Exhibit 10.1.1


 


FIRST AMENDMENT TO LOAN AND SECURITY
AGREEMENT


 


This First Amendment to Loan and Security Agreement (this “First
Amendment”) made and entered into as of the 5th day of November, 2004, is by
and between LASALLE BANK NATIONAL ASSOCIATION,
a national banking association (“LENDER”),
having its principal place of business at 135 South LaSalle Street, Chicago,
Illinois 60603-4105, and VITA FOOD PRODUCTS, INC.,
a Nevada corporation, with its chief executive office located at 2222 West Lake
Street, Chicago, Illinois 60612 (“Vita Food”), VIRGINIA
HONEY COMPANY, INC., a Virginia corporation, with its chief
executive office located at 2222 West Lake Street, Chicago, Illinois 60612 (“Virginia
Honey”), THE HALIFAX GROUP, INC., a Georgia
corporation, with its chief executive office located at 2222 West Lake Street,
Chicago, Illinois 60612 (“Halifax”), and VITA SPECIALTY FOODS, INC.,
a Delaware corporation, with its chief executive office located at 2222 West
Lake Street, Chicago, Illinois 60612  (“Specialty
Foods”) (Vita Food, Virginia Honey, Halifax and Specialty Foods are
individually a  “Borrower” and
collectively the “Borrowers”).


 


W I T N E S S E T H:


 


WHEREAS, prior
hereto, Lender provided certain loans, extensions of credit and other financial
accommodations (the “Financial Accommodations”) to Borrowers pursuant to (a)
that certain Loan and Security Agreement dated as of September 5, 2003, by and
between Lender and Borrowers (as further amended or restated from time to time,
the “Loan Agreement”), and (b) the other documents, agreements and instruments
referenced in the Loan Agreement or executed and delivered pursuant thereto;


 


WHEREAS, Borrowers
have requested that Lender, among other things, (i) waive certain existing
Events of Default, and (ii) modify certain financial and non-financial
covenants (collectively the “Additional Financial Accommodations”); and


 


WHEREAS, Lender is
willing to provide the Additional Financial Accommodations, but solely on the
terms and subject to the provisions set forth in this First Amendment and the
other agreements, documents and instruments referenced herein or executed and
delivered pursuant hereto.


 


NOW, THEREFORE, in
consideration of the foregoing, the mutual promises and understandings of the
parties hereto set forth herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Lender and Borrowers
hereby agree as set forth in this First Amendment.


 


I.              Definitions.


 


A.            Use
of Defined Terms.  Except as expressly set forth in this First
Amendment, all terms which have an initial capital letter where not required by
the rules of grammar are used herein as defined in the Loan Agreement.


 





















 


B.            Amended
Definitions.  Effective as
of the date of this First Amendment, Section 1.1 of the Loan Agreement is
hereby amended by deleting the definitions of “Overadvance” and “Tangible Net
Worth Benchmark” and substituting therefor the following:


 


“Overadvance”: shall mean zero
Dollars.


 


“Tangible
Net Worth Benchmark”: shall mean negative One Million Eight
Hundred Thousand and no/100 Dollars (-$1,800,000.00) as of December 31, 2004,
negative Nine Hundred Thousand and no/100 Dollars (-$900,000.00) as March 31,
2005, through September 30, 2005, negative One Hundred Thousand and no/100 Dollars
(-$100,000.00) as of December 31, 2005, and shall increase by Eight Hundred
Thousand and no/100 Dollars ($800,000.00) as of December 31, 2006, and as of
the last day of each fiscal year thereafter.


 


II.            Amendments to Loan
Agreement.  Effective as
of the date of this First Amendment, the Loan Agreement is hereby amended as
follows:


 


A.            Eligible Inventory.  Sections 6.1 and 6.2 of the Loan Agreement
are hereby amended by deleting Sections 6.1 and 6.2 of the Loan Agreement in
their entirety and substituting therefor the following, respectively:


 


“6.1         Eligible Inventory.  “Eligible Inventory” means the portion of
Inventory that:  (A) consists of (i)
raw materials, (ii) work-in-process, (iii) finished goods, or (iv) packaging
materials; (B) is not more than three hundred sixty-five (365) days
old; (C) is not consigned to or from any Person; (D) does not violate
the negative covenants and similar provisions of this Section 6 and does
satisfy the positive covenants and similar provisions of this Section 6;
(E) Lender has in good faith determined, in accordance with its customary
business practices, is not unacceptable due to age, type, category or quantity;
(F) is subject to Lender’s first position priority perfected security
interest and lien; and (G) is located at one of the locations specified on
Schedule 4.4 and if located at a warehouse, other storage facility or a leased
facility, Lender has (i) received an original Warehouse Agreement or
Landlord Agreement in form and substance acceptable to Lender, (ii) filed
its Uniform Commercial Code financing statements in accordance with applicable
law with regard to the respective location of each such warehouse, leased
facility or other storage facility, and (iii) as evidenced by then
currently dated Uniform Commercial Code judgment and lien searches satisfactory
to Lender, there are no security interests or liens in and to the Collateral
located at such warehouse, other storage facility or leased facility other than
Lender’s first position priority security interest and lien; notwithstanding
the foregoing, up to $250,000 in the aggregate of Inventory which does not
satisfy the requirements of subsection 6.1(G), but otherwise meets the
definition of Eligible Inventory, may be included in Eligible Inventory.


 


6.2           Additional Representations, Warranties and Covenants.
Borrowers represent and warrant to and covenant with Lender that:  (A) the Inventory shall be kept only at
the locations specified on Schedule 4.4; (B) Borrowers now keep and
hereafter at all times shall keep correct and accurate records itemizing and
describing the age, kind, type and quantity of Inventory and Borrowers’ stated
actual cost therefor, together with


 


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withdrawals therefrom and additions thereto for each month, all of
which records shall be available, upon demand, to any of Lender’s officers,
employees or agents for inspection and copying thereof; (C) all Inventory
is now and hereafter at all times shall be of good and merchantable quality,
free from defects; (D) any of Lender’s officers, employees or agents
shall, now and at any time or times hereafter, have the right, upon demand, to
inspect and examine the Inventory and to check and test the same as to quality,
quantity, value and condition; and (E) all Eligible Inventory set forth on
the Borrowing Base Certificate (1) consists of (i) raw materials, (ii)
work-in-process, (iii) finished goods, or (iv) packaging materials; (2) is
not more than three hundred sixty-five (365) days old; (3) is not consigned
to any Person; (4) does not violate the negative covenants and similar
provisions of this Section 6 and does satisfy the positive covenants, and
similar provisions of this Section 6; (5) is subject to Lender’s first
position priority preferred security interest and lien; and (7) except as
otherwise permitted in Section 6.1 above, is located at one of the locations
specified on Schedule 4.4, and, if located at a warehouse, other storage
facility or leased facility, Lender has (i) received an original executed
Warehouse Agreement or Landlord Agreement in form and substance acceptable to
Lender, (ii) filed its Uniform Commercial Code financing statements in
accordance with applicable law with regard to the respective location of each
such warehouse, other storage facility or leased facility, and (iii) as
evidenced by then currently dated Uniform Commercial Code judgment and lien
searches satisfactory to Lender, there are no security interests or liens in
and to the Collateral located at such warehouse, other storage facility or
leased facility, other than Lender’s first position priority security interest
and lien.  All costs, fees and expenses
incurred by Lender in connection with this Section 6, or which Lender becomes
obligated to pay, shall be part of the Liabilities, secured by the Collateral
and payable by Borrowers to Lender on demand.”


 


B.            Financial Covenants.  Section 9.4 of the Loan Agreement is hereby
amended by deleting Section 9.4 of the Loan Agreement in its entirety and
substituting therefor the following:


 


“9.4         Financial Covenants.  During the term of this Loan Agreement, and
thereafter for so long as there are any outstanding Liabilities owed to Lender,
Borrowers covenant that they shall:


 


(A)          Tangible Net Worth.  Maintain
a minimum Tangible Net Worth of not less than the Tangible Net Worth Benchmark
tested as of the last day of each calendar quarter.


 


(B)           Cash Flow Coverage Ratio.  Not permit Borrowers’ Cash Flow Coverage
Ratio to be less than 1.10 to 1.00, tested as of the last day of each calendar
quarter beginning with the calendar quarter ending March 31, 2005.


 


(C)           Minimum
EBITDA.  Maintain EBITDA of not less
than Eight Hundred Fifty Thousand and no/100 ($850,000.00) for the three month
period ending December 31, 2004.”


 


C.            Financial Reporting.  Section 9.5 (F) of the Loan Agreement is
hereby amended by deleting Section 9.5 (F) of the Loan Agreement in its
entirety and substituting therefor the following:


 


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“(F)         As
soon as available, but in no event later than fifteen (15) days after the
15th and last day of each month, a Borrowing Base Certificate dated as of the
15th and last day of such month, respectively.”


 


III.           Conditions Precedent.
Lender’s obligation to provide the Additional Financial Accommodations to
Borrowers is subject to the full and timely performance of the following
covenants prior to or contemporaneously with the execution of this First
Amendment:


 


A.            Borrowers executing and delivering,
or causing to be executed and delivered to Lender, the following documents,
each of which shall be in form and substance acceptable to Lender:


 


(i)                                     An
original Secretary’s Certificate of even date herewith executed by the
Secretary of each Borrower to Lender; and


 


(ii)                                  such
other agreements, documents and instruments as Lender may reasonably request;


 


B.            No Unmatured Event of Default or
Event of Default exists under the Loan Agreement, as amended by this First
Amendment, or the Other Agreements other than the “Existing Defaults”
(hereinafter defined);


 


C.            No claims, litigation, arbitration
proceedings or governmental proceedings not disclosed in writing to Lender
prior to the date of hereof shall be pending or known to be threatened against
Borrowers and no known material development not so disclosed shall have
occurred in any claims, litigation, arbitration proceedings or governmental
proceedings so disclosed which in the opinion of Lender is likely to materially
or adversely affect the financial position or business of any Borrower or the capability
of any Borrower to pay its obligations and liabilities to Lender; and


 


D.            There shall have been no material or
adverse change in the business, financial condition or results of operations
since the date of each Borrower’s most recently delivered financial statements
to Lender.


 


IV.           Conflict.  If, and to the extent, the terms and
provisions of this First Amendment contradict or conflict with the terms and
provisions of the Loan Agreement, the terms and provisions of this First
Amendment shall govern and control; provided, however, to the extent the terms
and provisions of this First Amendment do not contradict or conflict with the
terms and provisions of the Loan Agreement, the Loan Agreement, as amended by
this First Amendment, shall remain in and have its intended full force and
effect, and Lender and Borrowers hereby affirm, confirm and ratify the same.


 


V.            Waiver of Events of
Default.


 


A.            Borrowers hereby acknowledge and
agree as follows:  (i) the following
Events of


 


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Default have occurred and are
existing under the Loan Agreement (the “Existing Defaults”): (a) as of
September 30, 2004, Borrowers were in violation of the Tangible Net Worth
covenant contained in Section 9.4(1) of the Loan Agreement, and (b) as of
September 30, 2004, Borrowers were in violation of the Cash Flow Coverage Ratio
covenant contained in Section 9.4(2) of the Loan Agreement; (ii) no Events of
Default currently exist other than the Existing Defaults set forth above, and
(iii) as a result of the Existing Defaults, Lender has the right to immediately
exercise such of its rights and remedies pursuant to the Loan Agreement as it
deems appropriate, including, without limitation, terminating all advances to
Borrowers, instituting the Default Rate and demanding immediate payment of all
outstanding Liabilities.


 


B.            Borrowers hereby
represent and warrant to Lender that no Event of Default exists as of the date
of this First Amendment, other than the Existing Defaults.  Lender hereby waives the Existing Defaults;
provided that such waiver shall not be or be deemed to be a waiver by Lender of
any other Events of Default, whether now existing or hereafter arising or
occurring, including, without limitation, any other Events of Default arising
under Section 9.4 of the Loan Agreement after September 30, 2004.


 


VI.           Severability.
 Wherever possible, each provision of
this First Amendment shall be interpreted in such manner as to be valid and
enforceable under applicable law, but if any provision of this First Amendment
is held to be invalid or unenforceable by a court of competent jurisdiction,
such provision shall be severed herefrom and such invalidity or
unenforceability shall not affect any other provision of this First Amendment,
the balance of which shall remain in and have its intended full force and
effect.  Provided, however, if such
provision may be modified so as to be valid and enforceable as a matter of law,
such provision shall be deemed to be modified so as to be valid and enforceable
to the maximum extent permitted by law.


 


VII.          Reaffirmation.  Borrowers hereby reaffirm and remake all of
the representations, warranties, covenants, duties, obligations and liabilities
contained in the Loan Agreement, as amended hereby.


 


VIII.        Fees, Costs and Expenses.


 


A.            Contemporaneously herewith,
Borrowers shall pay to the Bank a fully-earned, non-refundable amendment fee in
the amount of $10,000.00.


 


B.            Borrowers agree to pay, upon demand,
all fees, costs and expenses of Lender, including, but not limited to,
reasonable attorneys’ fees, in connection with the preparation, execution,
delivery and administration of this First Amendment and the other agreements,
documents and instruments executed and delivered in connection herewith or
pursuant hereto.


 


IX.           Reservation of Rights.  Lender continues to reserve all of its rights
and remedies, including all security interests, assignments and liens pursuant
to the Loan Agreement and the Other Agreements, as well as any rights and
remedies at law, in equity or otherwise. 
Nothing contained in this First Amendment shall be or be deemed a waiver
of any presently existing or any hereafter arising or occurring breach, default
or event of default, other than the Existing Defaults as set forth above, nor
shall preclude the subsequent exercise of any of Lender’s rights or remedies.


 


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X.            Choice of Law.  This First Amendment has been delivered and
accepted in Chicago, Illinois, and shall be governed by and construed in accordance
with the laws of the State of Illinois, regardless of the laws that might
otherwise govern under applicable principles of conflicts of law as to all
matters, including matters of validity, construction, effect, performance and
remedies.


 


XI.           Counterpart.  This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.


 


XII.         Waiver of Jury Trial.  BORROWERS AND LENDER EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHT TO TRIAL BY JURY.


 


[signature page follows]


 


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IN WITNESS WHEREOF,
Lender and Borrowers have caused this First Amendment to be executed and
delivered by their duly authorized officers as of the date first set forth
above.


 


	
  LASALLE BANK NATIONAL ASSOCIATION,

  	
  VIRGINIA HONEY COMPANY, INC.,

  
	
  a national banking association

  	
  a Virginia corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Sara A. Huizinga

  	
   

  	
  By:

  	
  /s/ Stephen D. Rubin

  	
   

  
	
  Name:

  	
  Sara A. Huizinga

  	
   

  	
  Name:

  	
  Stephen D. Rubin

  	
   

  
	
  Title:

  	
  Assistant Vice President

  	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VITA FOOD PRODUCTS, INC.,

  
	
   

  	
  a Nevada corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Clark L. Feldman

  	
   

  
	
   

  	
  Name:

  	
  Clark L. Feldman

  	
   

  
	
   

  	
  Title:

  	
  Executive Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE HALIFAX GROUP, INC.,

  
	
   

  	
  a Georgia corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Clifford Bolen

  	
   

  
	
   

  	
  Name:

  	
  Clifford Bolen

  	
   

  
	
   

  	
  Title:

  	
  Treasurer & Secretary

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VITA SPECIALTY FOODS, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Clifford Bolen

  	
   

  
	
   

  	
  Name:

  	
  Clifford Bolen

  	
   

  
	
   

  	
  Title:

  	
  Assistant Secretary

  	
   

  
								



 


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