FIRST AMENDMENT TO
SECURITY AND LOAN AGREEMENT
AND
ADDENDUM TO SECURITY AND LOAN AGREEMENT
BETWEEN MONTEREY PASTA COMPANY
AND IMPERIAL BANK DATED JULY 24, 1997
This First Amendment ("Amendment") amends that certain Security and Loan
Agreement and the Addendum thereto dated July 24, 1997, between Monterey
Pasta Company ("Borrower") and Imperial Bank ("Bank") (collectively, the
Security and Loan Agreement and the Addendum are referred to herein as the
"Agreement") as follows:
1. Paragraphs 7.g. and 7.h. of the Addendum are hereby amended to read in
their entirety as follows:
"7.g. Make or incur obligations for, capital expenditures in excess
of eight hundred thousand dollars ($800,000.00) in the period from the
date hereof to December 31, 1998, or in excess of five hundred thousand
dollars ($500,000.00) in any one fiscal year thereafter."
"7.h. Make, or incur liability for, payments of rent under new
leases of real property in excess of one hundred thousand dollars
($100,000.00), and personal property in excess of one hundred thousand
dollars ($100,000.00), in any one fiscal year."
2. Paragraphs 9.a., b., and c., of the Addendum are hereby amended to read
in their entirety as follows:
"a. At all times maintain a minimum tangible net worth (meaning
the excess of all assets, excluding any value for goodwill, trademarks,
patents, copyrights, organization expense and other similar intangible
items, over its liabilities, less subordinated debt) of not less than
four million two hundred fifty thousand dollars ($4,250,000.00). The
minimum tangible net worth shall increase by two hundred thousand dollars
($200,000.00) each fiscal quarter end beginning March 31, 1998 and
thereafter.
"b. At all times maintain a maximum ratio of total
debt-to-tangible net worth not to exceed 1.5 to 1.0."
"c. At all times maintain a minimum working capital (Borrower's
current assets minus current liabilities) of not less than one million
dollars ($1,000,000.00).
3. A new covenant, current ratio, will be included in paragraph 9.n. and
will read in its entirety as follows:
"n. At all times maintain a current ratio of not less than 1.25 to
1.00. Current ratio is defined as current assets divided by current
liabilities."
1
First Amendment to the Security and Loan Agreement
and Addendum to Security and Loan Agreement
Monterey Pasta Company
Page 2
4. Paragraph 16. Of the Addendum is hereby amended to read in its entirety
as follows:
"16. The terms and conditions of this Addendum and the Security
and Loan Agreement extend to all obligations of Borrower to Bank and the
Borrower agrees to comply with all such terms and conditions until all
obligations of Borrower to Bank are repaid in full. Should there be a
default under the Security and Loan Agreement, this Addendum, any
General Security Agreement executed by Borrower, under any note executed
by Borrower, or under any other obligations of Borrower to Bank, or the
provisions of any documents executed by Borrower in relation to any such
obligation (and Borrower shall have failed to cure such default within
any applicable cure period), all obligations, loans and liabilities of
Borrower to Bank, due or to become due, whether now existing or
hereafter arising, shall at the option of the Bank, become immediately
due and payable without notice or demand, and Bank shall thereupon have
the right to exercise all of its default rights and remedies.
5. Except as provided above, the Agreement remains unchanged.
6. This Amendment is effective as of March 2, 1998, and the parties hereby
confirm that the Agreement as amended is in full force and effect.
Monterey Pasta Company Imperial Bank
"BORROWER" "BANK"
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxx Xxxxxx
---------------------------- ----------------------------
Title: Chief Financial Officer Title: Vice President
-------------------------- -------------------------
By: /s/ R. Xxxxx Xxxxxx By:
---------------------------- ----------------------------
Title: President & CEO Title:
-------------------------- -------------------------
