Document:

exv10w12

 

AMENDMENT NO. 1 TO

SUNTRON CORPORATION

AMENDED AND RESTATED CREDIT AGREEMENT

     Amendment No. 1 (this “Amendment”), dated as of March 23, 2004, among
K*TEC Operating Corp., EFTC Operating Corp., each a Delaware corporation (each
a “Borrower” and collectively, the “Borrowers”), Suntron Corporation (the
“Company”), the guarantors listed as such on the signature pages hereof (each a
“Guarantor” and, collectively, the “Guarantors”) and Citicorp USA, Inc., as
Administrative Agent and sole Lender and Issuer (each as defined below), to the
Amended and Restated Credit Agreement, dated as of April 11, 2003 (as amended
to the date hereof, the “Credit Agreement”), among the Company, the Borrowers,
the Lenders and Issuers from time to time party thereto and Citicorp USA, Inc.,
as agent for such Lenders and Issuers (in such capacity, the “Administrative
Agent”). Capitalized terms used herein but not defined herein are used as
defined in the Credit Agreement.

W I T N E S S E T H:

     WHEREAS, the Company, the Borrowers, the Lenders, the Issuers and the
Administrative Agent are party to the Credit Agreement;

     WHEREAS, the Company and the Borrowers have requested an increase in the
Advance Rates for (i) Eligible Raw Materials and (ii) Eligible Finished Goods;

     WHEREAS, the Company and the Borrowers have requested that the minimum
EBITDA required for the Fiscal Quarters ending (i) September 30, 2004 and (ii)
December 31, 2004 set forth in clause (d) of Section 5.1 (Minimum EBITDA) be
amended;

     WHEREAS, pursuant to Section 11.1 (Amendments, Waivers) of the Credit
Agreement, the consent of the Lenders constituting (i) the Supermajority
Lenders is required to effect any increase in the Advance Rate and (ii) the
Requisite Lenders is required to effect any change in the financial covenants
set forth in Section 5.1 (Minimum EBITDA) of the Credit Agreement;

     WHEREAS, the Administrative Agent and the undersigned Lender, being the
sole Lender as of the date hereof, the Company and the Borrowers have agreed,
subject to certain limitations and conditions set forth below, to make certain
amendments to the Credit Agreement, as more specifically set forth below;

     NOW, THEREFORE, in consideration of the premises and the covenants and
obligations contained herein the parties hereto agree as follows:

     Section 1. Amendment

     Effective as of the Amendment Effective Date (as defined below) and
subject to the satisfaction (or due waiver) of the conditions set forth in
Section 2 (Conditions Precedent to the Effectiveness of this Amendment) hereof,
the Administrative Agent and the Lender party hereto hereby agree to amend the
Credit Agreements as follows:

 

 

Amendment No. 1 to

Amended and Restated Credit Agreement

Suntron Corporation

          (a) Amendment to Article I (Definitions, Interpretation and Accounting
Terms)

               (i) Clause (b) of the definition of “Advance Rate” in Section 1.1 (Defined
Terms) is hereby amended in its entirety to read as follows:

               (b) in the case of Eligible Raw Materials, 38%

               (ii) Clause (c) of the definition of “Advance Rate” in Section 1.1
(Defined Terms) is hereby amended in its entirety to read as follows:

               (c) in the case of Eligible Finished Goods, 46%

          (b) Amendment to Article V (Financial Covenants)

          Clause (d) of Section 5.1 (Minimum EBITDA) is deleted in its entirety and
replaced with the following:

               (d) The Company shall have, as of the last day of each Fiscal
Quarter set forth below, EBITDA for the four Fiscal Quarters ending on
such day of not less than the amount set forth opposite such Fiscal
Quarter:

	 	 	 	 	 
	FISCAL QUARTER ENDING	 	 
	ON OR ABOUT
	 	MINIMUM EBITDA

	March 31, 2004
	 	 	($8,000,000	)
	June 30, 2004
	 	$	0	 
	September 30, 2004
	 	$	2,000,000	 
	December 31, 2004
	 	$	5,000,000	 

     Section 2. Conditions Precedent to the Effectiveness of this Amendment

          This Amendment shall become effective when, and only when, each of the
following conditions precedent shall have been satisfied or waived by the
Administrative Agent (the “Amendment Effective Date”):

          (a) Certain Documents. The Administrative Agent shall have received each
of the following, each dated the Amendment Effective Date (unless otherwise
agreed by the Administrative Agent), in form and substance satisfactory to the
Administrative Agent and in sufficient copies for each Lender:

               (i) this Amendment, executed by each Borrower, each Guarantor, the
Administrative Agent and each Lender; and

               (ii) such additional documentation as the Administrative Agent or the
Lenders party thereto may reasonably require;

          (b) Corporate and Other Proceedings. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection with the
transactions

- 2 -

 

Amendment No. 1 to

Amended and Restated Credit Agreement

Suntron Corporation

contemplated by this Amendment shall be satisfactory in all respects to
the Administrative Agent and each Lender;

          (c) No Default or Event of Default. After giving effect to this
Amendment, no Default or Event of Default shall have occurred and be
continuing, either on the date hereof or on the Amendment Effective Date; and

          (d) Fees and Expenses Paid. Each Borrower shall have paid all Obligations
due, after giving effect to this Amendment, on or before the later of the date
hereof and the Amendment Effective Date including, without limitation, the fees
set forth in Section 4 (Fees and Expenses) hereof.

     Section 3. Representations and Warranties

          On and as of the date hereof and as of the Amendment Effective Date, after
giving effect to this Amendment, the Company and each Borrower hereby represent
and warrant to the Administrative Agent and each Lender as follows:

          (a) this Amendment has been duly authorized, executed and delivered by
each Borrower and each Guarantor and constitutes a legal, valid and binding
obligation of each Borrower and each Guarantor, enforceable against the
Borrower and each Guarantor in accordance with its terms and the Credit
Agreement as amended by this Amendment and constitutes the legal, valid and
binding obligation of each Borrower and each Guarantor, enforceable against
each Borrower and each Guarantor in accordance with its terms;

          (b) all of the representations and warranties of the Company and each
Borrower contained in Article IV (Representations and Warranties) of the Credit
Agreement and in any other Loan Document are true and correct in all material
respects on and as of the date hereof and the Amendment Effective Date, in each
case as if made on and as of such date and except to the extent that such
representations and warranties specifically relate to a specific date, in which
case such representations and warranties shall be true and correct in all
material respects as of such specific date; and

          (c) no Default or Event of Default has occurred and is continuing.

     Section 4. Fees and Expenses

          Each Borrower and each other Loan Party agrees to pay on demand in
accordance with the terms of Section 11.3 (Costs and Expenses) of the Credit
Agreement all costs and expenses of the Administrative Agent in connection with
the preparation, reproduction, execution and delivery of this Amendment and all
other Loan Documents entered into in connection herewith (including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Administrative Agent with respect thereto and all other Loan Documents).

     Section 5. Release

          In further consideration for the Administrative Agent and the Lenders’
execution of this Agreement, each Borrower and each other Loan Party hereby
release each of the Administrative Agent, each Lender and the Issuer and their
respective Affiliates, officers,

- 3 -

 

Amendment No. 1 to

Amended and Restated Credit Agreement

Suntron Corporation

employees, directors, agents and advisors (collectively, the “Releasees”)
from any and all claims, demands, liabilities, responsibilities, disputes,
causes of action (whether at law or equity) and obligations of any nature
whatsoever, whether liquidated or unliquidated, known or unknown, matured or
unmatured, fixed or contingent that any of the Loan Parties may have against
any Releasee and that arise from or relate to the Obligations, any Collateral,
any Loan Document or any document, dealing or other matter in connection with
any of the Loan Documents or the Collateral, and any third party liable in
whole or in part for any of the Obligations, in each case to the extent arising
(a) on or prior to the date hereof or the Amendment Effective Date or (b) out
of, or relating to, actions, dealings or other matters occurring on or prior to
the date hereof or the Amendment Effective Date (including, without limitation,
any actions or inactions of any Releasee prior to the date hereof or the
Amendment Effective Date).

     Section 6. Reference to the Effect on the Loan Documents

          (a) As of the Amendment Effective Date, each reference in the Credit
Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of
like import, and each reference in the other Loan Documents to the Credit
Agreement (including, without limitation, by means of words like “thereunder”,
“thereof” and words of like import), shall mean and be a reference to the
Credit Agreement as modified hereby, and this Amendment and the Credit
Agreement shall be read together and construed as a single instrument. Each of
the table of contents and lists of Exhibits and Schedules of the Credit
Agreement shall be amended to reflect the changes made in this Amendment as of
the Amendment Effective Date.

          (b) Except as expressly amended hereby, all of the terms and provisions of
the Credit Agreement and all other Loan Documents are and shall remain in full
force and effect and are hereby ratified and confirmed.

          (c) The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of the Lenders, Issuers, Arranger or the Administrative Agent under any
of the Loan Documents, nor constitute a waiver or amendment of any other
provision of any of the Loan Documents or for any purpose except as expressly
set forth herein.

          (d) This Amendment is a Loan Document.

     Section 7. Consents by Guarantors

          Each Guarantor hereby consents to the provisions hereof and agrees that
the terms hereof shall not affect in any way its obligations and liabilities
under the Loan Documents (as amended and otherwise expressly modified hereby),
all of which obligations and liabilities shall remain in full force and effect
and each of which is hereby reaffirmed (as amended and otherwise expressly
modified hereby).

     Section 8. Execution in Counterparts

          This Amendment may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Signature pages may be detached from
multiple separate counterparts and attached to a single counterpart so that all
signature pages are attached to the same document. Delivery of an

- 4 -

 

Amendment No. 1 to

Amended and Restated Credit Agreement

Suntron Corporation

executed counterpart by telecopy shall be effective as delivery of a
manually executed counterpart of this Amendment.

     Section 9. Governing Law

          This Amendment shall be governed by and construed in accordance with the
law of the State of New York.

     Section 10. Section Titles

          The section titles contained in this Amendment are and shall be without
substantive meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto, except when used to reference a section.
Any reference to the number of a clause, sub-clause or subsection of any Loan
Document immediately followed by a reference in parenthesis to the title of the
section of such Loan Document containing such clause, sub-clause or subsection
is a reference to such clause, sub-clause or subsection and not to the entire
section; provided, however, that, in case of direct conflict between the
reference to the title and the reference to the number of such section, the
reference to the title shall govern absent manifest error. If any reference to
the number of a section (but not to any clause, sub-clause or subsection
thereof) of any Loan Document is followed immediately by a reference in
parenthesis to the title of a section of any Loan Document, the title reference
shall govern in case of direct conflict absent manifest error.

     Section 11. Notices

          All communications and notices hereunder shall be given as provided in the
Credit Agreement or, as the case may be, the Guaranty.

     Section 12. Severability

          The fact that any term or provision of this Agreement is held invalid,
illegal or unenforceable as to any person in any situation in any jurisdiction
shall not affect the validity, enforceability or legality of the remaining
terms or provisions hereof or the validity, enforceability or legality of such
offending term or provision in any other situation or jurisdiction or as
applied to any person

     Section 13. Successors

          The terms of this Amendment shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and assigns.

     Section 14. Waiver of Jury Trial

          EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION
OR PROCEEDING WITH RESPECT TO THIS AMENDMENT OR ANY OTHER LOAN DOCUMENT.

[SIGNATURE PAGES FOLLOW]

- 5 -

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers and general partners thereunto duly
authorized, as of the date first written above.

	 	 	 	 	 
	 	SUNTRON CORPORATION,

as Company and Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	Peter W. Harper 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	K*TEC OPERATING CORP.,

as Borrower

 	 
	 	By:  	/s/ Peter W. Harper
 	 
	 	 	Name:  	Peter W. Harper 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	EFTC OPERATING CORP.,

as Borrower

 	 
	 	By:  	/s/ Peter W. Harper
 	 
	 	 	Name:  	Peter W. Harper 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

[Signature Page to Amendment no. 1 to Suntron’s Amended and Restated Credit Agreement]

 

 

	 	 	 	 	 
	 	CITICORP USA, INC.,

as Administrative Agent and Lender

 	 
	 	By:  	/s/ Keith R. Gerding
 	 
	 	 	Name:  	Keith R. Gerding 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page to Amendment no. 1 to Suntron’s Amended and Restated Credit Agreement]

 

 

	 	 	 	 	 
	 	 	 
	 	Additional Guarantors:	 
	 	 	 
	 	RODNIC LLC,

as Guarantor	 
	 	 	 
	 	By: K*TEC Operating Corp.,

as its sole Member	 
	 	 	 
	 	By:  	  /s/ Peter W. Harper
 	 
	 	 	Name:  	Peter W. Harper 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	 	 
	 	CATHIO LLC,

as Guarantor	 
	 	 	 
	 	By: K*TEC Operating Corp.,

as its sole Member	 
	 	 	 
	 	By:  	                  /s/ Peter W. Harper
 	 
	 	 	Name:  	Peter W. Harper 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

	 
	

	

	

	 	 	 	 	 
	 	SUNTRON GCO, L.P.

(f/k/a K*TEC Electronics L.P.),

as Guarantor	 
	 	 	 
	 	By: RodniC LLC,

as its general partner	 
	 	 	 
	 	 	By: K*TEC Operating Corp.,

as its sole Member	 
	 	 	 
	 	By:  	                  /s/ Peter W. Harper
 	 
	 	 	Name:  	Peter W. Harper 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	SUNTRON-IOWA, INC.,

as Guarantor

 	 
	 	By:  	/s/ Peter W. Harper
 	 
	 	 	Name:  	Peter W. Harper 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

[Signature Page to Amendment no. 1 to Suntron’s Amended and Restated Credit Agreement]

 

 

	 	 	 	 	 
	 	SUNTRON-KANSAS, INC.

as Guarantor

 	 
	 	By:  	/s/ Peter W. Harper
 	 
	 	 	Name:  	Peter W. Harper 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	CURRENT ELECTRONICS, INC.,

as Guarantor

 	 
	 	By:  	/s/ Peter W. Harper
 	 
	 	 	Name:  	Peter W. Harper 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	RM ELECTRONICS, INC.,

as Guarantor

 	 
	 	By:  	/s/ Peter W. Harper
 	 
	 	 	Name:  	Peter W. Harper 	 
	 	 	Title:  	Chief Financial Officer<PAGE>

                                  Exhibit 10.1

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT is entered into effective the 16th day of January, 2004,
by and between GFY Foods, INC., a Nevada corporation (herein called the
"CORPORATION"), and Edward Schwalb (herein called the "EMPLOYEE").

1.   EMPLOYMENT. The CORPORATION hereby employs EMPLOYEE, and EMPLOYEE hereby
     accepts such employment, to serve as and in the capacity of President or
     such other capacity as may be determined by the Board of Directors of the
     CORPORATION upon and subject to the terms and conditions set forth herein.

2.   TERM OF EMPLOYMENT. The term of this Agreement, and the term of the
     employment of EMPLOYEE hereunder, shall be for a period of five (5) years
     beginning January 16, 2004 and ending December 31, 2008, unless sooner
     terminated in the manner provided herein. The term of this Agreement and of
     the employment of EMPLOYEE hereunder may be extended or renewed for such
     additional terms or periods and upon and subject to such additional terms
     and conditions as the parties may agree.

3.   DUTIES.
     A.  EMPLOYEE, during normal business hours, shall devote his best efforts
         and his entire time, attention and energy to the business and affairs
         of the CORPORATION. EMPLOYEE shall perform all duties normally and
         properly incident to the office or positions held by him and such
         further duties as may from time to time be assigned to him by the Board
         of Directors of the CORPORATION.
     B.  EMPLOYEE agrees to adhere to all existing rules and company policies of
         the CORPORATION, as well as any other procedures, duties and
         responsibilities that may be reasonably required of EMPLOYEE and
         promulgated by the CORPORATION, its executive officers and its Board of
         Directors.
     C.  During the term of this Agreement, EMPLOYEE shall not engage, directly
         or indirectly, in any activities competitive with any business which is
         now or which hereafter may be conducted by the CORPORATION, or its any
         of its subsidiaries.

4.   COMPENSATION. As compensation for the services rendered by EMPLOYEE during
     the term of this Agreement, the CORPORATION shall make the following
     payments to EMPLOYEE:
     A.  Cash compensation to be determined by the Board of Directors based upon
         performance and available capital.
     B.  A payment of two hundred and fifty million (250,000,000) shares of
         restricted common stock of CORPORATION. Such stock, along with other
         holdings by EMPLOYEE shall be non-dilutive and shall at all times
         during the term of this Agreement equal at least a seventy percent
         (70%) ownership of CORPORATION.
     C.  EMPLOYEE shall be due an annual bonus as determined by the Compensation
         Committee of the Board of Directors of CORPORATION. Such bonus may be
         paid in cash or stock form as determined by the Compensation Committee
         of the Board of Directors of CORPORATION. The CORPORATION shall not be
         obligated to pay any bonus under this subparagraph.

                                       1
<PAGE>

5.   EMPLOYEE BENEFITS. During the term of this Agreement, EMPLOYEE shall
     receive and be entitled to participate in all benefits customarily offered
     to or conferred upon other employees of the CORPORATION.

6.   TERMINATION OF EMPLOYMENT.
     A.  Upon the occurrence of any of the following events and the expiration
         of the period, if any, specified, this Agreement and the employment of
         EMPLOYEE hereunder shall terminate:
         (1)  The death of EMPLOYEE.
         (2)  The expiration of a period of three (3) business days after the
              delivery by EMPLOYEE of notice of resignation of EMPLOYEE as an
              employee of the CORPORATION.
         (3)  The "disability" of EMPLOYEE. The term "disability", as used
              herein, shall mean the inability or failure of EMPLOYEE, by reason
              of any medically demonstrable physical or mental condition, to
              perform his duties hereunder. The disability of EMPLOYEE shall be
              deemed to have occurred if: (i) the issuer of any disability
              income policy insuring EMPLOYEE shall have determined that
              EMPLOYEE is disabled, whether partially or totally, within the
              meaning of the provisions of such policy; (ii) EMPLOYEE shall be
              absent from work for a period of sixty (60) consecutive business
              days or two or more periods, each of which shall be of less than
              sixty (60) business days but all of which in the aggregate shall
              be of more than ninety (90) business days for any reason without
              the written notice of the CORPORATION or (iii) the CORPORATION
              shall have received written opinions from two duly licensed
              physicians that EMPLOYEE, by reason of any medically demonstrable
              physical or mental condition, is unable to perform his duties for
              the foreseeable future or that the continued performance of his
              duties will endanger his life.
         (4)  The misconduct of EMPLOYEE as evidenced by the following:
              (a)  The material breach by EMPLOYEE of any covenants of this
                   Agreement.
              (b)  The habitual neglect by EMPLOYEE of his duties as an
                   employee.
              (c)  The commission by EMPLOYEE of fraud, misappropriation,
                   embezzlement or the like.
              (d)  Any gross or lewd misbehavior, any material wrongdoing, any
                   criminal activity or the like on the part of the EMPLOYEE.
         (5)  A determination on the part of the Board of Directors of the
              CORPORATION of the inability or failure of EMPLOYEE to perform his
              duties hereunder in a reasonably satisfactory manner.

                                       2
<PAGE>

7.   CONFIDENTIAL INFORMATION AND TRADE SECRETS. As consideration for and to
     induce the employment of EMPLOYEE by the CORPORATION, EMPLOYEE hereby
     covenants and agrees that:
    A.   All information relating to or used in the business and operation of
         the CORPORATION including, but not limited to, data, records, computer
         programs, manuals, processes, methods, marketing programs and
         intangible rights and procedures, client and customer lists, and client
         lead lists whether prepared, compiled, developed or obtained by
         EMPLOYEE or by the CORPORATION prior to or during the term of this
         Agreement and the employment of EMPLOYEE hereunder, are and shall be
         confidential information and trade secrets which are the exclusive
         property of the CORPORATION.
    B.   All programs, customer and clients lists, computer programs, manuals,
         records, data and processes relating to or used in the business and
         operations of the CORPORATION or of any of its customers and made,
         first reduced to practice, devised or conceived by EMPLOYEE, alone or
         with others, during the term of this Agreement and the employment of
         EMPLOYEE hereunder, whether made, first reduced to practice, devised or
         conceived during or outside of regular working hours, on or away from
         the CORPORATION's premises or at the expense of the CORPORATION or of
         EMPLOYEE or of any other person, are and shall be confidential
         information and trade secrets which are the exclusive property of the
         CORPORATION. EMPLOYEE further agrees that he shall promptly and fully
         disclose and assign to the CORPORATION (or, if the CORPORATION shall
         otherwise direct EMPLOYEE in writing, as so directed by the
         CORPORATION) all rights and interests that he has or may have in and to
         all such programs, lists, records and data. All such matters are and
         shall be confidential information and trade secrets, which are the
         exclusive property of the CORPORATION whether or not so disclosed or
         assigned. EMPLOYEE shall fully cooperate with the CORPORATION and its
         representatives in preparing, and shall execute, acknowledge and
         deliver as directed by the CORPORATION, such instruments (including,
         but not limited to, assignments, applications for copyrights, trade
         names and trademarks) and take such other action as the CORPORATION may
         deem necessary or appropriate to evidence of effect the provisions of
         this paragraph.
    C.   All records, customer and client lists, programs, data, computer
         programs and other materials relating to confidential information and
         trade secrets which are the exclusive property of the CORPORATION,
         including, without limitation, material in written form or in a form
         produced or stored by any electrical or mechanical means or process,
         whether prepared, compiled or obtained by EMPLOYEE or by the
         CORPORATION or prior to or during the term of this Agreement and the
         employment of EMPLOYEE hereunder, are and shall be the exclusive
         property of the CORPORATION.
    D.   Except in the regular course of his employment by the CORPORATION
         hereunder or as the CORPORATION may expressly authorize or direct in
         writing, EMPLOYEE shall not, during or after the term of this Agreement
         and of his employment hereunder copy, reproduce, disclose or divulge to
         others, use or permit others to use any confidential information and
         trade secrets which are the property of the CORPORATION, or any
         records, client and customer lists, lead lists, data, computer

                                       3
<PAGE>

         programs, other materials relating to any such confidential information
         or trade secrets. EMPLOYEE further covenants and agrees that during the
         term of this Agreement and his employment by the CORPORATION he shall
         not remove from the custody and control of the CORPORATION any lists,
         data, recorders, computer programs and other materials relating to such
         confidential information and trade secrets and that upon termination of
         this Agreement and of his employment he shall deliver the same to the
         CORPORATION.

8.   EQUITABLE REMEDIES. The parties acknowledge and agree that in the event of
     a default or breach or of a threatened default or breach by EMPLOYEE of the
     provisions of Section 7 and 8 of this Agreement, the CORPORATION shall
     sustain irreparable injury and damages, the amount or extent of which
     cannot be measured in money and for which there does not and shall not
     exist any adequate remedy at law. Accordingly, each of the parties hereby
     agrees that in the event of a fault or breach or of a threatened default or
     breach by EMPLOYEE of the provisions of Section 7 and 8 of this Agreement,
     the CORPORATION shall be entitled to immediate injunctive relief and to
     specific performance and that in any legal action or proceeding for
     injunctive relief and specific performance the EMPLOYEE or CORORATION shall
     be deemed to have hereby waived, and shall not assert in such action or
     proceeding, the defense or claim that the CORPORATION has an adequate
     remedy at law or that an adequate remedy at law exists. The foregoing shall
     not, however, be deemed to limit or restrict the remedies at law or in
     equity of the CORPORATION for any default or breach or any threatened
     default or breach of the provisions of this Agreement. The covenants
     contained in this paragraph shall be construed as covenants independent of
     any other provisions of this Agreement, and the existence of any claim or
     cause of action by one party against the other shall not constitute a
     defense to the enforcement thereof.

9.   NOTICES. All notices, directions, consents, other communications to, upon,
     and between the parties shall be in writing and shall be deemed to have
     been given, delivered, made and received when sent or mailed by certified
     mail, postage prepaid and return receipt requested, addressed to the
     CORPORATION at its principal office and to EMPLOYEE at his residential
     address as it appears on the employment records or the CORPORATION.

10.  PRIOR AGREEMENTS. All prior agreements and understandings of every kind
     between the parties regarding the employment of EMPLOYEE by the CORPORATION
     are superseded by this Agreement and are hereby terminated.

11.  EFFECT. This Agreement shall be binding on and inure to the respective
     benefit of EMPLOYEE and the personal representative of EMPLOYEE and the
     CORPORATION and its successor and assigns.

12.  SEVERABILITY. The invalidity or unenforceability or any provision of this
     Agreement shall not affect the validity or enforceability of any other
     provision.

13.  MODIFICATION. No provision of this Agreement, including the provision of
     this paragraph, may be modified, deleted or amended in any manner except by
     an Agreement in writing executed by each of the parties.

                                       4
<PAGE>

14.  ASSIGNMENT. Neither this Agreement nor any interest herein may be assigned
     by either party.

15.  CONSTRUCTION. This Agreement is executed and delivered in the State of
     Illinois and shall be construed and enforced in accordance with the laws of
     such state.

16.  ORIGINAL COPIES. This Agreement may be executed in more than one
     counterpart, each of which shall be deemed an original and binding as
     against the signator.

17.  HEADINGS. The underlined headings herein are for convenience only and shall
     not affect the interpretation of this Agreement.

18.  ATTORNEYS' FEE. If either party brings an action to enforce his or its
     rights under this Agreement, in addition remedies to which such party may
     be entitled, the prevailing party shall be entitled to recover attorneys'
     fees and costs.

WITNESS the following signatures as of the above written date.

                  CORPORATION:       GFY FOODS, INC.
                                     A Nevada corporation

                                     By: /s/ Edward Schwalb
                                     -------------------------------------------
                                     Edward Schwalb, President and Sole Director

                  EMPLOYEE:          /s/ Edward Schwalb
                                     -------------------------------------------
                                     Edward Schwalb

                                       5

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