LOAN AGREEMENT
(LENDER)
FIRST NATIONAL BANK OF NEW ENGLAND
00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
AND
(BORROWER)
XXXXX-MIDLAND CORPORATION
0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
AND
(GUARANTORS)
Xxxxx-Midland Corporation, a Virginia corporation
Easi-Set Industries, Inc., a Virginia corporation
Xxxxx-Carolina Corporation, a North Carolina corporation
Concrete Safety Systems, Inc., a Virginia corporation
Midland Advertising & Design, Inc., a Virginia corporation
Your request for First National Bank of New England ("LENDER") to extend a loan
in the amount of $4,000,000 with a United States Department of Agriculture Rural
Business-Cooperative Service (f/k/a Farmers Home Administration, hereafter
referred to as "Agency") 80.00% Guarantee has been approved subject to the
following provisions:
1. Requirements:
(a) The Borrower shall pay a guaranty fee of 2% of the amount guaranteed
prior to the disbursement of the loan.
(b) The Borrower shall execute all instruments and agreements as Lender
may require in order to document the loan, including:
1. Promissory Note;
2. Commercial Loan Financial Condition Affidavits;
3. Mortgage Deed;
4. Guarantee Agreement;
5. Assignment of Lease with Right to Reassignment of Lease;
6. Lessors Agreement;
7. Environmental Indemnity Agreement;
8. Security Agreements;
9. UCC-1 financing statements;
10. Any such other instruments and agreements as Lender or Lender's
counsel may require in connection herewith.
2. This Authorization is subject to:
(a) Receipt by Lender of evidence that there has been no unremedied
adverse change since the date of application, or since any of the
preceding disbursements, in the financial or any other condition of
Borrower or Guarantors, which would warrant withholding or not
making any such disbursement or any further disbursement.
(b) The representations made by Borrower in its loan application, the
requirements or conditions set forth in Lender's application form,
including the supporting documents thereto, the conditions set forth
herein and any future conditions imposed by Lender (with prior
Agency approval).
3. Terms of Loan:
(a) Repayment term, interest rate(s) and maturity.
NOTE PAYABLE: The undersigned will pay principal and interest by
making payments in the initial amount of $37,087.27 on the first
day of each month beginning on August 1, 1998. The undersigned
will make these payments until they have paid in full all
principal and interest and any other sums due hereunder.
Notwithstanding the foregoing, the entire indebtedness evidenced
by this Note, including, but not limited to, all outstanding
principal and accrued and unpaid interest, shall be due and
payable in full on the twenty-third (23th) anniversary date of
this Note.
The undersigned's initial monthly payments shall be calculated in
accordance with the full amortization of the loan evidenced by
this Note by level monthly payments of principal and interest
over a twenty-three (23) year period at the interest rate
applicable on the date hereof. On each Adjustment Date (as
herein defined), the amount of the monthly payments will be
adjusted so as to provide for the full amortization of the then
outstanding principal at the interest rate established at each
Adjustment Date in level monthly payments of principal and
interest over the remaining term of the original twenty-three
(23) year amortization period.
Interest Rate
Interest shall accrue on the outstanding principal amount of this Note at
a per annum rate of one and one-half (1.50%) percentage points above
the Prime Rate on a floating basis. The initial interest rate
hereunder is ten (10.0%) percent. On October 1, 1998 and on the
first day of each, January, April, July, and October thereafter
until all sums due hereunder are paid in full (each being referred
to as an "Adjustment Date"), the interest rate on the unpaid
principal balance hereunder shall be adjusted, without notice or
demand, to a per annum rate of one and one-half percentage points
above the Prime Rate in effect on the applicable Adjustment Date (or
the following business day in the event that such Adjustment Date
falls on a Saturday, Sunday or holiday), which such rate shall
remain in effect until the succeeding Adjustment Date. Interest
hereunder shall be computed on a daily basis and on the basis of a
Three Hundred Sixty (360) day year and a thirty (30) day month. The
undersigned further agrees to pay all taxes levied or assessed on
this Note or the debt evidenced hereby against the holder of this
Note, and further agrees to pay all costs, expenses and attorneys'
fees incurred in any action to collect this Note or to defend,
protect, preserve, or realize upon or foreclose any mortgage or
security agreement securing this Note or to protect, defend,
preserve, foreclose or sustain the lien of said mortgage or security
agreement or in any litigation or controversy arising from or
connected with said mortgage, security agreement, or this Note. As
used herein, "Prime Rate" shall mean the lowest New York prime rate
as set forth in the money rate section of the Wall Street Journal
(or in any successor publication).
In the event of prepayment, the Borrower will pay a penalty of 5% of
the prepayment amount in year 1, 4% in year 2, 3% in year 3, 2%
inyear 2, and 1% in year 5. The Borrower may prepay the loan in part
or in full in years 6-23 without penalty, provided three weeks prior
written notice is given to Lender.
Holder should give written notice to the undersigned of each increase or
decrease in the interest (and change in installment amount, if
applicable) within thirty days after the effective date of each rate
adjustment; however, the fluctuation of the interest rate is not
contingent on whether the notice is given.
If the undersigned shall be in default in payment due on the
indebtedness herein and the Agency purchases its guaranteed
portion of said indebtedness, the rate of interest on both the
guaranteed and unguaranteed portions herein shall become fixed at
the rate in effect as of the date of default. If the undersigned
shall not be in default in payment when Agency purchases its
guaranteed portion, the rate of interest on both the guaranteed
and unguaranteed portions herein shall be fixed at the rate in
effect as of the date of purchase by Agency.
All payments received by the Lender, at the option of the Lender, shall
be applied first to any outstanding charges and expenses incurred by
the Lender in connection with this Note or any documents executed in
connection with this Note, then to any unpaid and accrued interest
and finally to the outstanding principal due under the Note. The
undersigned agrees that the interest shall accrue at the foregoing
rate on unpaid balance before and after maturity, by acceleration or
otherwise.
The Borrower hereby grants to the Lender and Holder hereof a lien and
right of set-off for all of the Borrower's liabilities to Lender or
Holder upon and against all of the Borrower's deposits, credits, and
other property now owned or hereafter in the possession or control
of Lender or Holder or in transit to. The Lender or Holder may at
any time may apply the same or any part thereof to any of the
Borrower's liabilities to Lender or Holder, whether or not matured
at the time of such application, at any time after the occurrence of
an "Event of Default" under the loan documents executed in
connection herewith.
Borrower agrees to pay a late charge equal to 5% of the payment amount due
if such payment is not received within ten days of the due date.
Funds received from the borrower will be applied first to interest
to the date of receipt, then to principal and then to the late fee.
The Borrower agrees that, in addition to other events of default stated
in the Note or related loan documents, each of the following shall
constitute an "event of default" under the Note:
1. Failure of Borrower or any Guarantor to pay or perform any of
Borrower's or Guarantor's liabilities or obligations to
Lender.
2. If Borrower or any Guarantor of any obligation of Borrower to
Lender or Holder shall be in default under any security
agreement, mortgage or other agreement governing, securing or
relating to this Loan.
(b) Use of Proceeds of Loan as follows (show specific uses for which
loan is authorized):
1. Approximately $2,895,376 for debt refinance to various
creditors as identified in Schedule A
2. Approximately $500,000 for building improvements
3. Approximately $409,000 for equipment
4. Approximately $195,624 for working capital and closing costs.
5. Balance, if any, to pay closing costs and working capital.
NOTE: DISBURSEMENT OF LOAN PROCEEDS SHALL BE BY TWO PARTY CHECKS (PAYABLE TO
BORROWER AND VENDOR, OR TO BORROWER AND CREDITOR), TO ASSURE THAT USE OF
PROCEEDS COMPLIES WITH THIS LOAN AUTHORIZATION.
(c) Collateral:
1. First mortgage on land and buildings located at 0000 Xxxxxxx
Xxxxx, Xxxxxxx XX.
2. First mortgage on 19.1 acres of raw land located at south Side
of Route 28, Midland VA.
3. First mortgage on land and buildings located at 0000 XX 00,
Xxxxxxxxxx, X.X.
4. Title Insurance in the amount of the loan and in form and
content satisfactory to Lender shall be obtained for all
mortgages and shall not contain any mechanics' lien or survey
exceptions.
5. A first security interest in all machinery and equipment,
including power driven machinery and equipment (including
titled motor vehicles), furniture and fixtures, leasehold
improvements, and general intangibles now owned, to be
acquired with loan proceeds or hereafter acquired together
with all replacements thereof, all attachments,
accessories, parts and tools belonging thereto or for use
in connection therewith and proceeds of the same.
UCC SEARCH BEFORE AND AFTER RECORDING REQUIRED.
----------------------------------------------
6. A second security interest in all accounts receivable and
inventory now owned, to be acquired with loan proceeds
or hereafter acquired together with all replacements
thereof, all attachments, accessories, parts and tools
belonging thereto or for use in connection therewith and
proceeds of the same subject only to a first security
interest held by First National Bank of New England having
an approximate unpaid balance of $500,000
UCC SEARCH BEFORE AND AFTER RECORDING REQUIRED
------------------------------------------------
7. The unlimited corporate gurantees of Xxxxx-Midland
Corporation, a Virginia corporation; Easi-Set Industries,
Inc., a Virginia corporation; Xxxxx-Carolina Corporation,
a North Carolina corporation; Concrete Safety Systems,
Inc., a Virginia corporation; and Midland Advertising
& Design, Inc., a Virginia corporation secured by first
security interests in all machinery and equipment,
including power driven machinery and equipment (excluding
titled motor vehicles), furniture and fixtures, leasehold
improvements, and general intangibles now owned, to be
acquired with loan proceeds or hereafter acquired together
with all replacements thereof, all attachments,
accessories, parts and tools belonging thereto or for use
in connection therewith and proceeds of the same and
second security interests in all accounts receivable
and inventory now owned, to be acquired with loan
proceeds or hereafter acquired together with all
replacements thereof, all attachments, accessories, parts
and tools belonging thereto or for use in connection
therewith and proceeds of the same subject only to a first
security interest held by First National Bank of New
England having an approximate unpaid balance of $500,000
UCC SEARCH BEFORE AND AFTER RECORDING REQUIRED
----------------------------------------------
8. Assignment of life insurance with acknowledgment of home
office on Xxxxxx Xxxxx in the amount of $1,000,000 which
shall be decreasing term or existing permanent type
insurance. Original policy to be retained by Lender. No
additional life insurance is to be purchased from business
income or assets without prior written approval of Agency.
Proceeds from life insurance policies shall be applied at
the time of death to repay the outstanding balance for the
following loans: (a) $4,000,000 Agency term loan; (b)
$500,000 Lender line of credit.
Note: Assignment of life insurance shall be by an absolute
assignment properly acknowledged by home office of
insurer. Lender shall not be named as beneficiary of the
policy.
9. Monthly tax escrow to be collected for all mortgaged
properties equal to 1/12th of the annual real estate tax
obligation.
4. To further induce Lender to make and Agency to guarantee this Loan, Lender
and Agency impose the following conditions:
(a) Execution of all documents required in Item 1 above.
(b) Reimbursable Expenses - Borrower will, on demand, reimburse Lender
for any and all expenses incurred, or which may be hereafter
incurred, by Lender from time to time in connection with or by
reason of Borrower's application for and the making and
administration of the Loan.
(c) Books, Records, and Reports - Corporate Borrower will at all times
keep proper books of account in a manner satisfactory to Lender
and/or Agency. Corporate Borrower hereby authorizes Lender or Agency
to make or cause to be made, at Corporate Borrower's expense and in
such manner and at such times as Lender or Agency may require, (a)
inspections and audits of any books, records and papers in the
custody or control of Corporate Borrower or others, relating
to Corporate Borrower's financial or business conditions,
including the making of copies thereof and extracts therefrom,
and (b) inspections and appraisals of any of Corporate Borrower's
assets. At a minimum, Lender will require an annual examination
to be conducted at Corporate Borrowers headquarters. Such
examination will inspect the books and records of the Corporate
Borrower and the collateral of the Lender. Corporate Borrower
will furnish to Lender and AGENCY for the twelve (12) month
period ending December 31, 1998 and annually thereafter (no later
than 3 months following the expiration of any such period) and at
such other times and in such form as Lender may prescribe,
Corporate Borrower's independent CPA-prepared audit-quality
consolidated financial statements including Balance Sheet, Profit
and Loss Statement, Cash Flow Statement, and supplemental
schedules of Cost of Goods Sold and Operating Expenses.
Corporate Borrower will submit to Lender quarterly prepared
financial statements prepared by management. Corporate Borrower
hereby authorizes all Federal, State, and municipal authorities
to furnish reports of examinations, records, and other
information from reports, returns, files and records of such
authorities upon request therefor by Lender or Agency.
(d) Borrower shall not execute any contracts for management consulting
services without prior approval of Lender and Agency.
(e) Distributions and Compensation - Borrower will not, without the
prior written consent of Lender or Agency (a) if Borrower is
a corporation, declare or pay any dividend or make any distribution
upon its capital stock, or purchase or retire any of its capital
stock, or consolidate or merge with any other company, or give any
preferential treatment, make any advance, directly or
indirectly, by way of loan, gift, bonus, or otherwise, to any
company directly or indirectly, controlling or affiliated with or
controlled by Borrower, or any other company, or to any officer,
director or employee of Borrower, or of any such company, (b) if
Borrower is a partnership or individual make any distribution of
assets of the business of Borrower, other than reasonable
compensation for services, or give any preferential treatment,
make any advance, directly or indirectly, by way of loan, gift,
bonus, or otherwise, to any partner or any of its employees, or to
any company directly or indirectly controlling or affiliated with
or controlled by Borrower, or any other company.
(f) Other Provisions:
1. Corporate Borrower shall not in any way alter its form of
business organization without the prior written consent of
Lender.
2. Prior to the first disbursement Lender shall be in receipt of
satisfactory evidence that all applicable taxes have been paid
and all zoning regulations and all licensing regulations have
been complied with.
INSURANCE PROVISIONS
3. Borrower shall provide and maintain hazard insurance on all
Real Estate mortgaged to lender in such amounts and for such
coverage as shall be satisfactory in all respects to Lender.
Said insurance shall be maintained for the life of the loan.
Policy coverage on real property shall designate Lender as
mortgagee under a standard or New York mortgage clause and shall
provide a minimum to ten (10) days written notice to Lender of
cancellation.
4. Prior to first disbursement, the lender must be in receipt of
evidence of the kind described below from an
independent authoritative source which is sufficient to indicate
to the lender that the properties are not in special flood
hazard areas (SFHA). Property is defined as the asset(s) financed
as a part of the AGENCY financial assistance and/or other
collateral deemed necessary by the field office. If such
evidence is not provided to the lender, the borrower must
obtain, and maintain, a Standard Flood Insurance Policy
(SFIP) or other appropriate special flood hazard insurance in
amounts and coverages equal to the lesser of (1) the insurable
value of the property or (2) the maximum amount of coverage
available. Borrower can show that special flood hazard
insurance has been acquired by submitting a copy of the policy
or providing evidence of premium payment for the appropriate
coverage to a licensed insurance agent. Borrower will not be
eligible for either any future disaster assistance or AGENCY
business loan assistance if the special flood hazard insurance
is not maintained as stipulated herein throughout the entire
term of this loan.
As evidence that the properties are not located within a special
flood hazard area subject to flooding, mudslides or erosions, the
lender may rely on a determination of special flood hazard area
status by the borrower's property & casualty insurance company,
real estate appraiser, title insurance company, a local government
Agency or other authoritative source acceptable to Agency which
would ordinarily have knowledge of the special flood hazard area
status for the properties.
5. Borrower and Gurantors shall provide and maintain hazard
insurance on all business personal property in such amounts and
for such coverage as shall be satisfactory in all respects
to lender. Said insurance shall be maintained for the life of
the loan. Policy coverage on personal property shall
designate Lender as loss payee under a standard lender's loss
payable clause and shall provide a minimum of 10 days written
notice to lender prior to cancellation.
STANDBY PROVISIONS
6. Standby Agreement of Xxxxx-Midland Corporation, covering the
total amount of Borrower's indebtedness to related parties in
the amount of $116,000
REAL ESTATE PROVISIONS
7. Prior to first disbursement on this loan, Lender to have
satisfactory evidence that all real estate taxes have been
paid.
CORPORATION PROVISIONS
8. Corporate Requirements of XXXXX-MIDLAND CORPORATION, :
Prior to first disbursement on this loan, XXXXX-MIDLAND CORPORATION,
to provide Lender with:
a) Resolution of Board of Directors
b) Certificate of Good Standing from the Secretary of State's
Office.
c) Affidavit of Secretary of Corporation listing names
of Stockholders and numbers of shares owned by each to be the
same as set forth in the loan application.
Borrower agrees that it will not authorize nor issue additional
shares of its capital stock, nor sell, transfer, or redeem any
of its outstanding shares of corporate stock without the prior
written consent of Lender.
9. Corporate Requirements of Xxxxx-Midland Corporation, a
Virginia corporation.:
Prior to first disbursement on this loan, Xxxxx-Midland Corporation,
a Virginia corporation to provide Lender with:
a) Resolution of Board of Directors
b) Certificate of Good Standing from the Secretary of
State's Office.
c) Affidavit of Secretary of Corporation listing names of
Stockholders and numbers of shares owned by each to be
the same as set forth in the loan application.
Guarantor agrees that it will not authorize nor issue additional
shares of its capital stock, nor sell, transfer, or redeem any
of its outstanding shares of corporate stock without the prior
written consent of Lender.
10. Corporate Requirements Easi-Set Industries, Inc., a Virginia
corporation.:
Prior to first disbursement on this loan, Easi-Set Industries,
Inc., a Virginia corporation. to provide Lender with:
a) Resolution of Board of Directors
b) Certificate of Good Standing from the Secretary of
State's Office.
c) Affidavit of Secretary of Corporation listing names of
Stockholders and numbers of shares owned by each to be
the same as set forth in the loan application.
Guarantor agrees that it will not authorize nor issue additional
shares of its capital stock, nor sell, transfer, or redeem any
of its outstanding shares of corporate stock without the prior
written consent of Lender.
11. Corporate Requirements Xxxxx-Carolina Corporation, a North
Carolina corporation:
Prior to first disbursement on this loan Xxxxx-Carolina Corporation,
a North Carolina corporation to provide Lender with:
a) Resolution of Board of Directors
b) Certificate of Good Standing from the Secretary of State's
Office.
c) Affidavit of Secretary of Corporation listing names of
Stockholders and numbers of shares owned by each to be the
same as set forth in the loan application.
Guarantor agrees that it will not authorize nor issue additional
shares of its capital stock, nor sell, transfer, or redeem any
of its outstanding shares of corporate stock without the prior
written consent of Lender.
12. Corporate Requirements Concrete Safety Systems, Inc., a
Virginia corporation:
Prior to first disbursement on this loan Concrete Safety Systems,
Inc., a Virginia corporation to provide Lender with:
a) Resolution of Board of Directors
b) Certificate of Good Standing from the Secretary of State's
Office.
c) Affidavit of Secretary of Corporation listing names of
Stockholders and numbers of shares owned by each to be the
same as set forth in the loan application.
Guarantor agrees that it will not authorize nor issue additional
shares of its capital stock, nor sell, transfer, or redeem any
of its outstanding shares of corporate stock without the prior
written consent of Lender.
13. Corporate Requirements Midland Advertising & Design, Inc., a
Virginia corporation:
Prior to first disbursement on this loan Midland Advertising &
Design, Inc., a Virginia corporation to provide Lender with:
a) Resolution of Board of Directors
b) Certificate of Good Standing from the Secretary of State's
Office.
c) Affidavit of Secretary of Corporation listing names of
Stockholders and numbers of shares owned by each to be the
same as set forth in the loan application.
Guarantor agrees that it will not authorize nor issue additional
shares of its capital stock, nor sell, transfer, or redeem any
of its outstanding shares of corporate stock without the prior
written consent of Lender.
14. Borrower agrees to comply with all existing and future state and
federal regulations governing the handling, storage and use
of any and all hazardous, toxic, or otherwise regulated,
substances or materials; and further covenants that he will
permit no such materials or substances or by-products or
wastes thereof, to be permanently stored at the facility,
and that borrower will operate the facility in such a
manner that the site will remain free of contaminating
materials, wastes, by products or substances.
15. Borrower agrees to comply with all existing and future state and federal
regulations governing the maintenance and emplacement of
underground storage tanks and further covenants that borrower
will permit no petroleum base waste or hazardous waste to be
stored at the site, and that he will operate the business in
such a manner that the site will remain free of such
contamination waste.
MISCELLANEOUS PROVISIONS
16. Unfinanced fixed asset expenditures are limited to $300,000 per annum for
a five year period.
17. Tangible net worth of Borrower shall be at least 10% of tangible assets
upon closing the $4,000,000 loan and shall be evidenced by a
proforma balance sheet prepared by a CPA.
18. Corporate Borrower's debt to net worth ratio, as defined under generally
accepted accounting principles, shall not exceed 4.00x at
12/31/97, 3.75x at 12/31/98, and 3.50x at 12/31/99 and
annually thereafter, measured annually based on the Borrower's
12/31 fiscal year end CPA-audited financial statements.
19. Corporate Borrower shall maintain minimum working capital, as defined
under generally accepted accounting principles, of at least $1
(i.e. positive working capital), measured annually based on
the Borrower's 12/31 fiscal year end CPA-audited financial
statements.
20. Corporate Borrower's current ratio, as defined under generally accepted
accounting principles, shall be at least 1.0x, measured
annually based on the Borrower's 12/31 fiscal year end
CPA-audited financial statements.
21. Borrower will not, prior to payment in full of the indebtedness
evidenced by the Note, without prior written consent of the
holder of the Note, pledge, mortgage or otherwise cause or
permit to be encumbered in any manner whatsoever any of
Borrower's property or assets, whether then owned or
thereafter acquired. However, the holder of the Note will
permit Chattel Mortgages on purchased equipment not to
exceed $200,000 on an annual basis so long as the Borrower
is not in default of any of its obligations.
22. Total Annual salaries or drawings by Xxxxxx Xxxxx including bonuses,
commissions or other compensation, shall be limited to
$350,000, with annual increases not to exceed 20%, provided
that Xxxxx-Midland Corporation reports a net profit.
23. During the term of the Loan, the Borrower shall not assume or agree to
pay any debt, liability, or obligation of others.
24. Opinion Letter of Borrower's Counsel.
5. Parties Affected - This Agreement shall be binding upon Borrower and
Borrower's successors and assigns. No provision stated herein shall be
waived without the prior written consent of Agency. The Loan shall be
administered as provided in the Guaranty Agreement. The terms and
conditions of this Authorization and Loan Agreement shall survive the Loan
Closing and shall not be merged into the Loan Documentation
notwithstanding any provisions to the contrary contained herein.
FIRST NATIONAL BANK OF NEW ENGLAND
------------------------------------------------------------------------------
By Xxxx Xxxxxx, Vice President Date
Borrower hereby agrees to the conditions imposed herein and further agrees that
the terms and conditions herein are for the benefit of, and may be enforced by,
Lender and Agency. This Authorization and Loan Agreement and amendments
constitute the Loan Agreement between Lender and Borrower.
------------------------------------------------------------------------------
XXXXX-MIDLAND CORPORATION, Title Date
------------------------------------------------------------------------------
Xxxxx-Midland Corporation, a Virginia corporation Title Date
------------------------------------------------------------------------------
Easi-Set Industries, Inc., a Virginia corporation Title Date
------------------------------------------------------------------------------
Xxxxx-Carolina Corporation, a North Carolina
corporation. Title Date
------------------------------------------------------------------------------
Concrete Safety Systems, Inc., a Virginia corporation Title Date
------------------------------------------------------------------------------
Midland Advertising & Design, Inc., a Virginia
corporation Title Date
NOTE: Corporate applicants must execute Authorization in corporate name, by duly
authorized officer, and seal must be affixed and duly attested; partnership
applicants must execute in firm name, together with signature of a General
Partner.
------------------------------------------------------------------------------
INSTRUCTIONS: INDICATE THE PARAGRAPHS BEING CERTIFIED AND AGREED TO BY
HAVING THE OBLIGOR INITIAL NEXT TO THE APPROPRIATE PARAGRAPHS, PRIOR TO
SIGNING.
------------------------------------------------------------------------------
CERTIFICATION AND LOAN AGREEMENT
The United States Department of Agriculture Rural Business Cooperative
Service (f/k/a/ Farmers Home Administration) ("Agency") in order to induce FIRST
NATIONAL BANK OF NEW ENGLAND ("Lender") to make a guaranteed Loan ("Loan") to
XXXXX-MIDLAND CORPORATION, a Delaware corporation ("Borrower"), and in
consideration therefor, Borrower and (if applicable)___________N/A
________________ ("Operating Company"), XXXXX-MIDLAND CORPORATION,
a Virginia corporation, XXXXX-CAROLINA CORPORATION, a North Carolina
corporation, EASI-SET INDUSTRIES, INC., a Virginia corporation, CONCRETE SAFETY
SYSTEMS, INC., a Virginia corporation, and MIDLAND ADVERTISING & DESIGN, INC., a
Virginia corporation, the guarantors of the Loan (collectively, the
"Guarantors") (the Borrower, Operating Company, if applicable and the Guarantors
are singularly or collectively, "Obligor") hereby certifies to, and agrees and
covenants with, the Lender and the Agency and their respective successors and
assigns, as follows:
I. CERTIFICATIONS
The Obligor hereby certifies:
____a. Adverse Change - That there has been no material adverse change in
Obligor's financial condition, organization, operations or fixed assets
or mortgaged real estate since the date the Loan application was
signed.
____b. [INTENTIONALLY DELETED]
____c. Current Taxes - That Obligor is current on all federal, state and local
taxes, including, but not limited to, income taxes, payroll taxes, real
estate taxes and sales taxes.
____d. Environmental - that:
1) At the time Obligor submitted the Loan application, Obligor was in
material compliance with all local, state and federal environmental
laws and regulations pertaining to environmental contamination;
2) Obligor has complied, and will continue to comply, with these laws
and regulations;
3) Obligor has no knowledge of any environmental contamination of any
real or personal property pledged as collateral of the Loan which
violates any such laws and regulations (other than what was
disclosed in connection with the Environmental Investigation of the
Virginia and North Carolina properties performed by EMG, dated
March 18 and March 26, 1998);
4) Obligor assumes full responsibility for all costs incurred in any
clean-up of environmental contamination and agrees to indemnify and
hold harmless Lender and the Agency against payment of any such
costs (Lender or Agency may require Obligor to execute a separate
indemnification agreement);
5) Until full repayment of Loan, Obligor will promptly notify Lender
and the Agency if it knows, suspects or believes there may be any
environmental contamination in or around the real property securing
the Loan, or if Obligor and/or such property are subject to any
investigation or enforcement action by any Governmental agency
pertaining to any environmental contamination of the property.
____e. Bankruptcy - That no petition in bankruptcy has been filed by, or to
the undersigneds' knowledge, against the Obligor or any Guarantor of
the Loan as of the date hereof.
____f. Liens - That within the preceding thirty (30) days, neither the Obligor
nor any Guarantor of the Loan has granted a security interest in any of
the collateral given as security for the Loan, nor has the Obligor or
any such Guarantor suffered the imposition of any involuntary and/or
judicial liens or encumbrances upon the loan collateral.
____g. Legal Proceedings - That there are no pending, or to the undersigneds'
knowledge, threatened legal proceedings to which the Obligor or any
Guarantor is a party, or to which the loan collateral or mortgaged real
estate are subject, nor any contingent liabilities of the Obligor or
any Guarantor which will adversely affect the transactions contemplated
in connection with the Loan, except as may be disclosed in the Loan
application or in an addendum hereto.
____h. Obligations - That the financial obligations of the Obligor and each
Guarantor of the Loan are current and not in material default. Obligor
and any such Guarantor are not in material default under any current
agreement or obligations binding upon Obligor or any such Guarantor,
and the Loan will not violate or be in conflict with or constitute a
default under any guaranty, obligation or agreement to which Obligor or
any Guarantor are bound.
____i. No Breach - That neither the execution and delivery of the Loan
agreements, the consummation of the transactions contemplated
thereby, nor the fulfillment of or compliance with the terms and
conditions of such agreements is prevented by, limited by, or
conflicts with or results in a breach of the terms, conditions or
provisions of any restriction or any evidence of indebtedness,
agreement or instrument of whatever nature to which Obligor or any
Guarantor are now a party or by which Obligor or any Guarantor are
bound, or constitutes a default under any of the foregoing.
____j. Mechanics Liens - That within the last ninety (90) days, including
the date hereof, no person, firm or corporation has furnished any
labor, services or materials in connection with the construction or
repair of any buildings or improvements on any of the mortgaged real
estate, or on any adjoining property of the mortgagor, the
obligations for which have not been paid, and that no person, firm
or corporation is entitled to any mechanic's lien on said mortgaged
real estate.
___k. Execution - That all parties to the Loan agreements have executed the
documents freely and voluntarily, after due examination and study of
the terms and conditions thereof, for good and fair consideration
received by them as of the date of execution.
____l. Capacity - That no party to the Loan agreements is presently under
legal, physical, mental or contractual disability, so as to be
prohibited from, or incapable of, consummating the Loan transaction
and/or performing their obligations and duties in accordance with the
terms and provisions of the Loan agreements.
____m. Mortgaged Premises - That the mortgagor of any mortgaged real estate
has good and indefeasible right, title and interest in fee simple in
and to the premises, and that all necessary governmental permits and
approvals for the present use thereof, including, without limitation,
subdivision and occupancy approval, have been obtained.
____n. Legal Representation - That at the time of the closing, the undersigned
was not represented by the Law Firm of Xxxxxx, Xxxxx & Xxxxxxxx, P.C.
or Xxxxxxx & Xxxxxxxxx LLP nor any agent or representative thereof, nor
did they pay any fee or compensation to the Law Firm of Xxxxxx, Xxxxx &
Xxxxxxxx, P.C. or Xxxxxxx & Xxxxxxxxx LLP for personal representation
in this transaction.
____o. [INTENTIONALLY DELETED].
____p. Taxpayer Identification Numbers - That the correct taxpayer
identification numbers for the undersigned are as follows:
NAME TAXPAYER I.D. NO.
Xxxxx-Midland Corporation, a 00-0000000
Virginia corporation
Xxxxx-Carolina Corporation, a 00-0000000
North Carolina corporation
Concrete Safety Systems, Inc., a 00-0000000
Virginia corporation
Easi-Set Industries, Inc., a 00-0000000
Virginia corporation
Midland Advertising & Design, Inc. 00-0000000
A Virginia corporation
____q. Commercial Transaction - That the Loan is a commercial transaction, and
the documents delivered to the Lender in connection with the Loan,
including, without limitation, the Note, the Deed(s) of Trust and
Security Agreement, are executed and delivered as part of a commercial
transaction.
____r. ERISA - That the Obligor and each Subsidiary or Affiliate of Obligor is
in compliance in all material respects with all applicable provisions
of the Employee Retirement Income Security Act of 1974 ("ERISA"), as it
may be amended from time to time.
____s. Organization - That Xxxxx-Midland Corporation, Easi-Set Industries,
Inc., Concrete Safety Systems, Inc. and Midland Advertising &
Design, Inc. are corporations duly organized under the laws of the
Commonwealth of Virginia with a principal place of business at 0000
Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000; that Xxxxx-Midland
Corporation, the Borrower, is a corporation organized under the laws
of the State of Delaware with a principal place of business at 0000
Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000; and that Xxxxx-Carolina
Corporation is a corporation duly organized under the laws of the
State of North Carolina with a principal place of business at 0000
Xxxxxxx 00, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000.
That _______N/A___________ is a partnership duly organized under the
laws of the State of ______N/A__________ with a principal place of
business _________N/A_____________.
That _______N/A___________ is a limited liability company duly
organized under the laws of the State of ______N/A__________ with a
principal place of business at __________N/A_______________.
____t. Other
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
II. AFFIRMATIVE COVENANTS
The Obligor shall, and hereby agrees and covenants to:
____a. Reimbursable Expenses - Reimburse Lender for expenses incurred in
the making and administration of the Loan.
____b. Books, Records and Reports -
(i) Keep proper books of account in a manner satisfactory to
Lender;
(ii) Furnish year-end statements to Lender within ________ (__) days
(if not filled in then one hundred twenty (120) days) of fiscal
year end;
(iii) Furnish additional financial statements or reports whenever
Lender requests them;
(iv) Allow Lender and/or the Agency to:
(A) Inspect and audit books, records and papers relating to
Obligor's financial or business condition; and
(B) Inspect and appraise any of Obligor's assets; and
(C) Allow all government authorities to furnish reports of
examinations, or any records pertaining to Obligor, upon
request by Lender or the Agency.
____c. [INTENTIONALLY DELETED]
____d. American-Made Products - To the extent feasible, purchase only
American-made equipment and products with the proceeds of the Loan.
____e. Taxes - Pay all federal, state and local taxes, including, without
limitation, income, payroll, real estate and sales taxes of the
Obligor's business when they come due.
____f. Occupancy - Occupy, at all times during the term of the Loan, at least
51% of the total square footage and 100% of the renovated square
footage of rentable property. Obligor certifies that it will not use
Loan proceeds to improve or renovate any of the space leased to third
parties.
____g. Other Documents - Provide Lender with all additional certifications,
documents or other information Lender is required to obtain from
Obligor or any third party pursuant to the Authorization issued by the
Agency to Lender in connection with the Loan (the "Authorization");
____h. Execution - Execute a note and any other documents required by
Lender;
____i. Compliance with Authorization - Do everything necessary for Lender
to comply with the terms and conditions of the Authorization,
including, without limitation, acquire and maintain for the term of
the Loan all insurance required by the Lender for such amounts and
in such forms as the Lender may require, including, without
limitation, real estate hazard insurance, personal property hazard
insurance, flood insurance, life insurance and liability insurance.
Any and all such policies shall contain all endorsements or special
clauses as may be required by the Authorization.
____j. Other -
___________________________NONE______________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
III. NEGATIVE COVENANTS
The Obligor shall not, without Lender's prior written consent:
_____a. Distributions - Make any distribution of company assets that will
adversely affect the financial condition of the Obligor.
_____b. Ownership Changes - Change the ownership structure or interests in
the Obligor during the term of the Loan.
_____c. Transfer of Assets - Sell, lease, pledge, encumber (except by purchase
money liens on property acquired after the date of the Note), or
otherwise dispose of any of Obligor's property or assets, except in the
ordinary course of business.
_____d. Fixed Asset Limitation - Acquire by purchase or lease agreement any
fixed assets totaling more than $500,000 in any year with no more than
$300,000 for unfinanced expenditures for a five year period, and
$200,000 for financed expenditures.
_____e. Location Limitation - Acquire by purchase or by lease any additional
locations.
_____f. Limitation on Compensation - Give annual increases to compensation of
corporate officers in excess of five percent (5%). No increases may be
made unless a profit was earned in the most recent fiscal year and
Borrower is in compliance with the terms and conditions of this
Agreement.
_____g. Other
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
IV. MISCELLANEOUS
_____a. The terms and conditions hereof shall be binding upon each and every
Obligor and shall inure to the benefit of the Lender and its successors
and assigns.
_____b. The terms and conditions hereof shall survive the closing of the Loan.
_____c. If any Obligor fails to abide by any of the agreements and/or
covenants contained herein or in the Authorization (as it applies to
any such Obligor), and/or if any of the certifications made herein
proves at any time to be incorrect or untrue, it shall constitute an
event of default under the documents evidencing, securing and/or
governing the Loan, immediately entitling the Lender to any and all
rights and remedies it may have thereunder, including without
limitation, the right to accelerate all sums due under the Loan.
This Certification and Loan Agreement is executed under seal this 25
day of June, 1998.
WITNESS/ATTEST: BORROWER:
XXXXX-MIDLAND CORPORATION, a Delaware
corporation
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxx [SEAL]
----------------------------- ------------------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxx
Title: President
WITNESS/ATTEST: GUARANTOR:
XXXXX-MIDLAND CORPORATION,
a Virginia corporation
By: /s/ Xxxxxx X. Xxxxx [SEAL]
----------------------------
Name: Xxxxxx X. Xxxxx
Title: President
EASI-SET INDUSTRIES, INC.,
a Virginia corporation
By: /s/ Xxxxxx X. Xxxxx [SEAL]
----------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman of the Board
XXXXX-CAROLINA CORPORATION,
a North Carolina corporation
By: /s/ Xxxxxx X. Xxxxx [SEAL]
----------------------------
Name: Xxxxxx X. Xxxxx
Title: President
CONCRETE SAFETY SYSTEMS, INC.,
a Virginia corporation
By: /s/ Xxxxxx X. Xxxxx [SEAL]
----------------------------
Name: Xxxxxx X. Xxxxx
Title: President
MIDLAND ADVERTISING & DESIGN, INC.,
a Virginia corporation
By: /s/ Xxxxxx X. Xxxxx [SEAL]
----------------------------
Name: Xxxxxx X. Xxxxx
Title: President
COMMONWEALTH OF VIRGINIA )
) to wit:
CITY OF RICHMOND )
--------
The foregoing instrument was acknowledged before me in my jurisdiction
aforesaid, this 25th day of June, 1998 by Xxxxxx X. Xxxxx, President of
XXXXX-MIDLAND CORPORATION, a Delaware corporation, on behalf of the corporation.
[NOTARIAL SEAL] /s/ Xxxxxx X. Xxxx
--------------------------
Notary Public
My Commission Expires: June 30, 1999
---------------
* * *
COMMONWEALTH OF VIRGINIA )
) to wit:
CITY OF RICHMOND )
--------
The foregoing instrument was acknowledged before me in my jurisdiction
aforesaid, this 25th day of June, 1998 by Xxxxxx X. Xxxxx, President of
XXXXX-MIDLAND CORPORATION, a Virginia corporation, on behalf of the corporation.
[NOTARIAL SEAL] /s/ Xxxxxx X. Xxxx
-----------------------------
Notary Public
My Commission Expires: June 30, 1999
----------------
COMMONWEALTH OF VIRGINIA )
) to wit:
CITY OF RICHMOND )
--------
The foregoing instrument was acknowledged before me in my jurisdiction
aforesaid, this 25th day of June, 1998 by Xxxxxx X. Xxxxx, Chairman of the Board
of EASI-SET INDUSTRIES, INC., a Virginia corporation, on behalf of the
corporation.
[NOTARIAL SEAL] Xxxxxx X. Xxxx
-------------------------
Notary Public
My Commission Expires: June 30, 1999
-------------
* * *
COMMONWEALTH OF VIRGINIA )
) to wit:
CITY OF RICHMOND )
I, a Notary Public of the County and State aforesaid, certify that Xxxxxx
X. Xxxxxx personally appeared before me this day and acknowledged that he is
Secretary of Xxxxx-Carolina Corporation, a North Carolina corporation, and that
by authority duly given and as an act of the corporation, the foregoing
instrument was signed in its name by its President, sealed with its corporate
seal and attested by him as its Secretary.
Witness my hand and official stamp or seal, this 25th day of June, 1998.
[NOTARIAL SEAL] /s/ Xxxxxx X. Xxxx
------------------------
Notary Public
My Commission Expires: June 30, 1999
---------------
COMMONWEALTH OF VIRGINIA )
) to wit:
CITY OF RICHMOND )
The foregoing instrument was acknowledged before me in my jurisdiction
aforesaid, this 25th day of June, 1998 by Xxxxxx X. Xxxxx, President of CONCRETE
SAFETY SYSTEMS, INC., a Virginia corporation, on behalf of the corporation.
[NOTARIAL SEAL] /s/ Xxxxxx X. Xxxx
--------------------------
Notary Public
My Commission Expires: June 30, 1999
-------------
* * *
COMMONWEALTH OF VIRGINIA )
) to wit:
CITY OF RICHMOND )
The foregoing instrument was acknowledged before me in my jurisdiction
aforesaid, this 25th day of June, 1998 by Xxxxxx X. Xxxxx, President of MIDLAND
ADVERTISING & DESIGN, INC., a Virginia corporation, on behalf of the
corporation.
[NOTARIAL SEAL] /s/ Xxxxxx X. Xxxx
--------------------------------------
Notary Public
My Commission Expires: June 30, 1999
-------------
