Exhibit 10.3
THIRD AMENDMENT TO
SECOND AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
-----------------------------
THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED SECURITIES PURCHASE
AGREEMENT is entered into as of October 31, 2003 (this "AMENDMENT"), by and
among OVERHILL FARMS, INC., a Nevada corporation (the "COMPANY"), the entities
from time to time parties thereto as Guarantors and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ CAPITAL
PARTNERS II, L.P., a California limited partnership (the "PURCHASER").
R E C I T A L S
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A. The Company, the entities from time to time parties thereto as
Guarantors and the Purchaser are parties to 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, and a Second Amendment to Second Amended and Restated
Securities Purchase Agreement dated as of June 19, 2003 (as so amended, the
"SECURITIES PURCHASE AGREEMENT"). Unless otherwise indicated, capitalized terms
used and not otherwise defined herein have the meanings ascribed to them in the
Securities Purchase Agreement.
B. On or about September 11, 2003, Overhill Ventures was fully and
finally dissolved in accordance with Applicable Laws pursuant to Section 8.30 of
the Securities Purchase Agreement (as subsequently modified). Therefore,
Overhill Ventures is no longer a Guarantor under, or a party to, the Securities
Purchase Agreement.
C. The Company has requested that the Purchaser provide additional
funds to the Company in the amount of $4,200,000 (the "ADDITIONAL FUNDS") to be
used to finance the Company's accounts receivable, to build up its inventory
levels and for other working capital purposes. In this regard, the Company
desires to amend and restate the November 1999 Note to, among other things,
increase the aggregate principal amount thereof by the amount of the Additional
Funds to be provided to the Company by the Purchaser. The Company has further
requested that the Company extend the maturity date of the November 1999 Note
from October 31, 2004 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. The Company
has requested that the Purchaser waive the Specified Events of Default.
E. At the Company's request, the Purchaser is willing to provide the
Additional Funds, to amend and restate the November 1999 Note to, among other
things, increase the aggregate principal amount thereof by the amount of the
Additional Funds to be provided to the Company by the Purchaser and to extend
the maturity date of the November 1999 Note to October 31, 2006, but only on the
terms and subject to the conditions set forth herein.
F. In addition, Pleasant Street and the Company are entering into
certain amendments to the PSI Senior Credit Agreement and other Senior Credit
Documents as provided for therein. In particular, the Company has requested that
Pleasant Street loan additional funds to the Company, and Pleasant Street is
willing to do so in accordance with such amendments and other documents.
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 the
Company, the Purchaser waives the Specified Events of Default pursuant to
Section 11.5 of the Securities Purchase 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 the Purchaser 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 the Purchaser to grant any
waivers in the future.
2. AMENDMENT AND RESTATEMENT OF EXISTING AMENDED AND RESTATED NOTE.
(a) AUTHORIZATION. The Company has authorized and approved the
amendment and restatement of the Amended and Restated Secured Senior
Subordinated Note Due 2004 in the original principal amount of $28,000,000, as
amended by an Amendment dated April 4, 2003 (as so amended, the "EXISTING
AMENDED AND RESTATED NOTE"), on the terms and subject to the conditions set
forth in a Second Amended and Restated Secured Senior Subordinated Note Due 2006
in the aggregate principal amount of $28,858,000, in substantially the form of
EXHIBIT B attached hereto (the "NOVEMBER 1999 NOTE"). The parties acknowledge
and agree that (i) $24,658,000 of the total principal amount of the November
1999 Note evidences and represents the aggregate principal amount of the
Existing Amended and Restated Note outstanding as of the date hereof and (ii)
$4,200,000 of the total principal amount of the November 1999 Note evidences and
represents the Additional Funds being provided to the Company by the Purchaser
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) the Company shall
be deemed to have issued the November 1999 Note in exchange for the Existing
Amended and Restated Note and the Additional Funds and (ii) the Purchaser shall
be deemed to have purchased the November 1999 Note in exchange for the Existing
Amended and Restated Note and the Additional Funds.
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(c) CLOSING. 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, the Company shall deliver the November 1999 Note to the Purchaser, duly
executed on behalf of the Company, against delivery by the Purchaser of the
Existing Amended and Restated Note and the Additional Funds (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 the Company may request in writing).
(d) USE OF PROCEEDS. The Additional Funds to be received by
the Company hereunder, after payment of all amounts described in Sections 4(f)
and (g), shall be used solely to finance the Company's accounts receivable, to
build up its inventory levels and for other working capital purposes.
3. AMENDMENTS TO SECURITIES PURCHASE AGREEMENT. Effective on and as of
the Third Amendment Effective Date, pursuant to Section 12.3 of the Securities
Purchase Agreement, the Securities Purchase Agreement shall be amended as
follows:
(a) Section 1.1 of the Securities Purchase Agreement shall be
amended by adding the following new definitions to Section 1.1 in alphabetical
order:
"'EXCESS CASH FLOW' shall mean, for any Fiscal Year,
(i) EBITDA of the Company and its Subsidiaries for such Fiscal
Year, MINUS (ii) the sum of (A) Cash Interest Expense; (B)
payments of principal on any Indebtedness of the Company and
its Subsidiaries; (C) Capital Lease Obligations of the Company
or any of its Subsidiaries representing principal; (D) cash
Taxes paid by the Company and its Subsidiaries; (E) cash
dividends or distributions, if any, paid by the Company; (F)
Capital Expenditures; and (G) all Tax Sharing Cash Payments,
in each of clauses (A) through (G) for such Fiscal Year."
"'INTEREST RATE EVENT' shall have the meaning set
forth in the November 1999 Note or any other Note, as
applicable."
"'LLCP REPRESENTATIVE' shall have the meaning set
forth in the Investor Rights Agreement."
"'SENIOR CREDIT AGREEMENT' shall mean (i) that
certain Second Amended and Restated Loan and Security
Agreement dated as of the Effective Date (the "PSI SENIOR
CREDIT AGREEMENT"), among the Company, Overhill Ventures and
Pleasant Street, as the assignee of UBOC, as amended by a
First Amendment dated as of May 16, 2003, a Second Amendment
dated as of June 19, 2003, and a Third Amendment dated as of
the Third Amendment Effective Date, as further amended from
time to time, subject to the terms of the Intercreditor
Agreement, or (ii) such other loan or credit agreement entered
into by the Company and any other Senior Lender in connection
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with a refinancing of the Senior Indebtedness owing to PSI
under the PSI Senior Credit Documents (the "OTHER SENIOR
CREDIT AGREEMENT"), subject to SECTION 9.10(b). The PSI Senior
Credit Agreement amends and restates the UBOC Senior Credit
Agreement."
"'SENIOR NOTES' shall mean any promissory note or
notes or similar instruments of indebtedness evidencing Senior
Indebtedness, including (i) the Senior Term A Note (as defined
in the PSI Senior Credit Agreement) and the Senior Term B Note
(as defined in the PSI Senior Credit Agreement) or (ii) any
promissory note or notes evidencing Senior Indebtedness under
the Other Senior Credit Agreement."
"'THIRD AMENDMENT' shall mean that certain Third
Amendment to Second Amended and Restated Securities Purchase
Agreement dated as of October 31, 2003, among the parties."
"'THIRD AMENDMENT EFFECTIVE DATE' shall mean the date
of the closing of the transactions under the Third Amendment."
(b) Section 1.1 of the Securities Purchase Agreement shall be
further 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, in each case determined in
accordance with GAAP."
"'INVESTOR RIGHTS AGREEMENT' shall mean that certain
Amended and Restated Investor Rights Agreement dated as of
October 29, 2002, among the Company, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and the Purchaser, as amended by an Amendment to
Amended and Restated Investor Rights Agreement dated as of
April 16, 2003, and a Second Amendment to Amended and Restated
Investor Rights Agreement dated as of the Third Amendment
Effective Date, by and among the Company, ▇▇▇▇▇ ▇▇▇▇▇ and the
Purchaser, and as further amended from time to time."
"'LEVERAGE RATIO' shall mean:
(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 the
Company 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 the
Company 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 the Company 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 the Company 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 the Company 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 9.14(a), the minimum Fixed Charge
Coverage Ratio under Section 9.14(b) and the maximum Leverage
Ratio under Section 9.14(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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"'NOTES' shall mean, collectively, the November 1999
Note, the April 2003 Bridge Note (which has been paid in full)
and any other promissory notes or similar instruments issued
by the Company or any other Company Party to the Purchaser (or
any of its Affiliates), and shall also include, where
applicable, any additional note or notes issued in connection
with any Assignments thereof."
"'NOVEMBER 1999 NOTE' shall mean that certain Second
Amended and Restated Secured Senior Subordinated Note Due 2006
dated as of the Third Amendment Effective Date in the
aggregate principal amount of $28,858,000, which amends and
restates that certain Amended and Restated Secured Senior
Subordinated Note Due 2004 dated as of October 29, 2002, as
amended by an Amendment to Amended and Restated Secured Senior
Subordinated Note Due 2004 dated as of April 4, 2003, which,
in turn, amends and restates that certain Secured Senior
Subordinated Note Due 2004 dated November 24, 1999, as
amended, in the original principal amount of $28,000,000, as
further amended from time to time."
"'SECURITY AGREEMENT'" shall mean that certain
Amended and Restated Security Agreement dated as of October
29, 2002, among the Company, the Guarantors and the Purchaser,
as amended by an Amendment to Amended and Restated Security
Agreement dated as of April 4, 2003, as amended by a Second
Amendment to Amended and Restated Security Agreement dated as
of April 16, 2003, as amended by a Third Amendment to Amended
and Restated Security Agreement dated as of the Third
Amendment Effective Date, and as further amended from time to
time. (Any references to Security Agreement (Company) or
Security Agreement (Subsidiary) in any Investment Document
shall mean the Security Agreement on and after the First
Amended and Restated Effective Date.)"
(c) Section 3.5 (Conflict with Other Instruments; Existing
Defaults; Ranking) of the Securities Purchase Agreement shall be amended by
adding the following phrase immediately following the heading of such Section:
"Except as set forth on Schedule 3.5:"
(d) Paragraph (c) of Section 3.5 (Conflict with Other
Instruments; Existing Defaults; Ranking) of the Securities Purchase Agreement
shall be amended to read in its entirety as follows:
"(c) No Company 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 Company
Party, including any public or private debt or equity
financings."
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(e) Section 3.6 (Governmental and Other Third Party Consents)
of the Securities Purchase 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."
(f) Section 8.22 (Survival of Certain Affirmative Covenants)
of the Securities Purchase Agreement shall be amended to read in its entirety as
follows:
"8.22 SURVIVAL OF CERTAIN AFFIRMATIVE COVENANTS. From
and after the date that the monetary Obligations under the
Note have been paid in full and, if Pleasant Street holds the
Senior Notes, the Senior Notes have been paid in full, and so
long as the Purchaser owns or holds, or has the contractual
right to acquire, directly or indirectly, five percent (5.0%)
of more of the Common Stock calculated on a Fully Diluted
Basis, the Company shall not be obligated to perform, comply
with and observe any of the covenants set forth in this
Article 8 except for (a) Section 8.2 (Performance of Certain
Investment Documents) and (b) Section 8.19 (AMEX Listing)
(PROVIDED that the Company shall not be obligated to perform,
comply with and observe the covenants set forth in Section 8.2
or Section 8.19 once the Purchaser no longer owns or holds, or
has the contractual right to acquire, directly or indirectly,
five percent (5.0%) of more of the Common Stock calculated on
a Fully Diluted Basis)."
(g) Section 8.29 (Hiring of Sales Force) of the Securities
Purchase Agreement shall be amended to read in its entirety as follows:
"8.29 HIRING OF SALES FORCE. The Company shall use
its best efforts to hire, as soon as practicable, additional
qualified sales people."
(h) Section 9.1 (Limitations on Indebtedness) of the
Securities Purchase Agreement shall be amended by adding the following paragraph
at the end of such Section:
"Notwithstanding the foregoing, from and after the
date that the monetary Obligations under the Notes have been
paid in full and, if Pleasant Street holds the Senior Notes,
the Senior Notes have been paid in full, and so long as the
Purchaser owns or holds, or has the contractual right to
acquire, directly or indirectly, five percent (5.0%) of more
of the Common Stock calculated on a Fully Diluted Basis, the
Company shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume, guarantee, suffer to
exist or become or remain liable with respect to any
additional Indebtedness, PROVIDED that the Company and such
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Subsidiaries may incur additional Indebtedness if the Leverage
Ratio would not be greater than 4.0 to 1.0 determined on a pro
forma basis as if the additional Indebtedness had been
incurred on the last day of the calendar month immediately
preceding the calendar month in which the additional
Indebtedness is proposed to be incurred. (For this purpose,
the Leverage Ratio would be calculated based on the ratio
described in clause (iv) of the definition of Leverage Ratio,
PROVIDED that EBITDA would be measured for the twelve (12)
calendar months ending on the last day of the calendar month
immediately preceding the calendar month in which the
additional Indebtedness is proposed to be incurred)."
(i) Clause (d) of Section 9.1 (Limitations on Indebtedness) of
the Securities Purchase Agreement shall be amended to read in its entirety as
follows:
"(d) 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 (i)
$850,000 at any time from September 29, 2003 to and including
December 28, 2003, (ii) $500,000 at any time during the period
commencing on December 29, 2003 and ending on March 28, 2004
and (iii) $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 the Company shall not be
deemed to be in violation of this clause (d) 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"
(j) Clause (b) of Section 9.10 (Agreements Affecting Capital
Stock and Indebtedness; Amendments to Material Contracts) of the Securities
Purchase Agreement shall be amended to read in its entirety as follows:
"(b) extend, refinance, renew, replace, restructure,
exchange or refund any Indebtedness; PROVIDED, HOWEVER, that
the Company may at any time refinance the principal balance of
all Senior Indebtedness then outstanding and owing to the
Senior Lender, up to the maximum amount of such principal
balance, with a bank or similar financial institution pursuant
to then-existing "market" terms and conditions for a
"formula-based," "asset-based" revolving credit facility,
PROVIDED that (i) the maximum principal amount of such credit
facility shall not be greater than $22,800,000, (ii) the
interest rate that would be charged under such credit facility
would not be greater than the highest rate that historically
was charged under the "asset-based" portion of the UBOC Credit
Agreement, and (iii) after giving effect to such refinancing,
the terms of subordination which would apply to the
Indebtedness evidenced by the Note would be no less favorable
to the Purchaser than the terms set forth in the Amended and
Restated Intercreditor and Subordination Agreement dated as of
October 29, 2002, as amended through April 4, 2003, between
UBOC and the Purchaser, without regard to the execution and
delivery of the Intercreditor Agreement;"
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(k) Section 9.14 (Financial Covenants) of the Securities
Purchase Agreement shall be amended to read in its entirety as follows:
"9.14 FINANCIAL COVENANTS. Until the monetary
Obligations under the Note have been paid in full, the Company
shall perform, comply with and observe each of the covenants
set forth in this SECTION 9.14:
"(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
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"(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:
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
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"(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:
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) the Company
prepares and furnishes to the Purchaser a "payback" analysis
of Capital Expenditures it proposes to make or incur in excess
of such amounts, (B) the Purchaser has at least five (5)
Business Days to review such analysis and (C) if satisfied
with such analysis in its sole discretion, the Purchaser
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consents in writing to such excess amount(s) prior to the
incurrence thereof, then the Company may make or incur such
excess Capital Expenditures; PROVIDED FURTHER, HOWEVER, that
in addition to the Capital Expenditures the Company may incur
in any Fiscal Quarter as provided for above, the Company 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.]"
"(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
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"(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:
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
-13-
"(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 the Company,
aggregating funds maintained solely in deposit accounts that
are subject to the Deposit Account Control Agreements, shall
not be less than $500,000."
(l) Section 9.15 (Survival of Certain Negative Covenants) of
the Securities Purchase Agreement shall be amended to read in its entirety as
follows:
"9.15 SURVIVAL OF CERTAIN NEGATIVE COVENANTS. From
and after the date that the monetary Obligations under the
Notes have been paid in full and, if Pleasant Street holds the
Senior Notes, the Senior Notes have been paid in full, and so
long as the Purchaser owns or holds, or has the contractual
right to acquire, directly or indirectly, five percent (5.0%)
of more of the Common Stock calculated on a Fully Diluted
Basis, the Company shall not be obligated to perform, comply
with and observe the covenants set forth in this Article 9
except for (a) the last paragraph of Section 9.1 (Limitations
on Indebtedness) and (b) Section 9.8 (Transactions with
Affiliates) (PROVIDED that the Company shall not be obligated
to perform, comply with and observe the covenants set forth in
the last paragraph of Section 9.1 or Section 9.8 once the
Purchaser no longer owns or holds, or has the contractual
right to acquire, directly or indirectly, five percent (5.0%)
of more of the Common Stock calculated on a Fully Diluted
Basis)."
(m) Clause (ii) of paragraph (b) (Covenants) of Section 11.1
(Events of Default) of the Securities Purchase Agreement shall be amended to
read in its entirety as follows:
"(ii) The Company shall fail to achieve (w) the
minimum EBITDA amount set forth in Column (B) of SECTION
9.14(A) for the corresponding period, (x) the minimum Fixed
Charge Coverage Ratio set forth in Column (B) of SECTION
9.14(B) for the corresponding period, (y) the maximum Leverage
Ratio set forth in Column (B) of SECTION 9.14(C) as of the
last day of the corresponding period or (z) any other covenant
set forth in SECTION 9.14; or"
-14-
(n) Paragraph (c) of Section 11.1 (Events of Default) of the
Securities Purchase Agreement shall be amended to read in its entirety as
follows:
"(c) INVESTMENT DOCUMENTS. Any Company Party shall
breach or fail to perform, comply with or observe any
agreement, covenant or obligation required to be performed by
it under this Agreement or any other Investment Document
(other than the agreements, covenants and other obligations
covered by Section 11.1(a), Section 11.1(b) and Section
11.1(m)) and, if such breach or failure may be cured, such
breach or failure shall not have been remedied within ten (10)
Business Days after any officer of the Company or any of its
Subsidiaries becomes aware or should have become aware of such
failure or breach; or"
(o) Paragraph (m) of Section 11.1 (Events of Default) of the
Securities Purchase Agreement shall be amended to read in its entirety as
follows:
"(m) LLCP REPRESENTATIVE; PRINCIPAL SHAREHOLDER. (i)
The Company shall breach or fail to perform, comply with or
observe any agreement, covenant or obligation required to be
performed by it under Section 1 of the Investor Rights
Agreement or (ii) the Principal Shareholder (as defined in the
Investor Rights Agreement) shall breach or fail to perform,
comply with or observe any agreement, covenant or obligation
required to be performed by him under the Investor Rights
Agreement."
(p) Clause (xii) of Section 11.1 (Events of Default) of the
Securities Purchase Agreement shall be amended to read in its entirety as
follows:
"(xii) in the case of clause (m)(i) above, as of the
close of business on the day the Company shall have breached
or failed to perform, comply with or observe any such
agreement, covenant or obligation, and in the case of clause
(m)(ii) above, as of the close of business on the day the
Principal Shareholder Company shall have breached or failed to
perform, comply with or observe any such agreement, covenant
or obligation."
(q) Section 11.4 (Appointment of Receiver) of the Securities
Purchase Agreement shall be amended by adding the following clause to the end of
such Section:
"; PROVIDED, HOWEVER, that the remedy set forth in this
Section 11.4 shall no longer be available to the Purchaser
after the monetary Obligations under the Note have been paid
in full."
-15-
(r) Section 12.14 (Confidentiality) of the Securities Purchase
Agreement shall be amended to read in its entirety as follows:
"12.14 CONFIDENTIALITY. The Purchaser agrees to
maintain the confidentiality of any and all of the Company's
confidential or proprietary information it receives from the
Company or through the Company's professional advisors or
representatives, and not to disclose such information to third
parties without the prior written consent of the Company,
except that the Purchaser may disclose such confidential or
proprietary information (a) if such information was or becomes
generally available to the public other than through a breach
of this Section 12.14, (b) to legal counsel, accountants and
other professional advisors of the Purchaser and to the
partners (general and limited), members, managers, officers,
directors, employees and other authorized representatives of
the Purchaser, PROVIDED that each such Person needs to know
that such information is related to the Purchaser's investment
in the Company and agrees to be bound by this Section 12.14,
(c) if required by Applicable Law, to regulatory officials
having jurisdiction over the Purchaser, or in connection with
any legal proceeding, process or order, provided that the
Purchaser uses its commercially reasonable efforts to limit
disclosure and obtain confidential treatment or a protective
order for the information and that the Purchaser provides the
Company with written notice of any such request or requirement
and allows the Company to participate in the proceeding,
process or procedure through which disclosure is to be made,
all at the Company'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 the Purchaser by an unrelated third
party or source that was not known by the Purchaser to have
been prohibited from disclosing such information. The
Purchaser 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 the
Company in contravention of the Exchange Act, including
without limitation, Rule 10b-5 thereunder."
(s) Each of the Disclosure Schedules to the Securities
Purchase 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 the
Purchaser's waiver of the Specified Events of Default set forth in Section 1,
the purchase of the November 1999 Note by the Purchaser as provided in Section 2
and the effectiveness of the amendments set forth in Section 3 shall be subject
to the satisfaction, in the Purchaser'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"):
-16-
(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 INVESTMENT DOCUMENTS. The Purchaser 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 DOCUMENTS"):
(i) NOVEMBER 1999 NOTE. The November 1999 Note, duly
executed by the Company;
(ii) AMENDMENT TO INVESTOR RIGHTS AGREEMENT. A second
amendment to the Investor Rights Agreement, in form and substance satisfactory
to the Purchaser, duly executed by the Company and ▇▇▇▇▇ ▇▇▇▇▇;
(iii) TERMINATION OF EQUITY REPURCHASE OPTION
AGREEMENT. A Termination Agreement Re: Equity Repurchase Option Agreement, in
form and substance satisfactory to the Purchaser, duly executed by the Company;
(iv) AMENDMENT TO INTERCREDITOR AGREEMENT. A First
Amendment to and Consent Under Second Amended and Restated Intercreditor and
Subordination Agreement, in form and substance satisfactory to the Purchaser,
duly executed by the Company; and
(v) AMENDMENT TO SECURITY AGREEMENT. A Third
Amendment to Amended and Restated Security Agreement, in form and substance
satisfactory to the Purchaser, duly executed by the Company.
(c) LEGAL OPINION. (i) ▇▇▇▇▇ & ▇▇▇▇▇▇, special counsel to the
Company, shall have delivered to the Purchaser a legal opinion letter, in form
and substance satisfactory to the Purchaser, addressed to the Purchaser and
dated as of the Third Amendment Effective Date, and (ii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, special Nevada counsel to the Company, shall have delivered to the
Purchaser a legal opinion letter, in form and substance satisfactory to the
Purchaser, addressed to the Purchaser and dated as of the Third Amendment
Effective Date.
(d) EXTENSION OF TERMS OF EMPLOYMENT AGREEMENTS. The Purchaser
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 the
Purchaser.
(e) REPRESENTATIONS AND WARRANTIES. The Purchaser shall have
received from the Company an Officers' Certificate, in form and substance
satisfactory to the Purchaser, dated as of the Third Amendment Effective Date
and duly executed by the President and Chief Executive Officer and the Chief
Financial Officer of the Company, to the effect that (i) after giving effect to
the execution, delivery and performance of this Amendment and the other Third
Amendment Documents and the amended Disclosure Schedules attached as EXHIBIT C
hereto, each of the representations and warranties of the Company contained in
-17-
the Securities Purchase 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 the Company 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) the Company 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
any other Third Amendment Document and (v) since September 29, 2002, no Material
Adverse Change has occurred other than as previously disclosed to the Purchaser
in writing or as previously disclosed in the Company's SEC Documents.
(f) ACCRUED AND UNPAID INTEREST. The Purchaser shall have
received, by wire transfer in immediately available funds, all accrued and
unpaid interest under the November 1999 Note through and including the Third
Amendment Effective Date (PROVIDED that such amounts may be withheld by the
Purchaser from the Additional Funds to be provided to the Company by the
Purchaser).
(g) REIMBURSEMENT OF FEES AND EXPENSES. The Company shall have
reimbursed the Purchaser for all actual and estimated fees, costs and expenses,
including attorneys' fees and expenses, expended or incurred by the Purchaser 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 fees and expenses may be withheld by the Purchaser from the Additional
Funds to be provided to the Company by the Purchaser).
(h) CONSENTS. The Company 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 other Third Amendment Documents, and the Purchaser shall have approved the
terms and conditions thereof.
(i) CERTIFIED COMPANY BOARD RESOLUTIONS. The Purchaser shall
have received a Secretary's Certificate from the Company, in form and substance
satisfactory to the Purchaser, duly executed by the Secretary of the Company and
dated as of the Third Amendment Effective Date, certifying as to (i) the charter
of the Company, as amended, (ii) the bylaws of the Company, as amended, and
(iii) the resolutions of the Board of Directors of the Company approving the
execution, delivery and performance of this Amendment and each of the other
Third Amendment Documents and the consummation of the transactions contemplated
hereby and thereby.
(j) GOOD STANDING CERTIFICATES. The Purchaser shall have
received (i) a corporate good standing certificate and a tax good standing
certificate, if available, for the Company 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 the Company 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
-18-
certificate and a tax good standing certificate, if available, of the Company
from the Secretaries of State or similar governmental authority of each
jurisdiction in which the Company 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. The Purchaser shall have
received executed copies of all assignment agreements and other documents, if
any, evidencing or memorializing the assignment or transfer to the Company of
trademark rights and all other assets, if any, formerly owned or held by
Overhill Ventures.
(l) CERTIFIED FINANCIAL PROJECTIONS. The Company shall have
delivered to the Purchaser, and the Purchaser shall have approved, consolidated
financial projections of the Company 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 the Purchaser, duly executed by the President and
Chief Executive Officer and the Chief Financial Officer of the Company,
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 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 THE COMPANY. In order to induce
the Purchaser to enter into this Amendment, the Company represents and warrants
to the Purchaser as follows:
(a) AUTHORIZATION; BINDING EFFECT. The Company has the full
power and authority to enter into, deliver and perform its obligations under
this Amendment and the other Third Amendment Documents. The execution, delivery
and performance by the Company of this Amendment and the other Third Amendment
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 the Company. This Amendment has been, and on the Third Amendment
Effective Date each of the Third Amendment Documents will be, duly executed and
delivered by the Company. This Amendment constitutes, and on the Third Amendment
Effective Date each of the Third Amendment Documents will constitute, the legal,
valid and binding obligations of the Company, enforceable against the Company 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.
-19-
(b) NO CONFLICT. The execution, delivery and performance by
the Company of this Amendment and the other Third Amendment 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 the Company 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 the Company or any of its Subsidiaries is a
party or by which any of its or their properties or assets are bound.
(c) RANK; OBLIGATIONS. No Indebtedness of the Company ranks
senior to the Indebtedness evidenced by the November 1999 Note other than the
Senior Indebtedness. No Indebtedness of the Company ranks PARI PASSU with any
Indebtedness evidenced by the November 1999 Note. Immediately following the
Closing, there will be no agreement, indenture, instrument or other document to
which the Company 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 Purchaser (including principal, interest,
premium, if any, or other amounts under the November 1999 Note) to the repayment
of any other existing or future Indebtedness or other obligations of the Company
or any of its Subsidiaries other than the Senior Indebtedness.
(d) NO CONSENTS. Neither the Company 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 Document or the issuance, sale or delivery of the November 1999 Note,
or for the purpose of maintaining in full force and effect any Licenses and
Permits of the Company 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 the Company or any of its assets.
(e) REPRESENTATIONS AND WARRANTIES. After giving effect to the
amended Disclosure Schedules attached as EXHIBIT C hereto, each of the
representations and warranties of the Company contained in Section 3 of the
Securities Purchase 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, exchange and sale of the
November 1999 Note in accordance with the terms of this Amendment are exempt
from the registration requirements of the Securities Act and the registration or
qualification requirements of any applicable state securities or "blue sky"
laws.
(g) NO DEFAULT. No Default or Event of Default (other than the
Specified Events of Default) has occurred and is continuing or will result from
the execution, delivery or performance of this Amendment or the other Third
Amendment Documents, the issuance, sale or delivery of the November 1999 Note or
the consummation of the other transactions contemplated hereby or thereby.
-20-
(h) COLLATERAL SECURITY. The Liens granted in favor of the
Purchaser 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 under the November 1999 Note and all other
Obligations, 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 the Company.
No assets or properties owned or held by Overhill Ventures were assigned or
transferred to any Person other than the Company.
(j) NOVEMBER 1999 NOTE. As of the date hereof, the principal
amount of the November 1999 Note outstanding is $24,658,000.
6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby represents and warrants to the Company that:
(a) The Purchaser is acquiring the November 1999 Note for its
own account, for investment purposes, and not with a view to or for sale in
connection with any distribution thereof. The Purchaser understands that the
November 1999 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 the Purchaser's investment intent as expressed herein; and
(b) The Purchaser 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, the Purchaser 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
November 1999 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 the Company in connection with the closing of the
transactions contemplated by this Amendment, on (but not before or after)
Friday, January 9, 2004, the Company shall pay to LLCP Inc. (as defined in the
Investor Rights Agreement), by wire transfer in immediately available funds, the
following fees: (a) A non-refundable new capital fee (the "NEW CAPITAL FEE") in
the amount of $168,000 and (b) a non-refundable amendment fee (the "AMENDMENT
FEE") in the amount of $184,800. 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.
-21-
(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 Pleasant Street in and to the Trade
Payables Deposit Account are senior to the security interests and liens of the
Purchaser 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 Securities Purchase Agreement on and as of the Third
Amendment Effective Date, and the Securities Purchase 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. The Company hereby
ratifies, approves and affirms in all respects each of the Securities Purchase
Agreement, as amended hereby, the Notes, the Collateral Documents (including the
Liens granted in favor of the Purchaser under the Collateral Documents) and each
of the other Investment 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 the Purchaser under or in
connection with the Securities Purchase Agreement, the Notes, the Collateral
Documents and the other Investment 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 Securities Purchase Agreement or any Investment Document or the obligations
of the Company Parties 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 Securities Purchase Agreement, the Note, the
Collateral Documents or any other Investment Document, or a forbearance by the
Purchaser of any of its rights, remedies or powers against the Company Parties
(or any of them) or the Collateral. The Purchaser hereby expressly reserves all
of its rights, powers and remedies under or in connection with the Securities
Purchase Agreement, the Note, the Collateral Documents and the other Investment
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,
the Company, 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 the Purchaser and its
present and former officers, directors, partners (general and limited),
stockholders, employees, agents, attorneys, successors and assigns from and
against any and all claims, rights, actions, causes of action, suits,
liabilities, defenses, damages, losses, costs and expenses (including attorneys'
-22-
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 Securities Purchase Agreement or
any other Investment 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. The Company 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. The Company 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.
The Company 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. The Company 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 the Company or any of its
Affiliates against the Purchaser, or any Affiliates, partners, directors,
officers, employees, agents, representatives, attorneys, accountants or advisors
of the Purchaser, 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 Securities Purchase
Agreement or any other Investment Document or the transactions contemplated
hereby or thereby, or any act, omission or event occurring in connection
herewith or therewith. The Company, 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.
-23-
11. MISCELLANEOUS PROVISIONS.
(a) ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Amendment,
together with the other Third Amendment 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.
(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]
-24-
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.
COMPANY
-------
OVERHILL FARMS, INC., a Nevada corporation
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------
▇▇▇▇▇ ▇▇▇▇▇
President and Chief Executive Officer
By: /S/ ▇▇▇▇ Steinbrun
--------------------------
▇▇▇▇ Steinbrun
Senior Vice President and Chief
Financial Officer
PURCHASER
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS II,
L.P., a California limited partnership
By: LLCP California Equity Partners II,
L.P., a California limited
partnership, its General Partner
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Capital
Partners, Inc., its General
Partner
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
-25-