AMENDMENT OF LOAN AGREEMENT
THIS AMENDMENT OF LOAN AGREEMENT is executed this May 28, 2003, by
GALAXY NUTRITIONAL FOODS, INC., a Delaware corporation f/k/a GALAXY FOODS
COMPANY, a Delaware corporation ("Borrower"), and is consented to by
SOUTHTRUST BANK, ("Lender"), and is made with regard to the following
matters:
R E C I T A L S:
A. On or about March 10, 2000, Borrower executed a loan agreement
(the "Loan Agreement") in favor of Lender setting forth the terms and
conditions upon which the Lender was willing to lend the Borrower the sum
of EIGHT MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($8,500,000.00)
in order to refinance and retire existing indebtedness of Borrower and to
provide the Borrower with financing for the acquisition of new equipment,
which loan was evidenced by a Note dated March 10, 2000, in the sum of
EIGHT MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($8,500,000.00),
which was renewed and increased by a future advance in the sum of
$1,500,000.00, as evidenced by that certain Renewal Promissory Note dated
September 15, 2000, in the sum of TEN MILLION AND NO/100 DOLLARS
($10,000,000.00) and was secured by a Security Agreement dated March 10,
2000, encumbering certain collateral of the Borrower as referenced in said
Security Agreement; and
B. Certain terms of the Loan Agreement have previously been amended;
and
C. Borrower has again requested Lender to amend the terms of the
Loan Agreement and Lender is agreeable to such amendment.
THEREFORE, for and in consideration of TEN AND NO/100 DOLLARS ($10.00)
and for other valuable consideration received by the parties, it is hereby
agreed as follows:
1. Section 1.02, definition of Funded Debt, is hereby modified such that
the definition of Funded Debt shall not include trade payables, trade
credit or accrued liabilities incurred in the ordinary course of business.
2. Section 1.02, definition of Interest Rate, is hereby modified to read
as follows:
"means the applicable rate of interest to be borne by the Note (except
when the Default Rate is in effect) with respect to the Loan, such
rate shall be a floating rate calculated at an annual rate equal to
one percent (1.0%) per annum in excess of the SOUTHTRUST BANK Base
Rate of Interest in effect from time to time calculated on a daily
moving basis upon the principal balance hereof from time to time
outstanding, but in no event to exceed the maximum rate allowed by
Florida Law, as amended, or as preempted and prescribed from time to
time by the Laws of the United States of America or any rule or
regulation of any department or agency thereof. The Base Rate of
Interest of SOUTHTRUST BANK shall be that rate of interest (but not
necessarily the best or lowest rate charged borrowing customers of
SOUTHTRUST BANK) described by it as its Base Rate of Interest, whether
or not such rate shall be otherwise published, as such rate shall vary
from time to time, and each adjustment shall be effective on the day
the change occurs."
3. Section 1.02, definition of Note, is hereby modified to read as
follows:
"means that certain Renewal Promissory Note dated May 28, 2003, made
by the Borrower to the order of the Bank in the amount of "TEN MILLION
ONE HUNDRED THIRTY-ONE THOUSAND NINE HUNDRED EIGHTY-FOUR AND 85/100
DOLLARS ($10,131,984.85)."
4. Section 2.01, subsection (a), is hereby modified to read as follows:
"The indebtedness of the Borrower under the Loan shall be evidenced by
the Note. Principal and interest shall be repaid as set forth in the
Note."
5. Section 8.03, Addresses for Notices, Etc., is hereby modified such
that all notices sent to the Bank shall also be sent to the following
address:
SOUTHTRUST BANK
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▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
6. Section 5.01(a) Accounting, Financial Statements, Etc., is hereby
amended by deleting therefrom subsections (i), (ii) and (iv) and, in lieu
thereof, substituting the following:
"(i) Within ten (10) days after filing with the Securities and
Exchange Commission the following: (i) a copy of Borrower's annual report
on Form 10-K; and (ii) a copy of Borrower's quarterly reports on Form 10-Q.
Such reports may by furnished by email and will be deemed furnished if they
are publicly available and accessible.
(ii) Intentionally omitted.
(iv) Intentionally omitted."
7. Section 5.01(j) Tangible Net Worth, is hereby amended to read as
follows:
"(j) Tangible Net Worth. The Borrower must have a minimum
Tangible Net Worth equal to at least Eleven Million and No/100 Dollars
($11,000,000.00). Preferred stock shall be excluded for the purposes of
calculating Tangible Net Worth."
8. Section 5.01(k) Total Liabilities to Tangible Net Worth, is hereby
amended to read as follows:
"(k) Total Liabilities to Tangible Net Worth, The Borrower shall
maintain a ratio of Total Liabilities to Tangible Net Worth of no more than
2.50 to 1.00 as calculated for any rolling four quarter period, which shall
be measured quarterly. Preferred stock shall be excluded for the purposes
of calculating Tangible Net Worth."
9. Section 5.01(l) Maximum Funded Debt to EBITDA, is hereby amended to
read as follows:
"(l) Maximum Funded Debt to EBITDA The Borrower shall maintain
a ratio of maximum Funded Debt to EBITDA of not greater than 3.25 to 1 as
of, and to be measured at, March 31, 2004 and the same date of each year
thereafter until all of the obligations have been repaid. In the event of
a material expansion of the Borrower's manufacturing facilities, Bank
agrees to readdress this covenant. Non-cash stock expense/benefit shall be
excluded for the purposes of calculating EBITDA."
10. Other than as specifically set forth herein above, the terms and
provisions of the Loan Agreement shall remain the same and in full force
and effect.
IN WITNESS WHEREOF, the undersigned parties have executed this
document effective the day and year first above written.
GALAXY NUTRITIONAL FOODS, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. NEW
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▇▇▇▇▇▇▇▇▇▇▇ ▇. NEW
Chief Executive Officer
SOUTHTRUST BANK
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇, Group Vice President
