital Authorized:
Class A Common Stock: 50,000,000 shares
Total Class A Common Outstanding: 29,233,363 shares
Total Options: 3,239,952 options
No other convertible securities, options or warrants.
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SCHEDULE 3(B)
OUR FOOD PRODUCTS GROUP, INC.
D/B/A JARDINE FOODS
CAPITALIZATION
AUTHORIZED:
Class A Preferred Stock - 10,000,000 shares
Class B Preferred Stock - 10,000,000 shares
Class C Preferred Stock - 5,000,000 shares
Class A Common Stock - 10,000,000 shares
Class B Common Stock - 10,000,000 shares
OUTSTANDING:
7,984,194 shares of Class B Common Stock
There are no options, warrants or convertible securities except as set
forth below.
Warrants for Class B Common Stock:
Warrant, held by KBK Financial, Inc., to purchase 177,778 shares of
Class B Common Stock, subject to adjustment, at $.01 per share,
expiring May 15, 2006.
Warrants for Class B Preferred Stock:
Warrant, held by KBK Financial, Inc., to purchase 277,778 shares of
Class B Preferred stock, subject to adjustment, at $.01 per share,
expiring May 15, 2006.
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Schedule 5.4
(LISTING OF SUBSIDIARIES OF PARENT AND BORROWER)
PARENT: 1. World Seair Corporation, a Florida corporation - 100% ownership
interest and a nonoperating shell entity.
2. Our Food Products Group, Inc., a Texas corporation- 100%
ownership interest.
BORROWER: None.
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