EXHIBIT (a)
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, made as of the 14th
day of June, 1996, by and between XXXXXXXX'X FOODS, INC. , a Virginia
corporation (the "Borrower), and CRESTAR BANK, a Virginia banking corporation
formerly known as United Virginia Bank (the "Bank"), provides as follows:
The Borrower and the Bank are parties to that certain Amended and Restated
Revolving Credit Agreement dated as of November 15, 1994, as amended by a First
Amendment to Revolving Credit Agreement dated as of September 13, 1995 and
letter agreements dated March 25 and March 29, 1996 (collectively, the
"Agreement"). The parties desire to amend and restate the Agreement as
hereinafter set forth.
SECTION 1. DEFINITIONS.
Capitalized terms used in this Agreement shall have the meanings specified
in Annex I hereto (unless otherwise defined herein).
SECTION 2. CREDIT COMMITMENTS.
2.1 Revolving Credit Loans. The Bank has made and, subject to the terms and
conditions herein set forth, shall make revolving credit loans (the "Revolving
Credit Loans") to the Borrower, from time to time during the Commitment Period
in amounts not to exceed, in the aggregate outstanding at any one time, the
lesser of (i) the Borrowing Base, or (ii) $7,500,000 (the "Revolving Credit
Commitment"). The Revolving Credit Loans shall be evidenced by a promissory note
in the form attached hereto as Exhibit A (the "Revolving Credit Note"). During
the Commitment Period, the Borrower may use the Commitment by borrowing,
prepaying the Revolving Credit Loans in whole or in part without premium or
penalty, and reborrowing, all in accordance with the terms and conditions
hereof.
2.2 Term Loan. Subject to and upon the terms and conditions herein set
forth, the Bank shall make a term loan (the "Term Loan" and, collectively with
the Revolving Credit Loans,
the "Loans") to the Borrower on the Closing Date in the principal amount of
$1,750,000. The Term Loan shall be evidenced by a promissory note in the form
attached hereto as Exhibit B (the "Term Loan Note" and, collectively with the
Revolving Credit Note, the "Notes").
SECTION 3. REPRESENTATIONS AND WARRANTIES.
In order to induce the Bank to enter into this Agreement and to make the
Loans, the Borrower makes the following representations, covenants and
warranties which shall survive the execution and delivery of this Agreement and
the other documents and instruments referred to herein:
3.1 Status. Each of the Borrower and the Subsidiaries is a duly organized
and validly existing corporation in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power and authority to
own or hold under lease its property and assets, to transact the business in
which it is engaged, to enter into and perform this Agreement and the other Loan
Documents to which it is party, and, with respect to the Borrower, to borrow
hereunder; and each of the Borrower and the Subsidiaries is duly qualified or
licensed as a foreign corporation in good standing in each jurisdiction where
failure to so qualify would have a material adverse effect on the business or
assets of the Borrower and the Subsidiaries, taken as a whole.
3.2 Compliance with Other Instruments. Neither the Borrower nor any
Subsidiary is in material default under any Material Agreement to which it is a
party, and neither the execution, delivery or performance of this Agreement and
the other Loan Documents, nor the consummation of the transactions herein or
therein contemplated, nor compliance with the terms and provisions hereof or
thereof, will contravene any provision of law, statute, rule or regulation to
which the Borrower or the Subsidiaries is subject or any judgment, decree,
franchise, order or permit applicable to the Borrower or the Subsidiaries or
will conflict or will be inconsistent with or will result in any breach of, any
of the terms, covenants, conditions or provisions of, or constitute a default
under, or, except as provided by the Security Documents, result in the creation
or imposition of (or the obligation to create or impose) any Lien upon any of
the property or assets of the Borrower or the Subsidiaries (other than Permitted
Encumbrances) pursuant to, the terms of any indenture, mortgage, deed of trust
or Material Agreement to which the Borrower or a Subsidiary is a signatory or by
which it is bound or to which it may be subject or violate any provision the
certificate of incorporation or bylaws of the Borrower or a Subsidiary.
3.3 Litigation. There are no actions, suits or proceedings pending or, to
the knowledge of the Borrower, threatened, against
or affecting the Borrower or the Subsidiaries before any court or before any
governmental or administrative body or agency, which, if adversely determined,
would have a material adverse effect on the business or assets of the Borrower
and the Subsidiaries, taken as a whole.
3.4 Compliance with Law. Except for (i) matters which do not exceed a sum
in question in excess of $75,000 individually, or in the aggregate exceed the
sum in question of $250,000 or (ii) matters which exceed a sum in question in
excess of $75,000 individually, or in the aggregate exceed the sum in question
of $250,000, but which will not materially adversely affect the business or
operation of the Borrower and the Subsidiaries, taken as a whole: (a) all
business and operations of the Borrower and the Subsidiaries have been and are
being conducted in accordance with all applicable laws, rules and regulations of
all Federal, state, local and other governmental authorities including all laws,
rules and regulations relating to environmental protection; (b) the Borrower and
the Subsidiaries have obtained all permits, licenses and authorizations, or
consents which are otherwise necessary, for the Borrower and the Subsidiaries to
conduct its business as it is presently being conducted; and (c) the Borrower
and the Subsidiaries are not parties to, have not been threatened with, and
there are no facts existing as a basis for, any governmental or other proceeding
which might result in a suspension, limitation or revocation of any such permit,
license or authorization.
3.5 Capitalization of Subsidiaries. All of the issued and outstanding
capital stock of the Subsidiaries (the "Subsidiary Stock") has been duly and
validly issued and is fully paid and nonassessable. All of the Subsidiary Stock
is owned by the Borrower or a Subsidiary, free and clear of any and all Liens.
3.6 Governmental Approvals. No order, permission, consent, approval,
license, authorization, registration or validation of, or filing with, or
exemption by, any governmental agency, commission, board or public authority is
required to authorize, or is required in connection with the execution, delivery
and performance of, this Agreement or the other Loan Documents.
3.7 Federal Reserve Margin Regulations; Proceeds. The Borrower is not
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System). No part of the proceeds of the Loans will be used to purchase
or carry any such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock.
3.8 Taxes.
(a) All tax returns of any nature whatsoever, including, but not
limited to, all Federal income, payroll, stock transfer and excise tax returns
and all appropriate state and local income, sales, excise, payroll, franchise
and real and personal property tax returns, and corresponding returns under the
laws of any jurisdiction, which are required to be filed by the Borrower and the
Subsidiaries or on their behalf, have been or will be filed by the due date or
extended due date of such returns.
(b) Except for amounts which in the aggregate do not exceed $250,000,
(i) all tax amounts as shown on the applicable returns and notices described in
Section 3.8(a) reflect all taxes due and payable with respect to the periods
covered thereby, (ii) there are no other tax liabilities, interest or penalties
payable by the Borrower and the Subsidiaries with respect to such periods, and
(iii) no other tax liabilities, disallowances or assessments have been assessed
or proposed which remain unpaid.
3.9 Investment Company Act. Neither the Borrower nor the entering into of
the Loan Documents nor the issuance of the Notes is subject to any of the
provision of the Investment Company Act of 1940, as amended.
3.10 Material Agreements. All patents, Material Agreements or similar
commitments of the Borrower and the Subsidiaries are in full force, none of the
parties thereunder are in material default thereunder and no written notice of
default has been given or received.
3.11 Financial Condition.
(a) The Financial Statements of the Borrower and the Subsidiaries for
the year ended December 30, 1995, audited by Price Waterhouse and the unaudited
Financial Statements for the three-month period ended March 30, 1996, previously
delivered to the Bank, have been prepared in accordance with generally accepted
accounting principles consistently applied and fairly present the financial
condition and the results of operations of the Borrower. There are no material
liabilities or any material unrealized or anticipated losses from unfavorable
commitments which are not disclosed in such Financial Statements. There has been
no material adverse change in the operations, business, or assets of, or in the
condition (financial or otherwise) of, the Borrower and the Subsidiaries from
that set forth in such Financial Statements.
(b) At the time of, and after giving effect to, the making of each
Loan, each of the Borrower and Dutterer's (i) is Solvent, and (ii) possesses, in
the opinion of the Borrower, sufficient capital to conduct the business in which
it is engaged or presently proposes to engage.
3.12 Disclosure. Neither this Agreement nor any of the Security Documents
nor any statement, list, certificate or other
document or information, or any Schedules to this Agreement, delivered or to be
delivered to the Bank contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
statements contained herein, in light of the circumstances in which they are
made, not misleading.
3.13 The Security Documents. The Security Documents, when executed and
delivered and, to the extent appropriate, filed or recorded in locations where
required by law in connection with the execution and delivery hereof, will grant
to the Bank a valid and perfected Lien in an on the property described therein
(the "Collateral"), and no Person will have any right, title or interest in or
to the Collateral which is, or which shall be, prior, paramount, superior or
equal to the right, title and interest of the Bank therein, except for Permitted
Encumbrances.
SECTION 4. CONDITIONS PRECEDENT TO TERM LOAN.
The Bank shall not be obligated to make the Term Loan or any additional
Revolving Credit Loans unless on the Closing Date (unless otherwise specifically
indicated) the following conditions have been satisfied to the satisfaction of
the Bank:
4.1 Notes. The Bank shall have received the Notes, duly executed and
completed by the Borrower.
4.2 Supporting Documents of the Borrower. There shall have been delivered
to the Bank such opinions, information and copies of documents, approvals and
records (certified where appropriate) of corporate and legal proceedings as the
Bank may have reasonably requested relating to the Borrower's and Dutterer's
entering into and performance of this Agreement and the other Loan Documents to
which each is a party. Such documents shall, in any event, include:
(a) certified copies of the corporate charter and bylaws of the
Borrower and Dutterer's;
(b) certificates of authorized officers of the Borrower and Dutterer's
certifying the corporate resolutions of the Borrower and Dutterer's relating to
the entering into and performance of the aforesaid documents and the
transactions contemplated thereby; and
(c) certificates of authorized officers of the Borrower and Dutterer's
with respect to the incumbency and specimen signatures of their respective
officers or representatives authorized to execute such documents and any other
documents and papers, and to take any other action, in connection therewith; and
(d) an opinion of McGuire, Woods, Battle, & Xxxxxx, L.L.P., counsel to
the Borrower and Dutterer's.
4.3 Security Documents. There shall have been delivered to the Bank:
(a) a deed of trust from the Borrower on the Virginia Real Property in
the form attached hereto as Exhibit C (the "Virginia Deed of Trust") and a deed
of trust from Dutterer's on the Maryland Real Property in the form attached
hereto as Exhibit D (the "Maryland Deed of Trust" and, collectively with the
Virginia Deed of Trust, the "Deeds of Trust");
(b) a security agreement from the Borrower, in the form attached
hereto as Exhibit E (the "Security Agreement"), granting to the Bank, as
security for the Loans, a security interest in all accounts, inventory,
furniture, fixtures and equipment, general intangibles, instruments, documents
and chattel paper of the Borrower;
(c) a security agreement from Dutterer's in the form attached hereto
as Exhibit F (the "Dutterer's Security Agreement"), granting to the Bank, as
security for the Loans, a security interest in that certain promissory note
dated September 3, 1995, payable to Dutterer's, by Value Added Food Services,
Inc. in the original principal amount of $1,038,756 (the "VAFSI Note");
(d) the assignment by the Borrower to the Bank of monies due and to
become due from the U.S. Defense Logistics Agency for the supply of foods to
military facilities in southern Virginia in the form attached hereto as Exhibit
G (the "Assignment");
(e) appropriate financing statements on forms UCC-1;
(f) the "VAFSI Note";
(g) a guaranty from Dutterer's, in the form attached hereto as Exhibit
H, guaranteeing the payment of the Loan (the "Dutterer's Guaranty"); and
(h) evidence satisfactory to the Bank that each of the Borrower and
Dutterer's has sufficient right, title and interest in and to the Collateral
owned by it to grant to the Bank the Liens contemplated hereby and by the Deeds
of Trust and the Security Agreements and that all Security Documents necessary
to provide the Bank with perfected Liens in the Collateral (subject only to
Permitted Encumbrances) have been filed or recorded or delivered to the Bank (or
to the duly authorized agent of the title insurance company issuing the loan
insurance policies in favor of the Bank, in which case the Bank shall have
received written or telefax confirmation from such agent that such agent has
received and will record the Deeds of Trust) in form satisfactory to the Bank.
4.4 Representations and Warranties. All representations and warranties made
by the Borrower herein or otherwise by the Borrower in writing in connection
therewith shall be true and correct in all material respects with the same
effect as though such representations and warranties have been made at and as of
such time.
4.5 Insurance. The Borrower shall have furnished to the Bank evidence
acceptable to the Bank that the insurance policies required by the Deeds of
Trust and Section 6.4 hereof have been obtained and are in full force and
effect.
4.6 Title Insurance. The Bank shall have received (i) copies of all title
insurance policies, title searches, abstracts of titles or other title work
requested by the Bank with regard to the Real Property, (ii) legal, valid and
binding commitments from Lawyers Title Insurance Company, or such other title
insurance company as shall be acceptable to the Bank, to issue loan title
insurance policies or updates to existing policies in form and substance
satisfactory to the Bank in respect of the Deeds of Trust showing that the Deeds
of Trust are valid first Liens subject only to Permitted Encumbrances and that
the Virginia Real Property and the Maryland Real Property is owned in fee simple
by the Borrower and Dutterer's, respectively, free of encumbrances other than
Permitted Encumbrances. Such commitment(s) shall include such affirmative
coverage and other endorsements as the Bank shall require and shall in all
respects be acceptable to the Bank in its sole discretion. The Bank shall also
have received evidence on or prior to the execution and delivery thereof that
the Borrower has arranged for the payment of the premium for such title
insurance policies or updates to existing policies.
4.7 Surveys. The Bank shall have received current physical surveys of the
Virginia Real Property and improvements, prepared and certified by a certified
land surveyor in accordance with the Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys meeting the accuracy requirements of a Class A
survey, and otherwise acceptable to the Lender, which surveys shall designate,
without limitation, (i) the dimensions of the Real Property, (ii) the dimensions
and location of the buildings and other improvements constructed thereon, (iii)
the dimensions of the parking areas as well as the total number of on-site
parking spaces, (iv) the location of all easements of record affecting the Real
Property, specifying the holder of each such easement and the pertinent
recordation information, (v) any and all buildings restriction and/or setback
lines and (vi) means of ingress and egress. In addition to the foregoing
requirements, such surveys shall (i) be prepared in accordance with the Survey
Instructions of Lawyers Title Insurance Corporation Surveyor's report, (ii)
contain a metes and bounds description of the Real Property, (iii) show
appurtenant easements and rights of way on adjoining property benefiting the
Real Property, and (iv) be specifically certified to the Bank as well as to the
Borrower and
Lawyers Title Insurance Corporation or such other applicable title insurance
company.
4.8 Appraisal. The Bank shall have received an appraisal, by an appraiser
selected by the Bank, of the fair market value of the Virginia Real Property,
which appraisal shall be satisfactory to the Bank in all respects.
4.9 Environmental Audit Report. The Bank shall have received an
environmental site assessment or environmental audit report on the Virginia Real
Property from an engineer or other qualified environmental expert selected by
the Bank, which appraisal shall be satisfactory to the Bank in all respects.
SECTION 5. CONDITIONS PRECEDENT TO EACH LOAN.
The Bank shall not be obligated to make any Loan hereunder unless on the
date of such Loan the following conditions have been satisfied to the
satisfaction of the Bank (and each borrowing by the Borrower hereunder shall
constitute a representation and warranty by the Borrower as of the date of such
borrowing that such conditions have been so satisfied):
5.1 Default. On the date of the Loan (and after giving effect thereto)
there shall exist no Event of Default and no condition, event or act which, with
the giving of notice or lapse of time, or both, as specified in Section 8
hereof, would constitute an Event of Default.
5.2 Maximum Amount of Revolving Credit Loans. The unpaid principal balance
of the Revolving Credit Note, after giving effect to such Revolving Credit Loan,
shall not exceed the lesser of (i) the Borrowing Base, or (ii) $7,500,000.
SECTION 6. AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees that, so long as the Commitment is in
effect, and until the Notes, together with interest and all other obligations
incurred hereunder, are paid in full, the Borrower will, unless having procured
the written consent of the Bank otherwise:
6.1 Financial Statements. Furnish to the Bank:
(a) As soon as practicable and in any event within 45 days after the
close of each quarter of each fiscal year of the Borrower and its Subsidiaries,
as at the end of and for the period commencing at the end of the previous fiscal
year and ending with such quarter, as the case may be, an unaudited
consolidating and consolidated balance sheet(s) of the Borrower and its
Subsidiaries, and a consolidating and consolidated statement(s) of income and
surplus account of the Borrower and
its Subsidiaries; all in reasonable detail and certified by the chief accounting
officer of the Borrower subject to year-end audit and adjustments and setting
forth in comparative form the corresponding figures as of one year prior thereto
or for the appropriate periods of the preceding fiscal year, as the case may be;
(b) As soon as practicable and in any event within 120 days after the
close of each fiscal year of the Borrower and its Subsidiaries, as at the end of
and for the fiscal year just closed, as the case may be, a consolidating and
consolidated balance sheet(s) of the Borrower and its Subsidiaries, and a
consolidating and consolidated statement(s) of income and surplus account of the
Borrower and its Subsidiaries for such fiscal year setting forth, in the case of
consolidating and consolidated balance sheets and statements, the corresponding
figures of the previous annual audit in comparative form, all in reasonable
detail and certified by Price Waterhouse or other independent public accountants
of recognized standing selected by the Borrower and satisfactory to the Bank;
(c) Promptly upon receipt thereof, copies of all detailed financial
reports, if any, submitted to the Borrower or any of its Subsidiaries by its
independent auditors, in connection with each annual or interim audit of their
respective books by such auditors;
(d) As soon as practicable and in any event within 10 days after the
close of each month of each fiscal year of the Borrower and its Subsidiaries,
detailed information in form satisfactory to the Bank concerning the Inventory
and Receivables of the Borrower (including but not limited to, aging information
(in 30-day increments) with respect thereto).
(e) As soon as practicable and in any event within 120 days after the
close of each fiscal year, a copy of the Borrower's annual report on Form 10-K
to the Securities and Exchange Commission;
(f) As soon as practicable and in any event within 60 days after the
close of each fiscal quarter, a copy of the Borrower's quarterly report on Form
10-Q to the Securities and Exchange Commission;
(g) At any time and from time to time, as the Bank, in its sole and
absolute discretion, deems necessary and appropriate, a commercial finance audit
of Inventory and Receivables, such audit to be conducted by the Bank or its
agents at the expense of the Borrower; provided, however, that such expense
shall be consistent with the expense of other commercial finance audits
performed by the Bank for other, similarly situated customers of the Bank; and
(h) With reasonable promptness, such other information respecting the
business, operations and financial conditions of the Borrower or any Subsidiary
as any Bank may, from time to time, reasonably request.
6.2 Notice of Litigation. Promptly give written notice to the Bank of (i)
any action or proceeding, or to the extent the Borrower may have any notice
thereof, any claim, which may reasonably be expected to be commenced or asserted
against the Borrower or any of its Subsidiaries in which the amount involved is
$250,000 or more and not covered by insurance, and (ii) any dispute which may
exist between the Borrower or any of its Subsidiaries and any governmental
regulatory body (including any audit by the Internal Revenue Service), which may
substantially affect the normal business operations of the Borrower or any of
its Subsidiaries or any of their respective properties and assets.
6.3 Payment of Charges. Duly pay and discharge, and cause each of its
Subsidiaries to duly pay and discharge (i) all taxes, assessments and
governmental charges or levies imposed upon or against it or its property or
assets, or upon any property leased by it, prior to the date on which penalties
attach thereto, unless and to the extent only that such taxes, assessments and
governmental charges or levies are being contested in good faith and by
appropriate proceedings, (ii) all lawful claims, whether for labor, materials,
supplies, services or anything else, which might or could, if unpaid, become a
lien or charge upon such property or assets, unless and to the extent only that
the validity thereof is being contested in trade bills when due in accordance
with their original terms, including any applicable grace periods, unless and to
the extent only that such trade bills are being contested in good faith and by
appropriate proceedings.
6.4 Insurance. Keep, and cause each of its Subsidiaries to keep, (i) all of
its insurable property insured at all times with financially sound and
responsible insurance carriers against loss or damage by fire and other risks,
casualties and contingencies as required by the Security Documents and in such
manner and to the extent that like properties are customarily so insured by
other corporations engaged in the same or similar business similarly situated,
(ii) adequate insurance at all times with financially sound and responsible
insurance carriers against liability on account of damage to persons and
properties and under all applicable workmen's compensation laws, and (iii)
adequate insurance covering such other risks as the Bank may reasonably request.
6.5 Maintenance of Records. Keep, and cause each of its Subsidiaries to
keep, at all times books of record and accounts in which full, true and correct
entries will be made of all dealings or transactions in relation to its business
and affairs, and the Borrower will provide, and will cause each of its
Subsidiaries to provide, adequate protection against loss or damage to such
books of record and account.
6.6 Preservation of Corporate Existence. Maintain and preserve its
corporate existence and right to carry on its business and duly procure all
necessary renewals and extensions thereof, use its best efforts to maintain,
preserve and renew all rights, powers, privileges and franchises which in the
opinion of the Board of Directors of the Borrower continue to be advantageous to
it and comply in all material respects with all applicable laws, statutes and
regulations of the United States of America and of any State or municipality,
and of any agency thereof, in respect of the conduct of its business, and in
each such case, cause each of its Subsidiaries so to do.
6.7 Preservation of Assets. Keep, and cause each of its Subsidiaries so to
keep, its property in good repair, working order and condition and from time to
time make all needful and proper repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto, so that the business carried on
by it may be properly and advantageously conducted at all times in accordance
with prudent business management.
6.8 Inspection of Books and Assets. Allow any representative, officer or
accountant of the Bank to visit and inspect any of its property, to examine its
books of record and account and to discuss its affairs, finances and accounts
with its officers, and at such reasonable time and as often as the Bank may
request and, in each such case, cause each of its Subsidiaries so to do.
6.9 Payment of Indebtedness. Duly and punctually pay, or cause to be paid,
the principal of and the interest on all Indebtedness for Borrowed Money
heretofore or hereafter incurred or assumed by it, or in respect of which it
shall otherwise be liable, when and as the same shall become due and payable,
unless such Indebtedness for Borrowed Money be renewed or extended, and
faithfully observe, perform and discharge all the covenants, conditions and
obligations which are imposed on it by any and all indentures and other
agreements securing, relating to, or evidencing such Indebtedness or pursuant to
which such Indebtedness for Borrowed Money is incurred, and not permit any act
or omission to occur or exist which is or may be declared to be a default
thereunder.
6.10 Further Assurances. Make, execute or endorse, and acknowledge and
deliver or file, all such vouchers, invoices, notices, and certifications and
additional agreements, undertakings, conveyances, transfers, assignments, or
further assurances, and take any and all such other actions, as the Bank may,
from time to time, deem necessary or proper in connection with this Agreement,
the obligations of the Borrower hereunder or under the other Loan Documents, or
for the better assuring and confirming unto the Bank all or any part of the
security for the Notes.
6.11 Notice of Default. Forthwith upon any officer of the Borrower
obtaining knowledge of the existence of an Event of Default, deliver to the Bank
a certificate signed by an officer of the Borrower specifying the nature
thereof, the period of existence thereof, and what action the Borrower proposes
to take with respect thereto.
6.12 Arms-length Transactions. Conduct and cause each of its Subsidiaries
to conduct all transactions with any of its respective Affiliates on an
arms-length basis.
6.13 Solvency. Continue to be Solvent and ensure each Subsidiary will
continue to be Solvent.
6.14 Lock Box. At the request of the Bank, in its sole and absolute
discretion, enter into a lock-box arrangement, for the collection of
Receivables, such arrangement to be satisfactory in form and substance to the
Bank.
6.15 Collateralization of Outstanding Letters of Credit. At the request of
the Bank, in its sole and absolute discretion, provide liquid collateral
acceptable to the Bank as security for any outstanding letters of credit issued
by the Bank at the request of and for the account of the Borrower.
6.16 Assignment of Claims Act. Deliver or cause to be delivered to the
Bank, within 60 days following the Closing Date, copies of Notices to the
contracting and disbursing officers for the contract which is the subject of the
Assignment, such notices having been duly acknowledged by such officers and
sufficient to perfect the Assignment in favor of the Bank.
SECTION 7. NEGATIVE COVENANTS.
The Borrower covenants and agrees that so long as the Commitment is in
effect and until the Notes, together with interest and all other obligations
incurred hereunder, are paid in full, the Borrower will not, without first
having procured the written consent of the Bank:
7.1 Liens. Contract, create, incur, assume or suffer to exist any Lien upon
or with respect to, or by transfer or otherwise subject to the prior payment of
any indebtedness (other than the Notes), any of the Collateral or any other
property of the Borrower, whether now owned or hereafter acquired, or permit
Dutterer's so to do; except (i) liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings, (ii) other liens, charges,
and encumbrances incidental to the conduct of its business or the ownership of
the Collateral or such other property which were not incurred in connection with
the borrowings of money or the obtaining of advances or credit and which do not
materially detract from the value of the Collateral or such other property or
materially impair the use thereof in the operation of its business; and (iii)
Liens in favor of the Bank;
7.2 Other Indebtedness. Contract, create, incur, assume or suffer to exist
any Indebtedness for Borrowed Money (other than indebtedness to the Bank or
trade debt incurred in the ordinary course of business) or permit Dutterer's so
to do.
7.3 Consolidation and Merger. Wind up, liquidate or dissolve its affairs or
enter into any transaction of merger or consolidation or permit Dutterer's so to
do (or agree to do any of the foregoing at any future time) except that (i)
Dutterer's may merge into the Borrower provided that the Borrower shall at all
times be the continuing corporation, and (ii) Dutterer's may merge into or
consolidate with any other Subsidiary.
7.4 Sale of Assets. Convey, sell, lease or otherwise dispose of (or agree
to do any of the foregoing at any future time or permit Dutterer's so to do),
(i) all or a substantial part of its property or assets or any part of such
property or assets essential to the conduct of its business substantially as now
conducted, or (ii) any of its assets, except in the ordinary course of business
(excluding the sale of obsolete equipment) or with the consent of the Bank,
which consent shall not be unreasonably withheld. The Bank acknowledges that the
Borrower intends to cause Dutterer's to sell the Maryland Real Property and
agrees that it will not unreasonably withhold its consent to such a sale and the
release of the Bank's lien on the Maryland Real Property; provided, however,
that the Bank's consent and release may be conditioned upon the application of
the net proceeds of any such sale to the Loans as determined by the Bank in its
sole discretion.
7.5 Borrowing Base. Permit the aggregate unpaid principal amount of the
Revolving Credit Note at any time outstanding to exceed the Borrowing Base.
7.6 Related Transactions. Enter into any transaction with any Person which
is an Affiliate of the Borrower or Dutterer's, or in which any officer or
director of the Borrower or a Subsidiary has a financial interest, on more
favorable terms than if such Person was totally unrelated, or permit Dutterer's
to so do.
7.7 Engage in Same Type of Business. Enter into, or permit Dutterer's to
enter into, any business which is substantially different from and/or not
connected with the business in which the Borrower or Dutterer's is presently
engaged.
7.8 Sale of Accounts Receivable. Sell, discount, transfer, assign or
otherwise dispose of any of its accounts receivable, notes receivable,
installment or conditional sales agreements or any other of its rights to
receive income or monies howsoever evidenced or permit Dutterer's so to do
except pursuant to the Security Documents.
7.9 Tangible Net Worth. Permit Tangible Net Worth to be at any time less
than $7,000,000; provided, however, that on December 31, 1996, and on each
December 31 thereafter, such amount shall increase by the greater of (i) 75% of
the Borrower's net income for the fiscal year then ended, or (ii) $500,000.
7.10 Debt; Equity Ratio. Permit the ratio of Long-Term Debt to Tangible Net
Worth to exceed at any time 1.75:1.0.
7.11 Current Ratio. Permit the ratio of current assets to current
labilities at any time to be less than 1.25:1.0.
7.12 Capital Expenditures. In any fiscal year make or commit to make any
direct or indirect capital expenditures in excess of $300,000.
7.13 Debt Service Coverage Ratio. Permit the ratio (determined at the end
of each fiscal year and for such year) of EBITD to Debt Service to be less than
1.25:1.0.
7.14 Real Estate. Directly or indirectly, make any investment in, or engage
in any development of, real estate, other than in the ordinary course of the
Borrower's regular business.
7.15 Dividends. During any fiscal year, declare or pay, directly or
indirectly, any dividends on any class of its capital stock, or make any
distribution to any shareholder or shareholders as such, in excess of $163,000.
SECTION 8. EVENTS OF DEFAULT.
Upon the occurrence of any of the following specified events (each an
"Event of Default"):
8.1 Principal and Interest. The Borrower shall default in the due and
punctual payment of (i) any principal due on the Notes; or (ii) for a period of
15 days, any interest on the Notes or in the due and punctual payment of other
amounts due hereunder; or
8.2 Representations and Warranties. Any representation, warranty or
statement made by the Borrower herein or otherwise in writing by the Borrower or
Dutterer's in connection herewith or therewith, or in any certificate or
statement furnished pursuant to or in connection herewith or therewith, shall be
breached or shall prove to be untrue in any material respect on the date as of
which made; or
8.3 Negative Covenants. The Borrower shall default in the due performance
or observance of any term, covenant or agreement on its part to be performed or
observed pursuant to Sections 7.3, 7.4, 7.7 or 7.8 of this Agreement; or
8.4 Other Covenants. The Borrower shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any of the provisions of this Agreement (other than those
referred to in Sections 8.1, 8.2 and 8.3) and such default (which shall be
capable of cure) shall continue unremedied for a period of 30 days after the
earlier of the date on which the Bank gives the Borrower notice of such default
or on the date an officer of the Borrower becomes aware thereof; or
8.5 Other Obligations. Any indebtedness of the Borrower (i) shall be duly
declared to be or shall become due and payable prior to the stated maturity
thereof, or (ii) shall not be paid as and when the same becomes due and payable
including any applicable grace period, or there shall occur and be continuing
any event which constitutes an event of default under any instrument, agreement
or evidence of indebtedness relating to any indebtedness of the Borrower, the
effect of which is to permit the holder or holders to cause the indebtedness
evidenced thereby to become due prior to its stated maturity; or
8.6 Insolvency. The Borrower or Dutterer's shall dissolve or suspend or
discontinue its business, or shall make an assignment for the benefit of
creditors or a composition with creditors, shall be unable or admit in writing
its inability to pay its debts as they mature, shall file a petition in
bankruptcy, shall become insolvent (howsoever such insolvency may be evidenced),
shall be adjudicated insolvent or bankrupt, shall petition or apply to any
tribunal for the appointment of any receiver, liquidator, custodian or trustee
of or for it or any substantial part of its property or assets, shall commence
any proceedings relating to it under any bankruptcy, reorganization,
arrangement, readjustment of debt, receivership, dissolution or liquidation law
or statute of any jurisdiction, whether now or hereafter in effect; or there
shall be commenced against the Borrower or Dutterer's any such proceeding which
shall remain undismissed for a period of 60 days or more, or any order, judgment
or decree approving the petition in any such proceeding shall be entered; or the
Borrower or Dutterer's shall by any act or failure to act indicate its consent
to, approval of or acquiescence in, any such proceeding or in the appointment of
any receiver, liquidator, custodian or trustee of or for it or any substantial
part of its property or assets, or shall suffer any such appointment to continue
undischarged or unstayed for a period of 60 days or more; or the Borrower or
Dutterer's shall take any action for the purpose of effecting any of the
foregoing; or any court of competent jurisdiction shall assume jurisdiction with
respect to any such proceeding or a receiver or trustee or custodian or other
officer or representative of a court or of creditors, or any court, governmental
officer or agency, shall under color of legal authority, take and hold
possession of any substantial part of the property or assets of the Borrower or
Dutterer's; or
8.7 Other Documents. Any of the Security Documents shall fail to grant to
the Bank the Lien intended to be created thereby (provided, however, that the
Borrower shall cause the Lien of the Assignment to be perfected not later than
90 days after the date hereof);
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing the Bank may, by written notice to the Borrower: (i)
declare the principal of an accrued interest on the Notes to be, whereupon the
same shall forthwith become, due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; and/or (ii) declare the Revolving Credit Commitment terminated,
whereupon the Revolving Credit Commitment shall forthwith terminate immediately;
provided that if any Event of Default described in Section 8.6 shall occur with
respect to the Borrower or Dutterer's, the result which would otherwise occur
only upon the giving of written notice by the Bank to the Borrower as herein
described shall occur automatically, without the giving of any such notice.
SECTION 9. MISCELLANEOUS.
9.1 Calculations and Financial Data. Calculations hereunder shall be made
and financial data required hereby shall be prepared both as to classification
of items and as to amount in accordance with generally accepted accounting
principles, consistent with the Financial Statements.
9.2 Amendment and Waiver. Except as otherwise provided, no provision of any
of the Loan Documents may be changed, waived, discharged or terminated orally,
but only by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought. Any such
change, waiver, discharge or termination shall be effective only in the specific
instance and for the specific purposes for which made or given.
9.3 Expenses.
(a) Whether or not the transactions hereby contemplated shall be
consummated, the Borrower shall pay all reasonable out-of-pocket costs and
expenses of the Bank incurred in connection with the preparation, execution,
delivery, filing and recording and amendment (including any waiver or consent),
modification, and enforcement of the Loan Documents and the making and repayment
of the Loans, and the payment of all interest and fees, including, without
limitation, the reasonable fees and expenses of Xxxxxxx & Xxxxxxx, special
counsel for the Bank, and any local counsel retained by the Bank.
(b) The Borrower agrees to pay, and to save the Bank harmless from all
damages, liability and expenses for, any stamp and similar taxes (including
interest and penalties, if any), which may be payable in connection with the
Loan Documents or the issuance of the Notes or any modification of any of the
foregoing.
(c) All obligations provided for in this Section 9.3 and Section 6.10
shall survive any termination of this Agreement and the payment in full of the
Notes.
9.4 Successors and Assigns; Descriptive Headings.
(a) This Agreement shall bind, and the benefits hereof shall inure to,
the Borrower and the Bank and their respective successors and assigns provided
that the Borrower may not transfer or assign any or all of its rights and
obligations hereunder, without the prior written consent of the Bank.
(b) The descriptive headings of the various provisions of this
Agreement are inserted for convenience of reference only and shall not be deemed
to affect the meaning or construction of any of the provisions hereof.
9.5 Notices, Requests, Demands, Etc. Except as otherwise expressly provided
herein, all notices, requests, demands or other communications to or upon the
respective parties hereto shall be deemed to have been duly given or made when
deposited in the mails (by registered or certified mail, return receipt
requested), postage prepaid, or in the case of telex, telegraphic, telecopier or
cable notice, when delivered to the telex, telegraph, telecopier or cable
company, or in the case of telex or telecopier notice sent over a telex or
telecopier owned or operated by a party hereto, when sent, addressed as follows:
(i) if to the Bank, at the Bank's Office, and (ii) if to the Borrower, at its
address specified with its signature below, or to such other addresses as either
of the parties hereto may hereafter specify to the other in writing, provided
that communication with respect to a change of address shall be deemed to be
effective when actually received.
9.6 Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be governed by and construed and interpreted in
accordance with the internal laws of the Commonwealth of Virginia (without
regard to principles of conflicts of law).
9.7 Counterparts. This Agreement may be executed in any number of
counterparts, and by the different parties hereto on the same or separate
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
9.8 Waiver. No failure or delay on the part of the Bank in exercising any
right, power or privilege under this Agreement or any other Loan Document, and
no course of dealing between the Borrower and the Bank shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly provided are cumulative and not exclusive of any rights or remedies
which the Bank would otherwise have pursuant to such documents or at law or
equity. No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of the Bank to any other or
further action in any circumstances without notice or demand.
9.9 Severability. If any provision of this Agreement shall be held or
deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the
same shall not affect any other provision or provisions herein contained or
render the same invalid, inoperative or unenforceable to any extent whatever.
9.10 Right of Set-off. In addition to any rights now or hereafter granted
under applicable law or otherwise and not by way of limitation of any such
rights, upon the occurrence of an Event of Default the Bank is hereby authorized
at any time or from time to time, without notice to the Borrower or to any other
Person, any such notice being hereby expressly waived, to set-off and to
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final) and any other indebtedness at any time held or owing by
the Bank to or for the credit or the account of the Borrower against and on
account of the obligations and liabilities of the Borrower to the Bank now or
hereafter existing under any of the Loan Documents irrespective of whether or
not the Bank shall have made any demand hereunder or thereunder and although
said obligations, liabilities or claims, or any of them, shall be contingent or
unmatured. The Bank exercising any rights granted under this Section 9.10 shall
thereafter notify the Borrower of such action; provided that the failure to give
such notice shall not affect the validity of such set-off and application.
9.11 No Third Party Beneficiaries. This Agreement is solely for the benefit
of the Bank and the Borrower and their respective successors and assigns (except
as otherwise expressly provided herein) and nothing contained herein shall be
deemed to confer upon anyone other than the Borrower and the Bank and their
respective successors and assigns any right to insist on or to enforce the
performance or observance of any of the obligations contained herein. All
conditions to the obligations of the Bank to make the Loans hereunder are
imposed solely and exclusively for the benefit of the Bank and its successors
and assigns and no other Person shall have standing to require satisfaction of
such conditions in accordance with their terms and no other Person shall under
any circumstances be deemed to be beneficiary of such conditions.
9.12 Survival. Each of the representations, warranties, terms, covenants,
agreements and conditions contained in this Agreement shall specifically survive
the execution and delivery of this Agreement and the other Loan Documents and
the making of the Loans and shall, unless otherwise expressly provided, continue
in full force and effect until the Loans together with interest thereon, the
commitment fees, and all other sums payable hereunder or thereunder have been
indefeasibly paid in full.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the date first above written.
0000 Xxxxxx Xxxxxx XXXXXXXX'X FOODS, INC.
Xxxxxxxxxx, XX 00000
By: Xxxxxx X. Xxxxxxxxx, Xx.
------------------------
(Signature)
Senior Vice President
CRESTAR BANK
By: Xxxxx X. Xxxx
------------------------
(Signature)
Vice President
ANNEX I
DEFINITIONS
As used in the Amended and Restated Credit Agreement to which this Annex I
is annexed, the following terms shall have the meanings herein specified or as
specified in the Section of such Credit Agreement or in such other document
herein referenced:
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by or under common control with, the Borrower.
"Agreement" shall mean the Amended and Restated Credit Agreement to which
this Annex I is attached as it may from time to time be amended, extended,
supplemented or otherwise modified.
"Assignment" - Section 4.3(d).
"Bank" - introductory paragraph.
"Bank's Office" shall mean 000 Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000,
Attention: Commercial Division.
"Borrower" - introductory paragraph.
"Borrowing Base" shall mean at a particular time, the sum of (x) the Net
Security Value of Eligible Inventory plus (y) the Net Security Value of Eligible
Receivables.
"Business Day" shall mean any day excluding Saturday, Sunday and any day on
which banks in Norfolk, Virginia are authorized by law or governmental action to
close.
"Capitalized Lease Obligation" shall mean any obligation to pay rent or
other amounts under any lease (or other arrangement conveying the right to use)
real and/or personal property, which obligation is, or is required to be,
classified and accounted for as a capital lease on a balance sheet prepared in
accordance with generally accepted accounting principles.
"Collateral" - Section 3.13.
"Commitment Period" shall mean, for the Revolving Credit Commitment, the
period from and including the date hereof to and including the Termination Date.
"Debt Service" shall mean, for any period, the aggregate of all principal
and interest payments required, scheduled or made during such period.
"Deeds of Trust" - Section 4.3(a).
"Default" shall mean any event which with notice or lapse of time, or both,
would become an Event of Default.
"Dollars", "U.S. $", "$", and "U.S. dollars" shall mean the lawful currency
of the United States of America.
"Dutterer's" shall mean Dutterer's of Manchester Corp., a Maryland
corporation and a Subsidiary.
"Dutterer's Guaranty" - Section 4.3(g).
"Dutterer's Security Agreement" - Section 4.3(c).
"EBITD" shall mean, for any period, the sum for such period of (i) net
income, (ii) taxes accrued to any government or governmental instrumentality
(other than real estate taxes, sales taxes or use taxes), (iii) interest
expense, and (iv) to the extent earnings have been reduced thereby, depreciation
expense, amortization expense and other non-cash expenses, minus dividends.
Eligible Inventory" or "Inventory Value" shall mean, at the time of any
determination thereof, all Inventory of the Borrower as to which the following
requirements have been fulfilled to the satisfaction of the Bank: (a) the
Borrower has lawful and absolute title to such Inventory; (b) the Borrower has
the full and unqualified right to assign and grant a security interest in such
Inventory to the Bank as security for the Loans; (c) except as otherwise
permitted hereunder, all of such Inventory is subject to a fully perfected first
security interest in favor of the Bank pursuant to the Security Documents, prior
to the rights of, and enforceable as such against, any other Person; (d) none of
such Inventory is subject to any security interest or other Lien in favor of any
person other than the Lien of the Bank pursuant to the Security Documents and
other Liens permitted hereunder; and (e) none of such Inventory is obsolete,
unsalable, damaged or otherwise unfit for sale or further processing.
"Eligible Receivables" shall mean, at the time of any determination
thereof, all Receivables of the Borrower as to which the following requirements
have been fulfilled to the satisfaction of the Bank: (a) the Borrower has lawful
and absolute title to each of such Receivables; (b) each of such Receivables is
a valid, legally enforceable obligation of the Person who is obligated under
such Receivables (the "account debtor"); (c) none of such Receivables is subject
to any dispute, off-set, counterclaim or other claim or defense on the part of
the account debtor or to any claim on the part of the account debtor denying
liability under such Receivable in whole or in part; (d) the Borrower has the
full and unqualified right to assign and grant a security interest in such
Receivables to the Bank as security for the Loans; (e) all of such Receivables
are subject to a fully perfected first security interest in favor of the Bank
pursuant to the Security Documents, prior to the rights of, and enforceable as
such against, any other Person; (f) none
of such Receivables is subject to any security interest or Lien in favor of any
Person other than the lien of the Bank pursuant to the Security Documents and
other Liens permitted hereunder; (g) each of such Receivables is evidenced by an
invoice rendered to the account debtor and is not evidenced by an instrument or
chattel paper; (h) each of such Receivables has arisen from the sale (on an
absolute and not a consignment or approval basis) of goods by the Borrower in
the ordinary course of the Borrower's business, which goods have been shipped or
delivered to the account debtor for such Receivables or otherwise identified to
the contract of sale to such account debtor if title has passed; (i) no account
debtor in respect of any of the Receivables is (A) incorporated in or primarily
conducting business in any jurisdiction located outside the United States of
America or Puerto Rico, (B) an Affiliate of the Borrower, or (C) any foreign
government or any agency, department or instrumentality therefor; (j) the
Borrower is not aware and has no reason to be aware of any reorganization,
bankruptcy, receivership, custodianship, insolvency or other like condition in
respect of any account debtor for any of the Receivables; (k) none of such
Receivables has been outstanding more than 90 days from their respective invoice
dates; (l) none of such Receivables are due from an account debtor with respect
to which 25% or more, in amount, of Receivables due therefrom have been
outstanding more than 90 days from their respective invoice dates; and (m) the
Borrower is not in default in any obligation to the account debtor in respect to
any goods provided or services rendered by such account debtor or otherwise.
"Event of Default" shall mean each of the Events of Default defined in
Section 8.
"Financial Statements" shall mean, with respect to any Person, the
statement of financial position (balance sheet) and the statement of earnings
and stockholders' equity of such person.
"Guarantee" shall mean, by any Person, any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
for Borrowed Money or other obligation of any other Person and, without limiting
the generality of the foregoing, any obligation, direct or indirect, contingent
or otherwise, of such Person (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness for Borrowed Money or other
obligation (whether arising by virtue of partnership arrangements, by agreement
to keep-well, to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Indebtedness
for Borrowed Money or other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part), provided that the
term "Guarantee" shall not include endorsements for collection of deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Indebtedness for Borrowed Money" shall mean all indebtedness of
(including, without limitation, all indebtedness assumed by) a Person (i) in
respect of money borrowed (including, without limitation, the unpaid amount of
the purchase price of any property, incurred for such purpose in lieu of
borrowing money or using available funds to pay said amount, and not
constituting an account payable or expense accrual incurred or assumed in the
ordinary course of business), or evidenced by a promissory note, bond,
debenture, or other like obligation to pay money, or (ii) constituting a
Capitalized Lease Obligation of such Person, or (iii) constituting a Guarantee
by such Person.
"Inventory" shall have the meaning assigned thereto in the Security
Agreement.
"Lien" shall mean any mortgage, deed of trust, security deed, pledge,
security interest, encumbrance, lien or other charge of any kind (including any
agreement to give any of the foregoing, any lease in the nature thereof, and any
conditional sale or other title retention agreement), any lien arising by
operation of law and the filing of or agreement to give any financing statement
under the Uniform Commercial Code of any jurisdiction.
"Loans" - Section 2.2.
"Loan Documents" shall mean, collectively, the Agreement, the Notes and the
Security Documents and any other instruments or documents delivered by or on
behalf of the Borrower or Dutterer's hereunder.
"Long-Term Debt" shall mean all Indebtedness for Borrowed Money as
determined in accordance with generally accepted accounting principles.
"Material Agreement" shall mean all outstanding contracts, agreements,
leases and other understandings to which the Borrower and/or its Subsidiaries is
a party, or by or under which it has any rights or obligations, except for (i)
those (other than orders for the purchase and sale of merchandise) involving an
income to or expenditure by the Borrower or a Subsidiary of less than $250,000
or expiring no later than one (1) year from the date hereof, and (ii) those
contracts or orders for the purchase and sale of merchandise involving a
commitment for less than one (1) year or involving a commitment for less than
$250,000.
"Maryland Deed of Trust" - Section 4.3(a).
"Maryland Real Property" shall mean the real property of Dutterer's in
Manchester, Maryland described in the Maryland Deed of Trust.
"Net Security Value" shall mean, in respect to (i) Eligible Receivables, an
amount equal to 85% (or such other greater or lesser percentage as the Bank
shall from time to time determine in its sole and absolute discretion) of the
book value of Eligible Receivables as reflected on the books of the Borrower in
accordance with generally-accepted accounting principles on any date of
determination thereof, less a reserve for discounts and allowances; and (ii)
Eligible Inventory, an amount equal to 20% (or such other greater or lesser
percentage as the Bank shall from time to time determine in its sole and
absolute discretion) of the value of the Eligible Inventory as reflected on the
books of the Borrower as at the date of any determination thereof, valued in
accordance with generally-accepted accounting principles based on FIFO.
"Notes" - Section 2.2.
"Permitted Encumbrances" shall mean the Liens listed on Schedule I attached
hereto.
"Person" shall mean and include an individual, a partnership, a corporation
(including a business trust), a joint stock company, a trust, an unincorporated
association, a joint venture or other entity or a government or an agency or
political subdivision thereof.
"Real Property" shall mean the Maryland Real Property and the Virginia Real
Property.
"Receivables" shall mean Accounts and General Intangibles, as defined in
the Security Agreement.
"Revolving Credit Commitment" - Section 2.1.
"Revolving Credit Loans" - Section 2.1.
"Revolving Credit Note" - Section 2.1.
"Security Agreement" - Section 4.3(b).
"Security Documents" shall mean the collective reference to each of the
instruments or documents referred to in Section 4.3 pursuant to which a Lien or
security interest in the Collateral is intended to be granted to the Bank,
including all supplements or amendments thereto or replacements thereof.
"Solvent" shall mean, with respect to any Person, that the fair value of
the property of such Person is, on the date of determination, greater than the
total amount of liabilities (including contingent liabilities) of such Person as
of such date and that, as of such date, such Person is able to pay all
Indebtedness for Borrowed Money of such Person as such Indebtedness for Borrowed
Money matures.
"Subsidiary" shall mean Dutterer's and any other firm, corporation, trust
or other unincorporated organization or association or other enterprise more
than 50% of the indicia of equity rights (whether capital stock or otherwise) of
which is at the time owned, directly or indirectly, by the Borrower and/or by
one or more of its Subsidiaries.
"Subsidiary Stock" - Section 3.5.
"Tangible Net Worth" shall mean, as at any date at which the amount thereof
shall be determined, the amount by which the sum of (a) the par value (or value
stated on the books of the corporation) of the capital stock of all classes of
the Borrower, and (b) the amount of the consolidated surplus, capital or earned,
of the Borrower and its Subsidiaries, exceeds the aggregate of all amounts
appearing on the asset side of the balance sheet for goodwill, patents, patent
right, trademarks, trade names, copyrights, franchises, treasury stock,
organizational expenses and other similar items, if any, all determined in
accordance with generally accepted accounting principles consistent with the
Financial Statements.
"Term Loan" - Section 2.2.
"Term Loan Note" - Section 2.2.
"Termination Date" shall mean July 31, 1997, or such earlier date as the
Commitment shall terminate as provided herein or such later date as may
hereafter be agreed to by the Bank, in writing.
"UCC" - Section 3.13.
"VAFSI Note" - Section 4.3(c).
"Virginia Deed of Trust" - Section 4.3(a).
"Virginia Real Property" shall mean the real property of the Borrower in
Portsmouth, Virginia described in the Virginia Deed of Trust.
"Written" or "in writing" shall mean any form of written communication or a
communication by means of telex, telecopier device, telegraph or cable.
SCHEDULE I
PERMITTED ENCUMBRANCES
A.1. With respect to the Real Property, all those matters shown in Schedule
B, Section 2 of the Lawyers Title Insurance Corporation Commitment Case Nos.
1960353 and C965185N issued to the Bank.
A.2. With respect to property other than Real Property:
(a) Such minor defects, irregularities, encumbrances and clouds on
title as do not, in the aggregate, materially impair the value of such property
or its use for the purpose for which it is held;
(b) Deposits under worker's compensation, unemployment insurance and
social security laws or to secure statutory obligations or surety or appeal
bonds or performance of other similar bonds in the ordinary course of business,
or statutory liens of landlords, carriers, warehousemen, mechanics and
materialmen and other similar liens, in respect of liabilities which are not yet
due or which are being contested in good faith, liens for taxes not yet due and
payable, and liens for taxes due and payable, the validity or amount of which is
currently being contested in good faith by appropriate proceedings;
(c) Purchase money Liens granted to the seller or Person financing the
seller on assets if (i) limited to the specific assets acquired; and (ii) the
debt secured by the Lien is the unpaid balance of the acquisition cost of the
specific assets on which the Lien is granted;
(d) Liens granted to the Bank in connection with the transactions
contemplated hereby or otherwise; and
(e) Liens upon real and/or tangible personal property acquired after
the date of this Agreement (by purchase, construction or otherwise) by the
Borrower or any Subsidiary, each of which Liens existed on such property before
the time of its acquisition and was not created in anticipation thereof;
provided, however, that no such Lien shall extend to or cover any property of
the Borrower or such Subsidiary other than the respective property so acquired
and improvements thereon.
