**Exhibit 10.1.1**

 

**FIRST AMENDMENT TO LOAN AND SECURITYAGREEMENT**

 

This First Amendment to Loan and Security Agreement (this “FirstAmendment”) made and entered into as of the 5th day of November, 2004, is byand 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 LakeStreet, Chicago, Illinois 60612 (“Vita Food”), **VIRGINIAHONEY COMPANY, INC.**, a Virginia corporation, with its chiefexecutive office located at 2222 West Lake Street, Chicago, Illinois 60612 (“VirginiaHoney”), **THE HALIFAX GROUP, INC.**, a Georgiacorporation, 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 WestLake Street, Chicago, Illinois 60612  (“SpecialtyFoods”) (Vita Food, Virginia Honey, Halifax and Specialty Foods areindividually a  “Borrower” andcollectively the “Borrowers”).

 

**W I T N E S S E T H:**

 

**WHEREAS,** priorhereto, Lender provided certain loans, extensions of credit and other financialaccommodations (the “Financial Accommodations”) to Borrowers pursuant to (a)that certain Loan and Security Agreement dated as of September 5, 2003, by andbetween Lender and Borrowers (as further amended or restated from time to time,the “Loan Agreement”), and (b) the other documents, agreements and instrumentsreferenced in the Loan Agreement or executed and delivered pursuant thereto;

 

**WHEREAS,** Borrowershave requested that Lender, among other things, (i) waive certain existingEvents of Default, and (ii) modify certain financial and non-financialcovenants (collectively the “Additional Financial Accommodations”); and

 

**WHEREAS,** Lender iswilling to provide the Additional Financial Accommodations, but solely on theterms and subject to the provisions set forth in this First Amendment and theother agreements, documents and instruments referenced herein or executed anddelivered pursuant hereto.

 

**NOW, THEREFORE,** inconsideration of the foregoing, the mutual promises and understandings of theparties hereto set forth herein and other good and valuable consideration, thereceipt and sufficiency of which is hereby acknowledged, Lender and Borrowershereby agree as set forth in this First Amendment.

 

I.              **Definitions**.

 

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

 

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B.            **AmendedDefinitions**.  Effective asof the date of this First Amendment, Section 1.1 of the Loan Agreement ishereby amended by deleting the definitions of “Overadvance” and “Tangible NetWorth Benchmark” and substituting therefor the following:

 

“**Overadvance**”: shall mean zeroDollars.

 

“**TangibleNet Worth Benchmark**”: shall mean negative One Million EightHundred 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 HundredThousand and no/100 Dollars ($800,000.00) as of December 31, 2006, and as ofthe last day of each fiscal year thereafter.

 

II.            **Amendments to LoanAgreement**.  Effective asof the date of this First Amendment, the Loan Agreement is hereby amended asfollows:

 

A.            **Eligible Inventory**.  Sections 6.1 and 6.2 of the Loan Agreementare hereby amended by deleting Sections 6.1 and 6.2 of the Loan Agreement intheir entirety and substituting therefor the following, respectively:

 

“6.1         **Eligible Inventory**.  “Eligible Inventory” means the portion ofInventory that:  (A) consists of (i)raw materials, (ii) work-in-process, (iii) finished goods, or (iv) packagingmaterials; (B) is not more than three hundred sixty-five (365) daysold; (C) is not consigned to or from any Person; (D) does not violatethe negative covenants and similar provisions of this Section 6 and doessatisfy the positive covenants and similar provisions of this Section 6;(E) Lender has in good faith determined, in accordance with its customarybusiness practices, is not unacceptable due to age, type, category or quantity;(F) is subject to Lender’s first position priority perfected securityinterest and lien; and (G) is located at one of the locations specified onSchedule 4.4 and if located at a warehouse, other storage facility or a leasedfacility, Lender has (i) received an original Warehouse Agreement orLandlord Agreement in form and substance acceptable to Lender, (ii) filedits Uniform Commercial Code financing statements in accordance with applicablelaw with regard to the respective location of each such warehouse, leasedfacility or other storage facility, and (iii) as evidenced by thencurrently dated Uniform Commercial Code judgment and lien searches satisfactoryto Lender, there are no security interests or liens in and to the Collaterallocated at such warehouse, other storage facility or leased facility other thanLender’s first position priority security interest and lien; notwithstandingthe foregoing, up to $250,000 in the aggregate of Inventory which does notsatisfy the requirements of subsection 6.1(G), but otherwise meets thedefinition 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 atthe locations specified on Schedule 4.4; (B) Borrowers now keep andhereafter at all times shall keep correct and accurate records itemizing anddescribing the age, kind, type and quantity of Inventory and Borrowers’ statedactual cost therefor, together with

 

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withdrawals therefrom and additions thereto for each month, all ofwhich records shall be available, upon demand, to any of Lender’s officers,employees or agents for inspection and copying thereof; (C) all Inventoryis now and hereafter at all times shall be of good and merchantable quality,free from defects; (D) any of Lender’s officers, employees or agentsshall, now and at any time or times hereafter, have the right, upon demand, toinspect 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 onthe Borrowing Base Certificate (1) consists of (i) raw materials, (ii)work-in-process, (iii) finished goods, or (iv) packaging materials; (2) isnot more than three hundred sixty-five (365) days old; (3) is not consignedto any Person; (4) does not violate the negative covenants and similarprovisions of this Section 6 and does satisfy the positive covenants, andsimilar provisions of this Section 6; (5) is subject to Lender’s firstposition priority preferred security interest and lien; and (7) except asotherwise permitted in Section 6.1 above, is located at one of the locationsspecified on Schedule 4.4, and, if located at a warehouse, other storagefacility or leased facility, Lender has (i) received an original executedWarehouse Agreement or Landlord Agreement in form and substance acceptable toLender, (ii) filed its Uniform Commercial Code financing statements inaccordance with applicable law with regard to the respective location of eachsuch warehouse, other storage facility or leased facility, and (iii) asevidenced by then currently dated Uniform Commercial Code judgment and liensearches satisfactory to Lender, there are no security interests or liens inand to the Collateral located at such warehouse, other storage facility orleased facility, other than Lender’s first position priority security interestand lien.  All costs, fees and expensesincurred by Lender in connection with this Section 6, or which Lender becomesobligated to pay, shall be part of the Liabilities, secured by the Collateraland payable by Borrowers to Lender on demand.”

 

B.            **Financial Covenants**.  Section 9.4 of the Loan Agreement is herebyamended by deleting Section 9.4 of the Loan Agreement in its entirety andsubstituting therefor the following:

 

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

 

(A)          Tangible Net Worth.** **Maintaina minimum Tangible Net Worth of not less than the Tangible Net Worth Benchmarktested as of the last day of each calendar quarter.

 

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

 

(C)           MinimumEBITDA.  Maintain EBITDA of not lessthan Eight Hundred Fifty Thousand and no/100 ($850,000.00) for the three monthperiod ending December 31, 2004.”

 

C.            **Financial Reporting**.  Section 9.5 (F) of the Loan Agreement ishereby amended by deleting Section 9.5 (F) of the Loan Agreement in itsentirety and substituting therefor the following:

 

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“(F)         Assoon as available, but in no event later than fifteen (15) days after the15th and last day of each month, a Borrowing Base Certificate dated as of the15th and last day of such month, respectively.”

 

III.           **Conditions Precedent**.Lender’s obligation to provide the Additional Financial Accommodations toBorrowers is subject to the full and timely performance of the followingcovenants prior to or contemporaneously with the execution of this FirstAmendment:

 

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)                                     Anoriginal Secretary’s Certificate of even date herewith executed by theSecretary of each Borrower to Lender; and

 

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

 

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

 

C.            No claims, litigation, arbitrationproceedings or governmental proceedings not disclosed in writing to Lenderprior to the date of hereof shall be pending or known to be threatened againstBorrowers and no known material development not so disclosed shall haveoccurred in any claims, litigation, arbitration proceedings or governmentalproceedings so disclosed which in the opinion of Lender is likely to materiallyor adversely affect the financial position or business of any Borrower or the capabilityof any Borrower to pay its obligations and liabilities to Lender; and

 

D.            There shall have been no material oradverse change in the business, financial condition or results of operationssince the date of each Borrower’s most recently delivered financial statementsto Lender.

 

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

 

V.            **Waiver of Events ofDefault**.

 

A.            Borrowers hereby acknowledge andagree as follows:  (i) the followingEvents of

 

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Default have occurred and areexisting under the Loan Agreement (the “Existing Defaults”): (a) as ofSeptember 30, 2004, Borrowers were in violation of the Tangible Net Worthcovenant contained in Section 9.4(1) of the Loan Agreement, and (b) as ofSeptember 30, 2004, Borrowers were in violation of the Cash Flow Coverage Ratiocovenant contained in Section 9.4(2) of the Loan Agreement; (ii) no Events ofDefault currently exist other than the Existing Defaults set forth above, and(iii) as a result of the Existing Defaults, Lender has the right to immediatelyexercise such of its rights and remedies pursuant to the Loan Agreement as itdeems appropriate, including, without limitation, terminating all advances toBorrowers, instituting the Default Rate and demanding immediate payment of alloutstanding Liabilities.

 

B.            Borrowers herebyrepresent and warrant to Lender that no Event of Default exists as of the dateof 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 ofany other Events of Default, whether now existing or hereafter arising oroccurring, including, without limitation, any other Events of Default arisingunder Section 9.4 of the Loan Agreement after September 30, 2004.

 

VI.           **Severability.** Wherever possible, each provision ofthis First Amendment shall be interpreted in such manner as to be valid andenforceable under applicable law, but if any provision of this First Amendmentis held to be invalid or unenforceable by a court of competent jurisdiction,such provision shall be severed herefrom and such invalidity orunenforceability shall not affect any other provision of this First Amendment,the balance of which shall remain in and have its intended full force andeffect.  Provided, however, if suchprovision 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 enforceableto the maximum extent permitted by law.

 

VII.          **Reaffirmation**.  Borrowers hereby reaffirm and remake all ofthe representations, warranties, covenants, duties, obligations and liabilitiescontained 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 inthe 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 orpursuant hereto.

 

IX.           **Reservation of Rights**.  Lender continues to reserve all of its rightsand remedies, including all security interests, assignments and liens pursuantto the Loan Agreement and the Other Agreements, as well as any rights andremedies at law, in equity or otherwise. Nothing contained in this First Amendment shall be or be deemed a waiverof any presently existing or any hereafter arising or occurring breach, defaultor event of default, other than the Existing Defaults as set forth above, norshall 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 andaccepted in Chicago, Illinois, and shall be governed by and construed in accordancewith the laws of the State of Illinois, regardless of the laws that mightotherwise govern under applicable principles of conflicts of law as to allmatters, including matters of validity, construction, effect, performance andremedies.

 

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

 

XII.         **Waiver of Jury Trial.**  BORROWERS AND LENDER EACH HEREBY WAIVE THEIRRESPECTIVE 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 anddelivered by their duly authorized officers as of the date first set forthabove.

 
| **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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