EXHIBIT 10.16
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
---------------------------
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT is entered into as of May 16, 2003 (this "AMENDMENT"), by and among
OVERHILL FARMS, INC., a Nevada corporation (the "Borrower"), OVERHILL L.C.
VENTURES, INC., a California corporation ("OVERHILL VENTURES"), and PLEASANT
STREET INVESTORS, LLC, a California limited liability company (the "LENDER").
R E C I T A L S
A. The Borrower, Overhill Ventures and the Lender are parties to that
certain Second Amended and Restated Loan and Security Agreement dated as of
April 16, 2003 (the "LOAN AGREEMENT"), pursuant to which, among other things, on
and as of the Effective Date, the parties amended and restated the Existing Loan
Agreement, all on the terms and subject to the conditions set forth therein and
in the other Loan Documents. Unless otherwise indicated, capitalized terms used
and not otherwise defined herein have the meanings ascribed to them in the Loan
Agreement.
B. In connection with the execution and delivery of that certain First
Amendment to Second Amended and Restated Securities Purchase Agreement dated of
even date herewith by and among the Borrower, the entities from time to time
parties thereto (including Overhill Ventures) and the Senior Subordinated
Creditor, the parties wish to amend certain definitions contained in Schedule A
to the Loan Agreement, all as provided for herein.
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. AMENDMENTS TO LOAN AGREEMENT. Effective as of April 24, 2003, the
Loan Agreement shall be amended as follows:
(a) 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:
"EXISTING SECURITIES PURCHASE AGREEMENT" has the
meaning set forth in Section 1.1(b).
"'FIRST AMENDMENT' means that certain First Amendment
to Second Amended and Restated Loan and Security Agreement
dated as of May 16, 2003."
"'FIRST AMENDMENT EFFECTIVE DATE' has the meaning set
forth in the First Amendment."
"'MAY 2003 FIRST AMENDMENT FEE' has the meaning set
forth in Section 3(c) of that certain First Amendment to
Second Amended and Restated Securities Purchase Agreement
dated as of May 16, 2003, among the Borrower, the entities
from time to time parties thereto and the Senior Subordinated
Creditor, which amends the Securities Purchase Agreement."
"SECURITIES PURCHASE AGREEMENT" has the meaning set
forth in Section 1.1(b).
(b) 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, respectively:
"'ADJUSTED CURRENT ASSETS' shall mean, collectively,
(i) cash, (ii) accounts receivable, net, (iii) inventory, net,
and (iv) prepaid expenses (including, for purposes of this
calculation, any prepaid expenses attributable to that certain
operating lease dated January 24, 2001, between the Borrower
and General Electric Capital Corporation, under which the
Borrower leased four Frigoscandia spiral freezers (serial
numbers 10651, 10652, 10653 and 10654) and related equipment,
whether such prepaid expenses are classified as long-term or
short-term), in each case determined in accordance with GAAP."
"'NET INCOME (LOSS)' shall mean, for any period, net
income (loss) after Taxes of the 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 following shall be excluded from the
calculation of Net Income (Loss):
(i) the costs incurred by the Borrower in
connection with the restoration required to be made
at the manufacturing facilities located at 0000
Xxxxxxx Xxxxx xx Xxx Xxxxx, Xxxxxxxxxx, up to a
maximum of $250,000;
(ii) 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
-2-
filing by or against American Airlines, in an amount
not to exceed (A) $1,500,000 if the filing occurs
during the period commencing on the Effective Date
and ending on April 30, 2003; (B) $1,300,000 if the
filing occurs during the period commencing on May 1,
2003 and ending on May 31, 2003; (C) $1,100,000 if
the filing occurs during the period commencing on
June 1, 2003 and ending on June 30, 2003; (D)
$1,000,000 if the filing occurs during the period
commencing on July 1, 2003 and ending on July 31,
2003; (E) $900,000 if the filing occurs during the
period commencing on August 1, 2003 and ending on
August 31, 2003; and (F) $800,000 if the filing
occurs on or after September 1, 2003; and
(iii) the May 2003 First Amendment Fee.
Any accounting gains associated with the recovery of
any of the costs or write-offs described in clauses (i) and
(ii) 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; PROVIDED, however, that, for
purposes of calculating minimum Net Working Capital under
Section 4.3(g), the May 2003 First Amendment Fee shall be
excluded from the calculation of Adjusted Current Assets."
(c) Schedule A (Definitions and Rules of Construction) of the
Loan Agreement shall be amended by deleting from Schedule A (i) the definition
of "First Amendment to Securities Purchase Agreement" and (ii) the definition of
"Senior Subordinated Creditor" which first appears between the definitions of
"Liens" and "Loan Documents."
2. CONDITIONS PRECEDENT TO AMENDMENTS. The effectiveness of the
amendments set forth in Section 1 as of April 24, 2003, shall be subject to the
satisfaction, in the 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 "FIRST AMENDMENT EFFECTIVE
DATE"):
(a) FIRST AMENDMENT EFFECTIVE DATE. All of the conditions
precedent set forth in this Section 2 shall be satisfied on or before May 16,
2003.
(b) REPRESENTATIONS AND WARRANTIES. The Lender shall have
received from the Borrower an Officers' Certificate, in form and substance
satisfactory to the Lender, dated as of the First Amendment Effective Date and
duly executed by the President and Chief Executive Officer and the Chief
Financial Officer of the Borrower, to the effect that (i) after giving effect to
this Amendment, each of the representations and warranties of the Borrower
-3-
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 First Amendment Effective Date, with
the same effect as if made on and as of the First Amendment Effective Date; and
(ii) no Default or Event of Default has occurred and is continuing or will
result from the execution, delivery or performance of this Amendment and (iii)
since September 29, 2002, no Material Adverse Change has occurred other than as
previously disclosed to the Lender in writing or as previously disclosed in the
Borrower's SEC Documents.
(c) CONSENTS. The Borrower shall have obtained all Consents
required to be obtained from all Governmental Authorities and other Persons in
connection with the execution, delivery and performance of this Amendment, and
the Lender shall have approved the terms and conditions thereof.
(d) CERTIFIED BOARD RESOLUTIONS. The Lender shall have
received a Secretary's Certificate from each of the Borrower and Overhill
Ventures, in form and substance satisfactory to the Lender, duly executed by the
Secretary of the Borrower or Overhill Ventures, as the case may be, certifying
as to the resolutions of the Board of Directors of the Borrower or Overhill
Ventures, as the case may be, approving the execution, delivery and performance
of this Amendment and the consummation of the transactions contemplated hereby.
3. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. In order to induce
the Lender to enter into this Amendment, the Borrower represents and warrants to
the Lender as follows:
(a) AUTHORIZATION; BINDING EFFECT. Each of the Borrower and
the Overhill Ventures has the full power and authority to enter into, deliver
and perform its obligations under this Amendment. The execution, delivery and
performance by the Borrower and the Overhill Ventures of this Amendment 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 the Borrower
and the Overhill Ventures, respectively. This Amendment has been duly executed
and delivered by the Borrower and the Overhill Ventures and constitutes the
legal, valid and binding obligations of the Borrower and the Overhill Ventures,
enforceable against the Borrower and Overhill Ventures 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
the Borrower and the Overhill Ventures of this Amendment and the consummation of
the transactions contemplated hereby 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 the 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 or other agreement to
which the Borrower or any of its Subsidiaries is a party or by which any of its
or their properties or assets are bound.
-4-
4. CONFIRMATION; FULL FORCE AND EFFECT. The amendments set forth in
Section 1 above shall amend the Loan Agreement on and as of the First Amendment
Effective Date, and the Loan Agreement shall otherwise remain in full force and
effect, as amended thereby, from and after the First Amendment Effective Date in
accordance with its terms. The Borrower hereby ratifies, approves and affirms in
all respects each of the Loan Agreement, as amended hereby, the Notes, the
Collateral Documents (including the Liens granted in favor of the 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.
5. NO OTHER AMENDMENTS. This Amendment is being delivered without
prejudice to the rights, remedies or powers of the 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 1 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 the Borrower Parties thereunder. In addition,
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 Notes, the
Collateral Documents or any other Loan Document, or a forbearance by the Lender
of any of its rights, remedies or powers against the Borrower Parties (or any of
them) or the Collateral. The Lender hereby expressly reserves all of its rights,
powers and remedies under or in connection with the Loan Agreement, the Notes,
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.
6. MISCELLANEOUS PROVISIONS.
(a) ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Amendment
constitutes the entire understanding and agreement with respect to the subject
matter hereof and supersedes 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.
(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 any number
of 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.
-5-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their duly authorized representatives as of the date
first written above.
BORROWER
OVERHILL FARMS, INC., a Nevada corporation
By: /S/ XXXXX XXXXX
----------------------------------------
Xxxxx Xxxxx
President and Chief Executive Officer
By: /S/ XXXX STEINBRUN
----------------------------------------
Xxxx Steinbrun
Senior Vice President and Chief
Financial Officer
OVERHILL VENTURES
OVERHILL L.C. VENTURES, INC., a California
corporation
By: /S/ XXXXX XXXXX
----------------------------------------
Xxxxx Xxxxx
President
LENDER
PLEASANT STREET INVESTORS, LLC, a California
limited liability company
By: XXXXXX XXXXXXXXX CAPITAL PARTNERS, INC.,
its Manager
By: /S/ XXXXXX X. XXXXXX
----------------------------------------
Xxxxxx X. Xxxxxx
President
-6-
CONSENT OF GUARANTOR
The undersigned hereby acknowledges that it has read the foregoing
Amendment and consents to its terms.
OVERHILL L.C. VENTURES, INC., a California
corporation
By: /S/ XXXXX XXXXX
--------------------------------------
Xxxxx Xxxxx
President
-7-
