FIRST AMENDMENT TO
SECURITY AND LOAN AGREEMENT
BETWEEN MONTEREY PASTA COMPANY
AND IMPERIAL BANK DATED JULY 23, 1998
This First Amendment ("Amendment") amends that certain Security and
Loan Agreement and the Addendum thereto (the "Addendum"), dated July
23, 1998, by and 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. A new Paragraph 5.e is hereby added to the Agreement to read in its
entirety as follows:
"Year 2000 Compliance. Borrower and its subsidiaries, as
applicable, have reviewed the areas within their operations
and business which could be adversely affected by, and have
developed or are developing a program to address on a timely
basis, the Year 2000 Problem and have made related
appropriate inquiry of material suppliers and vendors, and
based on such review and program, the Year 2000 Problem will
not have a material adverse effect upon their financial
condition, operations or business as now conducted. "Year
2000 Problem" means the possibility that any computer
applications or equipment used by Borrower may be unable to
recognize and properly perform date sensitive functions
involving certain dates prior to and any dates on or after
December 31, 1999."
2. Paragraph 9.a of the Addendum is hereby amended to read in its
entirety as follows:
"At all times maintain a minimum tangible net worth (meaning
excess of all assets, excluding any value for goodwill,
trademarks, patents, copyrights, organization expense and other
similar intangible items, less its liabilities, plus subordinated
debt) of not less than $5,500,000. The minimum tangible net worth
shall increase by $200,000 each fiscal quarter end beginning March
31, 1999."
3. Paragraph 9.b of the Addendum is hereby amended to read in its
entirety as follows:
"At all times maintain a maximum ratio of total debt to tangible
net worth (total liabilities less subordinated debt divided by
tangible net worth), not to exceed 1.20:1."
4. Paragraph 9.d of the Addendum is hereby amended to read in its
entirety as follows:
"At all times maintain a current ratio (current assets divided by
current liabilities) of not less than 1.10:1."
4. 5. Paragraph 9.e of the Addendum is hereby amended to read in its
entirety as "Intentionally Omitted."
6. A new Paragraph 9.o is hereby added to the Agreement to read in its
entirety as follows:
"Year 2000 Compliance. Perform all acts reasonably
necessary to ensure that (a) Borrower and any business in
which Borrower holds a substantial interest, and (b) all
customers, suppliers and vendors whose compliance is likely
to be material to Borrower's business, become Year 2000
Compliant in a timely manner. Such acts shall include,
without limitation, performing a comprehensive review and
assessment of all Borrower's systems and adopting a detailed
plan, with itemized budget, for the remediation, monitoring
and testing of such systems. As used in this paragraph,
"Year 2000 Compliant" shall mean, in regard to any entity,
that all software, hardware, firmware, equipment, goods or
systems utilized by or material to the business operations
or financial condition of such entity, will properly perform
date sensitive functions before, during and after the year
2000. Borrower shall, immediately upon request, provide to
Bank such certifications or other evidence of Borrower's
compliance with the terms of this paragraph as Bank may from
time to time require."
7. Except as provided above, the Agreement remains unchanged.
8. This amendment is effective as of March 12, 1999, and the parties
hereby confirm that the Credit Agreement as amended is in full
force and effect.
Monterey Pasta Company Imperial Bank
"BORROWER" "BANK"
By: /s/ XXXXXXX X. XXXXXXXX By: /s/ XXXXX X. XXXXXX
_______________________ ____________________________
Xxxxxxx X. Xxxxxxxx Xxxxx X. Xxxxxx
Title: CFO and Secretary Title: Vice President
By: /s/ R. XXXXX XXXXXX
_______________________
R. Xxxxx Xxxxxx
Title: CEO and President
