Exhibit 10.8

 

AMENDMENT TO

EQUITY REPURCHASE OPTION AGREEMENT

 

THIS AMENDMENT TO EQUITY REPURCHASE OPTION AGREEMENT, dated as of April 16, 2003
(this “Amendment”), is made by and between OVERHILL FARMS, INC., a Nevada
corporation (the “Company”), and LEVINE LEICHTMAN CAPITAL PARTNERS II, L.P., a
California limited partnership (“LLCP”).

 

RECITALS

 

A. The parties hereto are currently parties to that certain Equity Repurchase
Option Agreement dated as of September 11, 2003 (the “Option Agreement”),
pursuant to which, among other things, LLCP granted to the Company certain
rights to repurchase all, but not less than all, of the LLCP Equity Securities
on the terms and subject to the conditions set forth therein. Capitalized terms
used and not defined herein have the meanings ascribed to them in the Option
Agreement.

 

B. Concurrently herewith, the Company, the entities from time to time parties
thereto as Guarantors (including Overhill L.C. Ventures, Inc.) and LLCP are
entering into that certain Second Amended and Restated Securities Purchase
Agreement dated of even date herewith (the “Securities Purchase Agreement”),
pursuant to which, among other things, the parties thereto are amending and
restating the Existing Securities Purchase Agreement (as defined therein), all
on the terms and subject to the conditions set forth therein.

 

C. In connection with the execution and delivery of the Securities Purchase
Agreement, the parties wish to amend the Option Agreement on the terms set forth
herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the promises and of the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

 

1. Amendments to Option Agreement. Pursuant to Section 3.7 of the Option
Agreement, the Option Agreement is hereby amended as follows:

 

1.1 Section 1 (Definitions) of the Option Agreement is hereby amended by
replacing the following existing definitions in their entirety with the
following amended definitions:

 

“‘Formula-Based Repurchase Price’ means, for purposes of calculating the
Repurchase Option Price, a repurchase price per share equal to:

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(i) (a) 6.50 times (y) EBITDA for the three (3) calendar month period ending on
the last day of the calendar month immediately preceding the calendar month in
which the Repurchase Option Notice Date occurs (the “Measurement Date”),
multiplied by (z) 4, minus (b) all Indebtedness of the Company (excluding (I)
Indebtedness described under clauses (iii), (vi) and (ix) of the definition of
Indebtedness and (II) Indebtedness equal to the greater of (x) $17,000,000 and
(y) indebtedness under the Company’s then existing revolving credit facility, if
any) existing on the Measurement Date, plus (c) all cash and cash equivalents of
the Company and its Subsidiaries existing on the Measurement Date (but only to
the extent that such cash and cash equivalents exceed the then outstanding
balance under the Company’s revolving or working capital credit facilities),
plus (d) the aggregate exercise or conversion prices for the shares of Capital
Stock of the Company issuable upon exercise or conversion of all “in-the-money”
Options Rights outstanding (the “Option Rights Shares”) as of the Measurement
Date; divided by

 

(ii) the number of shares of Capital Stock of the Company outstanding as of the
Measurement Date, plus the number of Option Rights Shares as of the Measurement
Date. (For purposes of clarification only, the November 1999 Warrant, the shares
of Series A Preferred Stock issued to LLCP prior to the date hereof, the Fifth
Amendment Warrant and options outstanding under the Company’s Stock Plans are
deemed to be Option Rights).”

 

provided, however, that for purposes of calculating EBITDA under this
definition, the following shall be added back to the calculation of Net Income
(Loss): (i) the costs incurred by the Company in connection with the restoration
required to be made at the manufacturing facilities located at 7666 Formula
Place in San Diego, California, up to a maximum of $250,000, and (ii) the
aggregate 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 a bankruptcy filing by or against American Airlines.

 

“‘Repurchase Option Trigger Event’ means the occurrence of either of the
following events:

 

(i) If a Default or Event of Default shall have occurred after August 15, 2003,
and be continuing and LLCP provides written notice to the Company either (a)
requesting that the Company make any payments to it that are in addition to
those which the Company is then obligated to make under the then existing
Investment Documents (e.g., interest payments calculated at the Default Rate) or
(b) declaring all Obligations to Purchaser to be immediately due and payable
pursuant to Section 10.2 of the Securities Purchase Agreement; or

 

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(ii) If the Company notifies LLCP in writing at any time after August 15, 2003,
that it intends in good faith to (a) (y) enter into a bona fide transaction in
the future with a third party to merge, consolidate, amalgamate or otherwise
combine, or to sell, lease, transfer or otherwise dispose of, in any transaction
or series of transactions, all or a significant portion of its assets or
properties (whether now owned or hereafter acquired) or (z) reorganize or
recapitalize, or (b) enter into a bona fide transaction in the future with a
third party which is valued at more than $8.0 million and, in the case of either
of clause (ii)(a) or (ii)(b) above, LLCP notifies the Company in writing, within
ten (10) days following LLCP’s receipt of the Company’s written notification of
such intent, that it does not consent to any such transaction, reorganization or
recapitalization, as the case may be.”

 

1.2 Clause (a) of Section 2.1 (Right to Repurchase Equity Securities) of the
Option Agreement is hereby amended by replacing such clause in its entirety with
the following:

 

“(a) On the terms and subject to the conditions set forth in this Agreement, if
a Repurchase Option Trigger Event occurs at any time after August 15, 2003, the
Company shall have the right to repurchase all, but not less than all (the
“Repurchase Option”), of the LLCP Equity Securities beneficially owned by LLCP
on the Repurchase Option Closing Date at the Repurchase Option Price; provided,
however, that the Company must pay and perform all other Obligations to
Purchaser outstanding as of the Repurchase Option Closing Date simultaneously
with, or prior to, the closing of the Repurchase Option. The parties acknowledge
and agree that in no event shall the Repurchase Option be effective on or prior
to August 15, 2003, with respect to any Default, Event of Default, act,
omission, event, condition or circumstance occurring or existing on or prior to
such date.”

 

2. Confirmation; Full Force and Effect. The Option Agreement, as amended hereby,
shall remain binding upon the Company and LLCP and shall remain in full force
and effect in accordance with its terms, as amended hereby. Further, the Company
expressly ratifies and reaffirms its obligations under the Option Agreement as
amended hereby.

 

3. Miscellaneous.

 

3.1 Entire Agreement. The Option Agreement, as amended hereby, constitutes the
entire understanding agreement among the parties with respect to the subject
matter hereof and supersedes any prior written or oral agreements or
understandings of the parties hereto with respect to such matter.

 

3.2 Governing Law. IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS ARISING
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED
IN SUCH STATE, WITHOUT REGARD TO THE CHOICE OF LAW OR CONFLICTS OF LAW
PRINCIPLES THEREOF.

 

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3.3 Counterparts. This Amendment may be executed in any number of counterparts
and by facsimile, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.

 

[REST OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.

 

COMPANY

OVERHILL FARMS, INC., a Nevada corporation

By:

 

/s/ James Rudis

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James Rudis

President and Chief Executive Officer

By:

 

/s/ John Steinbrun

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John Steinbrun

Senior Vice President and Chief Financial

Officer

LLCP

LEVINE LEICHTMAN 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:

 

Levine Leichtman Capital Partners,

Inc., its General Partner

   

By:

 

/s/ Steven E. Hartman

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Steven E. Hartman

Vice President

 

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