Exhibit 10.8
THIRD AMENDMENT TO
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
---------------------------
THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT is entered into as of October 31, 2003 (this "AMENDMENT"), by and
among OVERHILL FARMS, INC., a Nevada corporation ("BORROWER"), and PLEASANT
STREET INVESTORS, LLC, a California limited liability company ("Lender").
R E C I T A L S
---------------
A. Borrower, Overhill Ventures and Lender are parties to that certain
Second Amended and Restated Loan and Security Agreement dated as of April 16,
2003, as amended by a First Amendment to Second Amended and Restated Loan and
Security Agreement dated as of May 16, 2003, and a Second Amendment to Second
Amended and Restated Loan and Security Agreement dated as of June 19, 2003 (as
so amended, the "LOAN AGREEMENT"). Unless otherwise indicated, capitalized terms
used and not otherwise defined herein have the meanings ascribed to them in the
Loan Agreement.
B. On or about September 11, 2003, Overhill Ventures was fully and
finally dissolved in accordance with Applicable Laws pursuant to Section 9.15 of
the Loan Agreement. Therefore, Overhill Ventures is no longer a party to the
Loan Agreement.
C. Borrower has requested that Lender loan additional funds to Borrower
in the amount of $800,000 (the "ADDITIONAL FUNDS") to be used for working
capital purposes. In this regard, Borrower desires to amend and restate the
Senior Term A Note to, among other things, increase the aggregate principal
amount thereof by the amount of Additional Funds to be loaned to Borrower by
Lender. Borrower has further requested that Borrower extend the maturity dates
of the Senior Term A Note and the Senior Term B Note to October 31, 2006.
D. The Events of Default described in EXHIBIT A hereto (collectively,
the "SPECIFIED EVENTS OF DEFAULT") have occurred and are continuing. Borrower
has requested that Lender waive the Specified Events of Default.
E. At Borrower's request, Lender is willing to loan the Additional
Funds, to amend and restate the Senior Term A Note to, among other things,
increase the aggregate principal amount thereof by the amount of Additional
Funds to be loaned to Borrower by Lender and to extend the maturity dates of the
Senior Term A Note and the Senior Term B Note to October 31, 2006, but only on
the terms and subject to the conditions set forth herein.
F. In addition, the Senior Subordinated Creditor and Borrower are
entering into certain amendments to the Securities Purchase Agreement and other
Investment Documents (as defined in the Securities Purchase Agreement) as
provided for therein. In particular, Borrower has requested that the Senior
Subordinated Creditor also provide additional funds to Borrower, and the Senior
Subordinated Creditor is willing to do so in accordance with such amendments and
other agreements.
A G R E E M E N T
-----------------
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, conditions and provisions contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. LIMITED WAIVER OF SPECIFIED EVENTS OF DEFAULT. Effective on and as
of the Third Amendment Effective Date (as defined below), at the request of
Borrower, Lender waives the Specified Events of Default pursuant to Section 10.4
of the Loan Agreement. The waiver provided for in this Section 1 shall be
limited solely to the Specified Events of Default and shall not extend to any
other Default or Event of Default, whether past, present or future, shall not
impair any right, power or remedy of Lender which may arise as a result of such
other Default or Event of Default and shall not give rise to any obligation
whatsoever on the part of Lender to grant any waivers in the future.
2. AMENDMENT AND RESTATEMENT OF EXISTING SENIOR TERM A NOTE.
(a) AUTHORIZATION. Borrower has authorized and approved the
amendment and restatement of the Amended and Restated Secured Senior Term A Note
dated April 16, 2003, in the principal amount of $17,000,000 (the "EXISTING
SENIOR TERM A NOTE"), on the terms and subject to the conditions set forth in a
Second Amended and Restated Secured Senior Term A Note in the principal amount
of $17,800,000, in substantially the form of EXHIBIT B attached hereto (the
"SENIOR TERM A NOTE"). The parties acknowledge and agree that (i) $17,000,000 of
the total principal amount of the Senior Term A Note evidences and represents
the aggregate principal amount of the Existing Senior Term A Note outstanding as
of the date hereof and (ii) $800,000 of the total principal amount of the Senior
Term A Note evidences and represents the Additional Funds being provided to
Borrower by Lender under this Amendment.
(b) ISSUANCE OF NOTE. Subject to the terms and conditions
contained herein, and in reliance upon the representations, warranties,
covenants and agreements contained herein, at the Closing, (i) Borrower shall be
deemed to have issued the Senior Term A Note in exchange for the Existing Senior
Term A Note and the Additional Funds loaned by Lender to Borrower and (ii)
Lender shall be deemed to have loaned the Additional Funds to Borrower and
received the Senior Term A Note in exchange for the Existing Senior Term A Note
and the Additional Funds.
(c) CLOSINGS. The closing of the transactions contemplated by
this Amendment (the "CLOSING") shall take place at the offices of Irell &
▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
at 10:00 a.m. (Los Angeles time), on the Third Amendment Effective Date. At the
Closing, Borrower shall issue and deliver to Lender the Senior Term A Note, duly
executed on behalf of Borrower, against delivery by Lender of the Existing
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Senior Term A Note and the Additional Funds being loaned by Lender to Borrower
(net of amounts permitted to be withheld pursuant to Sections 4(f) and (g)) by
wire transfer in immediately available funds to such bank as Borrower may
request in writing).
(d) USE OF PROCEEDS. The Additional Funds to be received by
Borrower hereunder, after payment of all amounts described in Sections 4(f) and
(g), shall be used solely for working capital purposes.
3. AMENDMENTS TO LOAN AGREEMENT. Effective on and as of the Third
Amendment Effective Date, pursuant to Section 10.1 of the Loan Agreement, the
Loan Agreement shall be amended as follows:
(a) Clause (b) of Section 1.1 (Acknowledgments of Subordinated
Bridge Note Obligations) of the Loan Agreement shall be amended by deleting the
parenthetical at the end of such Section.
(b) Clause (b) of Section 1.8 (Repayment and Prepayment) of
the Loan Agreement shall be amended to read in its entirety as follows:
"(b) SENIOR TERM B LOAN MATURITY. The Senior Term B
Loan shall be repaid by Borrower as follows: Borrower shall
make monthly installment payments of principal of $69,445.00
each, and each such installment payment shall be due and
payable on the last Business Day of each calendar month (or
portion thereof), commencing November 28, 2003. Any remaining
principal balance of the Senior Term B Loan shall be paid on
the Senior Term B Maturity Date. Interest on the Senior Term B
Loan shall accrue and be paid in accordance with Section 1.5."
(c) Clause (c) of Section 1.8 (Optional Prepayments) of the
Loan Agreement shall be amended to read in its entirety as follows:
"(i) Notwithstanding the foregoing clauses (a) and
(b), Borrower may voluntarily prepay the Term Loans together
(but not separately), in whole but not in part, prior to their
Applicable Maturity Dates, without premium or penalty, in
accordance with the provisions of this Section 1.8(c). Any
prepayment of the Term Loans shall also include all accrued
and unpaid interest on the then-outstanding principal balance
thereof through the date of prepayment, premium, if any, and
all other amounts due under the Senior Term A Note and the
Senior Term B Note.
(ii) If Borrower elects to prepay the Term Loans
pursuant to clause (i) above, it shall furnish written notice
to Lender not less than sixty (60) days prior to the date of
prepayment. Such notice shall state that Borrower is prepaying
the Term Loans in full and set forth the total amount to be
paid and the specific date of prepayment. Such notice, once
given, shall be irrevocable. Notice of prepayment having been
given as aforesaid, Borrower shall make the prepayment of both
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Term Loans in full to Lender on such prepayment date, together
with all accrued and unpaid interest on the then-outstanding
principal balance thereof through the date of prepayment,
premium, if any, and all other amounts due under the Senior
Term A Note and the Senior Term B Note; PROVIDED that Borrower
shall also reimburse Lender at such time for any reasonable
direct loss or out-of-pocket expense incurred by Lender in
connection with such prepayment."
(d) Section 1.8 (Optional Prepayments) of the Loan Agreement
shall be amended by adding the following new clause (f) at the end of such
Section:
"(f) For each Fiscal Year, commencing with the Fiscal
Year ending September 28, 2003, Borrower shall apply fifty
percent (50.0%) of Excess Cash Flow for such Fiscal Year to
prepay the portion of the principal balance of the Senior Term
A Note described in clause (i) below and the principal amount
of the Senior Term B Note in the following order:
(i) First, to the principal balance of the
Senior Term A Loan, but only to the extent such
principal balance exceeds the In-Formula Amount as
shown on the latest Borrowing Base Certificate
delivered by Borrower to Lender; and
(ii) Second, to the extent there is any
Excess Cash Flow remaining from such Fiscal Year, to
the outstanding principal balance of the Senior Term
B Loan.
Such mandatory prepayment shall be due and payable by
Borrower to Lender not later than January 15th of the
following Fiscal Year (the date upon which such prepayment
will be made being referred to herein as the 'EXCESS CASH FLOW
PAYMENT DUE Date'). Not later than two (2) Business Days prior
to each Excess Cash Flow Payment Due Date, Borrower shall
deliver to Lender an Excess Cash Flow Calculation Certificate,
in form and substance satisfactory to Lender, signed by the
Chief Financial Officer of Borrower, showing in reasonable
detail the calculation of the amount of any Excess Cash Flow
payment due on such Excess Cash Flow Payment Due Date. In no
event shall any Excess Cash Flow be applied to (A) the
outstanding principal balance of, or other amounts owing
under, the Subordinated Note until the Excess Cash Flow has
been applied as provided for in clauses (i) and (ii) above or
(B) the In-Formula Amount of the Senior Term A Note."
(e) Section 1.9 (Term; Applicable Maturity Dates) of the Loan
Agreement shall be amended to read in its entirety as follows:
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"1.9 TERM; APPLICABLE MATURITY DATES. Each Term Loan
shall be due and payable as provided for in this Agreement,
including under Section 1.8, and any remaining Obligations
shall be immediately due and payable on the Applicable
Maturity Date, if not sooner paid (or required to be paid) in
full."
(f) Section 3.5 (Conflict with Other Instruments; Existing
Defaults; Ranking) of the Loan Agreement shall be amended by adding the
following phrase immediately following the heading of such Section:
"Except as set forth on Schedule 3.5:"
(g) Paragraph (c) of Section 3.5 (Conflict with Other
Instruments; Existing Defaults; Ranking) of the Loan Agreement shall be amended
to read in its entirety as follows:
"(c) No Borrower Party is subject to contractual
restrictions which prohibit or restrict any merger, sale of
assets or other event which could result in a Change in
Control or otherwise prohibit any financings by any Borrower
Party, including any public or private debt or equity
financings."
(h) Section 3.6 (Governmental and Other Third Party Consents)
of the Loan Agreement shall be amended by replacing the last sentence of such
Section with the following:
"The time within which any administrative or judicial
appeal, reconsideration, rehearing or other review of any such
Consent of any Governmental Authority may be taken or
instituted has lapsed, and no such appeal, reconsideration or
rehearing or other review has been taken or instituted."
(i) Clause (c)(iv) of Section 4.1 (Negative Covenants) of the
Loan Agreement is hereby amended to read in its entirety as follows:
"(iv) trade accounts payable arising in the ordinary
course of business that are more than sixty (60) days past
their due dates and do not exceed in the aggregate (x)
$850,000 at any time from September 29, 2003 to and including
December 28, 2003, (y) $500,000 at any time during the period
commencing on December 29, 2003 and ending on March 28, 2004
and (z) $250,000 at any time thereafter; PROVIDED, HOWEVER,
that if during any of such periods the aggregate amount of any
such trade accounts payable exceeds the applicable amount for
such period at any one time, then Borrower shall not be deemed
to be in violation of this clause (iv) if the amount in excess
of such applicable amount is being disputed or contested in
good faith by appropriate proceedings in a commercially
reasonable manner; or"
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(j) Section 4.3 (Financial Covenants) of the Loan Agreement
shall be amended to read in its entirety as follows:
"4.3 FINANCIAL COVENANTS. Until the monetary
Obligations under the Senior Term A Note and the Senior Term B
Note have been paid in full, Borrower shall perform, comply
with and observe each of the covenants set forth in this
Section 4.3:
"(a) MINIMUM EBITDA. For each of the periods listed
in the table below, EBITDA shall not be less than the total
amount reflected in Column (B) set forth opposite each such
period in the table:
MINIMUM EBITDA
--------------
PERIOD COLUMN (A) COLUMN (B)
------ ---------- ----------
Trailing one consecutive Fiscal
Quarter ending in December 2003...................... $1,608,000 $1,429,000
Trailing two consecutive Fiscal
Quarters ending in March 2004........................ 3,408,000 3,029,000
Trailing three consecutive Fiscal
Quarters ending in June 2004......................... 5,682,000 5,050,000
Trailing four consecutive Fiscal
Quarters ending in September 2004.................... 7,728,000 6,870,000
Trailing four consecutive Fiscal
Quarters ending in December 2004..................... 8,115,000 7,213,000
Trailing four consecutive Fiscal
Quarters ending in March 2005........................ 8,464,000 7,524,000
Trailing four consecutive Fiscal
Quarters ending in June 2005......................... 8,486,000 7,543,000
Trailing four consecutive Fiscal
Quarters ending in September 2005.................... 8,552,000 7,602,000
Trailing four consecutive Fiscal
Quarters ending in December 2005..................... 8,670,000 7,707,000
Trailing four consecutive Fiscal
Quarters ending in March 2006........................ 8,788,000 7,812,000
Trailing four consecutive Fiscal
Quarters ending in June 2006......................... 8,905,000 7,916,000
Trailing four consecutive Fiscal
Quarters ending in September 2006.................... 9,020,000 8,018,000
"(b) MINIMUM FIXED CHARGE COVERAGE RATIO. For each of
the periods listed in the table below, the Fixed Charge
Coverage Ratio shall not be less than the ratio reflected in
Column (B) set forth opposite each such period in the table:
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MINIMUM FIXED CHARGE
COVERAGE RATIO
--------------
PERIOD COLUMN (A) COLUMN (B)
------ ---------- ----------
Trailing one consecutive Fiscal 0.87
Quarter ending in December 2003................................... 0.78
Trailing two consecutive Fiscal 1.00
Quarters ending in March 2004..................................... 0.90
Trailing three consecutive Fiscal 1.10
Quarters ending in June 2004...................................... 1.00
Trailing four consecutive Fiscal 1.13
Quarters ending in September 2004................................. 1.00
Trailing four consecutive Fiscal 1.16
Quarters ending in December 2004.................................. 1.03
Trailing four consecutive Fiscal 1.18
Quarters ending in March 2005..................................... 1.05
Trailing four consecutive Fiscal 1.16
Quarters ending in June 2005...................................... 1.03
Trailing four consecutive Fiscal 1.15
Quarters ending in September 2005................................. 1.02
Trailing four consecutive Fiscal 1.17
Quarters ending in December 2005.................................. 1.04
Trailing four consecutive Fiscal 1.19
Quarters ending in March 2006..................................... 1.06
Trailing four consecutive Fiscal 1.21
Quarters ending in June 2006...................................... 1.08
Trailing four consecutive Fiscal 1.24
Quarters ending in September 2006................................. 1.09
"(c) MAXIMUM LEVERAGE RATIO. As of the last day of
each of the periods listed in the table below, the Leverage
Ratio shall not exceed the ratio reflected in Column (B) set
forth opposite each such period in the table:
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MAXIMUM LEVERAGE RATIO
----------------------
PERIOD COLUMN (A) COLUMN (B)
------ ---------- ----------
Trailing one consecutive Fiscal
Quarter ending in December 2003............................... 8.03 9.04
Trailing two consecutive Fiscal
Quarters ending in March 2004................................. 7.55 8.49
Trailing three consecutive Fiscal
Quarters ending in June 2004.................................. 6.76 7.61
Trailing four consecutive Fiscal
Quarters ending in September 2004............................. 6.60 7.42
Trailing four consecutive Fiscal
Quarters ending in December 2004.............................. 6.26 7.04
Trailing four consecutive Fiscal
Quarters ending in March 2005................................. 5.97 6.72
Trailing four consecutive Fiscal
Quarters ending in June 2005.................................. 5.93 6.67
Trailing four consecutive Fiscal
Quarters ending in September 2005............................. 5.85 6.59
Trailing four consecutive Fiscal
Quarters ending in December 2005.............................. 5.75 6.48
Trailing four consecutive Fiscal
Quarters ending in March 2006................................. 5.59 6.35
Trailing four consecutive Fiscal
Quarters ending in June 2006.................................. 5.49 6.24
Trailing four consecutive Fiscal
Quarters ending in September 2006............................. 5.39 6.13
"(d) MAXIMUM CAPITAL EXPENDITURES. Capital
Expenditures shall not exceed $300,000 with respect to any
Fiscal Quarter; PROVIDED, HOWEVER, that if (A) Borrower
prepares and furnishes to Lender a "payback" analysis of
Capital Expenditures it proposes to make or incur in excess of
such amounts, (B) Lender has at least five (5) Business Days
to review such analysis and (C) if satisfied with such
analysis in its sole discretion, Lender consents in writing to
such excess amount(s) prior to the incurrence thereof, then
Borrower may make or incur such excess Capital Expenditures;
PROVIDED FURTHER, HOWEVER, that in addition to the Capital
Expenditures Borrower may incur in any Fiscal Quarter as
provided above, Borrower may incur an aggregate of $850,000 of
Capital Expenditures in the Fiscal Year ending in September
2004 to expand its "mandarin chicken" manufacturing line.
"(e) [Intentionally Omitted.]"
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"(f) MAXIMUM PAYABLES TURN. For each of the "fiscal
months" listed in the table below, the Payables Turn
(expressed in a number of days) at the end of such month shall
not be greater than the number of days set forth opposite each
such month in the table:
"FISCAL MONTH(S)" PAYABLES TURN
----------------- -------------
October and November 2003............................ 42
December 2003........................................ 45
January 2004......................................... 47
February 2004........................................ 50
March, April and May 2004............................ 49
June 2004............................................ 50
July, August and September 2004...................... 49
October 2004......................................... 46
November 2004........................................ 49
December 2004........................................ 47
January 2005......................................... 48
February and March 2005.............................. 49
April 2005........................................... 48
May and June 2005.................................... 47
July 2005............................................ 48
August and September 2005............................ 47
October 2005......................................... 51
November 2005........................................ 50
December 2005........................................ 49
January and February 2006............................ 51
March 2006........................................... 49
April 2006........................................... 48
May 2006............................................. 47
June 2006............................................ 45
July 2006............................................ 44
August 2006.......................................... 43
September 2006....................................... 40
"(g) MINIMUM NET WORKING CAPITAL. For each of the
"fiscal months" listed in the table below, Net Working Capital
shall not be less than the amount set forth opposite each such
month in the table:
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MINIMUM NET
"FISCAL MONTH(S)" WORKING CAPITAL
----------------- ---------------
October 2003.................................................. $13,200,000
November 2003................................................. 13,000,000
December 2003................................................. 12,800,000
January and February 2004..................................... 12,700,000
March 2004.................................................... 12,400,000
April 2004.................................................... 12,600,000
May 2004...................................................... 12,700,000
June 2004..................................................... 13,000,000
July 2004..................................................... 13,100,000
August 2004................................................... 13,200,000
September 2004................................................ 13,500,000
October 2004.................................................. 13,600,000
November 2004................................................. 13,700,000
December 2004 and January 2005................................ 13,900,000
February 2005................................................. 14,100,000
March 2005.................................................... 14,400,000
April 2005.................................................... 14,500,000
May 2005...................................................... 14,700,000
June and July 2005............................................ 15,100,000
August 2005................................................... 15,300,000
September 2005................................................ 15,600,000
October 2005.................................................. 14,900,000
November 2005................................................. 15,000,000
December 2005................................................. 15,200,000
January 2006.................................................. 15,000,000
February 2006................................................. 15,100,000
March 2006.................................................... 15,500,000
April 2006.................................................... 15,700,000
May 2006...................................................... 15,900,000
June 2006..................................................... 16,200,000
July 2006..................................................... 16,300,000
August 2006................................................... 16,500,000
September 2006................................................ 16,800,000
"(h) MINIMUM LIQUIDITY. On any day, the seven (7)-day
rolling average (I.E., a backward looking average over the
immediately preceding seven calendar days) of the daily
available unrestricted cash balances of Borrower, aggregating
funds maintained solely in deposit accounts that are subject
to the Deposit Account Control Agreements, shall not be less
than $500,000."
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(k) Clause (b) of Section 7.1 (Events of Default) of the Loan
Agreement shall be amended to read in its entirety as follows:
"(b) (i) Borrower or any of its Subsidiaries
shall fail or neglect to perform, keep, or observe
any of the other covenants, promises, agreements,
requirements, conditions, or other terms or
provisions contained in this Agreement or any of the
other Loan Documents (other than any provision
embodied in or covered by any other clause of this
Section 7.1), and such default shall have continued
for a period of ten (10) Business Days after the
earlier to occur of Borrower's receipt of notice of
such breach from Lender or the date on which such
failure or neglect first becomes known to any officer
of Borrower; PROVIDED that there shall be no grace
period for Borrower's failure to perform, keep, or
observe any of the covenants, promises, agreements,
requirements, conditions, or other terms or
provisions contained in Section 4.2(e), Section
4.2(i) or Section 4.1; or
(ii) Borrower shall fail to achieve
(w) the minimum EBITDA amount set forth in Column (B)
of SECTION 4.3(a) for the corresponding period, (x)
the minimum Fixed Charge Coverage Ratio set forth in
Column (B) of SECTION 4.3(b) for the corresponding
period, (y) the maximum Leverage Ratio set forth in
Column (B) of SECTION 4.3(c) as of the last day of
the corresponding period or (z) any other covenant
set forth in SECTION 4.3; or"
(l) Section 9.10 (Hiring of Sales Force) of the Loan Agreement
shall be amended to read in its entirety as follows:
"9.10 HIRING OF SALES FORCE. Borrower shall use its
best efforts to hire, as soon as practicable, additional
qualified sales people."
(m) Paragraph (b) of Section 10.8 (Confidentiality) of the
Loan Agreement shall be amended to read in its entirety as follows:
"(b) Lender agrees to maintain the confidentiality of
any and all of Borrower's confidential or proprietary
information it receives from Borrower or through Borrower's
professional advisors or representatives, and not to disclose
such information to third parties without the prior written
consent of Borrower, except that Lender may disclose such
confidential or proprietary information (a) if such
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information was or becomes generally available to the public
other than through a breach of this Section 10.8, (b) to legal
counsel, accountants and other professional advisors of Lender
and to the partners (general and limited), members, managers,
officers, directors, employees and other authorized
representatives of Lender, provided that each such Person
needs to know that such information is related to Lender's
loans to Borrower and agrees to be bound by this Section 10.8,
(c) if required by Applicable Law, to regulatory officials
having jurisdiction over Lender, or in connection with any
legal proceeding, process or order, provided that Lender uses
its commercially reasonable efforts to limit disclosure and
obtain confidential treatment or a protective order for the
information and that Lender provides Borrower with written
notice of any such request or requirement and allows Borrower
to participate in the proceeding, process or procedure through
which disclosure is to be made, all at Borrower's sole cost
and expense, (d) to any other Person in connection with any
assignment of any Note (or any interest therein) or sale of
the Warrant Shares or (e) was rightfully disclosed to Lender
by an unrelated third party or source that was not known by
Lender to have been prohibited from disclosing such
information. Lender represents that it is familiar with the
Exchange Act and agrees that it will neither use, nor cause
any affiliate to use, any confidential or proprietary
information of Borrower in contravention of the Exchange Act,
including without limitation, Rule 10b-5 thereunder."
(n) Schedule A (Definitions and Rules of Construction) of the
Loan Agreement shall be amended by adding the following new definitions to
Schedule A in alphabetical order:
"'EXCESS CASH FLOW' has the meaning set forth in the
Securities Purchase Agreement."
"'EXCESS CASH FLOW PAYMENT DUE DATE' has the meaning
set forth in Section 1.8."
"'INTEREST RATE EVENT' means (i) for any Interest
Rate Event Measurement Period, Borrower's failure to meet one
or more of the following for such Period: (A) The minimum
EBITDA amount set forth in Column (A) (but meets the amount
set forth in Column (B)) of Section 4.3(a) of the Loan
Agreement; (B) the minimum Fixed Charge Coverage Ratio set
forth in Column (A) (but meets the amount set forth in Column
(B)) of Section 4.3(b) of the Loan Agreement or (C) the
maximum Leverage Ratio set forth in Column (A) (but meets the
amount set forth in Column (B)) of Section 4.3(c) of the Loan
Agreement, or (ii) in any election of directors, Borrower's
shareholders shall fail to elect as a member of the Board of
Directors of Borrower any individual(s) designated by the
Senior Subordinated Creditor under Section 1 of the Investor
Rights Agreement dated as of October 29, 2002, as amended from
time to time, for nomination and election to such Board."
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"'INTEREST RATE MEASUREMENT PERIOD' means each of the
measurement "Periods" described in Sections 4.3(a), (b) or (c)
of the Loan Agreement, as applicable."
"'PRIME RATE' means the rate of interest publicly
announced from time to time by Bank of America National Trust
and Savings Association as its 'prime rate.' The Prime Rate is
a reference rate and does not necessarily represent the lowest
or best rate actually charged by Bank of America National
Trust and Savings Association in connection with extensions of
credit to debtors."
"'SECOND AMENDMENT' shall mean that certain Second
Amendment to Second Amended and Restated Loan and Security
Agreement dated as of June 19, 2003."
"'THIRD AMENDMENT' shall mean that certain Third
Amendment to Second Amended and Restated Loan and Security
Agreement dated as of October 31, 2003."
"'THIRD AMENDMENT EFFECTIVE DATE' shall mean the date
of the closing of the transactions under the Third Amendment."
(o) Schedule A (Definitions and Rules of Construction) of the
Loan Agreement shall be amended by amending the following existing definitions
to read in their entirety as follows:
"'ADJUSTED CURRENT ASSETS' shall mean, collectively,
(i) cash, (ii) accounts receivable, net, (iii) inventory, net,
and (iv) prepaid expenses, in each case determined in
accordance with GAAP."
"'APPLICABLE RATE' means:
(i) With respect to the Senior Term A Loan,
a rate per annum accruing on the Senior Term A Loan
equal to the greater of (A) five and one-half percent
(5.5%) and (B) the Prime Rate in effect from time to
time PLUS 1.5%; provided, HOWEVER, that if for any
Performance Week the outstanding principal balance of
the Senior Term A Loan exceeds the In-Formula Amount
as shown on the Borrowing Base Certificate pertaining
to that Performance Week, then, with respect to such
excess, the Applicable Rate for the Application Week
to which that Performance Week relates shall be a
rate per annum equal to the greater of (A) eight
percent (8.0%) and (B) the Prime Rate in effect from
time to time PLUS 4.0%; and
(ii) With respect to the Senior Term B Loan,
a rate per annum accruing on the Senior Term B Loan
equal to twelve percent (12.0%).
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In addition, if, for any Interest Rate Measurement
Period, an Interest Rate Event occurs, the Applicable Rate for
the Fiscal Quarter immediately succeeding such Interest Rate
Event Measurement Period shall be equal to the rate of
interest determined, with respect to the Senior Term A Loan,
under clause (i), and with respect to the Senior Term B Loan,
under clause (ii), in each case PLUS two percent (2.0%)."
"'BORROWING BASE CERTIFICATE' means a certificate to
be delivered by Borrower to Lender pursuant to Section 5.1(b),
which shall be in form and substance satisfactory to Lender
from time to time."
"'COLLATERAL DOCUMENTS' means this Agreement, but
only to the extent of Article 6 (Creation of Security
Interests) and the related definitions and other provisions
included in this Agreement, the Pledge Agreement, the
Intellectual Property Security Agreement, the RWCI Assignment,
the Landlord Waivers, the Warehouse Bailment Agreements, the
Deposit Account Control Agreements, the UCC financing
statements and all other Loan Documents granting Liens to
Lender to secure the Obligations or other rights with respect
to the Collateral."
"'DEFAULT RATE' means, with respect to the Senior
Term A Loan or the Senior Term B Loan, as applicable, a rate
per annum equal to the Applicable Rate in effect at such time
and from time to time during the continuance of such Event of
Default PLUS two percent (2.0%) for the first sixty (60) days
during which such Event of Default shall remain uncured or
unwaived and, thereafter, such rate shall increase by one
percent (1.0%) per annum over the rate applicable to the
thirty (30) days prior thereto for each additional thirty (30)
days that such Event of Default remains uncured or unwaived;
PROVIDED, HOWEVER, that the Default Rate shall not exceed
twenty percent (20%)."
"'FISCAL QUARTER' means (i) the thirteen (13) week
period ending on the last Sunday of December, March, June and
September of any Fiscal Year, except that in the event that a
Fiscal Year ends on the first day of October, then "FISCAL
QUARTER" shall mean the fourteen (14) week period ending on
the first Sunday of January of such Fiscal Year and on the
last Sunday of each of the three (3) thirteen (13) week
periods thereafter, or (ii) such other period as Borrower may
designate in writing and Lender may approve in writing."
"'LEVERAGE RATIO' means:
(i) With respect to the Fiscal Quarter
period ending in December 2003, the ratio of (i) the
sum of (A) total Indebtedness (excluding any
reduction from original issue discount) of Borrower
and its Subsidiaries at the end of such period and
(B) all Capital Lease Obligations at the end of such
period to (ii) (A) EBITDA for such Fiscal Quarter,
MULTIPLIED BY (B) 4;
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(ii) With respect to the two (2) consecutive
Fiscal Quarter period ending in March 2004, the ratio
of (i) the sum of (A) total Indebtedness (excluding
any reduction from original issue discount) of
Borrower and its Subsidiaries at the end of such
period and (B) all Capital Lease Obligations at the
end of such period to (ii) (A) EBITDA for such two
(2) consecutive Fiscal Quarters, MULTIPLIED BY (B) 2;
(iii) With respect to the three (3)
consecutive Fiscal Quarter period ending in June
2004, the ratio of (i) the sum of (A) total
Indebtedness (excluding any reduction from original
issue discount) of Borrower and its Subsidiaries at
the end of such period and (B) all Capital Lease
Obligations at the end of such period to (ii) (A)
EBITDA for such three (3) consecutive Fiscal
Quarters, MULTIPLIED BY (B) 4, DIVIDED BY (C) 3; and
(iv) With respect to the four (4)
consecutive Fiscal Quarter period ending in September
2004 and each four (4) consecutive Fiscal Quarter
period ending thereafter, the ratio of (i) the sum of
(A) total Indebtedness (excluding any reduction from
original issue discount) of Borrower and its
Subsidiaries at the end of such period and (B) all
Capital Lease Obligations at the end of such period,
to (ii) EBITDA for the four (4) consecutive Fiscal
Quarters ending at the end of such period."
"'NET INCOME (LOSS)' shall mean, or any period, net
income (loss) after Taxes of Borrower and its Subsidiaries on
a consolidated basis for such period taken as a single
accounting period, all computed in accordance with GAAP;
PROVIDED, HOWEVER, that, for purposes of calculating minimum
EBITDA under Section 4.3(a), the minimum Fixed Charge Coverage
Ratio under Section 4.3(b) and the maximum Leverage Ratio
under Section 4.3(c), the aggregate non-cash losses recorded
as a direct result of a write-down of the value of American
Airlines inventory or of Accounts owed by American Airlines,
in each case due to a bankruptcy filing by or against American
Airlines, in an amount not to exceed $800,000 if the filing
occurs on or after September 1, 2003, shall be excluded from
the calculation of Net Income (Loss). Any accounting gains
associated with the recovery of any of the costs or
write-downs described above shall also be excluded from Net
Income (Loss)."
"'NET WORKING CAPITAL' shall mean, at any time, (i)
Adjusted Current Assets at such time, minus (ii) Adjusted
Current Liabilities at such time."
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"'RESERVES' means, at any given time, the sum of the
Producer Payables Reserves, the Rent Reserve and any other
reserve established by the Lender from time to time in its
sole discretion."
"'SECURITIES PURCHASE AGREEMENT' shall mean that
certain Second Amended and Restated Securities Purchase
Agreement dated as of April 16, 2003, as amended by a First
Amendment to Second Amended and Restated Securities Purchase
Agreement dated as of May 16, 2003, a Second Amendment to
Second Amended and Restated Securities Purchase Agreement
dated as of June 19, 2003, and a Third Amendment to Second
Amended and Restated Securities Purchase Agreement dated as of
October 31, 2003, as further amended from time to time."
"'SENIOR TERM A LOAN' means the term loan made by
Lender to Borrower in the amended and restated principal
amount of $17,800,000, as such principal amount may be
increased or decreased, and evidenced by the Senior Term A
Note."
"'SENIOR TERM A MATURITY DATE' means the earliest of
(a) October 31, 2006, (b) the date Lender's obligation to make
Loans is terminated and the Obligations are declared to be due
and payable pursuant to Section 7.2, and (c) the date of
prepayment in full by Borrower of the Obligations in
accordance with the provisions of Section 1.10."
"'SENIOR TERM B MATURITY DATE'" means the earliest of
(a) October 31, 2006, (b) the date Lender's obligation to make
Loans is terminated and the Obligations are declared to be due
and payable pursuant to Section 7.2, and (c) the date of
prepayment in full by Borrower of the Obligations in
accordance with the provisions of Section 1.10."
"'SENIOR TERM A NOTE'" means that certain Second
Amended and Restated Secured Senior Term A Note dated as of
the Third Amendment Effective Date, in the principal amount of
$17,800,000, which amends and restates that certain Amended
and Restated Secured Senior Term A Note amended and restated
as of April 16, 2003, executed and delivered by Borrower in
favor of Lender in the original principal amount of
$17,000,000, as further amended from time to time."
"'SUBORDINATED NOTE' means the Second Amended and
Restated Secured Senior Subordinated Note Due 2006 as of the
Third Amendment Effective Date, in the stated principal amount
of $28,858,000, which amends and restates the Amended and
Restated Secured Senior Subordinated Note Due 2004 dated
November 24, 1999, in the original principal amount of
$28,000,000, as amended from time to time."
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(p) Schedule A (Definitions and Rules of Construction) of the
Loan Agreement shall be amended by deleting the definition of "DESIGNATED
RESERVE" in its entirety."
(q) Each of the Disclosure Schedules to the Loan Agreement
listed in EXHIBIT C attached hereto shall be amended by the Disclosure Schedules
attached to EXHIBIT C as provided for in such amended Disclosure Schedules (it
being understood that such amended Disclosure Schedules shall update the
corresponding Disclosure Schedules through and including the Third Amendment
Effective Date).
4. CONDITIONS PRECEDENT TO AMENDMENTS. The effectiveness of Lender's
waiver of the Specified Events of Default set forth in Section 1, the loan of
the Additional Funds to be made by Lender as provided in Section 2 and the
effectiveness of the amendments set forth in Section 3 shall be subject to the
satisfaction, in Lender's sole discretion, of each of the following conditions
precedent (the date upon which the last of such conditions precedent to be so
satisfied shall be referred to herein as the "THIRD AMENDMENT EFFECTIVE DATE"):
(a) THIRD AMENDMENT EFFECTIVE DATE. All of the conditions
precedent set forth in this Section 4 shall be satisfied on or before October
31, 2003.
(b) AMENDED LOAN DOCUMENTS. Lender shall have received the
following closing documents, each dated as of the Third Amendment Effective Date
(collectively, and together with this Amendment, the "THIRD AMENDMENT LOAN
DOCUMENTS"):
(i) SENIOR TERM A NOTE. The Senior Term A Note, duly
executed on behalf of Borrower; and
(ii) AMENDMENT TO INTERCREDITOR AGREEMENT. A First
Amendment to and Consent Under Second Amended and Restated Intercreditor and
Subordination Agreement, duly executed by Senior Subordinated Creditor and
Borrower.
(c) LEGAL OPINION. (i) ▇▇▇▇▇ & ▇▇▇▇▇▇, special counsel to
Borrower, shall have delivered to Lender a legal opinion letter, in form and
substance satisfactory to Lender, addressed to Lender and dated as of the Third
Amendment Effective Date, and (ii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special
Nevada counsel to Borrower, shall have delivered to Lender a legal opinion
letter, in form and substance satisfactory to Lender, addressed to Lender and
dated as of the Third Amendment Effective Date.
(d) EXTENSION OF TERMS OF EMPLOYMENT AGREEMENTS. Lender shall
have received executed copies of (i) an amendment to the Employment Agreement of
▇▇▇▇▇ ▇▇▇▇▇ extending the term thereof through October 31, 2006, and (ii) an
amendment to the Employment Agreement of ▇▇▇▇ Steinbrun extending the term
thereof at least eighteen (18) months after the Third Amendment Effective Date,
in each case in form and substance satisfactory to Lender.
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(e) REPRESENTATIONS AND WARRANTIES. Lender shall have received
from Borrower an Officers' Certificate, in form and substance satisfactory to
Lender, dated as of the Third Amendment Effective Date and duly executed by the
President and Chief Executive Officer and the Chief Financial Officer of
Borrower, to the effect that (i) after giving effect to the execution, delivery
and performance of this Amendment and the other Third Amendment Loan Documents
and the amended Disclosure Schedules attached as EXHIBIT C hereto, each of the
representations and warranties of Borrower contained in the Loan Agreement was
true and correct on and as of the date made and was true and correct on and as
of the Third Amendment Effective Date, with the same effect as if made on and as
of the Third Amendment Effective Date; (ii) each of the covenants and agreements
of Borrower required to be performed or satisfied under this Amendment on or
before the Third Amendment Effective Date has been performed or satisfied on or
before the Third Amendment Effective Date; (iii) Borrower has satisfied or
fulfilled each of the conditions precedent set forth in this Section 4; (iv)
except for the Specified Events of Default, no Default or Event of Default has
occurred and is continuing or will result from the execution, delivery or
performance of this Amendment or the other Third Amendment Loan Documents and
(v) since September 29, 2002, no Material Adverse Change has occurred other than
as previously disclosed to Lender in writing or as previously disclosed in
Borrower's SEC Documents.
(f) ACCRUED AND UNPAID INTEREST. Lender shall have received,
by wire transfer in immediately available funds, all accrued and unpaid interest
under the Senior Term A Note and the Senior Term B Note through and including
the Third Amendment Effective Date (PROVIDED that such amounts may be withheld
by Lender from the Additional Funds to be provided to Borrower by Lender).
(g) REIMBURSEMENT OF FEES AND EXPENSES. Borrower shall have
reimbursed Lender for all actual and estimated fees, costs and expenses,
including attorneys' fees and expenses, expended or incurred by Lender in
connection with the negotiation, preparation, execution and performance of this
Amendment and the transactions contemplated hereby or that otherwise remain
outstanding and unreimbursed as of the Third Amendment Effective Date (PROVIDED
that such amounts may be withheld by Lender from the Additional Funds to be
provided to Borrower by Lender).
(h) CONSENTS. Borrower shall have obtained all Consents
required to be obtained from all Governmental Authorities and other Persons
(including the amendment referred to in Section 4(b)(ii) above) in connection
with the execution, delivery and performance of this Amendment and the other
Third Amendment Loan Documents, and Lender shall have approved the terms and
conditions thereof.
(i) CERTIFIED BORROWER BOARD RESOLUTIONS. Lender shall have
received a Secretary's Certificate from Borrower, in form and substance
satisfactory to Lender, duly executed by the Secretary of Borrower and dated as
of the Third Amendment Effective Date, certifying as to (i) the charter of
Borrower, as amended, (ii) the Bylaws of Borrower, as amended, and (iii) the
resolutions of the Board of Directors of Borrower approving the execution,
delivery and performance of this Amendment and each of the other Third Amendment
Loan Documents and the consummation of the transactions contemplated hereby and
thereby.
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(j) GOOD STANDING CERTIFICATES. Lender shall have received (i)
a corporate good standing certificate and a tax good standing certificate, if
available, for Borrower from the Secretary of State of the State of Nevada and
Nevada taxing authority, (ii) a corporate good standing certificate and a tax
good standing certificate for Borrower from the Secretary of State of the State
of California and the Franchise Tax Board of the State of California,
respectively, and (iii) a corporate good standing certificate and a tax good
standing certificate, if available, of Borrower from the Secretaries of State or
similar governmental authority of each jurisdiction in which Borrower is
required to be qualified to transact business as a foreign corporation or other
entity, in each case dated as of a recent practicable date prior to the Third
Amendment Effective Date.
(k) DISSOLUTION OF OVERHILL VENTURES. Lender shall have
received executed copies of all assignment agreements and other documents, if
any, evidencing or memorializing the assignment or transfer to Borrower of
trademark rights and all other assets, if any, formerly owned or held by
Overhill Ventures.
(l) CERTIFIED FINANCIAL PROJECTIONS. Borrower shall have
delivered to Lender, and Lender shall have approved, consolidated financial
projections of Borrower and its Subsidiaries for the period commencing on
October 1, 2003 and ending on the last day of the Fiscal Year ending in
September 2006. Such financial projections shall specify the assumptions on
which they are based and shall be made in good faith. The financial projections
shall be accompanied by an Officers' Certificate, in form and substance
satisfactory to Lender, duly executed by the President and Chief Executive
Officer and the Chief Financial Officer of Borrower, certifying as to the
assumptions on which such financial projections are based.
(m) LEGAL PROHIBITIONS. The consummation of the transactions
contemplated by this Amendment and the other Third Amendment Loan Documents
shall not be prohibited by or violate any Applicable Laws and shall not subject
any party to any Tax, penalty or liability, under or pursuant to any Applicable
Laws. Without limiting the generality of the foregoing, the consummation of the
transactions contemplated hereby shall otherwise comply with all applicable
requirements of federal securities and state securities or "blue sky" laws.
5. REPRESENTATIONS AND WARRANTIES OF BORROWER. In order to induce
Lender to enter into this Amendment, Borrower represents and warrants to Lender
as follows:
(a) AUTHORIZATION; BINDING EFFECT. Borrower has the full power
and authority to enter into, deliver and perform its obligations under this
Amendment and the other Third Amendment Loan Documents. The execution, delivery
and performance by Borrower of this Amendment and the other Third Amendment Loan
Documents and the consummation of the other transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary action on the
part of Borrower. This Amendment has been, and on the Third Amendment Effective
Date each of the Third Amendment Loan Documents will be, duly executed and
delivered by Borrower. This Amendment constitutes, and on the Third Amendment
Effective Date each of the Third Amendment Loan Documents will constitute, the
legal, valid and binding obligations of Borrower, enforceable against Borrower
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in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
conveyance or similar laws relating to or limiting creditors' rights generally
or by equitable principles relating to enforceability and except as rights of
indemnity or contribution may be limited by federal or state securities or other
laws or the public policy underlying such laws.
(b) NO CONFLICT. The execution, delivery and performance by
Borrower of this Amendment and the other Third Amendment Loan Documents and the
consummation of the transactions contemplated hereby and thereby do not and will
not violate or conflict with, or cause a default under, or give rise to a right
of termination under, (i) the charter or bylaws of Borrower or any of its
Subsidiaries, as in effect on the date hereof; (ii) any Applicable Laws; or
(iii) any term of any material contract, indenture, note, mortgage, instrument,
agreement or other document to which Borrower or any of its Subsidiaries is a
party or by which any of its or their properties or assets are bound.
(c) RANK; OBLIGATIONS. The Indebtedness evidenced by the
Senior Term A Note ranks PARI PASSU with the Indebtedness evidenced by the
Senior Term B Note, and no other Indebtedness of Borrower ranks senior to, or
PARI PASSU with, any Indebtedness evidenced by the Senior Term A Note or the
Senior Term B Note. Immediately following the Closing, there will be no
agreement, indenture, instrument or other document to which Borrower or any of
its Subsidiaries is a party or by which it or they are bound that requires the
subordination in right of payment or rights upon liquidation of any Obligations
to the repayment of any other existing or future Indebtedness of Borrower or any
of its Subsidiaries.
(d) NO CONSENTS. Other than the consent of the Senior
Subordinated Lender, neither Borrower nor any of its Subsidiaries or other
Affiliates is required to obtain any Consent in connection with execution,
delivery or performance of this Amendment or any other Third Amendment Loan
Documents or the issuance, sale or delivery of the Senior Term A Note, or for
the purpose of maintaining in full force and effect any Licenses and Permits of
Borrower or any of its Subsidiaries, from any Governmental Authority or any
other Person, except where the failure to obtain such consent or maintain any
such License or Permit, as the case may be, could not have a Material Adverse
Effect. There are no orders, decrees, judgments, injunctions or rulings of any
Governmental Authority against Borrower or any of its assets.
(e) REPRESENTATIONS AND WARRANTIES. After giving effect to the
updated Disclosure Schedules attached as EXHIBIT C hereto, each of the
representations and warranties of Borrower contained in the Loan Agreement is
true and correct in all material respects (it being understood that Overhill
Ventures has been liquidated, wound up and dissolved).
(f) SECURITIES LAWS. The issuance and sale of the Senior Term
A Note in accordance with the terms of this Amendment will be exempt from the
registration requirements of the Securities Act and the registration or
qualification requirements of any applicable state securities or "blue sky"
laws.
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(g) NO DEFAULT. No Default or Event of Default has occurred
and is continuing (other than the Specified Events of Default) or will result
from the execution, delivery or performance of this Amendment or the other Third
Amendment Loan Documents, the issuance, sale or delivery of the Senior Term A
Note or the consummation of the other transactions contemplated hereby or
thereby.
(h) COLLATERAL SECURITY. The Liens granted in favor of Lender
under the Collateral Documents constitute valid, enforceable, perfected and
continuing security interests and liens in, on and to the Collateral to secure
the payment and performance in full of all Obligations, including all
Indebtedness and other Obligations under the Senior Term A Note and the Senior
Term B Note, and such security interests and liens are subject, as to priority,
only to the Senior Liens and Permitted Liens to the extent entitled to priority
under Applicable Law.
(i) OVERHILL VENTURES. Overhill Ventures has been liquidated,
wound up and dissolved in accordance with Applicable Laws, and the assets and
other properties of Overhill Ventures, including all right, title and interest
thereto, have been distributed or otherwise transferred solely to Borrower. No
assets or properties owned or held by Overhill Ventures were assigned or
transferred to any Person other than Borrower.
(j) NOTE PRINCIPAL BALANCES. As of the date hereof, the
principal amount of the Existing Senior Term A Note is $17,000,000 and the
principal amount of the Senior Term B Note is $5,000,000.
6. REPRESENTATIONS AND WARRANTIES OF LENDER. Lender hereby represents
and warrants to Borrower that:
(a) Lender is acquiring the Senior Term A Note for its own
account, for investment purposes, and not with a view to or for sale in
connection with any distribution thereof. Lender understands that the Senior
Term A Note has not been registered under the Securities Act or registered or
qualified under any state securities law in reliance upon specific exemptions
therefrom, which exemptions may depend upon, among other things, the BONA FIDE
nature of Lender's investment intent as expressed herein; and
(b) Lender is an "accredited investor" (as such term is
defined in Rule 501 of Regulation D promulgated under the Securities Act). By
reason of its business and financial experience, Lender has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the investment in the Senior Term
A Note, has the capacity to protect its own interests and is able to bear the
economic risk of such investment.
7. POST-CLOSING MATTERS.
(a) PAYMENT OF AMENDMENT AND CAPITAL FEES. As additional
consideration to be paid by Borrower in connection with the closing of the
transactions contemplated by this Amendment, on (but not before or after)
Friday, January 9, 2004, Borrower shall pay to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Capital
Partners, Inc. ("LLCP INC."), by wire transfer in immediately available funds to
an account designated by LLCP Inc., the following fees: (a) A non-refundable new
capital fee (the "NEW CAPITAL FEE") in the amount of $32,000 and (b) a
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non-refundable amendment fee (the "AMENDMENT FEE") in the amount of $35,200.
Each of the New Capital Fee and the Amendment Fee shall be deemed to have been
fully earned on the date of the Closing, but shall not be payable until Friday,
January 9, 2004.
(b) CONTROL AGREEMENT MATTERS. The parties hereto agree to use
their reasonable best efforts to amend the Restricted Account Agreement dated as
of April 16, 2003, with ▇▇▇▇▇ Fargo Bank, N.A., to, among other things, reflect
that the security interests and liens of Lender in and to the Trade Payables
Deposit Account are senior to the security interests and liens of the
Subordinated Creditor in and to the Trade Payables Deposit Account as provided
in the Intercreditor Agreement.
8. CONFIRMATION; FULL FORCE AND EFFECT. The amendments set forth in
Section 3 shall amend the Loan Agreement on and as of the Third Amendment
Effective Date, and the Loan Agreement shall otherwise remain in full force and
effect, as amended thereby, from and after the Third Amendment Effective Date in
accordance with its terms. Borrower hereby ratifies, approves and affirms in all
respects each of the Loan Agreement, as amended hereby, the Senior Term A Note,
the Senior Term B Note, the Collateral Documents (including the Liens granted in
favor of Lender under the Collateral Documents) and each of the other Loan
Documents, the terms and other provisions hereof and thereof and the Obligations
hereunder and thereunder.
9. NO OTHER AMENDMENTS. This Amendment is being delivered without
prejudice to the rights, remedies or powers of Lender under or in connection
with the Loan Agreement, the Notes, the Collateral Documents and the other Loan
Documents, Applicable Laws or otherwise and, except as expressly provided in
Section 3 above, shall not constitute or be deemed to constitute an amendment or
other modification of, or a supplement to, the Loan Agreement or any Loan
Document or the obligations of Borrower thereunder. In addition, except as
expressly provided in Section 1 above with respect to the Specified Events of
Default, nothing contained in this Amendment is intended to constitute, or shall
be construed as, a waiver of any breach, violation, Default or Event of Default,
whether past, present or future, under the Loan Agreement, the Note, the
Collateral Documents or any other Loan Document, or a forbearance by Lender of
any of its rights, remedies or powers against Borrower Parties (or any of them)
or the Collateral. Lender hereby expressly reserves all of its rights, powers
and remedies under or in connection with the Loan Agreement, the Note, the
Collateral Documents and the other Loan Documents, whether at law or in equity,
including, without limitation, the right to declare all Obligations to be due
and payable.
10. RELEASE.
(a) Effective on and as of the Third Amendment Effective Date,
Borrower, for itself and on behalf of its successors, assigns, and present and
future stockholders, officers, directors, Affiliates, employees, agents and
attorneys, hereby remises, releases and forever discharges Lender and its
present and former officers, directors, partners (general and limited),
stockholders, employees, agents, attorneys, successors and assigns from and
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against any and all claims, rights, actions, causes of action, suits,
liabilities, defenses, damages, losses, costs and expenses (including attorneys'
fees), of whatever nature, type or description, that are based upon, relate to
or arise out of any facts, acts, omissions, events or circumstances existing or
occurring on or prior to the Third Amendment Effective Date, whether arising out
of or otherwise related to this Amendment, the Loan Agreement or any other Loan
Document, any of the transactions contemplated hereby or thereby, the
administration or enforcement of the Obligations, any related discussions or
negotiations or otherwise, in each case whether known or unknown, existing or
potential or suspected or unsuspected. Borrower waives any and all claims,
rights and benefits it may have under any law of any jurisdiction that would
render ineffective a release made by a creditor of claims that the creditor does
not know or suspect to exist in its favor at the time of executing the release
and that, if known by it, would have materially affected its settlement with the
applicable debtor. Borrower acknowledges that it is aware of the following
provisions of section 1542 of the California Civil Code:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
Borrower expressly and voluntarily waives each and all claims, rights,
or benefits it has or may have under section 1542 of the California Civil Code,
or any other similar law of any other jurisdiction, to the full extent that it
may lawfully waive such claims, rights and benefits in connection with this
release. Borrower acknowledges that (a) it has been represented by independent
legal counsel of its own choice throughout all of the negotiation that preceded
the execution of this Amendment and that it has executed this Amendment after
receiving the advice of such independent legal counsel, and (b) it and its
respective counsel have had an adequate opportunity to make whatever
investigation or inquiry they deem necessary or desirable in connection with the
release contained in this Section 10.
(b) No claim shall be made by Borrower or any of its
Affiliates against Lender, or any Affiliates, partners, directors, officers,
employees, agents, representatives, attorneys, accountants or advisors of
Lender, for any special, indirect, consequential or punitive damages in respect
of any claim for breach of contract or under any other theory of liability
arising out of or related to this Amendment, the Loan Agreement or any other
Loan Document or the transactions contemplated hereby or thereby, or any act,
omission or event occurring in connection herewith or therewith. Borrower, on
behalf of itself and its Affiliates, hereby waives, releases and agrees not to
▇▇▇ upon any claim for such damages, whether or not accrued and whether or not
known or suspected to exist in its favor.
11. MISCELLANEOUS PROVISIONS.
(a) ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Amendment,
together with the other Third Amendment Loan Documents, constitute the entire
understanding and agreement with respect to the subject matter hereof and
supersede all prior oral and written, and all contemporaneous oral, agreements
and understandings with respect thereto. This Amendment shall inure to the
benefit of, and be binding upon, the parties and their respective successors and
permitted assigns.
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(b) GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE (WITHOUT
REGARD TO THE CHOICE OF LAW OR CONFLICTS OF LAW PROVISIONS THEREOF).
(c) COUNTERPARTS. This Amendment may be executed in one or
more counterparts and by facsimile transmission, each of which shall be deemed
an original and all of which taken together shall constitute one and the same
instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed and delivered by their duly authorized representatives as of the date
first written above.
BORROWER
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OVERHILL FARMS, INC., a Nevada corporation
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
President and Chief Executive Officer
By: /S/ ▇▇▇▇ Steinbrun
-------------------------------------
▇▇▇▇ Steinbrun
Senior Vice President and Chief
Financial Officer
LENDER
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PLEASANT STREET INVESTORS, LLC, a California
limited liability company
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Capital Partners, Inc.,
its Manager
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
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