<PAGE>
SECOND AMENDMENT TO
CREDIT AGREEMENT
This Second Amendment to Credit Agreement (this "Amendment") is entered
into as of August 10, 2000, by and between IMPERIAL BANK, a California banking
corporation ("Bank") on the one hand, and Monterey Pasta Company, a Delaware
corporation ("Borrower") on the other hand.
RECITALS
WHEREAS, Borrower and Bank are parties to that certain Credit
Agreement, dated as of August 2, 1999, as amended by that certain First
Amendment to Credit Agreement between Borrower and Bank, dated as of January 5,
2000 (and as otherwise amended, modified, revised, supplemented or restated from
time to time, the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement in accordance
with the terms and conditions of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. Section 1.01 of the Agreement is hereby amended to read in its
entirety as follows:
"1.01(a) REVOLVING CREDIT COMMITMENT.
(a) REVOLVING LINE OF CREDIT. Subject to the terms and conditions of
this Agreement, provided that no event of default then has occurred and
is continuing, Bank shall, upon Borrower's request make advances
("Revolving Loans") to Borrower, for working capital requirements of
Borrower, in an amount not to exceed $1,500,000 (the "Revolving Line of
Credit") until AUGUST 9, 2001 (the "Revolving Line of Credit Maturity
Date"). Revolving Loans may be repaid and reborrowed, provided that all
outstanding principal and accrued interest on the Revolving Loans shall
be payable in full on the Revolving Credit Maturity Date."
2. New Sections 1.07 and 1.08 are hereby inserted in the Agreement
immediately following existing Section 1.06 thereof to read in their
entireties as follows:
"1.07 SHORT TERM NON-REVOLVING COMMITMENT.
(a) NON-REVOLVING LOAN. Subject to the terms and conditions of this
Agreement, provided that no event of default then has occurred and is
continuing, Bank shall, upon Borrower's request make advances
("Non-Revolving Loans") to Borrower, for capital expenditures or
acquisitions approved, in writing by Bank, in an amount not to exceed
$8,500,000 (the "Non-Revolving Note") until AUGUST 9, 2001 (the
"Non-Revolving Note Maturity Date").
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(b) NON-REVOLVING NOTE. The interest rate, principal and interest
payments, maturity date and certain other terms of the Non-Revolving
Loan will be contained in a promissory note dated the date of this
agreement, as such may be amended or replaced from time to time."
1.08 APPLICABLE MARGIN; INTEREST COMPUTATION; LIBOR ADDENDUM'S; DEFAULT
RATE.
a) The applicable Prime Margin or LIBOR Margin as referenced
in the Revolving Note and the Non-Revolving Note shall be
determined based on the ratio of Debt to Tangible Net Worth as
set forth below:
<TABLE>
<CAPTION>
------------------------------------------ ---------------------------------- ----------------------------------
LEVERAGE (DEBT/TNW) (i) Prime Margin (ii) LIBOR Margin
------------------------------------------ ---------------------------------- ----------------------------------
<S> <C> <C>
Less than 0.50:1 0 185 b.p.
------------------------------------------ ---------------------------------- ----------------------------------
Greater than 0.51:1, but 0 210 b.p.
Less than 0.75:1
------------------------------------------ ---------------------------------- ----------------------------------
Greater than 0.76:1 0 235 b.p.
------------------------------------------ ---------------------------------- ----------------------------------
</TABLE>
The Bank will determine the applicable LIBOR Margin for each calendar fiscal
quarter on the forty-fifth (45th) day ("Margin Determination Date") following
the last day of each quarter of the immediately preceding fiscal quarter by
reference to the Compliance Certificate delivered to the Bank by the Borrower
pursuant to Section 4.5(d) of this Agreement with respect to the immediately
preceding calendar fiscal quarter beginning with the quarter ending September
30, 2000. Based on such determination, the applicable LIBOR Margin shall be
increased, decreased or remain the same on the Margin Determination Date and
remain in effect until the following Margin Determination Date. Failure to
deliver the Compliance Certificate within the required time shall cause the
highest Applicable Margin to be charged until such Compliance Certificate is
received by the Bank.
The applicable LIBOR Margin in effect as of August 10, 2000, will be Two Hundred
Percent (200%).
(b) Interest on all Credits shall be computed on the basis of
the actual days during which the principal balance is outstanding,
divided by 360, which shall for interest computation purposes be
considered one year. Interest on each Credit shall be due and payable
in accordance with the LIBOR Addendums attached to the Revolving Note
and the Term Note until payment in full of all amounts due hereunder,
and shall be payable in accordance with the provisions of Section 1.08
herein.
(c) The LIBOR Addenda attached to the Revolving Note and the
Term Note shall set forth additional terms relating to Prime Rate and
LIBOR Rate loans.
(d) Upon the occurrence and during the continuance of an Event
of Default hereunder the interest rate on each Credit shall be five percent per
year in excess of the rate otherwise applicable.
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3. Unless otherwise defined, all initially capitalized terms in this Amendment
shall be as defined in the Agreement. The Agreement, as amended hereby, shall be
and remain in full force and effect in accordance with its respective terms and
hereby is ratified and confirmed in all respects. Except as expressly set forth
herein, the execution, delivery, and performance of this Amendment shall not
operate as a waiver of, or as an amendment of, any right, power, or remedy of
Bank under the Agreement, as in effect prior to the date hereof. Borrower
ratifies and reaffirms the continuing effectiveness of all promissory notes,
guaranties, security agreements, mortgages, deeds of trust, environmental
agreements, and all other instruments, documents and agreements entered into in
connection with the Agreement.
4. Borrower represents and warrants that the Representations and Warranties
contained in the Agreement are true and correct as of the date of this
Amendment, and that no Event of Default has occurred and is continuing.
5. This Amendment may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
instrument.
6. As a condition to the effectiveness of this Amendment, Bank shall have
received, in form and substance satisfactory to Bank, the following:
(a) this Amendment, duly executed by Borrower;
(b) if requested by Bank, Bank shall have received a certified copy of the
resolutions of Borrower's board of directors authorizing the execution
and delivery of this Amendment and the execution and delivery of such
other documents, instruments and agreements as Bank shall reasonably
request; and
(c) such other documents, and completion of such other matters, as Bank
may reasonably deem necessary or appropriate.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the first date above written.
MONTEREY PASTA COMPANY IMPERIAL BANK,
a Delaware corporation a California banking corporation
By: By:
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R. Lance Hewitt Brian C. Santos
Title: CEO Title: Senior Vice President
By:
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Stephen Brinkman
Title: CFO/Secretary
