FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 2O549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 1996
-------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------- -----------------
Commission file number 0-7166
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DOUGHTIE'S FOODS, INC.
(Exact name of Registrant as specified in its charter)
VIRGINIA 54-0903892
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
2410 WESLEY STREET, PORTSMOUTH, VIRGINIA 23707
(Address of principal executive offices)
(757) 393-6007
(Registrant's telephone number, including area code)
------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $1 par value - 1,000,627 shares as of August 5,
1996.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
DOUGHTIE'S FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited) <F1>
<CAPTION>
June 29, December 30,
1996 1995
_____________ ____________
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 550,487 $ 513,319
Accounts receivable, net:
Trade 7,215,698 5,758,536
Officers and employees 0 3,323
Inventories 5,861,150 4,849,104
Deferred income taxes 193,339 193,339
Prepaid expenses and other
current assets 331,831 246,679
_____________ ____________
Total Current Assets 14,152,505 11,564,300
_____________ ____________
PROPERTY, PLANT AND EQUIPMENT -
AT COST:
Land 280,827 280,827
Buildings 4,304,616 4,290,986
Delivery equipment 361,474 375,408
Plant and refrigeration equipment 4,041,147 3,869,561
Office equipment 716,351 695,034
Leasehold improvements 6,062 0
____________ ____________
9,710,477 9,511,816
Less - accumulated depreciation 6,030,101 5,823,208
_____________ ____________
3,680,376 3,688,608
_____________ ____________
OTHER ASSETS 596,228 833,169
_____________ ____________
$ 18,429,109 $ 16,086,077
_____________ ____________
_____________ ____________
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 533,333 $ 133,333
Accounts payable 1,477,579 1,547,107
Income taxes payable 326,254 0
Accrued salaries, commissions and
bonuses 45,775 76,706
Accrued employee group insurance 750 174,026
Other accrued liabilities 302,355 113,580
_____________ ____________
Total Current Liabilities 2,686,046 2,044,752
LONG-TERM DEBT - less current portion 8,056,667 6,688,334
DEFERRED INCOME TAXES 49,931 49,931
_____________ ____________
Total Liabilities 10,792,644 8,783,017
_____________ ____________
STOCKHOLDERS' EQUITY:
Common stock - $1 par value;
authorized 2,000,000 shares, issued
and outstanding 1,000,627 shares at
June 29, 1996 and 1,002,527 shares
at December 30, 1995 1,000,627 1,002,527
Additional paid-in capital 2,818,609 2,823,597
Retained earnings 3,817,229 3,476,936
_____________ ____________
Total Stockholders' Equity 7,636,465 7,303,060
_____________ ____________
$ 18,429,109 $ 16,086,077
_____________ ____________
_____________ ____________
<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
DOUGHTIE'S FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
<F1>
<CAPTION>
QUARTERS ENDED SIX MONTHS ENDED
____________________________________ ___________________________________
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
_____________ ____________ _____________ ____________
<S> <C> <C> <C> <C>
NET SALES $ 22,457,784 $ 21,022,912 $ 38,437,634 $37,423,958
COST OF GOODS SOLD 18,537,061 17,379,825 31,852,170 30,726,629
_____________ _____________ _____________ ____________
GROSS PROFIT 3,920,723 3,643,087 6,585,464 6,697,329
_____________ _____________ _____________ ____________
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 3,125,789 3,509,822 5,678,760 6,784,852
INTEREST EXPENSE 133,409 128,373 234,034 217,936
_____________ _____________ _____________ ____________
3,259,198 3,638,195 5,912,794 7,002,788
_____________ _____________ _____________ ____________
INCOME (LOSS) BEFORE
INCOME TAXES 661,525 4,892 672,670 (305,459)
INCOME TAX EXPENSE (BENEFIT) 248,072 46,600 252,251 (5,600)
_____________ _____________ _____________ ____________
NET INCOME (LOSS) $ 413,453 $ (41,708) $ 420,419 $ (299,859)
_____________ _____________ _____________ ____________
_____________ _____________ _____________ ____________
NUMBER OF SHARES USED IN
COMPUTING EARNINGS PER
SHARE 1,000,627 1,008,518 1,000,627 1,008,518
_____________ _____________ _____________ ____________
_____________ _____________ _____________ ____________
EARNINGS (LOSS) PER SHARE $ .41 $ (.04) $ .42 $ (.30)
_____________ _____________ _____________ ____________
_____________ _____________ _____________ ____________
CASH DIVIDENDS PER SHARE $ .04 $ .04 $ .08 $ .08
_____________ _____________ _____________ ____________
_____________ _____________ _____________ ____________
<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
DOUGHTIE'S FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) <F1>
<CAPTION>
SIX MONTHS ENDED
__________________________________
June 29, July 1,
1996 1995
____________ ____________
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 420,419 $ (299,859)
Adjustments to reconcile net income
(loss) to net cash provided by
(used for) operations:
Depreciation 218,652 326,971
Loss (gain) on sale of property,
plant and equipment (200) 471
(Increase) decrease in assets:
Accounts receivable, net (1,453,839) (500,294)
Inventories (1,012,046) (413,081)
Prepaid expenses and other current
assets (85,152) (313,528)
Other assets 236,941 2,600
Increase (decrease) in liabilities:
Accounts payable (69,528) (580,649)
Income taxes payable 326,254 (399,504)
Accrued salaries, commissions and
bonuses (30,931) (80,872)
Accrued employee group insurance (173,276) 4,661
Other accrued liabilities (188,775 273,770
_____________ ____________
(1,433,931) (1,979,314)
_____________ ____________
Cash flows from investing activities:
Additions to property, plant and
equipment (210,420) (328,175)
Proceeds from sale of property,
plant and equipment 200 3,848
_____________ ____________
(210,220) (324,327)
_____________ ____________
Cash flows from financing activities:
Changes in long-term debt, including
current portion 1,768,333 1,338,333
Acquisition of treasury stock (6,888) 0
Cash dividends (80,126) (80,681)
_____________ ____________
1,681,319 1,257,652
_____________ ____________
Net increase (decrease) in cash 37,168 (1,045,989)
Cash at beginning of period 513,319 1,361,207
_____________ ____________
Cash at end of period $ 550,487 $ 315,218
_____________ ____________
_____________ ____________
<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
DOUGHTIE'S FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1 -
The consolidated financial statements include the accounts of
Doughtie's Foods, Inc. (the "Company") and its two majority-owned
subsidiaries. All material intercompany accounts and
transactions have been eliminated in consolidation.
Although the accompanying financial statements are unaudited,
management believes that they contain all adjustments (consisting
only of normal recurring accruals) necessary to present fairly
the financial position as of June 29, 1996 and December 30,
1995, results of operations for the quarters ended June 29, 1996
and July 1, 1995 and the six months ended June 29, 1996 and July
1, 1995 and cash flows for the six months ended June 29, 1996
and July 1, 1995. The results of operations for the periods
cited above are not necessarily indicative of the results to be
expected for the full year.
Note 2 -
On July 20, 1995, the Company sold certain properties located in
Carrol County, Maryland. The gross sale price was $165,000, with
net cash proceeds of $135,610. The cash was used to reduce the
Company's long-term debt. The net pretax gain on the sale was
$130,055.
On September 3, 1995, the Company sold substantially all of the
assets of the Home Food Service operation to Value Added Food
Services, Inc., a Maryland corporation (VAFS) and ceased
operations in the consumer portion of its business due to
unprofitability. Vernon W. Mules, Chairman of the Board of the
Company, and his wife, are the principal stockholders of VAFS.
All finance receivables, inventory, delivery equipment,
processing equipment and office equipment were sold. The total
sale price was $1,154,173 with a $115,417 cash down payment and
the balance of $1,038,756 in the form of a note secured by the
assets sold and personal guarantee of the Chairman. The note is
due in twelve monthly payments beginning September 3, 1996.
Interest is due monthly at the prime rate of the Company's bank.
The assets were sold primarily at net book value, except for
finance receivables which were discounted by 10%. The net
pretax loss on the sale, including abandoned assets and other
write-offs, was $96,498.
During the fourth quarter of 1995, the Company incurred a
$763,000 pretax charge primarily to reduce the carrying value of
fixed assets and inventories of its TWB Gourmet Foods, Inc. 70%
joint venture to estimated net realizable value and to provide
for other costs to exit the business. TWB has incurred net
operating losses since inception in the fourth quarter of 1994;
the 1995 net operating loss approximated $1,390,000 including the
$763,000 charge. On April 24, 1996, the Company entered into an
agreement to sell most of the assets of TWB. The conditions of
the sale were not met and settlement did not occur. The Company
remains committed to sell these assets.
Note 3 -
Inventories are stated at the lower of last-in, first-out (LIFO)
cost or market. Because inventory valuations under the LIFO
method are based on an annual determination, estimates must be
made at interim dates of year-end costs and levels of
inventories. The possibility of variations between estimated
year-end costs and levels of LIFO inventories and the actual
year-end amounts may materially affect the results of operations
as finally determined for the full year.
Note 4 -
Cash paid for interest totaled $133,409 and $128,373 for the
quarters ended June 29, 1996 and July 1, 1995 and $234,034 and
$217,936 for the six months ended June 29, 1996 and July 1, 1995,
respectively.
Income taxes resulted in a net refund of $166,900 and cash
payments of $217,000 for the quarters ended June 29, 1996 and
July 1, 1995 and a net refund of $166,900 and cash payments of
$451,000 for the six months ended June 29, 1996 and July 1, 1995,
respectively.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Sales for the quarter ended June 29, 1996 were $22.5 million
or 6.8% higher than sales for the prior year's second quarter of
$21.0 million. Sales for the six months ended June 29, 1996 were
$38.4 million or 2.7% higher than sales of $37.4 million for the
prior year's first six months. Sales under a contract with the
United States Department of Defense of $3.0 million more than
offset a decrease in sales of $1.6 million resulting from the
sale of the consumer operation in the third quarter of 1995.
The Company's gross profit margin (gross profit as a
percentage of net sales) marginally increased from 17.33% in the
quarter ended July 1, 1995, to 17.46% for the quarter ended June
29, 1996. The gross profit margin for the six months decreased
from 17.90% in 1995 to 17.13% in 1996. The elimination of the
consumer division with its higher mark-up was the primary cause
of this decline.
The Company's selling, general and administrative expenses,
expressed as a percentage of net sales decreased from 16.70% for
the second quarter of 1995 to 13.92% for the quarter ended June
29, 1996 and decreased from 18.13% for the first six months of
1995 to 14.77% for the six months ended June 29, 1996. The sale
of the consumer operation was the primary cause of the decline.
The remainder of the decline was due to a $254,000 decrease in
health and commercial insurance.
Interest expense for the quarter ended June 29, 1996
decreased to .59% of sales compared to .61% of sales for the
second quarter of 1995 and increased to .61% of sales for the
six months ended June 29, 1996 compared to .58% of sales for the
first six months of 1995. As the interest on the Company's debt
is prime related, interest expense will increase or decrease in
subsequent periods based on fluctuations in the prime rate and
the borrowing levels of the Company.
Income tax expense was $252,300 for the six months ended
June 29, 1996 compared to an income tax benefit of $5,600 for
the corresponding period of 1995. The lower effective tax
benefit in 1995 resulted from the non-recognition of tax benefits
for the net operating loss of a subsidiary that is not a member
of the controlled group for income tax purposes.
The Company reported net income of $420,400 or $.42 per
share for the first six months of 1996 compared to a net loss of
$299,900 or $.30 per share in the first six months of 1995.
Losses incurred by TWB Gourmet Foods, Inc. accounted for $.29 of
the 1995 per share net loss. TWB incurred no loss or income in
1996 due to the $763,000 pretax charge established in the fourth
quarter of 1995.
<PAGE>
Liquidity
The Company uses a number of liquidity indicators for
internal evaluation purposes. Certain of these measures as of
June 29, 1996 and December 30, 1995 are set forth below:
June 29, December 30,
1996 1995
____________ ____________
Total Debt to Total Debt Plus
Stockholders' Equity .53 .48
Current Assets to Current
Liabilities 5.27 5.66
Inventory Turnover (The
Annualized Cost of Goods
Sold to Ending Inventory) 10.87 12.99
The decreases in both the current assets to current
liabilities ratio and the inventory turnover ratio were caused
by the increases in inventory and debt that were required to
service a sales contract with the United States Department of
Defense.
On July 20, 1995, the Company sold certain properties
located in Carrol County, Maryland. The gross sale price was
$165,000, with net cash proceeds of $135,610. The cash was used
to reduce the Company's long-term debt. The net pretax gain on
the sale was $130,055.
On September 3, 1995, the Company sold substantially all of
the assets of the Home Food Service operation to Value Added Food
Services, Inc., a Maryland corporation ("VAFS"), and ceased
operations in the consumer portion of its business due to
unprofitability. Vernon W. Mules, Chairman of the Board of the
Company, and his wife are the principal stockholders of VAFS.
All finance receivables, inventory, delivery equipment,
processing equipment and office equipment were sold. The total
sale price was $1,154,173 with a $115,417 cash down payment and
the balance of $1,038,756 in the form of a note, which is secured
by the assets sold and the personal guarantee of the Chairman.
The note is due in twelve monthly payments beginning September 3,
1996. Interest is due monthly at the prime rate of the Company's
bank. The assets were sold primarily at net book value, except
for finance receivables which were discounted by 10%. The net
pretax loss on the sale, including abandoned assets and other
write-offs, was $96,498.
During the fourth quarter of 1995, the Company incurred a
$763,000 pretax charge primarily to reduce the carrying value of
fixed assets and inventories of its TWB Gourmet Foods, Inc. 70%
joint venture to estimated net realizable value and to provide
for other costs to exit the business. TWB has incurred net
operating losses since inception in the fourth quarter of 1994;
the 1995 net operating loss approximated $1,390,000 including the
$763,000 charge. On April 24, 1996, the Company entered into an
agreement to sell most of the assets of TWB. The conditions of
the sale were not met and settlement did not occur. The Company
remains committed to sell these assets.
Capital Resources
The Company's debt financing at June 29, 1996, consisted of
the following:
A $7,500,000 revolving bank note at prime. The prime rate
at June 29, 1996 was 8.25%. The note is due three years after
the annual renewal date, currently July, 1997, subject to annual
renewal. As of June 29, 1996, the Company had borrowed
$6,040,000 against this credit line and had $1,460,000 of
additional borrowing capacity.
A $2,000,000 Industrial Revenue Bond from a bank for the
purpose of expanding the Company's plant and office facilities in
Portsmouth, Virginia at an annual interest rate of 91.50% of
prime. As of June 29, 1996, the Company had fully utilized the
Industrial Revenue Bond and the outstanding balance was $800,000.
A $1,750,000 bank term loan at prime plus 0.50%. The loan
is to be repaid in quarterly installments of $100,000 beginning
in October 1996. The funds were used to finance the increased
inventory and accounts receivable required to service a one-year
contract awarded to the Company in January 1996 by the United
States Department of Defense to furnish food items to various
military installations. The contract contains three yearly
renewal options. The United States Department of Defense had
estimated annual sales volume to be approximately $19 million.
Based on actual sales volume to date, estimated annual sales
volume should approximate $12 million.
While the Company does not anticipate a material increase in
its capital requirements in the near future, such an increase, if
it occurs, is likely to be met through additional long-term debt
financing.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the business, to which
the Company or any of its subsidiaries is a party or to which any
of their property is the subject.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3(a). Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3(a) to the Company's
Annual Report on Form 10-K for the year ended December 29,
1984).
3(b). Bylaws of the Company (incorporated by
reference to Exhibit 3(b) to the Company's Annual Report on Form
10-K for the year ended December 30, 1995).
4(a). Amended and Restated Credit Agreement dated as
of June 14, 1996, between the Company and Crestar Bank relating
to a $7,500,000 revolving credit commitment and a $1,750,000 term
loan.
4(b)(1). Commercial Note dated June 14, 1996, made by
the Company in favor of Crestar Bank in the principal amount of
$7,500,000.
4(b)(2). Commercial Note dated June 14, 1996, made by
the Company in favor of Crestar Bank in the principal amount of
$1,750,000.
9. Voting Trust Agreement Dated June 17, 1986,
among Mary H. Doughtie, Mary D. Houfek, Barbara D. Horton and
Elsie D. Waddell, as Amended (incorporated by reference to
Exhibit 9 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1994).
10(a)(1). Agreement dated October 24, 1992 between
the Company and the Bakery, Confectionery and Tobacco Workers'
International Union, Local No. 66 (incorporated by reference to
Exhibit 10(a)(1) to the Company's Annual Report on Form 10-K for
the year ended December 26, 1992).
10(b)(1). Lease dated June 9, 1989 between the
Company and Cardon Associates relating to premises located at
800-840 Florida Avenue, Portsmouth, Virginia (incorporated by
reference to Exhibit 10(b)(1) to the Company's Annual Report on
Form 10-K for the year ended December 30, 1989).
10(b)(2). Lease Dated June 19, 1989 Between Keen
Leasing, Inc. of Carlisle, Pennsylvania and Doughtie's Foods,
Inc. And related Agreements relating to the sale and lease back
of the Company's Existing fleet of trucks(incorporated by
reference to Exhibit 10(b)(8) to the Company's Annual Report on
Form 10-K for the year ended December 30, 1989).
10(b)(3). Lease Agreement Dated January 26, 1996,
Between Keen Leasing, Inc., Lessor, and the Company, Lessee,
relating to the leasing of certain trucks (incorporated by
reference to Exhibit 10(b)(3) to the Company's Annual Report on
Form 10-K for the year ended December 30, 1995).
10(b)(4). Truck lease and Service Agreement dated May
2, 1991 between Lend Lease Trucks, Inc. and Dutterer's of
Manchester Corporation and certain amendments thereto relating
to the leasing of certain trucks (incorporated by reference to
Exhibit 10(b)(10) to the Company's Annual Report on Form 10-K
for the year ended December 28, 1991).
10(b)(5). Industrial Lease Agreement dated as of
August 17, 1994, between Wendell's Machine & Welding, Inc.,
lessor, TWB Gourmet Foods, Inc., lessee, and Riddle Associates,
Inc., agent, relating to premises located at 2620 Elmhurst Lane,
Portsmouth, Virginia (incorporated by reference to Exhibit
10(b)(7) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1994).
10(b)(6). Agreement to Sublease dated as of February
22, 1996 between the Company, Lessee, and Groves Faison, Lessor,
relating to premises located at 902 Cooke Avenue, Norfolk,
Virginia
(incorporated by reference to Exhibit 10(b)(6) to the Company's
Annual Report on Form 10-K for the year ended December 30, 1995).
10(b)(7). General Commercial Lease dated as of
February 21, 1996, between the Company, Lessee, and Starch
Realty, Inc., Lessor, relating to premises located at 902 Cooke
Avenue, Norfolk, Virginia (incorporated by reference to Exhibit
10(b)(7) to the Company's Annual Report on Form 10-K for the year
ended December 30, 1995).
10(c)(1). Security Agreement dated as of June 14,
1996, made by the Company to Crestar Bank granting a security
interest in accounts, inventory, equipment, and general
intangibles.
10(c)(2). Security Agreement dated as of June 14,
1996, made by Dutterer's of Manchester Corporation to Crestar
Bank granting a security interest in a promissory note dated
September 3, 1995, made by Value Added Food Services, Inc.,
payable to the order of the holder in the original principal
amount of $1,038,756.
10(c)(3). Guaranty Agreement dated as of June 14,
1996, made by Dutterer's of Manchester Corporation for the
benefit of Crestar Bank.
10(c)(4). Assignment dated as of June 14, 1996, made
by the Company to Crestar Bank assigning as a security interest
the Company's rights to receive all monies under Contract No.
SP0300-967-D-2900 dated January 26, 1996 between the Company and
the United States Department of Defense.
10(c)(5). Credit Line Deed of Trust dated as of June
14, 1996, made by the Company for the benefit of Crestar Bank
relating to certain property located at 2410 and 2415 Wesley
Street and 149 Chautauqua Avenue, Portsmouth, Virginia, securing
the maximum principal amount of $3,025,000.
10(c)(6). Indemnity Deed of Trust dated as of
June 12, 1996, made by Dutterer's of Manchester Corporation for
the benefit of Crestar Bank relating to certain property located
in Carroll County, Maryland, securing the maximum principal
amount of $1,200,000.
10(d)(1). Crestar Bank Defined Contribution Master
Plan and Trust Agreement, Basic Plan Document #01, an employee
benefit plan under which the Company became a participating
employer on January 1, 1992 (incorporated by reference to Exhibit
10(d)(1) to the Company's Annual Report on Form 10-K for the year
ended December 26, 1992).
10(d)(2). Crestar Bank Adoption Agreement #005, Non
Standardized Code 401(k) Profit Sharing Plan, an agreement by
which the Company became a participating employer in the Crestar
Bank Defined Contribution Master Plan and Trust Agreement dated
June 5, 1992 (incorporated by reference to Exhibit 10(d)(2) to
the Company's Annual Report on Form 10-K for the year ended
December 26, 1992).
10(e)(1). Stockholders' Agreement dated as of August
5, 1994, between TWB Gourmet Foods, Inc., the Company, and
Loetitia Adam-St. James and Chris L. St. James (incorporated by
reference to Exhibit 10(e)(1) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1994).
10(e)(2). License Agreement dated as of August 5,
1994, between Chris L. St. James and Loetitia Adam-St. James,
licensors, and TWB Gourmet Foods, Inc., licensee (incorporated by
reference to Exhibit 10(e)(2) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1994).
10(e)(3). Agreement dated as of August 5, 1994,
between the Company and TWB Gourmet Foods, Inc., establishing a
$600,000 line of credit (incorporated by reference to
Exhibit 10(e)(3) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994).
10(e)(4). Security Agreement dated as of August 5,
1994, made by TWB Gourmet Foods, Inc. to the Company
granting the Company a security interest in accounts, equipment,
inventory, and general intangibles (incorporated by reference to
Exhibit 10(e)(4) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994).
10(e)(5). Line of Credit Note dated August 5, 1994,
made by TWB Gourmet Foods, Inc. in favor of the Company in the
principal amount of $600,000 (incorporated by reference to
Exhibit 10(e)(5) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994).
10(e)(6). Subsidiary Security Agreement dated as of
September 13, 1995, made by TWB Gourmet Foods, Inc. to the
Company granting the Company a security interest in accounts,
chattel paper, instruments, contract rights, inventory, and
general intangibles (incorporated by reference to Exhibit
10(c)(2) to the Company's Annual Report on Form 10-K for the year
ended December 30, 1995).
10(f)(1). Closing Agreement dated as of September 3,
1995, among Dutterer's of Manchester Corporation, Doughtie's
Foods, Inc., Value Added Food Services, Inc., Vernon W. Mules,
and Kathryn M. Mules (incorporated by reference to Exhibit
10(f)(1) to the Company's Annual Report on Form 10-K for the year
ended December 30, 1995).
10(f)(2). Term Note of Value Added Food Services,
Inc. dated as of September 3, 1995, in the original principal
amount of $1,077,821.00 (incorporated by reference to Exhibit
10(f)(2) to the Company's Annual Report on Form 10-K for the year
ended December 30, 1995).
10(f)(3). Amendment to Term Note dated as of October
1, 1995, between Value Added Food Services, Inc. and Dutterer's
of Manchester Corporation (incorporated by reference to Exhibit
10(f)(3) to the Company's Annual Report on Form 10-K for the year
ended December 30, 1995).
10(f)(4). Assumption of Liabilities and Obligations
dated as of September 3, 1995, by Value Added Food Services, Inc.
and Vernon W. Mules and Kathryn M. Mules for the benefit of
Dutterer's of Manchester Corporation and Doughtie's Foods, Inc
(incorporated by reference to Exhibit 10(f)(4)to the Company's
Annual Report on Form 10-K for the year ended December 30,
1995).
10(f)(5). Bill of Sale dated as of September 3, 1995
by Doughtie's Foods, Inc. and Dutterer's of Manchester
Corporation to Value Added Food Services, Inc. (incorporated by
reference to Exhibit 10(f)(5)to the Company's Annual Report on
Form 10-K for the year ended December 30, 1995).
10(f)(6). Guaranty dated as of September 3, 1995, by
Kathryn M. Mules, in favor of Dutterer's of Manchester
Corporation (incorporated by reference to Exhibit 10(f)(6)
to the Company's Annual Report on Form 10-K for the year ended
December 30, 1995).
10(f)(7). Guaranty dated as of September 3, 1995, by
Vernon W. Mules, in favor of Dutterer's of Manchester
Corporation (incorporated by reference to Exhibit 10(f)(7)
to the Company's Annual Report on Form 10-K for the year ended
December 30, 1995).
10(f)(8). Security Agreement dated as of September 3,
1995, between Value Added Food Services, Inc. And Dutterer's of
Manchester Corporation (incorporated by reference to Exhibit
10(f)(8)to the Company's Annual Report on Form 10-K for the year
ended December 30, 1995).
27. Financial Data Schedule.
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the
quarter ended June 29, 1996.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act
of 1934 the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
DOUGHTIE'S FOODS, INC.
/s/ Marion S. Whitfield, Jr.
----------------------------
August 12, 1996 By: Marion S. Whitfield, Jr.
(Signature)
Senior Vice President
(Principal Financial and
Accounting Officer)
<PAGE>
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, made
as of the 14th day of June, 1996, by and between DOUGHTIE'S
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, & Boothe,
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 Kaufman & Canoles, 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.
2410 Wesley Street DOUGHTIE'S FOODS, INC.
Portsmouth, VA 23707
By: Marion S. Whitfield, Jr.
------------------------
(Signature)
Senior Vice President
CRESTAR BANK
By: Bruce W. Nave
------------------------
(Signature)
Vice President
<PAGE> 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 500 East Main Street, Norfolk,
Virginia 23510, 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.
<PAGE>
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.
<PAGE>
Commercial Note - Crestar Bank
CRESTAR DOUGHTIE'S FOODS, INC.
June 14, 1996 Borrower
Date
Seven Million Five Hundred Thousand------------------------------
- ----------------------------Dollars Loan Amount
($7,500,000.00) Bruce W. Nave
---------------
Officer
__ Original _x_ Renewal Loan
For Value Received, the undersigned (whether one or more) jointly
and severally promise to pay to the order of Crestar Bank (the
"Bank") at any of its offices, or at such place as the Bank may
in writing designate, without offset and in immediately available
funds, the Loan Amount shown above, including or plus interest,
and any other amounts due, upon the terms specified below.
IMPORTANT NOTICE
THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH
CONSTITUTES A WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR
AND ALLOWS THE CREDITOR TO OBTAIN A JUDGMENT AGAINST YOU WITHOUT
ANY FURTHER NOTICE.
Repayment Terms
Master Borrowing Note
This is an open and revolving line of credit; you may borrow an
aggregate principal amount up to the Loan Amount outstanding at
any one time.
* Principal on demand, plus interest, but the undersigned
shall be liable for only so much of the Loan Amount
shown above as shall be equal to the total advanced to or for the
undersigned, or any of them, by the Bank from time to
time, less all payments made by or for the undersigned and
applied by the Bank to principal, plus interest on each
such advance, and any other amounts due all as shown on the
Bank's books and records, which shall be prima facie
evidence of the amount owed. *SEE ADDENDUM.
This Master Borrowing arrangement will terminate upon
written notice from the Bank to the undersigned, or if such
notice is not sooner given, _________________ from the date of
this Note, unless an alternative termination date is
indicated in the Agreement, as defined below.
Additional Terms And Conditions
This Note is governed by additional terms and conditions
contained in an Amended and Restated Credit Agreement between the
undersigned and the Bank dated June 14, 1996, and any
modifications, renewals, extensions or replacements thereof (the
"Agreement"), which is incorporated herein by reference. In the
event of a conflict between any term or condition contained in
this Note and in the Agreement, such term or condition of the
Agreement shall control.
If this Note is payable on demand, the Bank shall have the right
to demand payment at any time even if an event of default (as
identified herein) has not occurred.
Interest
Accrued interest will be payable on the last day of each month,
beginning on July 1, 1996. Interest on a Term-Fixed Payment Loan
with a fixed interest rate or an Instalment-Simple Interest Loan
will accrue on a 30/360 basis. On all other loan types, interest
will accrue daily on an actual/360 basis (that is, on the actual
number of days elapsed over a year of 360 days) unless otherwise
stated here: _________________________ Each scheduled payment
made on this Note shall be applied to accrued interest before it
is applied to principal. Interest shall accrue from the date of
this Note on the unpaid balance and shall continue to accrue
after maturity, whether by acceleration or otherwise, until this
Note is paid in full. If the stated Rate (as defined below) is
based on the Prime Rate of Crestar Bank, the interest rate is
subject to increase or decrease at the sole option of the Bank.
Subject to the above, interest per annum payable on this Note
(the "Rate") shall be Prime Rate.
The "Prime Rate" shall be the rate established from time to
time by Crestar Bank. as a reference for fixing the lending
rate for commercial loans. The Prime Rate is a reference rate
only and does not necessarily represent the lowest rate of
interest charged for commercial borrowings.
Adjustments to interest rates subject to change shall be
effective as of the date the Prime Rate changes.
Collateral
Any collateral pledged to the Bank to secure any of the
undersigned's existing or future liabilities to the Bank shall
secure this Note. To the extent permitted by law, each of the
undersigned grants to the Bank a security interest in and a lien
upon all deposits or investments maintained by the undersigned
with, and all indebtedness owed to the undersigned by, the Bank
or any of its affiliates.
This Note is also secured by the following collateral and
proceeds thereof: SEE SCHEDULE A, ATTACHED.
All of the foregoing security is referred to collectively as the
"Collateral". The Collateral is security for the payment of this
Note and any other liability (including overdrafts and future
advances) of the undersigned to the Bank, however evidenced, now
existing or hereafter incurred, matured or unmatured, direct or
indirect, absolute or contingent, several, joint, or joint and
several, including any extensions, modifications or renewals.
The proceeds of any Collateral may be applied against the
liabilities of the undersigned to the Bank in such order as the
Bank deems proper.
Loan Purpose And Updated Financial Information Required
The undersigned warrant and represent
that the loan evidenced by this Note is being made solely for the
purpose of acquiring or carrying on a business, professional or
commercial activity or acquiring real or personal property as an
investment (other than a personal investment) or for carrying on
an investment activity (other than a personal investment
activity). The undersigned agree to provide to the Bank updated
financial information, including, but not limited to, tax
returns, current financial statements in form satisfactory to the
Bank, as well as additional information, reports or schedules
(financial or otherwise), all as the Bank may from time to time
request.
Default, Acceleration And Setoff
*Any one of the
following shall constitute an event of default under the terms of
this Note: (1) the failure to make when due any instalment or
other payment, whether of principal, interest, late charges or
other authorized charges due under this Note, or the failure to
pay the amount demanded by the Bank if this Note is payable on
demand; (2) the death, dissolution, merger, acquisition,
consolidation or termination of existence of the undersigned, any
guarantor of the indebtedness of any of the undersigned to the
Bank, any endorser, or any other party to this Note (collectively
called a "Party"); (3) the insolvency or inability to pay debts
as they mature of any Party, or the application for the
appointment of a receiver for any Party or the filing of a
petition under any provision of the Bankruptcy Code or other
insolvency law, statute or proceeding by or against any Party or
any assignment for the benefit of creditors by or against any
Party; (4) the entry of a judgment against any Party or the
issuance or service of any attachment, levy or garnishment
against any Party or the property of any Party, or the
repossession or seizure of property of any Party; (5) a
determination by the Bank that it deems itself insecure or that a
material adverse change in the financial condition of any Party
or decline or depreciation in the value or market value of any
Collateral has occurred since the date of this Note or is
reasonably anticipated; (6) the failure of any Party to perform
any other obligation to the Bank under this Note or under any
other agreement with the Bank; (7) the occurrence of an event of
default with respect to any existing or future indebtedness of
any Party to the Bank or any other creditor of the Party; (8) a
material change in the ownership, control or management of any
Party that is an entity, unless such change is approved by the
Bank in its sole discretion; (9) if any Party gives notice to the
Bank purporting to terminate such Party's obligations under or
with respect to this Note; (10) the sale or transfer by a Party
of all or substantially all of such Party's assets other than in
the ordinary course of business; or (11) any Party commits fraud
or makes a material misrepresentation at any time in connection
with this Note. If an event of default occurs, or in the event
of non-payment of this Note in full at maturity, the entire
unpaid balance of this Note shall, at the option of the Bank,
become immediately due and payable, without notice or demand.
Upon the occurrence of an event of default, the Bank shall be
entitled to interest on the unpaid balance at the stated Rate
plus 2.00% (the "Default Rate"), unless otherwise required by
law, until paid in full. To the extent permitted by law, upon
default, the Bank will have the right, in addition to all other
remedies permitted by law, to set off the amount due under this
Note or due under any other obligation to the Bank against any
and all accounts, whether checking or savings or otherwise,
credits, money, stocks, bonds or other security or property of
any nature whatsoever on deposit with, held by, owed by, or in
the possession of, the Bank or any of its affiliates to the
credit of or for the account of any Party, without notice to or
consent by any Party. The remedies provided in this Note and any
other agreement between the Bank and any Party are cumulative and
not exclusive of any remedies provided by law. *SEE ADDENDUM.
Capital Adequacy
Should the Bank, after the date hereof, determine that the
adoption of any law or regulation regarding capital adequacy, or
any change in the interpretation or administration thereof, has
or would have the effect of reducing the Bank's rate of return
hereunder to a level below that which the Bank could have
achieved but for such adoption or change, by an amount which the
Bank considers to be material, then, from time to time, 30 days
after written demand by the Bank, the undersigned shall pay to
the Bank such additional amounts as will compensate the Bank for
such reduction. Each demand by the Bank shall be made in good
faith and shall be accompanied by a certificate claiming
compensation under this paragraph and stating the amounts to be
paid to it hereunder and the basis therefor.
Late Charges And Other Authorized Charges
*If this is an Instalment-Simple
Interest loan, if any portion of a payment is at least seven (7)
days past due, the undersigned agree to pay a late charge of 5%
of the amount which is past due. On all other loan types, the
undersigned agree to pay such late charge if any portion of a
payment is at least ten (10) days past due. Unless prohibited by
applicable law, the undersigned agree to pay the fee established
by the Bank from time to time for returned checks if a payment is
made on this Note with a check and the check is dishonored for
any reason after the second presentment. In addition, as
permitted by applicable law, the undersigned agree to pay the
following: (1) all expenses, including, without limitation, any
and all court or collection costs, and attorneys' fees of 25% of
the unpaid balance of this Note, or actual attorneys' fees if in
excess of such amount, whether suit be brought or not, incurred
in collecting this Note; (2) all costs incurred in evaluating,
preserving or disposing of any Collateral granted as security for
the payment of this Note, including the cost of any audits,
appraisals, appraisal updates, reappraisals or environmental
inspections which the Bank from time to time in its sole
discretion may deem necessary; (3) any premiums for property
insurance purchased on behalf of the undersigned or on behalf of
the owner(s) of the Collateral pursuant to any security
instrument relating to the Collateral; (4) any expenses or costs
incurred in defending any claim arising out of the execution of
this Note or the obligation which it evidences, or otherwise
involving the employment by the Bank of attorneys with respect to
this Note and the obligations it evidences; and (5) any other
charges permitted by applicable law. The undersigned agree to
pay such authorized charges on demand or, at the Bank's option,
such charges may be added to the unpaid balance of the Note and
shall accrue interest at the stated Rate. Upon the occurrence of
an event of default, interest shall accrue at the Default Rate.
*SEE ADDENDUM.
Waivers
The undersigned and each other Party waive presentment, demand,
protest, notice of protest and notice of dishonor and waive all
exemptions, whether homestead or otherwise, as to the obligations
evidenced by this Note. The undersigned and each other Party
waive any rights to require the Bank to proceed against any other
Party or person or any Collateral before proceeding against the
undersigned or any of them, or any other Party, and agree that
without notice to any Party and without affecting any Party's
liability, the Bank, at any time or times, may grant extensions
of the time for payment or other indulgences to any Party or
permit the renewal or modification of this Note, or permit the
substitution, exchange or release of any Collateral for this Note
and may add or release any Party primarily or secondarily liable.
The undersigned and each other Party agree that the Bank may
apply all monies made available to it from any part of the
proceeds of the disposition of any Collateral or by exercise of
the right of setoff either to the obligations under this Note or
to any other obligations of any Party to the Bank, as the Bank
may elect from time to time. The undersigned also waive any
rights afforded to them by Sections 49-25 and 49-26 of the Code
of Virginia of 1950 as amended.
TO THE EXTENT LEGALLY PERMISSIBLE, THE UNDERSIGNED WAIVE ANY
RIGHT TO TRIAL BY JURY IN ANY LITIGATION RELATING TO TRANSACTIONS
UNDER THIS NOTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
Severability, Amendments And No Waiver By Bank
Any provision of this Note which is
prohibited or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the
remaining provisions of this Note. No amendment, modification,
termination or waiver of any provision of this Note, nor consent
to any departure by the undersigned from any term of this Note,
shall in any event be effective unless it is in writing and
signed by an authorized employee of the Bank, and then such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. If the
interest Rate is tied to an external index and the index becomes
unavailable during the term of this loan, the Bank may designate
a substitute index with notice to the Borrower. No failure or
delay on the part of the Bank to exercise any right, power or
remedy under this Note shall be construed as a waiver of the
right to exercise the same or any other right at any time.
Liability, Successors And Assigns And Governing Law
Each of the undersigned shall be
jointly and severally obligated and liable on this Note. This
Note shall apply to and bind each of the undersigned's heirs,
personal representatives, successors and assigns and shall inure
to the benefit of the Bank, its successors and assigns. This
Note shall be governed by the internal laws of the Commonwealth
of Virginia and applicable federal law.
By signing below, the undersigned agree to the terms of this Note
and acknowledge receipt of a loan in the Loan Amount shown above.
DOUGHTIE'S FOODS, INC.
By: Marion S. Whitfield, Jr.
------------------------
(Signature)
Senior Vice President
<PAGE>
SCHEDULE A
TO COMMERCIAL NOTE
DATED JUNE 14, 1996,
MADE BY DOUGHTIE'S FOODS, INC.
1. Credit line deed of trust dated of even date, from
Doughtie's Foods, Inc. ("Borrower") to David A. Durham
and David Singleton, trustees ("Trustees"), on real estate
and improvements located in Portsmouth, Virginia.
2. Guaranty of even date, from Dutterer's of Manchester
Corp. ("Dutterer").
3. Credit line deed of trust dated of even date, from
Dutterer's to Trustees, on real estate and improvements
located in Manchester, Maryland.
4. Security Agreement from Borrower dated of even date, on
Accounts, Inventory, Equipment and General Intangibles.
5. Security Agreement from Dutterer's dated of even date, on a
promissory note dated September 3, 1995, made by Value Added
Food Services, Inc., and payable to Dutterer's in the
original principal amount of $1,038.756.
6. Borrower's Assignment dated of even date pursuant to the
Assignment of Claims Act, of its rights to receive monies
due and to become due to Borrower pursuant to its contract
with the United States of America (Defense Logistics Agency)
for the supply of foods to military facilities in southern
Virginia.
DOUGHTIE'S FOODS, INC.,
a Virginia corporation
By: Marion S. Whitfield, Jr.
(Signature)
Its: Senior Vice President
<PAGE>
ADDENDUM
TO COMMERCIAL NOTE
DATED JUNE 14, 1996,
MADE BY DOUGHTIE'S FOODS, INC.
1. Notwithstanding the provisions of this Note under the
heading, "Repayment Terms," principal shall be payable on the
Termination Date, as defined in the Agreement (as hereinafter
defined in this Note).
2. Notwithstanding the provisions of this Note under the
heading, "Default, Acceleration and Setoff," the only event of
default under this Note shall be an Event of Default as defined
in the Agreement.
3. Notwithstanding the provisions of this Note under the
heading, "Late Charges And Other Authorized Charges," attorneys'
fees payable to the Bank shall be limited to reasonable fees and
expenses of counsel to the Bank.
DOUGHTIE'S FOODS, INC.,
a Virginia corporation
By: Marion S. Whitfield, Jr.
------------------------
(Signature)
Its: Senior Vice President
<PAGE>
Commercial Note - Crestar Bank
DOUGHTIE'S FOODS, INC. June 14,
1996 Borrower Date
One Million Seven Hundred Fifty Thousand-------------------------
- --------------------Dollars Loan Amount
($1,750,000.00) Bruce W. Nave
---------------
Loan Officer _xOriginal __ Renewal Loan
For Value Received, the undersigned (whether one or more) jointly
and severally promise to pay to the order of Crestar Bank (the
"Bank") at any of its offices, or at such place as the Bank may
in writing designate, without offset and in immediately available
funds, the Loan Amount shown above, including or plus interest,
and any other amounts due, upon the terms specified below.
Repayment Terms
Term--Variable Payment.
In 17 consecutive quarterly instalments of principal of $100,000
each, plus interest, payable on the first day of each calendar
quarter, beginning October 1, 1996, and a final payment of
$50,000 plus interest and any other amounts owned due on January
1, 2001.
Additional Terms And Conditions
This Note is governed by additional terms and conditions
contained in an Amended and Restated Credit Agreement between the
undersigned and the Bank dated June 14, 1996, and any
modifications, renewals, extensions or replacements thereof (the
"Agreement"), which is incorporated herein by reference. In the
event of a conflict between any term or condition contained in
this Note and in the Agreement, such term or condition of the
Agreement shall control.
If this Note is payable on demand, the Bank shall have the right
to demand payment at any time even if an event of default (as
identified herein) has not occurred.
Interest
Accrued interest will be payable on the first day of each month,
beginning on July 1, 1996. Interest on a Term-Fixed Payment Loan
with a fixed interest rate or an Instalment-Simple Interest Loan
will accrue on a 30/360 basis. On all other loan types, interest
will accrue daily on an actual/360 basis (that is, on the actual
number of days elapsed over a year of 360 days) unless otherwise
stated here: _________________________ Each scheduled payment
made on this Note shall be applied to accrued interest before it
is applied to principal. Interest shall accrue from the date of
this Note on the unpaid balance and shall continue to accrue
after maturity, whether by acceleration or otherwise, until this
Note is paid in full. If the stated Rate (as defined below) is
based on the Prime Rate of Crestar Bank, the interest rate is
subject to increase or decrease at the sole option of the Bank.
Subject to the above, interest per annum payable on this Note
(the "Rate") shall be Prime Rate plus 1/2%.
The "Prime Rate" shall be the rate established from time to
time by Crestar Bank as a reference for fixing the lending rate
for commercial loans. The Prime Rate is a reference rate only
and does not necessarily represent the lowest rate of interest
charged for commercial borrowings.
Adjustments to interest rates subject to change shall be
effective as of the date the Prime Rate changes.
*SEE ADDENDUM
Collateral
Any collateral pledged to the
Bank to secure any of the undersigned's existing or future
liabilities to the Bank shall secure this Note. To the extent
permitted by law, each of the undersigned grants to the Bank a
security interest in and a lien upon all deposits or investments
maintained by the undersigned with, and all indebtedness owed to
the undersigned by, the Bank or any of its affiliates.
This Note is also secured by the following collateral and
proceeds thereof: SEE SCHEDULE A, ATTACHED.
All of the foregoing security is referred to collectively as the
"Collateral". The Collateral is security for the payment of this
Note and any other liability (including overdrafts and future
advances) of the undersigned to the Bank, however evidenced, now
existing or hereafter incurred, matured or unmatured, direct or
indirect, absolute or contingent, several, joint, or joint and
several, including any extensions, modifications or renewals.
The proceeds of any Collateral may be applied against the
liabilities of the undersigned to the Bank in such order as the
Bank deems proper.
Loan Purpose And Updated Financial Information Required
The undersigned warrant and represent that the loan evidenced by
this Note is being made solely for the purpose of acquiring or
carrying on a business, professional or commercial activity or
acquiring real or personal property as an investment (other than
a personal investment) or for carrying on an investment activity
(other than a personal investment activity). The undersigned
agree to provide to the Bank updated financial information,
including, but not limited to, tax returns, current financial
statements in form satisfactory to the Bank, as well as
additional information, reports or schedules (financial or
otherwise), all as the Bank may from time to time request.
Default, Acceleration And Setoff
*Any one of the following shall constitute an event of
default under the terms of this Note: (1) the failure to make
when due any instalment or other payment, whether of principal,
interest, late charges or other authorized charges due under this
Note, or the failure to pay the amount demanded by the Bank if
this Note is payable on demand; (2) the death, dissolution,
merger, acquisition, consolidation or termination of existence of
the undersigned, any guarantor of the indebtedness of any of the
undersigned to the Bank, any endorser, or any other party to this
Note (collectively called a "Party"); (3) the insolvency or
inability to pay debts as they mature of any Party, or the
application for the appointment of a receiver for any Party or
the filing of a petition under any provision of the Bankruptcy
Code or other insolvency law, statute or proceeding by or against
any Party or any assignment for the benefit of creditors by or
against any Party; (4) the entry of a judgment against any Party
or the issuance or service of any attachment, levy or garnishment
against any Party or the property of any Party, or the
repossession or seizure of property of any Party; (5) a
determination by the Bank that it deems itself insecure or that a
material adverse change in the financial condition of any Party
or decline or depreciation in the value or market value of any
Collateral has occurred since the date of this Note or is
reasonably anticipated; (6) the failure of any Party to perform
any other obligation to the Bank under this Note or under any
other agreement with the Bank; (7) the occurrence of an event of
default with respect to any existing or future indebtedness of
any Party to the Bank or any other creditor of the Party; (8) a
material change in the ownership, control or management of any
Party that is an entity, unless such change is approved by the
Bank in its sole discretion; (9) if any Party gives notice to the
Bank purporting to terminate such Party's obligations under or
with respect to this Note; (10) the sale or transfer by a Party
of all or substantially all of such Party's assets other than in
the ordinary course of business; or (11) any Party commits fraud
or makes a material misrepresentation at any time in connection
with this Note. If an event of default occurs, or in the event
of non-payment of this Note in full at maturity, the entire
unpaid balance of this Note shall, at the option of the Bank,
become immediately due and payable, without notice or demand.
Upon the occurrence of an event of default, the Bank shall be
entitled to interest on the unpaid balance at the stated Rate
plus 2.00% (the "Default Rate"), unless otherwise required by
law, until paid in full. To the extent permitted by law, upon
default, the Bank will have the right, in addition to all other
remedies permitted by law, to set off the amount due under this
Note or due under any other obligation to the Bank against any
and all accounts, whether checking or savings or otherwise,
credits, money, stocks, bonds or other security or property of
any nature whatsoever on deposit with, held by, owed by, or in
the possession of, the Bank or any of its affiliates to the
credit of or for the account of any Party, without notice to or
consent by any Party. The remedies provided in this Note and any
other agreement between the Bank and any Party are cumulative and
not exclusive of any remedies provided by law. *SEE ADDENDUM.
Capital Adequacy
Should the Bank, after the date hereof,
determine that the adoption of any law or regulation regarding
capital adequacy, or any change in the interpretation or
administration thereof, has or would have the effect of reducing
the Bank's rate of return hereunder to a level below that which
the Bank could have achieved but for such adoption or change, by
an amount which the Bank considers to be material, then, from
time to time, 30 days after written demand by the Bank, the
undersigned shall pay to the Bank such additional amounts as will
compensate the Bank for such reduction. Each demand by the Bank
shall be made in good faith and shall be accompanied by a
certificate claiming compensation under this paragraph and
stating the amounts to be paid to it hereunder and the basis
therefor.
Late Charges And Other Authorized Charges
*If this is an Instalment-Simple Interest loan, if any portion of
a payment is at least seven (7) days past due, the undersigned
agree to pay a late charge of 5% of the amount which is past due.
On all other loan types, the undersigned agree to pay such late
charge if any portion of a payment is at least ten (10) days past
due. Unless prohibited by applicable law, the undersigned agree
to pay the fee established by the Bank from time to time for
returned checks if a payment is made on this Note with a check
and the check is dishonored for any reason after the second
presentment. In addition, as permitted by applicable law, the
undersigned agree to pay the following: (1) all expenses,
including, without limitation, any and all court or collection
costs, and attorneys' fees of 25% of the unpaid balance of this
Note, or actual attorneys' fees if in excess of such amount,
whether suit be brought or not, incurred in collecting this Note;
(2) all costs incurred in evaluating, preserving or disposing of
any Collateral granted as security for the payment of this Note,
including the cost of any audits, appraisals, appraisal updates,
reappraisals or environmental inspections which the Bank from
time to time in its sole discretion may deem necessary; (3) any
premiums for property insurance purchased on behalf of the
undersigned or on behalf of the owner(s) of the Collateral
pursuant to any security instrument relating to the Collateral;
(4) any expenses or costs incurred in defending any claim arising
out of the execution of this Note or the obligation which it
evidences, or otherwise involving the employment by the Bank of
attorneys with respect to this Note and the obligations it
evidences; and (5) any other charges permitted by applicable law.
The undersigned agree to pay such authorized charges on demand
or, at the Bank's option, such charges may be added to the unpaid
balance of the Note and shall accrue interest at the stated Rate.
Upon the occurrence of an event of default, interest shall accrue
at the Default Rate. *SEE ADDENDUM.
Waivers
The undersigned and each
other Party waive presentment, demand, protest, notice of protest
and notice of dishonor and waive all exemptions, whether
homestead or otherwise, as to the obligations evidenced by this
Note. The undersigned and each other Party waive any rights to
require the Bank to proceed against any other Party or person or
any Collateral before proceeding against the undersigned or any
of them, or any other Party, and agree that without notice to any
Party and without affecting any Party's liability, the Bank, at
any time or times, may grant extensions of the time for payment
or other indulgences to any Party or permit the renewal or
modification of this Note, or permit the substitution, exchange
or release of any Collateral for this Note and may add or release
any Party primarily or secondarily liable. The undersigned and
each other Party agree that the Bank may apply all monies made
available to it from any part of the proceeds of the disposition
of any Collateral or by exercise of the right of Setoff either to
the obligations under this Note or to any other obligations of
any Party to the Bank, as the Bank may elect from time to time.
The undersigned also waive any rights afforded to them by
Sections 49-25 and 49-26 of the Code of Virginia of 1950 as
amended.
TO THE EXTENT LEGALLY PERMISSIBLE, THE UNDERSIGNED WAIVE ANY
RIGHT TO TRIAL BY JURY IN ANY LITIGATION RELATING TO TRANSACTIONS
UNDER THIS NOTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
Severability, Amendments And No Waiver By Bank
Any provision of this Note which is prohibited or unenforceable
shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of
this Note. No amendment, modification, termination or waiver of
any provision of this Note, nor consent to any departure by the
undersigned from any term of this Note, shall in any event be
effective unless it is in writing and signed by an authorized
employee of the Bank, and then such waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given. If the interest Rate is tied to an
external index and the index becomes unavailable during the term
of this loan, the Bank may designate a substitute index with
notice to the Borrower. No failure or delay on the part of the
Bank to exercise any right, power or remedy under this Note shall
be construed as a waiver of the right to exercise the same or any
other right at any time.
Liability, Successors And Assigns And Governing Law
Each of the undersigned shall be jointly and severally obligated
and liable on this Note. This Note shall apply to and bind each
of the undersigned's heirs, personal representatives, successors
and assigns and shall inure to the benefit of the Bank, its
successors and assigns. This Note shall be governed by the
internal laws of the Commonwealth of Virginia and applicable
federal law.
By signing below, the undersigned agree to the terms of this Note
and acknowledge receipt of a loan in the Loan Amount shown above.
DOUGHTIE'S FOODS, INC.
By: Marion S. Whitfield, Jr.
-------------------------
(Signature)
Senior Vice President
<PAGE>
SCHEDULE A
TO COMMERCIAL NOTE
DATED JUNE 14, 1996,
MADE BY DOUGHTIE'S FOODS, INC.
1. Credit line deed of trust dated of even date, from
Doughtie's Foods, Inc. ("Borrower") to David A. Durham
and David Singleton, trustees ("Trustees"), on real estate
and improvements located in Portsmouth, Virginia.
2. Guaranty of even date, from Dutterer's of Manchester
Corp. ("Dutterer").
3. Credit line deed of trust dated of even date, from
Dutterer's to Trustees, on real estate and improvements
located in Manchester, Maryland.
4. Security Agreement from Borrower dated of even date, on
Accounts, Inventory, Equipment and General Intangibles.
5. Security Agreement from Dutterer's dated of even date, on a
promissory note dated September 3, 1995, made by Value Added
Food Services, Inc., and payable to Dutterer's in the
original principal amount of $1,038.756.
6. Borrower's Assignment dated of even date pursuant to the
Assignment of Claims Act, of its rights to receive monies
due and to become due to Borrower pursuant to its contract
with the United States of America (Defense Logistics Agency)
for the supply of foods to military facilities in southern
Virginia.
DOUGHTIE'S FOODS, INC.,
a Virginia corporation
By: Marion S. Whitfield, Jr.
--------------------------
(Signature)
Its: Senior Vice President
<PAGE>
ADDENDUM
TO COMMERCIAL NOTE
DATED JUNE 14, 1996,
MADE BY DOUGHTIE'S FOODS, INC.
1. The maker of this Note shall have the right, upon
written notice to the Bank, so long as no Event of Default (as
defined in the Agreement) shall have occurred and be continuing,
to elect to have the interest rate on this Note converted, on a
prospective basis, from the floating rate specified in this Note
to a fixed rate of interest (the "Conversion"), such fixed rate
of interest to be specified by the Bank on the effective date of
the conversion.
2. Notwithstanding the provisions of this Note under the
heading, "Default, Acceleration and Setoff," the only event of
default under this Note shall be an Event of Default as defined
in the Agreement.
3. Notwithstanding the provisions of this Note under the
heading, "Late Charges And Other Authorized Charges," attorneys'
fees payable to the Bank shall be limited to reasonable fees and
expenses of counsel to the Bank.
DOUGHTIE'S FOODS, INC.,
a Virginia corporation
By: Marion S. Whitfield, Jr.
------------------------
(Signature)
Its: Senior Vice President
<PAGE>
Security Agreement
This Security Agreement is made by DOUGHTIE'S FOODS, INC., a
Virginia corporation (the Owner) for the use and benefit of
Crestar Bank (the Bank).
1. Security Agreement. In order to induce the Bank from time to
time to extend or continue to extend credit to DOUGHTIE'S FOODS,
INC. (the Borrower), the Owner (which may include the Borrower)
hereby grants the Bank, its successors and assigns, a security
interest in the collateral and all proceeds, products, rents and
profits thereof and all revenues from the right to use the
collateral as described below (the Collateral) to secure the
payment of all present and future indebtedness of every kind and
description, however evidenced, of the Borrower to the Bank,
whether such indebtedness is direct or indirect, fixed or
contingent, liquidated or unliquidated, including any extensions,
modifications or renewals thereof (the Indebtedness) and to
secure the performance by the Owner of the agreements and
warranties contained in this Security Agreement.
2. Collateral. As used in this Security Agreement, the term
"Collateral," whether now existing or hereafter acquired, shall
mean a blanket security interest in all accounts ("Accounts"),
inventory ("Inventory"), furniture, fixtures and equipment
("Equipment"), general intangibles ("General
Intangibles"),instruments, documents and chattel paper,
including, without limitation, all goods represented thereby and
all goods that may be reclaimed or repossessed from or returned
by account debtors and all proceeds, products, rents and profits
thereof (as all such terms are defined in the Uniform Commercial
Code).
All or a portion of the Collateral will be attached as a fixture
to realty located at 2410 and 2415 Wesley Street and 800-840
Florida Avenue, Portsmouth, Virginia.
The Owner also grants the Bank a security interest in all rights
to which an owner of the Collateral is now or may become entitled
by virtue of owning such Collateral including, without
limitation, interest, cash dividends, stock dividends and stock
rights, all of which shall, when received, and upon request by
the Bank, be delivered to the Bank with written authority to
sell, transfer or rehypothecate the same.
If the Collateral includes all rights, title and interest in an
Estate or Trust, the security interest shall not apply to any
shares of capital stock of Crestar Financial Corporation or any
of its affiliates, or to any units of participation in the Bank's
Common Trust Fund held by the Estate or Trust, but shall apply to
any proceeds from the sale of such stocks and units or cash
dividends thereof.
3. Accounts. If the Collateral includes Accounts:
a) The Owner warrants that each and every Account, now owned or
hereafter acquired, is a bona fide existing obligation, valid and
enforceable against the account debtor, for goods sold or leased
and delivered or services rendered in the ordinary course of
business; it is subject to no dispute, defense or offset; the
Owner has good title to the Account and has full right and power
to grant the Bank a security interest in the Collateral; b) The
Owner will immediately notify the Bank of any Account to which
the above warranties are or become untrue; c) The Owner will
prepare and deliver to the Bank, at the Bank's request, a listing
and aging of all Accounts and any further schedules or
information that the Bank may require. d) The Bank shall have
the right at any time to notify account debtors of its security
interest in the Accounts and require payments to be made directly
to the Bank. The Owner hereby appoints the Bank and any officer
or employee of the Bank, as the Bank may from time to time
designate, as its attorneys-in-fact for the Owner, to sign and
endorse in the name of the Owner, to give notice in the name of
the Owner, and to perform all other actions necessary or
desirable at the reasonable discretion of the Bank to effect
these provisions and carry out the intent hereof, all at the cost
and expense of the Owner. The Owner hereby ratifies and approves
all acts of such attorneys-in-fact and neither the Bank nor any
other such attorneys-in-fact will be liable for any acts of
commission or omission nor for any error of judgment or mistake
of fact or law. This power being coupled with an interest is
irrevocable so long as any Account or General Intangible assigned
to the Bank remains unpaid and the Borrower has any Indebtedness
to the Bank. The costs of such collection and enforcement,
including attorneys' fees and out-of-pocket expenses, shall be
borne solely by the Owner whether the same are incurred by the
Bank or the Owner;
e) At the option of the Bank, all payments on the Accounts
received by the Owner shall be remitted to the Bank in their
original form on the day of receipt; all notes, checks, drafts
and other instruments so received shall be duly endorsed to the
order of the Bank. At the Bank's election, the payments shall be
deposited into a special deposit account ("Special Account")
maintained with the Bank. The Bank may designate with each such
deposit the particular Account upon which payment was made. The
Special Account shall be held by the Bank as security for the
Indebtedness. Prior to depositing payments on the Accounts into
the Special Account, the Owner agrees that it will not commingle
such payments with any of the Owner's funds or property, but will
hold them separate and apart and in trust for the Bank. The Bank
will have the power to withdraw from the Special Account. The
Bank may at any time and from time to time, in its sole
discretion, apply any part of the funds in the Special Account to
the Indebtedness whether or not the same is due. Upon full and
final satisfaction of the Indebtedness plus termination of any
commitment to extend additional funds, the Bank will pay to the
Owner any excess funds, whether received by the Bank as a deposit
in the Special Account or as a direct payment on any of the
Indebtedness; f) If any of the Owner's Accounts arise out of
contracts with the United States or any department, agency, or
instrumentality thereof, the Owner will immediately notify the
Bank in writing and execute any instruments and take any steps
required by the Bank in order that all monies due and to become
due under such contracts shall be assigned to the Bank and in
order that proper notice be given under the Federal Assignment of
Claims Act; g) The Bank shall not be liable and shall suffer no
loss on account of loss or deprivation of any account due to acts
or omissions of the Bank unless the Bank's conduct is willful and
malicious, and the Bank shall have no duty to take any action to
preserve the Collateral or collect Accounts.
4. Inventory. If the Collateral includes Inventory:
a) The Owner agrees to maintain books and records pertaining to
the Inventory in such detail, form and scope as the Bank shall
require. The Owner shall promptly advise the Bank of any
substantial changes relating to the type, quality or quantity of
the Inventory or any event which would have a material effect on
the value of the Inventory or on the security interest granted to
the Bank. Upon reasonable notice by the Bank, the Owner shall
assemble and make readily available for inspection and
examination all of the Inventory and all books and records
pertaining to the Inventory at any time;
b) If the Inventory remains in the possession or control of any
of the Owner's agents or processors, the Owner shall notify such
agents or processors of the Bank's security interest, and upon
request, instruct them to hold such Inventory for the Bank's
account and subject to the Bank's instructions; c) The Owner
will prepare and deliver to the Bank, at the Bank's request,
listing of all Inventory and such information regarding the
Inventory as the Bank may require.
5. Securities, Instruments, Certificates of Deposit, Documents,
Chattel Paper and General Intangibles. If the Collateral
includes securities, instruments, certificates of deposit,
documents, chattel paper or general intangibles:
a) The Owner represents and warrants, as may be applicable, that
(i) The Owner has good and marketable title to the Collateral.
The Collateral is valid and genuine and represents a bona fide,
binding, legal obligation of the maker, issuer, or grantor, and
all signatures are genuine; (ii) The Collateral is in full force
and effect and is not in default and no prepayments have been
made; (iii) The Collateral is not represented by a judgment or
any other document not provided to the Bank; (iv) The Collateral
is not subject to any assignment, claim, lien, right of setoff or
security interest of any other party;
(v) Unless otherwise stated, the face amount on the Collateral
is the correct amount actually and unconditionally due or to
become due according to the terms of the Collateral, and such
amount is not disputed or subject to any setoff, credit,
deduction, or counterclaim;
(vi) With respect to the security on the Collateral, the lien or
security interest represented thereby is not subject to prior
claim, lien, or security interest of any other party, unless
otherwise stated herein, or in the document evidencing such
security;
(vii) With respect to the security on the Collateral, it has
been properly perfected by the filing or recording of all
necessary financing statements, deeds of trust or other documents
and the payment of all recording, transfer and other taxes and
fees made in the appropriate public offices. b) At any time, and
from time to time, whether before or after default, without
notice, and at the expense of the Owner, the Bank in its name or
in the name of its nominee or of the Owner, may, but shall not be
obligated to: (i) Notify the obligors on any Collateral to make
payment to the Bank of any or all dividends, interest, principal
payments and other sums now or hereafter payable upon or on
account of the Collateral, may collect the same by legal
proceedings or otherwise, and may perform any contract or endorse
in the name of the Owner any checks, drafts, notes, instruments
or other documents which constitute the collateral; (ii) Enter
into any extension, reorganization, deposit, merger or
consolidation agreement or any agreement in any way relating to
or affecting the Collateral and in connection therewith may
deposit or surrender control of the Collateral, accept other
property in exchange for the Collateral and do and perform such
acts and things as it may deem proper, and any money or property
received in exchange for the Collateral may be either applied to
any Indebtedness or may be held by the Bank pursuant to the
provisions of this Security Agreement; (iii) Make any compromise
or settlement it deems desirable or proper with reference to the
Collateral; (iv) Insure, process and preserve the Collateral;
(v) Cause the Collateral to be transferred to its name or the
name of its nominee; (vi) Exercise as to the Collateral all the
rights, powers and remedies of an owner.
6. Representations and Warranties. The Owner represents and
warrants to the Bank as follows: a) The Owner is and will
continue to be the absolute owner of the Collateral and that
there are no other liens or security interests affecting the
Collateral other than the security interest granted in this
Security Agreement except those previously disclosed to the Bank
in writing by the Owner; if the Owner is acting in the capacity
of trustee, administrator or executor of an estate, such fact
shall be disclosed and evidence of capacity shall be provided to
the Bank;
b) The Owner will defend the Collateral against the claims and
demands of all parties. The Owner will not, without prior
written consent of the Bank, grant any security interest in the
Collateral and will keep it free from any lien, encumbrance or
security interest;
c) The Owner represents and warrants that the Collateral never
has been, and never will be so long as this Agreement remains a
lien on the Collateral, used for the generation, collection,,
manufacture, storage, treatment, disposal, release or threatened
release of any hazardous substance, as those terms are defined in
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et
seq. ("CERCLA"), Superfund Amendments and Reauthorization Act
("SARA"), applicable state laws, or regulations adopted pursuant
to either of the foregoing. The Owner agrees to comply with any
federal, state or local law, statute, ordinance or regulation,
court or administrative order or decree or private agreement
regarding materials which require special handling in collection,
storage, treatment or disposal because of their impact on the
environment ("Environmental Requirements"). The Owner agrees to
indemnify and hold the Bank harmless against any and all claims,
losses and expenses resulting from a breach of this provision of
this Agreement and the Owner will pay or reimburse the Bank for
all costs and expenses for expert opinions or investigations
required or requested by the Bank which, in the Bank's sole
discretion, are necessary to ensure compliance with this
provision of this Agreement. This obligation to indemnify shall
survive the payment of the indebtedness and the satisfaction of
the Agreement; d) The Collateral is and will be used or bought
for use primarily for the following purpose: business; e) The
Owner warrants and represents that all Collateral has been
produced in compliance with the Fair Labor Standards Act or other
applicable wage and employee law, rule, regulation or order, and
that no existing or future liability shall occur as a result
thereof. The Owner may contest, in good faith, the applicability
of any such law, rule, regulation or order, including prosecuting
any appeals, so long as the Bank's interest in the Collateral, in
the opinion of the Bank, is not jeopardized thereby;
f) The Owner, if an individual, is above the age of majority and
has the legal capacity to enter into this Security Agreement;
g) If an individual, the Owner's home address is
____________________________; h) The Owner, if a corporation, is
duly organized and existing under the laws of Virginia; is duly
qualified and in good standing as a foreign corporation in every
jurisdiction where such qualification is necessary; the execution
and performance of this Security Agreement have been duly
authorized by action of its Board of Directors, no action of its
shareholders being necessary; the execution and performance of
this Security Agreement will not violate or contravene any
provisions of law or regulation or its Articles of Incorporation,
Shareholder Agreement, By-Laws or other agreements to which it is
a party or by which it is bound; and that no consent or approval
of any governmental agency or authority is required in making or
performing the obligations under this Security Agreement; i) The
Owner, if a partnership, is duly qualified and in good standing
to do business in every jurisdiction where such qualification is
necessary; the execution and performance of this Security
Agreement have been duly authorized by its partners, no further
actions of its partners is necessary; the execution and
performance of this Security Agreement will not violate or
contravene any provisions of law or regulation or its Partnership
Agreement or other agreements to which it is a party or by which
it is bound; and that no consent or approval of any governmental
agency or authority is required in making or performing the
obligations under this Security Agreement; j) If a corporation,
partnership or proprietorship, the location of the Owner's
principal place of business in Virginia (Jurisdiction) is
Portsmouth (City) and it does __ does not __ have a place of
business in another city or county in that jurisdiction (list
other jurisdiction if applicable):____________________; k) The
Collateral will be located at the locations specified on the
Schedule attached hereto; l) The Owner will maintain the
Collateral in the above locations. The Collateral shall not be
moved from the above locations without the prior written consent
of the Bank. The Owner must notify the Bank in writing at least
30 days prior to any change of its name, corporate structure or
identity; m) The Owner maintains its books of account and
records only at 2410 Wesley Street, Portsmouth, Virginia; n) All
information supplied and statements made to the Bank in any
financial or credit statement or application are true, correct,
complete, valid and genuine in all material respects.
7. Covenants.
a) The Owner shall maintain complete and accurate books of
account and records, and its principal books of account and
records, including all records concerning Accounts and contract
rights, shall be kept and maintained at the place (s) specified
above. The Owner shall not move such books of account and
records without giving the Bank at least 30 days prior written
notice and executing and delivering to the Bank financing
statements satisfactory to the Bank prior to any such move. All
accounting records and financial reports furnished to the Bank
shall be maintained and prepared in accordance with generally
accepted accounting principles consistently applied. It is
specifically agreed that the bank shall have and the Owner hereby
grants to the Bank a security interest in all books of account
and records of the Owner and shall have access to them at any
time for inspection, verification, examination and audit;
b) The Owner shall furnish to the Bank such financial and
business information and reports in form and content satisfactory
to the Bank as and when the Bank may from time to time require;
c) The Owner, if a corporation, shall maintain its corporate
existence in good standing and shall not consolidate or merge
with or acquire the stock of any other corporation without the
prior written consent of the Bank. If the Owner is a
corporation, the Owner shall, at the request of the Bank, qualify
as a foreign corporation and obtain all requisite licenses and
permits in each jurisdiction where the Owner does business. The
Owner shall not discontinue business, liquidate, sell, transfer,
assign or otherwise dispose of any of its assets, except with the
prior written permission of the Bank, provided, however, that it
may sell in the ordinary course of business and for a full
consideration in money or money's worth, any product, merchandise
or service produced or marketed by it. The Bank's security
interest shall attach to all proceeds of all sales or
dispositions of the Collateral; d) The Owner shall maintain all
of the Collateral in good condition and repair. The Bank shall
have the right to inspect the Collateral at any reasonable time
and shall have the right to obtain such appraisals, reappraisals,
appraisal updates or environmental inspections as the Bank, in
its sole discretion, may deem necessary from time to time.
e) The Owner shall at all times keep insurable Collateral
insured against any and all risks, including, without limitation,
fire, and such other insurance as may be required by the Bank
from time to time; and in such amounts as may be satisfactory to
the Bank. The Bank shall be named as Loss Payee on any such
insurance policies. Insurance may be purchased from an insurer
of the Owner's choice, except as otherwise required by law. The
Owner shall pay and discharge all taxes, assessments and charges
of every kind prior to the date when such taxes, assessments or
charges shall become delinquent and provide proof of such
payments to the Bank, upon request. However, nothing contained
in this Security Agreement shall require the Owner to pay any
such taxes, assessments and charges so long as it shall contest
its validity in good faith and shall post any bond or security
required by the Bank against the payment. Upon the failure of
the Owner to pay such required amounts, the Bank, at its option,
and at the Owner's expense, may obtain such insurance or pay such
taxes, assessments or charges with the costs or premiums becoming
part of the Indebtedness at the option of the Bank, such amounts
may be payable on demand. Any insurance obtained by the Bank, at
its option, may be single or dual interest, protecting its
rights, rights of the Owner or joint rights. Any insurance
obtained by the Bank, at its option, may be single or dual
interest, protecting its rights, rights of the Owner or joint
rights. Any insurance obtained by the Bank may provide, at its
option, that such insurance will pay the lesser of the unpaid
balance of the indebtedness or the repair or replacement value of
the Collateral. The Owner authorizes the Bank to give effect to
any of these options without prior notice to Owner or further
consent from owner. No matter which insurance coverage or
repayment options the Bank chooses, the collateral will secure
payment of these amounts. The Bank may use the proceeds of any
insurance obtained by Owner or by the Bank to repair or replace
the collateral or, if the Bank elects to do so, to repay part of
all of the indebtedness, and the Borrowers will still be
responsible to repay any remaining unpaid balance of the
indebtedness. Owner assigns to the Bank all amounts payable
under the insurance, including unearned premiums, directing the
insurer to make payment to the Bank, and Owner appoints us
attorney-in=fact to endorse any draft. f) The Owner will not
pledge or grant any security interest in any of the Collateral to
anyone except the Bank, or permit any lien or encumbrance to
attach to any of the Collateral, or any levy to be made on the
Collateral, or any financing statement (except financing
statements in favor of the Bank) to be on file against the
collateral; g)The Owner agrees that it will not permit any return
of merchandise, the sale of which gave rise to any of the
Accounts, except in the usual and regular course of business.
8. Default. In addition to any right which the Bank may have to
demand payment of the Indebtedness under any other agreement,
upon the occurrence of any of the following events of default,
the Bank, at its option, may declare any or all of the
Indebtedness immediately due and payable and may exercise any and
all of the rights and remedies of default of a secured party
under the Uniform Commercial Code and other applicable law and
all rights provided herein, all of which rights and remedies
shall, to the full extent permitted by law, be cumulative. The
occurrence of an Event of Default as defined in the Amended and
Restated Credit Agreement of even date herewith between the
Borrower and the Bank. The Bank may require the Owner to
assemble the Collateral and make it available to the Bank at a
place to be designated by the Bank which is reasonably convenient
to the Bank and the Owner. The Bank may take possession of the
Collateral without a court order. The Owner shall pay to the
Bank on demand all legal expenses and reasonable attorneys' fees
if the Bank refers this Security Agreement to an attorney who is
not a salaried employee of the Bank, appraisal fees and all
expenses incurred or paid by the Bank, in protecting and
enforcing the rights of the Bank under this Security Agreement,
including the Bank's right to take possession of the Collateral
and its proceeds, and to hold, prepare for sale, sell and dispose
of the Collateral. Any required notice by the Bank of sale or
other disposition on default, when placed in the mail and
addressed to or left upon the premises of the Owner, at the
address specified next to the Owner's signature below or such
other address of the Owner as may from time to time be shown on
the Bank's records, at least ten days prior to such action shall
constitute reasonable notice to the Owner.
9. Term. This security Agreement shall be a continuing
agreement and shall remain in full force and effect irrespective
of any interruptions in the business relations of the Borrower
with the Bank and shall apply to any ultimate balance which shall
remain due by the Borrower to the Bank; provided, however, that
the Owner may be written notice terminate this Security Agreement
with respect to all Indebtedness of the Borrower incurred or
contracted by the Borrower or acquired by the Bank after the date
on which such notice is personally delivered to or mailed via
registered mail and accepted by the Borrower's lending officer.
10. Execution by More than One Party. The term "Owner" as used
in this Security Agreement shall, if this instrument is signed by
more than one Party, mean the "Owner and each of them" and each
shall be jointly and severally obligated and liable. If any
Party shall be a partnership, the agreements and obligations on
the part of the Owner shall remain in force and applicable
regardless of any changes in the individuals composing the
partnership and the term "Owner" shall include any altered or
successive partnerships and the predecessor partnerships and
their partners shall not be released from any obligation or
liability.
11. Waivers by the Owner. The Owner hereby waives (1) notice of
acceptance of this Security Agreement and of any extensions or
renewals of credit by the Bank to the Borrower; (2) presentment
and demand for payment of the Indebtedness; (3) protest and
notice of dishonor or default to the Owner or to any other party
with respect to the Indebtedness; (4) all other notices to which
the Owner might otherwise be entitled; and (5) if for business
purposes, the benefit of the Homestead Exemption. The Owner
further waives any right to require that any action be brought
against the Borrower or any other party, to require that resort
be had to any security or to any balance of any deposit account
or credit on the books of the Bank in favor of the Borrower or
any other party. The Owner further agrees that it shall not be
subrogated and will not enforce on its part or behalf any right
of action which the Bank may have against the borrower until
every Indebtedness secured under this Security Agreement is paid
in full.
12. No Obligations to Extend Credit. This contract shall not be
construed to impose any obligation on the Bank to extend or
continue to extend any credit at any time.
13. Indemnity. The Owner agrees to indemnify and hold harmless
the Bank and its subsidiaries, affiliates, successors, parents,
and assigns and their respective agents, directors, employees,
and officers from and against any and all complaints, claims,
defenses, demands, actions, bills, causes of action (including,
without limitation, costs and attorneys' fees), and losses of
every nature and kind whatsoever, which may be raised or
sustained by any directors, officers, employees, shareholders,
creditors, regulators, successors in interest, or receivers of
the Borrower or any third party as a result of or arising out of,
directly or indirectly, the Bank extending credit as evidenced by
the Indebtedness to the Borrower, and taking the Collateral as
security for the Indebtedness, and the Owner further agrees to be
liable for any and all judgments which may be recovered in any
such action, claim, proceeding, suit, or bill, including any
compromise or settlement thereof, and defray any and all
expenses, including, without limitation, costs and attorneys'
fees, that may be incurred in or by reason of such actions,
claims, proceedings, suits, or bills.
14. Financing Statements. The Owner will deliver such
instruments of further assignment or assurance as the Bank may
from time to time request to carry out the intent of this
Security Agreement, and will join with the Bank in executing
financing statements and other documents in form satisfactory to
the Bank and pay the cost of filing the same, including all
recordation, transfer and other taxes and fees, continuation
statements and any other documents in any public office deemed
advisable by the Bank. The Owner agrees that a carbon,
photographic or other reproduction of a financing statement or
this Security Agreement shall be sufficient as a financing
statement.
15. Successor In Interest. This Security Agreement shall be
binding upon the Owner, its successors and assigns, and the
benefits hereof shall inure to the Bank, its successors and
assigns.
16. Waiver by the Bank. The Bank may waive any default or
remedy any default without waiving the default remedied or any
other prior or subsequent default. The Bank's failure to
exercise any right or take any action under this Security
Agreement shall not constitute a waiver of that or any other
right or action.
17. Waiver of Jury Trial. To the extent legally permissible,
the Owner waives all right to trial by jury in any litigation
relating to transactions under this Security Agreement, whether
sounding in contract, tort or otherwise.
18. Governing Law. The laws of the jurisdiction in which the
Bank is located shall govern the construction of this Security
Agreement and the rights and duties of the Owner and Parties.
The undersigned have executed or caused this Security Agreement
to be executed, under seal, as of this 14th day of June, 1996.
DOUGHTIE'S FOODS, INC.,
a Virginia corporation
2410 Wesley Street
Portsmouth, Virginia 23707
By: Marion S. Whitfield, Jr.
------------------------
(Signature)
Senior Vice President
<PAGE>
Security Agreement
This Security Agreement is made by DUTTERER'S OF MANCHESTER
CORPORATION, a Maryland corporation (the Owner) for the use and
benefit of Crestar Bank (the Bank).
1. Security Agreement. In order to induce the Bank from time to
time to extend or continue to extend credit to DOUGHTIE'S FOODS,
INC. (the Borrower), the Owner (which may include the Borrower)
hereby grants the Bank, its successors and assigns, a security
interest in the collateral and all proceeds, products, rents and
profits thereof and all revenues from the right to use the
collateral as described below (the Collateral) to secure the
payment of all present and future indebtedness of every kind and
description, however evidenced, of the Borrower to the Bank,
whether such indebtedness is direct or indirect, fixed or
contingent, liquidated or unliquidated, including any extensions,
modifications or renewals thereof (the Indebtedness) and to
secure the performance by the Owner of the agreements and
warranties contained in this Security Agreement.
2. Collateral. As used in this Security Agreement, the term
"Collateral," whether now existing or hereafter acquired, shall
mean the following securities, instruments, including unsecured
notes and notes secured by deeds of trust or otherwise,
certificates of deposit, documents, including documents of title,
documentary drafts, accounts, letters of credit, chattel paper,
general intangibles, including interest in estates and trusts,
and other property described as: Promissory note dated September
3, 1995, made by Value Added Food Services, Inc., and payable to
the Owner in the original principal amount of $1,038,756,
together with any and all documents which evidence and/or secure
such note.
The Owner also grants the Bank a security interest in all rights
to which an owner of the Collateral is now or may become entitled
by virtue of owning such Collateral including, without
limitation, interest, cash dividends, stock dividends and stock
rights, all of which shall, when received, and upon request by
the Bank, be delivered to the Bank with written authority to
sell, transfer or rehypothecate the same.
If the Collateral includes all rights, title and interest in an
Estate or Trust, the security interest shall not apply to any
shares of capital stock of Crestar Financial Corporation or any
of its affiliates, or to any units of participation in the Bank's
Common Trust Fund held by the Estate or Trust, but shall apply to
any proceeds from the sale of such stocks and units or cash
dividends thereof.
3. Accounts. If the Collateral includes Accounts:
a) The Owner warrants that each and every Account, now owned or
hereafter acquired, is a bona fide existing obligation, valid and
enforceable against the account debtor, for goods sold or leased
and delivered or services rendered in the ordinary course of
business; it is subject to no dispute, defense or offset; the
Owner has good title to the Account and has full right and power
to grant the Bank a security interest in the Collateral; b) The
Owner will immediately notify the Bank of any Account to which
the above warranties are or become untrue; c) The Owner will
prepare and deliver to the Bank, at the Bank's request, a listing
and aging of all Accounts and any further schedules or
information that the Bank may require. d) The Bank shall have
the right at any time to notify account debtors of its security
interest in the Accounts and require payments to be made directly
to the Bank. The Owner hereby appoints the Bank and any officer
or employee of the Bank, as the Bank may from time to time
designate, as its attorneys-in-fact for the Owner, to sign and
endorse in the name of the Owner, to give notice in the name of
the Owner, and to perform all other actions necessary or
desirable at the reasonable discretion of the Bank to effect
these provisions and carry out the intent hereof, all at the cost
and expense of the Owner. The Owner hereby ratifies and approves
all acts of such attorneys-in-fact and neither the Bank nor any
other such attorneys-in-fact will be liable for any acts of
commission or omission nor for any error of judgment or mistake
of fact or law. This power being coupled with an interest is
irrevocable so long as any Account or General Intangible assigned
to the Bank remains unpaid and the Borrower has any Indebtedness
to the Bank. The costs of such collection and enforcement,
including attorneys' fees and out-of-pocket expenses, shall be
borne solely by the Owner whether the same are incurred by the
Bank or the Owner;
e) At the option of the Bank, all payments on the Accounts
received by the Owner shall be remitted to the Bank in their
original form on the day of receipt; all notes, checks, drafts
and other instruments so received shall be duly endorsed to the
order of the Bank. At the Bank's election, the payments shall be
deposited into a special deposit account ("Special Account")
maintained with the Bank. The Bank may designate with each such
deposit the particular Account upon which payment was made. The
Special Account shall be held by the Bank as security for the
Indebtedness. Prior to depositing payments on the Accounts into
the Special Account, the Owner agrees that it will not commingle
such payments with any of the Owner's funds or property, but will
hold them separate and apart and in trust for the Bank. The Bank
will have the power to withdraw from the Special Account. The
Bank may at any time and from time to time, in its sole
discretion, apply any part of the funds in the Special Account to
the Indebtedness whether or not the same is due. Upon full and
final satisfaction of the Indebtedness plus termination of any
commitment to extend additional funds, the Bank will pay to the
Owner any excess funds, whether received by the Bank as a deposit
in the Special Account or as a direct payment on any of the
Indebtedness; f) If any of the Owner's Accounts arise out of
contracts with the United States or any department, agency, or
instrumentality thereof, the Owner will immediately notify the
Bank in writing and execute any instruments and take any steps
required by the Bank in order that all monies due and to become
due under such contracts shall be assigned to the Bank and in
order that proper notice be given under the Federal Assignment of
Claims Act; g) The Bank shall not be liable and shall suffer no
loss on account of loss or deprivation of any account due to acts
or omissions of the Bank unless the Bank's conduct is willful and
malicious, and the Bank shall have no duty to take any action to
preserve the Collateral or collect Accounts.
4. Inventory. If the Collateral includes Inventory:
a) The Owner agrees to maintain books and records pertaining to
the Inventory in such detail, form and scope as the Bank shall
require. The Owner shall promptly advise the Bank of any
substantial changes relating to the type, quality or quantity of
the Inventory or any event which would have a material effect on
the value of the Inventory or on the security interest granted to
the Bank. Upon reasonable notice by the Bank, the Owner shall
assemble and make readily available for inspection and
examination all of the Inventory and all books and records
pertaining to the Inventory at any time;
b) If the Inventory remains in the possession or control of any
of the Owner's agents or processors, the Owner shall notify such
agents or processors of the Bank's security interest, and upon
request, instruct them to hold such Inventory for the Bank's
account and subject to the Bank's instructions; c) The Owner
will prepare and deliver to the Bank, at the Bank's request,
listing of all Inventory and such information regarding the
Inventory as the Bank may require.
5. Securities, Instruments, Certificates of Deposit, Documents,
Chattel Paper and General Intangibles. If the Collateral
includes securities, instruments, certificates of deposit,
documents, chattel paper or general intangibles:
a) The Owner represents and warrants, as may be applicable, that
(i) The Owner has good and marketable title to the Collateral.
The Collateral is valid and genuine and represents a bona fide,
binding, legal obligation of the maker, issuer, or grantor, and
all signatures are genuine; (ii) The Collateral is in full force
and effect and is not in default and no prepayments have been
made; (iii) The Collateral is not represented by a judgment or
any other document not provided to the Bank; (iv) The Collateral
is not subject to any assignment, claim, lien, right of setoff or
security interest of any other party;
(v) Unless otherwise stated, the face amount on the Collateral
is the correct amount actually and unconditionally due or to
become due according to the terms of the Collateral, and such
amount is not disputed or subject to any setoff, credit,
deduction, or counterclaim;
(vi) With respect to the security on the Collateral, the lien or
security interest represented thereby is not subject to prior
claim, lien, or security interest of any other party, unless
otherwise stated herein, or in the document evidencing such
security;
(vii) With respect to the security on the Collateral, it has
been properly perfected by the filing or recording of all
necessary financing statements, deeds of trust or other documents
and the payment of all recording, transfer and other taxes and
fees made in the appropriate public offices. b) At any time, and
from time to time, whether before or after default, without
notice, and at the expense of the Owner, the Bank in its name or
in the name of its nominee or of the Owner, may, but shall not be
obligated to: (i) Notify the obligors on any Collateral to make
payment to the Bank of any or all dividends, interest, principal
payments and other sums now or hereafter payable upon or on
account of the Collateral, may collect the same by legal
proceedings or otherwise, and may perform any contract or endorse
in the name of the Owner any checks, drafts, notes, instruments
or other documents which constitute the collateral; (ii) Enter
into any extension, reorganization, deposit, merger or
consolidation agreement or any agreement in any way relating to
or affecting the Collateral and in connection therewith may
deposit or surrender control of the Collateral, accept other
property in exchange for the Collateral and do and perform such
acts and things as it may deem proper, and any money or property
received in exchange for the Collateral may be either applied to
any Indebtedness or may be held by the Bank pursuant to the
provisions of this Security Agreement; (iii) Make any compromise
or settlement it deems desirable or proper with reference to the
Collateral; (iv) Insure, process and preserve the Collateral;
(v) Cause the Collateral to be transferred to its name or the
name of its nominee; (vi) Exercise as to the Collateral all the
rights, powers and remedies of an owner.
6. Representations and Warranties. The Owner represents and
warrants to the Bank as follows: a) The Owner is and will
continue to be the absolute owner of the Collateral and that
there are no other liens or security interests affecting the
Collateral other than the security interest granted in this
Security Agreement except those previously disclosed to the Bank
in writing by the Owner; if the Owner is acting in the capacity
of trustee, administrator or executor of an estate, such fact
shall be disclosed and evidence of capacity shall be provided to
the Bank;
b) The Owner will defend the Collateral against the claims and
demands of all parties. The Owner will not, without prior
written consent of the Bank, grant any security interest in the
Collateral and will keep it free from any lien, encumbrance or
security interest;
c) The Owner represents and warrants that the Collateral never
has been, and never will be so long as this Agreement remains a
lien on the Collateral, used for the generation, collection,,
manufacture, storage, treatment, disposal, release or threatened
release of any hazardous substance, as those terms are defined in
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et
seq. ("CERCLA"), Superfund Amendments and Reauthorization Act
("SARA"), applicable state laws, or regulations adopted pursuant
to either of the foregoing. The Owner agrees to comply with any
federal, state or local law, statute, ordinance or regulation,
court or administrative order or decree or private agreement
regarding materials which require special handling in collection,
storage, treatment or disposal because of their impact on the
environment ("Environmental Requirements"). The Owner agrees to
indemnify and hold the Bank harmless against any and all claims,
losses and expenses resulting from a breach of this provision of
this Agreement and the Owner will pay or reimburse the Bank for
all costs and expenses for expert opinions or investigations
required or requested by the Bank which, in the Bank's sole
discretion, are necessary to ensure compliance with this
provision of this Agreement. This obligation to indemnify shall
survive the payment of the indebtedness and the satisfaction of
the Agreement; d) The Collateral is and will be used or bought
for use primarily for the following purpose: business; e) The
Owner warrants and represents that all Collateral has been
produced in compliance with the Fair Labor Standards Act or other
applicable wage and employee law, rule, regulation or order, and
that no existing or future liability shall occur as a result
thereof. The Owner may contest, in good faith, the applicability
of any such law, rule, regulation or order, including prosecuting
any appeals, so long as the Bank's interest in the Collateral, in
the opinion of the Bank, is not jeopardized thereby;
f) The Owner, if an individual, is above the age of majority and
has the legal capacity to enter into this Security Agreement;
g) If an individual, the Owner's home address is
____________________________; h) The Owner, if a corporation, is
duly organized and existing under the laws of Maryland; is duly
qualified and in good standing as a foreign corporation in every
jurisdiction where such qualification is necessary; the execution
and performance of this Security Agreement have been duly
authorized by action of its Board of Directors, no action of its
shareholders being necessary; the execution and performance of
this Security Agreement will not violate or contravene any
provisions of law or regulation or its Articles of Incorporation,
Shareholder Agreement, By-Laws or other agreements to which it is
a party or by which it is bound; and that no consent or approval
of any governmental agency or authority is required in making or
performing the obligations under this Security Agreement; i) The
Owner, if a partnership, is duly qualified and in good standing
to do business in every jurisdiction where such qualification is
necessary; the execution and performance of this Security
Agreement have been duly authorized by its partners, no further
actions of its partners is necessary; the execution and
performance of this Security Agreement will not violate or
contravene any provisions of law or regulation or its Partnership
Agreement or other agreements to which it is a party or by which
it is bound; and that no consent or approval of any governmental
agency or authority is required in making or performing the
obligations under this Security Agreement; j) If a corporation,
partnership or proprietorship, the location of the Owner's
principal place of business in _________(jurisdiction) is
___________(city) and it does __ does not __ have a place of
business in another city or county in that jurisdiction (list
other jurisdiction if applicable):____________________; k) The
Collateral will be located at the Bank;
l) The Owner will maintain the Collateral in the above
locations. The Collateral shall not be moved from the above
locations without the prior written consent of the Bank. The
Owner must notify the Bank in writing at least 30 days prior to
any change of its name, corporate structure or identity; m) The
Owner maintains its books of account and records only at
____________; n) All information supplied and statements made to
the Bank in any financial or credit statement or application are
true, correct, complete, valid and genuine in all material
respects.
7. Covenants.
a) The Owner shall maintain complete and accurate books of
account and records, and its principal books of account and
records, including all records concerning Accounts and contract
rights, shall be kept and maintained at the place (s) specified
above. The Owner shall not move such books of account and
records without giving the Bank at least 30 days prior written
notice and executing and delivering to the Bank financing
statements satisfactory to the Bank prior to any such move. All
accounting records and financial reports furnished to the Bank
shall be maintained and prepared in accordance with generally
accepted accounting principles consistently applied. It is
specifically agreed that the bank shall have and the Owner hereby
grants to the Bank a security interest in all books of account
and records of the Owner and shall have access to them at any
time for inspection, verification, examination and audit;
b) The Owner shall furnish to the Bank such financial and
business information and reports in form and content satisfactory
to the Bank as and when the Bank may from time to time require;
c) The Owner, if a corporation, shall maintain its corporate
existence in good standing and shall not consolidate or merge
with or acquire the stock of any other corporation without the
prior written consent of the Bank. If the Owner is a
corporation, the Owner shall, at the request of the Bank, qualify
as a foreign corporation and obtain all requisite licenses and
permits in each jurisdiction where the Owner does business. The
Owner shall not discontinue business, liquidate, sell, transfer,
assign or otherwise dispose of any of its assets, except with the
prior written permission of the Bank, provided, however, that it
may sell in the ordinary course of business and for a full
consideration in money or money's worth, any product, merchandise
or service produced or marketed by it. The Bank's security
interest shall attach to all proceeds of all sales or
dispositions of the Collateral; d) The Owner shall maintain all
of the Collateral in good condition and repair. The Bank shall
have the right to inspect the Collateral at any reasonable time
and shall have the right to obtain such appraisals, reappraisals,
appraisal updates or environmental inspections as the Bank, in
its sole discretion, may deem necessary from time to time.
e) The Owner shall at all times keep insurable Collateral
insured against any and all risks, including, without limitation,
fire, and such other insurance as may be required by the Bank
from time to time; and in such amounts as may be satisfactory to
the Bank. The Bank shall be named as Loss Payee on any such
insurance policies. Insurance may be purchased from an insurer
of the Owner's choice, except as otherwise required by law. The
Owner shall pay and discharge all taxes, assessments and charges
of every kind prior to the date when such taxes, assessments or
charges shall become delinquent and provide proof of such
payments to the Bank, upon request. However, nothing contained
in this Security Agreement shall require the Owner to pay any
such taxes, assessments and charges so long as it shall contest
its validity in good faith and shall post any bond or security
required by the Bank against the payment. Upon the failure of
the Owner to pay such required amounts, the Bank, at its option,
and at the Owner's expense, may obtain such insurance or pay such
taxes, assessments or charges with the costs or premiums becoming
part of the Indebtedness at the option of the Bank, such amounts
may be payable on demand. Any insurance obtained by the Bank, at
its option, may be single or dual interest, protecting its
rights, rights of the Owner or joint rights. Any insurance
obtained by the Bank, at its option, may be single or dual
interest, protecting its rights, rights of the Owner or joint
rights. Any insurance obtained by the Bank may provide, at its
option, that such insurance will pay the lesser of the unpaid
balance of the indebtedness or the repair or replacement value of
the Collateral. The Owner authorizes the Bank to give effect to
any of these options without prior notice to Owner or further
consent from owner. No matter which insurance coverage or
repayment options the Bank chooses, the collateral will secure
payment of these amounts. The Bank may use the proceeds of any
insurance obtained by Owner or by the Bank to repair or replace
the collateral or, if the Bank elects to do so, to repay part of
all of the indebtedness, and the Borrowers will still be
responsible to repay any remaining unpaid balance of the
indebtedness. Owner assigns to the Bank all amounts payable
under the insurance, including unearned premiums, directing the
insurer to make payment to the Bank, and Owner appoints us
attorney-in=fact to endorse any draft. f) The Owner will not
pledge or grant any security interest in any of the Collateral to
anyone except the Bank, or permit any lien or encumbrance to
attach to any of the Collateral, or any levy to be made on the
Collateral, or any financing statement (except financing
statements in favor of the Bank) to be on file against the
collateral; g)The Owner agrees that it will not permit any return
of merchandise, the sale of which gave rise to any of the
Accounts, except in the usual and regular course of business.
8. Default. In addition to any right which the Bank may have to
demand payment of the Indebtedness under any other agreement,
upon the occurrence of any of the following events of default,
the Bank, at its option, may declare any or all of the
Indebtedness immediately due and payable and may exercise any and
all of the rights and remedies of default of a secured party
under the Uniform Commercial Code and other applicable law and
all rights provided herein, all of which rights and remedies
shall, to the full extent permitted by law, be cumulative. The
occurrence of an Event of Default as defined in the Amended and
Restated Credit Agreement of even date herewith between the
Borrower and the Bank. The Bank may require the Owner to
assemble the Collateral and make it available to the Bank at a
place to be designated by the Bank which is reasonably convenient
to the Bank and the Owner. The Bank may take possession of the
Collateral without a court order. The Owner shall pay to the
Bank on demand all legal expenses and reasonable attorneys' fees
if the Bank refers this Security Agreement to an attorney who is
not a salaried employee of the Bank, appraisal fees and all
expenses incurred or paid by the Bank, in protecting and
enforcing the rights of the Bank under this Security Agreement,
including the Bank's right to take possession of the Collateral
and its proceeds, and to hold, prepare for sale, sell and dispose
of the Collateral. Any required notice by the Bank of sale or
other disposition on default, when placed in the mail and
addressed to or left upon the premises of the Owner, at the
address specified next to the Owner's signature below or such
other address of the Owner as may from time to time be shown on
the Bank's records, at least ten days prior to such action shall
constitute reasonable notice to the Owner.
9. Term. This security Agreement shall be a continuing
agreement and shall remain in full force and effect irrespective
of any interruptions in the business relations of the Borrower
with the Bank and shall apply to any ultimate balance which shall
remain due by the Borrower to the Bank; provided, however, that
the Owner may be written notice terminate this Security Agreement
with respect to all Indebtedness of the Borrower incurred or
contracted by the Borrower or acquired by the Bank after the date
on which such notice is personally delivered to or mailed via
registered mail and accepted by the Borrower's lending officer.
10. Execution by More than One Party. The term "Owner" as used
in this Security Agreement shall, if this instrument is signed by
more than one Party, mean the "Owner and each of them" and each
shall be jointly and severally obligated and liable. If any
Party shall be a partnership, the agreements and obligations on
the part of the Owner shall remain in force and applicable
regardless of any changes in the individuals composing the
partnership and the term "Owner" shall include any altered or
successive partnerships and the predecessor partnerships and
their partners shall not be released from any obligation or
liability.
11. Waivers by the Owner. The Owner hereby waives (1) notice of
acceptance of this Security Agreement and of any extensions or
renewals of credit by the Bank to the Borrower; (2) presentment
and demand for payment of the Indebtedness; (3) protest and
notice of dishonor or default to the Owner or to any other party
with respect to the Indebtedness; (4) all other notices to which
the Owner might otherwise be entitled; and (5) if for business
purposes, the benefit of the Homestead Exemption. The Owner
further waives any right to require that any action be brought
against the Borrower or any other party, to require that resort
be had to any security or to any balance of any deposit account
or credit on the books of the Bank in favor of the Borrower or
any other party. The Owner further agrees that it shall not be
subrogated and will not enforce on its part or behalf any right
of action which the Bank may have against the borrower until
every Indebtedness secured under this Security Agreement is paid
in full.
12. No Obligations to Extend Credit. This contract shall not be
construed to impose any obligation on the Bank to extend or
continue to extend any credit at any time.
13. Indemnity. The Owner agrees to indemnify and hold harmless
the Bank and its subsidiaries, affiliates, successors, parents,
and assigns and their respective agents, directors, employees,
and officers from and against any and all complaints, claims,
defenses, demands, actions, bills, causes of action (including,
without limitation, costs and attorneys' fees), and losses of
every nature and kind whatsoever, which may be raised or
sustained by any directors, officers, employees, shareholders,
creditors, regulators, successors in interest, or receivers of
the Borrower or any third party as a result of or arising out of,
directly or indirectly, the Bank extending credit as evidenced by
the Indebtedness to the Borrower, and taking the Collateral as
security for the Indebtedness, and the Owner further agrees to be
liable for any and all judgments which may be recovered in any
such action, claim, proceeding, suit, or bill, including any
compromise or settlement thereof, and defray any and all
expenses, including, without limitation, costs and attorneys'
fees, that may be incurred in or by reason of such actions,
claims, proceedings, suits, or bills.
14. Financing Statements. The Owner will deliver such
instruments of further assignment or assurance as the Bank may
from time to time request to carry out the intent of this
Security Agreement, and will join with the Bank in executing
financing statements and other documents in form satisfactory to
the Bank and pay the cost of filing the same, including all
recordation, transfer and other taxes and fees, continuation
statements and any other documents in any public office deemed
advisable by the Bank. The Owner agrees that a carbon,
photographic or other reproduction of a financing statement or
this Security Agreement shall be sufficient as a financing
statement.
15. Successor In Interest. This Security Agreement shall be
binding upon the Owner, its successors and assigns, and the
benefits hereof shall inure to the Bank, its successors and
assigns.
16. Waiver by the Bank. The Bank may waive any default or
remedy any default without waiving the default remedied or any
other prior or subsequent default. The Bank's failure to
exercise any right or take any action under this Security
Agreement shall not constitute a waiver of that or any other
right or action.
17. Waiver of Jury Trial. To the extent legally permissible,
the Owner waives all right to trial by jury in any litigation
relating to transactions under this Security Agreement, whether
sounding in contract, tort or otherwise.
18. Governing Law. The laws of the jurisdiction in which the
Bank is located shall govern the construction of this Security
Agreement and the rights and duties of the Owner and Parties.
The undersigned have executed or caused this Security Agreement
to be executed, under seal, as of this 14th day of June, 1996.
DUTTERER'S OF MANCHESTER CORPORATION
a Maryland corporation
By: Mary Beth Bulog
------------------------
(Signature)
Secretary/Treasurer
<PAGE>
GUARANTY AGREEMENT
GUARANTY AGREEMENT, made and entered into as of the 14th day of June,
1996, by DUTTERER'S OF MANCHESTER CORP., a Maryland corporation ("Guarantor")
for the benefit of CRESTAR BANK ("Bank").
As an inducement for the Bank to enter into an Amended and Restated
Credit Agreement of even date herewith (such Revolving Credit Agreement, as
now or hereafter amended, being herein referred to as the "Agreement") with
Doughtie's Foods, Inc., a Virginia corporation ("Doughtie's"), Guarantor
has agreed to guarantee unconditionally the indebtedness and other
obligations to the Bank of Doughtie's under or pursuant to the Agreement,
including, but not limited to, Doughtie's obligations to pay the principal
of and interest on the Notes (as defined in the Agreement). Such
indebtedness and obligations are hereinafter collectively referred to as the
"Guaranteed Obligations."
1. Guarantor unconditionally guarantees to the Bank the payment,
when due, by acceleration, extension or otherwise, of the Guaranteed
Obligations and the due and punctual observance or performance of each and
every other covenant or agreement of Doughtie's thereunder.
2. Guarantor agrees that the whole or any part of any security now or
hereafter held for the Guaranteed Obligations may be exchanged, comprised or
surrendered from time to time; that the time or place of payment of The
Guaranteed Obligations may be changed or extended, in whole or in part, to a
time certain or otherwise, and may be renewed or accelerated, in whole
or in part; that the obligors under the Guaranteed Obligations may be granted
indulgences generally; that any of the provisions of the Agreement, any note or
other instrument evidencing the Guaranteed Obligations or any security therefor
may be modified, amended or waived; that any part liable for the payment thereof
(including but not limited to any other guarantor of the Guaranteed
Obligations) may be granted indulgences or released, all without notice to
or further assent by Guarantor, who shall remain bound thereon, notwithstanding
any
such exchange, compromise, surrender, change, extension, renewal,
acceleration, indulgence, modification, amendment, waiver or release.
3. Guarantor expressly waives: (a) notice of acceptance of this Guaranty;
(b) presentment and demand for payment of any of the Guaranteed Obligations;
(c) protest and notice of dishonor or of default to Guarantor or to any other
party with respect to the Guaranteed Obligations or with respect to any
security therefor; (d) all other notices to which Guarantor might otherwise
be entitled; (e) demand for payment under this Guaranty; and (f) any right
to assert against the Bank, any defense (legal or equitable), set-off,
counterclaim or claim which it may now or hereafter have against Doughtie's.
4. This is a guaranty of payment and not of collection. The liability
of Guarantor on this Guaranty shall be direct and immediate and not conditioned
or contingent upon the pursuit of any remedies against Doughtie's or any other
person, nor against securities or liens available to the Bank, its successors,
assigns or agents. Guarantor waives any right to require that an action be
brought against Doughtie's or any other person or guarantor or to require
that resort be had to any security. If the Guaranteed Obligations are
partially paid through the election of the Bank to pursue any of the remedies
mentioned in this paragraph, or if the Guaranteed Obligations are otherwise
partially paid, guarantor shall remain liable for any balance thereof.
5. If at any time or times hereafter the Bank employs counsel to
intervene, or to file a petition, answer, motion or other pleading in any suit
or proceeding relating to the Guaranty, then in such event, all of the
reasonable attorneys' fees relating thereto shall be an additional liability of
Guarantor to the Bank, payable on demand.
6. As security for its obligations hereunder, the Guarantor agrees
that (a) in the event it fails to pay its obligations hereunder when due and
payable under this Guaranty, any of Guarantor's assets of any kind, nature or
description in the possession, control or custody of the Bank, may, without
notice to Guarantor be reduced to cash or the like and applied to the Bank
in reduction or payment of Guarantor's obligations hereunder; (b) all
indebtedness and liabilities now and at any time or times hereafter owing by
Doughtie's to Guarantor are hereby subordinated to the Guaranteed Obligations;
and (c) all security interests, liens and encumbrances which Guarantor now has
or from time to time hereafter may have upon any of the assets of Doughtie's
are hereby subordinated to the Guaranteed Obligations.
7. This Guaranty shall continue in full force and effect until the
Guaranteed Obligations are fully paid, performed and discharged. This Guaranty
shall be binding upon and inure to the benefit of the Bank, its successors and
assigns.
8. Guarantor represents to the Bank that it has knowledge of the
financial condition and affairs of Doughtie's and represents and agrees that it
will keep informed of such financial condition and affairs so long as this
Guaranty is in force. Guarantor further agrees that the Bank will have no
obligation to investigate such financial condition or affairs for the benefit
of Guarantor nor to advise Guarantor of any fact respecting, or any change in,
such financial condition or affairs which might come to the knowledge of the
Bank at any time, whether or not the Bank knows or believes or has reason to
know or believe that any such fact or change is unknown to Guarantor or might
(or does) materially increase the risk of Guarantor as guarantor of the
Guaranteed Obligations.
9. This Guaranty shall be deemed to be a contract made under, and for
all purposes shall be construed in accordance with, the internal laws and
judicial decisions of the Commonwealth of Virginia.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the day
and year first above written.
DUTTERER'S OF MANCHESTER CORP.
By: Mary Beth Balog
-------------------
(Signature)
Title: Secretary/Treasurer
<PAGE>
ASSIGNMENT
Know all men by these presents that DOUGHTIE'S FOODS, INC.,
a Virginia corporation with its principal office at 2410 Wesley
Street, Portsmouth, Virginia 23707 (hereinafter called the
Assignor), for valuable consideration, the receipt of which is
hereby acknowledged, hereby sells, assigns and transfers (under
the Assignment of Claims Act, 31 U.S.C. section 3727 and 41 U.S.C.
section 15) to CRESTAR BANK, a Virginia banking corporation with a place
of business at 500 Main Street, Norfolk, Virginia 23510, and its
successors and assigns (hereinafter called the Assignee), all
monies due and to become due from the United States of America,
together with all rights to receive the same, under a certain
Contract No. SP0300-967-D-2900 dated 26 January, 1996, between
the United States of America acting through the Defense Logistics
Agency, Defense Personnel Support Center, 2800 South 20th Street,
Philadelphia, Pennsylvania 19145-5099, and the Assignor, for the
supply of subsistence items (foods) to military facilities in
Zone One, Southern Virginia of the Mid-Atlantic Region; under any
letter of intent, letter of award, letter of acceptance of bid or
proposal, informal or incomplete contract, order, authorization
to commence performance or other similar instrument or
communication made or received by the Assignor in anticipation of
or in connection with said contract and under any and all
amendments thereof and supplements thereto.
The Assignor hereby authorizes and directs the United States
of America to make all payments due under said formal and/or
informal contract and any and all amendments thereof and
supplements thereto direct to the Assignee by checks or other
orders, payable to the order of the Assignee, and constitutes and
appoints the Assignee its true and lawful attorney, irrevocably
with full power of substitution for it and in its name or in the
name of the Assignor or otherwise, to ask, require, demand and
receive and give acquittance for any and all said monies due or
to become due, and to endorse the name of the Assignor to any
checks, drafts or other orders for the payment of money payable
to the Assignor in payment thereof.
The Assignor warrants that it is the lawful owner of all
rights under said formal and/or informal contract and any and all
amendments thereof and supplements thereto; that it has good
right to assign same; that its said rights are free from all
liens and encumbrances that it will warrant and defend the same
against the lawful claims and demands of all persons. The
Assignor agrees (1) that, if any payments under said formal
and/or informal contract or any amendment thereof or supplement
thereto shall be made to the Assignor, it will receive and hold
the same in trust for the Assignee and will forthwith upon
receipt deliver the same to the Assignee in the identical form of
payment received by the Assignor; and (2) that it will execute
and deliver all such further instruments and do all such further
acts and things as the Assignee may reasonable request or as
shall be necessary or desirable to further and more perfectly
assure to the Assignee its rights under said formal and/or
informal contract or any amendments thereof or supplements
thereto. IN WITNESS WHEREOF, the Assignor has caused this
instrument to be signed, sealed and delivered by its proper
officer thereunto duly authorized this 14th day of June, 1996
DOUGHTIE'S FOODS, INC.
By: Marion S. Whitfield, Jr.
------------------------
(Signature)
Title: Senior Vice President
COMMONWEALTH OF VIRGINIA
CITY OF NORFOLK, to-wit:
The foregoing instrument was acknowledged before me this
14th day of June, 1996, in the aforesaid jurisdiction by Marion
S. Whitfield, Jr., as Senior Vice Pres. of Doughtie's Foods,
Inc., on behalf of the corporation.
[Illegible]
-------------------
(Signature)
Notary Public
My commission expires: July 31, 1999
<PAGE>
This Is A Credit Line Deed Of Trust
This Credit Line Deed of Trust, made and entered into this 14th
day of June, 1996, by and among DOUGHTIE'S FOODS, INC., a
Virginia corporation (herein, whether one or more, referred to as
"Grantor"), DAVID A. DURHAM, and DAVID SINGLETON, who reside
in the City of Virginia Beach, and the City of Virginia Beach,
Virginia, respectively (either of whom may act and who are
referred to herein as "Trustee"); and Crestar Bank (herein
"Lender"), provides: The name of the noteholder secured
hereby is Crestar Bank. Communications to the noteholder
pursuant to Va. Code 55-58.2 are to be mailed or delivered to 500
East Main Street, Norfolk, Virginia 23510, Attention: Bruce W.
Nave. The maximum aggregate amount of principal to be secured
hereby at any one time is Three Million Twenty-Five Thousand
Dollars ($3,025,000).
For and in consideration of the indebtedness herein recited
and the trust herein created, Grantor hereby grants, bargains,
mortgages, assigns, sells and conveys unto Trustee, in trust,
with power of sale and with general warranty of title, all of
Grantor's present and future right, title and interest in and to
certain real estate located in the City of Portsmouth, Virginia,
and more particularly described as follows:
SEE EXHIBIT A ATTACHED
which has the address of 2410 and 2415 Wesley Street, and 149
Chautauqua Avenue, Portsmouth, Virginia 23707, together with all
easement and appurtenances thereto, all of the rights of Grantor
in and to the streets, alleys, and rights-of-way appurtenant to
and adjoining or adjacent to the land hereinabove described; and
together with any and all right, title and interest of Grantor in
and to the improvements, which shall include any and all
buildings and structures now or at any time hereafter erected,
constructed or situated upon said land or any part thereof,
together with all fixtures, machinery, apparatus, fittings and
equipment now or hereafter located in or upon the premises and
now owned or which may hereafter be owned by Grantor, in and upon
said land and premises, or which may hereafter be placed thereon,
including, but not limited to, any equity which may be acquired
by Grantor in such property and as a result of the making of
instalment payments on account of the purchase thereof, including
but not limited to elevators, escalators, boilers, engines,
heating, ventilating and air conditioning systems, sprinkler or
fire extinguishing systems, plumbing, partitions, wiring, storm
doors and windows, wire screens, awnings, carpeting, drapes,
window shades, switchboards, communications apparatus, floor
tiling, linoleum, attached cabinets, wall panels and decorations
attached to walls and ceilings, gas and electrical fixtures,
chattels, attached appliances, and material used and to be used
in the buildings and structures. Reference in this Deed of Trust
to "Property" shall be deemed to include, in addition to the
described land, improvements now or hereafter located thereon and
rights appurtenant thereto, all the equipment, furnishings,
fixtures, goods and chattels, above-mentioned and conveyed, all
of which are deemed part and parcel of the real estate and
appropriated to the use of the real estate and, whether affixed
or not, shall for the purposes of this Deed of Trust be deemed
conclusively to be real estate and conveyed hereby, together with
the proceeds of all the foregoing. In Trust (a) to secure
the prompt payment of Secured Indebtedness (as hereinafter
defined), payable to Lender at the address set out above; and (b)
to secure performance and observance of the terms and conditions
of this Deed of Trust, any Note (as hereinafter defined) or any
Agreement (as hereinafter defined). Lender has extended
credit, or may in the future extend credit to Grantor (herein,
whether one or more, "Debtor", and which as used herein shall
include any one or more and any combination of the parties
constituting Debtor). The term "Secured Indebtedness" as used
herein shall mean all indebtedness of Debtor to Lender, whether
now existing or hereinafter arising, direct or indirect, fixed or
contingent, due or to become due, joint or several, for whatever
purpose whether or not related to the Notes or Agreements, as
defined below, irrespective of how such indebtedness is
evidenced, whether by notes, bonds, letters of credit, advances,
overdrafts, accounting entries or otherwise, or by the
endorsement or guaranty by Debtor of the obligations of another;
provided, however, that the aggregate outstanding principal
amount of the Secured Indebtedness secured by this Deed of Trust
shall not at any one time exceed the maximum aggregate amount of
principal stated above, plus interest thereon (at the rate or
rates set forth in the Noted or Agreements or other evidences of
such indebtedness), fees due with respect to any such
indebtedness, and, to the extent permitted by applicable law, all
costs of collection with respect thereto, including without
limitation, any costs and expenses incurred by Trustee or Lender
in connection with the enforcement of this Deed of Trust or as
otherwise provided herein. Secured indebtedness shall include,
but not be limited to, the principal of, interest on and all
other amounts due under or in connection with the note from
Grantor to the Lender dated June 14, 1996, in the amount of
$1,750,000, the note from Grantor to the Lender dated June 14,
1996, in the amount of $7,500,000, and any modifications,
extensions or renewals of such notes, agreements or loans.
As used herein the term "Note" shall mean each note from
Debtor to Lender and specifically referred to above, and any and
all other notes or obligations executed and delivered by Debtor
to Lender, whether joint or several or joint and several, to
repay the Secured Indebtedness or any part thereof. The term
"Agreement" as used herein shall mean any and each agreement
between Debtor and Lender specifically referred to above, and any
and all other agreements of whatever nature executed and
delivered by Debtor to Lender in connection with any Note or the
Secured Indebtedness or any part thereof.
It is understood and agreed that the Secured Indebtedness
will be advanced from time to time by Lender in accordance with
the provisions of any Note or any Agreement, each of which is
incorporated herein and made a part hereof by reference to the
same extent as if fully set forth herein, and it is further
understood and agreed that, from time to time, repayments on
account of the Secured Indebtedness may be made and Lender may
thereafter make additional advances including re-advances of sums
previously repaid, as provided in any Note or any Agreement, it
being understood and agreed that each and every advance made at
the present or hereafter to Debtor or on behalf of Debtor or
Grantor shall be deemed to be an advance made on account of the
Secured Indebtedness and secured hereby unless otherwise
specifically provided in the Note, Agreement or other documents
evidencing such advance. Repayment to Lender of all of the
Secured Indebtedness by Debtor shall not terminate the lien of
this Deed of Trust unless it is released by Lender upon receipt
of the written request of Grantor, payment of all outstanding
Secured Indebtedness and termination of all applicable Notes and
Agreements; otherwise it shall remain in force to secure future
advances and indebtedness, irrespective of any additional
security that may be taken as to the Secured Indebtedness. Upon
authorization of Lender, Trustee and/or Lender shall release and
discharge, at the expense of Grantor or Debtor, this Deed of
Trust and the liens, security interests and assignments created
hereby. Grantor represents, warrants, covenants and agrees
as follows:
1. Payment and Performance. Grantor shall perform its
obligations under and comply with the provisions of this Deed of
Trust and any Note and any Agreement to which it is a party.
2. Covenants; Warranty of Title; Payment of Taxes and
Assessments; Prior Deeds of Trust or Mortgages. Grantor makes
the covenants and agrees to the other provisions set forth in
Section 55-59 of the Code of Virginia (1950), as amended.
Grantor is lawfully seized of the Property in fee simple absolute
or the leasehold estate if this Credit Line Deed of Trust is on a
leasehold, and has the right to convey the same. At the time of
recordation, this Deed of Trust shall be a First lien and
encumbrance on the Property. Grantor will execute such further
assurances as Trustee or Lender deems necessary or desirable in
order to more fully vest title in Trustee. So long as any part
of the Secured Indebtedness shall be unpaid, Grantor will protect
the title and possession of the Property and will pay when the
same become due all taxes and assessments now existing or
hereafter levied or assessed upon the Property or the interest
therein created by this Deed of Trust, or which by the laws of
the jurisdiction where the Property is located may be levied or
assessed against Trustee or its successors, or Lender, for or on
account of the Secured Indebtedness upon this Deed of Trust or
the interest in the Property thereby created, together with all
sums now or hereafter owing on any senior deeds of trust or
mortgages. Grantor will provide Lender with evidence of any such
payments which from time to time may be required by Lender.
Grantor will, at its expense, take such other action and execute
such other instruments as may be necessary or desirable in the
sole discretion of Lender to preserve and protect the lien and
priority of this Deed of Trust and all other instruments
evidencing or securing payment of the sums secured hereby.
3. Preservation and Maintenance of Property; Environmental
Requirements. No building or other improvement shall be
substantially altered, removed or demolished, except for changes
which enhance its value, nor shall any fixtures or attached
appliances on, in or about said buildings or improvements be
severed, removed, sold or mortgaged without the prior written
consent of Lender (provided, however, that minor non-structural
changes costing not more than $10,000 may be undertaken without
such consent, and that replacement of such appliances or fixtures
of equivalent value and function may be undertaken without such
consent). Grantor will not commit or suffer any waste, nor
permit or suffer any impairment or deterioration of the Property,
or any part thereof. Grantor will at all times keep and maintain
the Property and every part thereof in good condition, fit and
proper for the respective purposes for which they were originally
erected or installed. Grantor will comply in all material
respects with all statutes, orders, requirements or decrees
relating to the Property, whether under federal, state, county or
municipal authority, and will observe and comply with all
conditions and requirements necessary to preserve and extend any
and all rights, licenses, permits (including, but not limited to,
zoning variances, special exceptions and nonconforming uses),
privileges, franchises and concessions which are applicable to
the Property or which have been granted to or contracted for by
Grantor in connection with any existing or presently contemplated
use of Property. Grantor will permit Lender or its agents to
enter upon and inspect the Property at all reasonable times and
Lender shall have the right to obtain such appraisals,
reappraisals, appraisal updates or environmental inspections as
Lender, in its sole discretion, may deem necessary from time to
time.
Grantor represents and warrants that the Property never has
been, and never will be so long as this Deed of Trust remains in
effect, used for the generation, collection, manufacture,
storage, treatment, disposal, release or threatened release of
any hazardous substance, as those terms are defined in the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
("CERCLA"), Superfund Amendments and Reauthorization Act
("SARA"), applicable state laws, or regulations adopted pursuant
to either of the foregoing. Grantor agrees to comply with any
federal, state, or local law, statute, ordinance or regulation,
court or administrative order or decree or private agreement
regarding materials which require special handling in collection,
storage, treatment or disposal because of their impact on the
environment ("Environmental Requirements"). Grantor agrees to
indemnify and hold Lender harmless against any and all claims and
losses and expenses and costs resulting from a breach of this
paragraph and Grantor will pay or reimburse Lender for all costs
and expenses for expert opinions, inspections or investigations
required or requested by Lender which, in Lender's sole
discretion, are necessary to ensure compliance with this
paragraph. This obligation to indemnify shall survive the
payment of the Secured Indebtedness and the release of this Deed
of Trust.
4. Insurance. Grantor will keep the Property and the
improvements thereon insured against loss by fire, casualty and
other hazards (including flood damage, if the improvements are
located in a special flood hazard area) as may from time to time
be required by Lender for the benefit of Lender. If permitted by
applicable law, Grantor will maintain such public liability and
indemnity insurance as may from time to time be required by
Lender. To the extent permitted by applicable law, all such
insurance shall be written in forms, amounts and by companies
satisfactory to Lender and losses thereunder shall be payable to
Lender pursuant to a standard noncontributing mortgagee's clause.
Certificates or other proof of insurance shall be delivered to
Lender and Grantor shall provide Lender with such evidence of
payment of premiums due on account of such insurance as from time
to time may be required by Lender. All such policies shall
provide for at least thirty (30) days' prior written notice to
Lender of any cancellation or modification thereof, including
without limitation, cancellation for nonpayment of premium.
Grantor shall give Lender prompt notice of any loss covered by
such insurance and Lender shall have the right to join Grantor in
adjusting any loss. Grantor hereby authorizes Lender, at
Lender's option, to collect, adjust and compromise any losses
under any such insurance policies herein referred to. Any funds
received as payment for any loss under any such insurance shall
be paid over to Lender and shall be applied, after deducting the
costs of collection, at the option of Lender, either to the
prepayment of the Secured Indebtedness or to the reimbursement of
Grantor for expenses actually incurred by Grantor in the
restoration or replacement of Property, or any part thereof. In
the event of foreclosure of this Deed of Trust or other transfer
of title to the Property conveyed hereby, all right, title and
interest of Grantor, in and to any insurance policies then in
force, shall pass to the purchaser or grantee, which may be, but
shall not be limited to, Lender.
5. Lender's Right to Remedy Defaults. In the event Grantor
shall neglect or refuse (a) to keep the Property in good repair
and condition; (b) to pay promptly when due all taxes and
assessments as aforesaid; (c) to remove any statutory liens on
the Property; (d) to keep the buildings, improvements and
chattels insured as aforesaid; (e) to deliver certificates or
other proof of the policies or policy of insurance or the
renewals thereof to Lender as aforesaid; (f) or if all amounts
owed under any Note, Agreement or other obligation secured by
this Deed of Trust or any other deed of trust or other lien on
the Property are not paid promptly when due or all obligations,
covenants, conditions and agreements under such deed of trust or
other lien are not observed, then Lender may, if it shall so
elect, in addition to any other rights it may have under this
Deed of Trust, take possession of the Property, make repairs as
it deems necessary, pay such taxes and assessments with the
accrued penalties and/or interest, pay any necessary expenses,
redeem the Property which may have been sold or forfeited for
taxes or assessments thereon, purchase any tax title thereon,
remove any statutory liens or encumbrances and prosecute or
defend any suit in relation thereto, or insure and keep insured
said buildings, improvements and chattels as provided herein, or
make any payments as may be necessary to cure any default. Any
sums including, without limitation, costs, expenses and
attorneys' fees which may be expended by Lender or Trustee in so
doing or otherwise for the protection or preservation of the
Property hereby or the lien of this Deed of Trust thereon, shall
bear interest from the dates of such payments at the highest rate
of interest being paid on any Secured Indebtedness (but in no
event higher than the rate or rates permitted under applicable
law(, shall be paid by Grantor to Lender upon demand, shall
become a part of the Secured Indebtedness and shall be
recoverable as such in all respects. Any such liens, claims,
taxes, expenses, assessments or tax titles so purchased, paid or
redeemed by Lender shall, as between the parties hereto and their
successors in interest, be deemed valid, so that in no event
shall the necessity or validity of any such payment be disputed.
The occurrence of an "Event of Default" as defined in the Amended
and Restated Credit Agreement of even date herewith by and
between the Grantor and the Lender shall constitute a default
under this Deed of Trust.
6. Default, Acceleration of Payments; Trustee's Sale or Lease;
Advertisement Required. Upon the occurrence of any event of
default regardless of whether Lender shall have cured such event
of default on behalf of Grantor in accordance with the terms of
this Deed of Trust, Lender may elect, without notice, to cause
all the Secured Indebtedness to be at once due and payable in
full, and the Trustee, or its successor in trust, as soon as
reasonably practicable after requested to do so by Lender (i) may
take possession of the Property, may make any repairs or
replacements to the Property deemed necessary by Trustee or
Lender and/or sell (and in case of default of any purchaser,
resell) in whole or in part the Property at public auction at
such time and place and upon such terms and conditions as Trustee
may deem appropriate or as otherwise required by applicable law
or rule of the court following public advertisement for the time
and in the manner prescribed by applicable law and in accordance
with paragraph 16a, and in case of any sale, Trustee may require
a bidder's deposit of not more than ten percent (10%) of the
outstanding amount secured, but not less than $1,000, and shall
(the terms of sale having been complied with) execute a deed or
deeds, assignment and transfer of title to the Property to the
purchaser, with such purchaser being discharged from all
liability to see to the application of the purchase money; at any
such sale Lender may bid and become the purchaser of the
Property; or (ii) may take possession of the Property and may
lease the Property either pending sale or until the amount of the
Secured Indebtedness is paid and deduct from rents received all
costs of collection, repair, replacement and administration and
apply the net proceeds to the Secured Indebtedness. The Trustee
is hereby empowered to bring in its name, or in the name of the
Grantor, any suit or action it deems advisable for the
enforcement of the provisions of this clause, but the Trustee and
the Lender shall be in no way personally liable under any of the
provisions of such lease or of this clause, and shall not be
personally liable to any person by virtue of their possession of
the Property or by virtue of their acting under any provisions of
this clause, except to the extent of accounting for rents
actually received by them. The proceeds of any sale of the
Property by Trustee shall be applied by Trustee: First, to pay
all proper costs and charges, including but not limited to court
costs, advertising expenses, auctioneers' allowances, the
expenses, if any, required to correct any irregularity in the
title, premium for Trustee's bond, auditors' fees, attorneys'
fees, cost of repairs or replacements, and all other expenses of
sale incurred in and about the protection and execution of this
Deed of Trust, and all moneys advanced for taxes, assessments,
insurance, and with interest thereon at the highest rate of
interest being paid on any Secured Indebtedness (but in no event
higher than the rate or rates permitted under applicable law),
and all taxes and assessments due upon said land and premises at
time of sale, and to retain as compensation a trustee's
commission of not more than five percent (5%) on the amount of
said sale or sales unless a larger percentage or amount is agreed
upon in writing by Lender, and attorneys' fees and expenses of
any litigation which may arise on account of the execution and
enforcement of this Deed of Trust or any Note or Agreement;
second, to pay and satisfy all Secured Indebtedness, interest and
all other charges hereby secured then remaining unpaid, and
interest thereon to date of payment, whether the same shall be
due or not, it being understood and agreed by Grantor that the
amounts due under any Note or Agreement shall, upon such sale
being made before the maturity thereof, be and become immediately
due and payable at the election of Lender; and Third, to pay the
remainder of said proceeds, if any, to Grantor, its heirs,
personal representatives, successors or assigns, or to any other
person lawfully entitled thereto, upon the delivery and surrender
to the purchaser, his, her or their heirs and assigns, of
possession of the Property and premises, less costs and expenses
of obtaining possession. If after so applying such proceeds, any
portion of the Secured Indebtedness shall remain unpaid, such
balances shall continue to be due and payable, and shall be
subject to collection by Lender by suit or otherwise. In the
event the Property shall be advertised for sale as above provided
but be withdrawn from sale or for any other reason not sold,
Trustee shall be entitled to a reasonable fee and accruals, and
any fees of attorneys or auctioneers, and any other expenses
shall be charged to and paid by Grantor. In addition, in the
event of default hereunder, Lender shall have all rights and
remedies permitted by law and by any document evidencing,
governing, or securing the obligations secured hereby.
7. Substitute Trustee. Lender has the irrevocable right and
power to substitute without cause or notice a trustee or trustees
in the place of any Trustee named under this Deed of Trust. Such
power of appointment and substitution may be exercised at any
time hereafter and as many times as Lender, its successors or
assigns, may desire. Such substitute Trustee(s) shall be vested
with the same titles and powers as are granted herein to the
original Trustee. Nothing herein contained shall deprive Lender
of its right to apply for an receive any relief regarding the
Trustee hereunder which is now, or which may hereafter be,
provided for by the internal laws of the jurisdiction in which
the Property is located or applicable federal law.
8. Condemnation. Grantor hereby irrevocably grants, assigns,
transfers and set over unto Lender all right, title and interest
of Grantor in and to any award or payment made (not to exceed the
outstanding Secured Indebtedness including, without limitation,
accrued interest, and costs, expenses, reasonable attorneys'
fees, and disbursements incurred by Lender in connection with
collection of such award and payment) in respect of (a) any
taking of the Property or any part thereof as a result of, or by
agreement in anticipation or in lieu of, any exercise of the
power of eminent domain or condemnation; and (b) any such taking
of any appurtenances to the Property; and (c) any damage to the
Property or any part thereof due to governmental action
affecting, but not resulting in a taking of, the Property,
including, by way of example and not by way of limitation, the
changing of the grade of a street adjacent or proximate to the
Property provided that if no Event of Default has occurred which
remains uncured and such condemnation does not affect more than
25% of the fair market value of the improvements and Land
constituting a portion of the Property, Lender agrees to allow
Grantor to use such condemnation proceeds to rebuild or restore
the Property. Grantor agrees to promptly notify Lender of the
commencement of any condemnation or eminent domain proceeding.
Grantor further agrees, upon request, to make, execute and
deliver any assignments or other instruments necessary for the
purpose of assigning or transferring any such award or awards to
Lender free and clear of any encumbrances whatsoever. The excess
amount of such award over and above sums due Lender on account of
the Secured Indebtedness, interest and other charges, shall be
paid to Grantor, its successors and assigns.
9. Restrictions on Transfer of Property; No Secondary
Financing; Mechanics' Liens. NOTICE - THE DEBT SECURED
HEREBY IS SUBJECT TO CALL IN FULL OR THE TERMS THEREOF BEING
MODIFIED IN THE EVENT OF SALE OR CONVEYANCE OF THE PROPERTY.
(a) If all or any part of the Property is sold, transferred,
conveyed or encumbered without Lender's prior written consent,
Lender may, at its option, require immediate payment in full of
all sums secured by this Deed of Trust and exercise all remedies
provided in this Deed of Trust in the event of default. However,
this option shall not be exercised by Lender if exercise is
prohibited by federal law as of the date of this Deed of Trust.
Lender reserves the absolute option and right, if permitted by
applicable law, among other things, to: require the agreement by
Grantor and Grantor's transferee to any terms and conditions that
Lender may require upon transfer, increase the rate of interest
upon transfer, and charge an assumption fee. (b) To the extent
permitted by applicable law, Grantor shall not voluntarily or
otherwise permit to be created or filed against the Property,
without the prior written consent of Lender in each instance, any
other deed of trust or mortgage or other lien or liens or
superior to the lien of this Deed of Trust. c) Grantor will
keep and maintain the Property free from all liens arising by
virtue of all persons supplying labor or materials performed
thereon or incorporated therein, notwithstanding by whom such
labor or materials may have been contracted, and if any liens in
respect to any such labor or materials are filed against the
Property, Grantor shall cause the same to be released completely
of record either by payment and discharge or by the posting of
substitute collateral therefore in accordance with applicable
laws within twenty (20) days of the filing thereof, and Grantor
will make all payments on all liens permitted herein (if any),
when due.
10. Assignment of Rents. Grantor hereby assigns unto Lender
the rents, issues and profits accrued and to accrue from all
tenants of the Property or any part thereof, during the term of
this Deed of Trust, or any extensions thereof, it being
understood that as long as there is no event of default hereunder
Grantor shall have the privilege of collecting and receiving all
rents, issue, and profits (but no more than one (1) month in
advance) accruing under leases or contacts of tenancy for the
Property or any part thereof. Upon the occurrence of an event of
default, Lender may immediately collect such rents, issues and
profits as they become due and apply the same, less the costs and
expenses of collection thereof, toward the payment of any of the
Secured Indebtedness. Grantor will not execute any assignment of
the rents, issues and profits from the Property or any part
thereof unless such assignment shall provide that it is
subordinate to the assignment of rents set forth in this Deed of
Trust and any other assignments executed pursuant hereto or in
conjunction herewith.
11. Notice of Adverse Claim of Lien. If Grantor shall receive
any notice or other instrument which might materially adversely
affect the Property or the lien of this Deed of Trust thereon,
Grantor will furnish, within three (3) days following such
receipt, by certified mail, a copy of such notice or other
instrument to Lender. The notices referred to herein shall
include, but not be limited to, notices from any tenant or lessee
claiming a default by Grantor under any lease or occupancy
agreement, any notice by any public authority concerning any tax
or special assessment, and any notice of any alleged violation of
any building, zoning, fire or other law or regulation affecting
the Property.
12. Remedies Cumulative; Forbearance by Lender/Trustee Not a
Waiver. All remedies available to Lender or the Trustee with
respect to this Deed of Trust or under any instrument evidencing,
governing, or securing the Secured Indebtedness, including, but
not limited to, any other deeds conveying other property in trust
to secure payment of the obligations secured hereunder, or
provided by law or in equity or by any statute, or otherwise,
shall be cumulative and may be pursued concurrently or
successively. Grantor, for itself and all who claim under it,
waives to the extent that it lawfully may, all right to have the
Property marshaled upon any sale or foreclosure hereunder. No
delay or omission of Trustee or Lender to exercise any right,
power or remedy shall impair any such right, power or remedy, or
shall be construed to be a waiver of any default or any
acquiescence therein. No delay or omission on the part of Lender
to exercise any option granted for acceleration of the maturity
of the Secured Indebtedness or for foreclosure following any
default or any other option granted to Lender hereunder in any
one or more instances, or tender to and/or acceptance by Lender
of any partial payment on account of Grantor's or Debtor's
obligations shall constitute a waiver of any such default or
operate to rescind any such acceleration and each such option
shall remain continuously in full force and effect.
13. Covenants Running with the Land. All covenants hereof
shall run with and be binding on the land and improvements
conveyed hereby until this Deed of Trust shall be released of
record.
14. Hold Harmless. Grantor shall save Lender and Trustee
harmless from all costs and expenses, including reasonable
attorneys' fees and costs incurred by reason of any action, suit,
proceeding, hearing, motion or application before any court or
administrative body in and to which Lender and/or Trustee may be
or become a party by reason of this Deed of Trust, including, but
not limited to, condemnation, bankruptcy, probate and
administration proceedings, as well as any of the foregoing
wherein proof of claim is by law required to be filed or in which
it becomes necessary to defend or uphold the terms or priority of
this Deed of Trust, and all money paid or expended by Lender or
Trustee in that regard, together with interest thereon from date
of such payment at the highest rate of interest being charged on
any Secured Indebtedness (but in no event higher than the rate or
rates permitted under applicable law), shall be immediately and
without notice due and payable by Grantor, shall become a part of
the Secured Indebtedness and shall be recoverable as such in all
respects.
15. Trustee's Authority. Trustee or any person acting in its
stead shall have, at its discretion, authority to employ all
proper agents and attorneys in the execution of this Deed of
Trust, and pay for such services rendered out of the proceeds of
the sale of the Property conveyed hereby, should any be realized;
and if no sale be made, then Grantor hereby undertakes and agrees
to pay to Trustee the cost of such services rendered. If from
time to time more than one Trustee or Substitute Trustee shall
have been appointed hereunder, then any one Trustee or Substitute
Trustee may act for all such Trustees and/or Substitute
Trustee(s).
16. Governing Law. This Deed of Trust, without regard for the
place of contract, advance of funds or payment, shall be
governed, construed and enforced according to the laws of the
Commonwealth of Virginia, with reference to Articles 2 and 3,
Chapter Four, Title 55 of the Code of Virginia of 1950, as
amended, and with such further understandings in short form as
provided therein, including the following provisions: (a)
Advertisement Required: Advertisement of the time, place and
terms of sale once a week for two weeks in a newspaper having
general circulation in the city or county where the Property or
some part thereof is located, after the giving of prior notice as
prescribed by law.
(b) Exemptions waived.
(c) Subject to all upon default.
(d) Renewal, extensions or reinstatement permitted.
(e) Fire and extended coverage insurance required: $full
replacement value. (f) Substitution of Trustee permitted with
or without cause. (g) Any Trustee may act.
17. Severability of Provisions. In the event any one or more
of the provisions hereof or of any Note or Agreement shall for
any reason be held to be invalid, illegal, or unenforceable, in
whole or in part or in any respect, or in the event any one or
more of the provisions hereof or of any Note or Agreement operate
or would prospectively operate to invalidate this Deed of Trust,
then and in any of those events, at the option of Lender, such
provision or provisions shall be severable and shall not affect
any other provision hereof or of the Note or Agreement shall
remain operative and in full force and effect and shall in no way
be affected, prejudiced, or disturbed thereby.
18. Waiver of Notice of Future Advances and Consent to
Extensions, Modifications and Release. If Grantor (or any one or
more of the parties constituting Grantor) is not the Debtor, then
Grantor expressly (a) waives notice of any and all loans and/or
advances made, from time to time during the continuance of this
Deed of Trust by the Lender to Debtor (or any one or more of the
parties constituting Debtor; (b) agrees that modifications of the
terms of any Note or Agreement, including without limitation,
modifications extending the term for payment or adjusting the
interest rate applicable to any Secured Indebtedness, may be made
from time to time between Lender and Debtor without notice to or
consent of Grantor; (c) agrees that Lender, without notice to or
further consent of Grantor, may grant extension of time and other
indulgences to and renew any of the obligations of Debtor without
regard to the number and length of such extensions, renewals or
other indulgences. Grantor further agrees that Lender without
notice to or further consent of Grantor, may release or discharge
any persons who are or may be liable for the payment of any Note
or Agreement or release or discharge any collateral for payment
of the Secured Indebtedness and that any such release or
discharge shall not alter, modify, release or limit the liability
of Grantor (or any one or more of the parties constituting
Grantor) or the validity or the enforceability of this Deed of
Trust; and (d) agrees that Lender may exercise its rights under
this Deed of Trust prior to taking any action against the Debtor.
19. Time is of the Essence. Time shall be of the essence for
each and every provision of any Note, any Agreement, this Deed of
Trust and all other documents, agreements and contacts
evidencing, securing, or governing the obligations secured
hereby.
20. References; Applicability. All references in the foregoing
covenants to Lender shall apply equally to any subsequent holder
or assignee of any Note or any Agreement.
21. Titles. The paragraph titles contained in this Deed of
Trust are for reference purposes only and shall not affect the
meaning or interpretation of this Deed of Trust.
22. Designations. In any designation hereunder, the use of one
gender shall include any other gender wherever same may be
appropriate, and the plural shall be substituted for the singular
or the singular substituted for the plural in any place herein in
which the context may require such substitution.
23. Riders to this Deed of Trust. If a rider is executed by
Grantor and recorded together with this Deed of Trust, the
covenants and agreements of the rider shall be incorporated into
and shall amend and supplement the covenants and agreements of
this Deed of Trust as if the riders were a part of this Deed of
Trust.
IN WITNESS WHEREOF, Grantor on the year and day first written
above, has caused this Deed of Trust to be signed, sealed and
delivered.
DOUGHTIE'S FOODS, INC.
By: Marion S. Whitfield, Jr. (SEAL)
------------------------
(Signature)
Senior Vice President
[Acknowledgment for corporate Grantor]
Commonwealth of Virginia
City of Norfolk, to wit:
[Illegible], a Notary Public in and for the aforesaid
jurisdiction, do certify that Marion S. Whitfield, Jr., whose
name is signed to the Deed of Trust above, bearing date on the
14th day of June, 1996, as Senior Vice Pres. of Doughtie's Foods,
Inc., a Virginia corporation, has acknowledged the same, before
me in the jurisdiction aforesaid. Given under my hand this 14th
day of June, 1996.
My commission expires: July 31, 1996 [Illegible] (SEAL)
-------------
(Signature)
Notary Public
<PAGE>
EXHIBIT A TO CREDIT LINE DEED OF TRUST DATED JUNE 14, 1996, BY
AND AMONG DOUGHTIE'S FOODS, INC., a Virginia corporation, as
Grantor, DAVID A. DURHAM and DAVID SINGLETON, as Trustees, and
CRESTAR BANK
PARCEL ONE:
THAT certain lot, piece or parcel of land, with the
buildings and improvements thereon, situate in the City of
Portsmouth, State of Virginia, and is shown on a certain plat
entitled: "Plat Showing Property To Be Conveyed To Doughtie's
Barbecue, Portsmouth, Virginia", dated December 11, 1962, made by
Ball-Hassell & Wilson, and bounded and described according to
said plat as follows:
BEGINNING at a point at the intersection of the north side
of Wesley Street and the west line of a right of way of Norfolk &
Portsmouth Belt Line Railroad, and running thence North 4 degrees 58'
West along said right of way 585.00 feet to a point; thence South
85 degrees 02' West 242.56 feet to a point at the intersection of the
south side of Arlington Street and the east side of a twelve foot
(12) lane; thence South 4 degrees 58' East along said lane 585.00 feet
to the north side of Wesley Street, and thence east along the
north side of Wesley Street, North 85 degrees (formerly erroneously
designated as 58 degrees) 02' East 242.56 feet to the point of
beginning, and containing 3.258 acres;
BEING the same property conveyed by Portsmouth Industrial
Foundation, Incorporated to Robert Realty Corporation by deed
dated July 13, 1964, recorded in the Office of the Clerk of the
Circuit Court of Portsmouth, Virginia in Deed Book 430, page 39;
the said Robert Realty Corporation having merged into Doughtie's
Barbecue, Inc. on March 7, 1972, and the said Doughtie's
Barbecue, Inc. having merged into Doughtie's Foods, Inc. on March
7, 1972, as described in a Certificate of the Clerk of the
Virginia State Corporation Commission recorded in the Office of
the Clerk of the Circuit Court of Portsmouth, Virginia in Deed
Book 918, page 129.
PARCEL TWO:
All that certain piece or parcel of property, with the
appurtenances thereunto belonging, situate in the City of
Portsmouth, Virginia, containing approximately 4.36 acres, and
bounded and described as follows:
Beginning at a point on the east side of Chautauqua Avenue
160 feet north from the northeast intersection of Chautauqua
Avenue and Adriatic (formerly Arlington) Street, and from thence
running N 4 degrees 58' W along Chautauqua Avenue 349.65 feet; thence N
85 degrees 02' E 394.56 feet to the right-of-way of the Norfolk and
Portsmouth Belt Line Railroad; thence S 4 degrees 58' E along said
right-of-way 559.65 feet; thence S 85 degrees 02' W 242.56 feet to the
eastern end of Adriatic Street; thence N 4 degrees 58' W along the
eastern end of Adriatic Street 50 feet; thence S 85 degrees 02' W along
the northern side of Adriatic Street 6 feet; thence N 4 degrees 58' W
160 feet; and thence S 85 degrees 02' W 146 feet to the point of
beginning;
BEING the same property conveyed by Portsmouth Port and
Industrial Commission to Doughtie's Foods, Inc. by deed dated
June 28, 1984, recorded in the Office of the Clerk of the Circuit
Court of Portsmouth, Virginia in Deed Book 889, page 819.
PARCEL THREE:
All those ten certain lots of land, with the buildings and
improvements thereon, situate, in the City of Portsmouth,
Virginia, and known and designated as Lots Numbers 2279, 2280,
252, 253, 254, 255, 256, 257, 258, and 259 on the plat of the
Port Norfolk Land Company, recorded in the Clerk's Office of the
Circuit Court of the City of Chesapeake (formerly Norfolk
County), Virginia, in Map Book 4, pages 70 and 71; the said lots
taken together being bounded and described as follows:
Beginning at the southwest intersection of Virginia Avenue
and Wesley Street, and thence running southerly along the west
side of Virginia Avenue 400 feet to a point 200 feet north of the
north side of Detroit Street; thence westerly and at right angles
to Virginia Avenue 140 feet to an alley; thence northerly along
said alley 400 feet to Wesley Street; and thence easterly along
the south side of Wesley Street 140 feet to the point of
beginning.
Being a portion of the same property acquired by
Doughtie's Foods, Inc., a Virginia corporation, by deed from
Raymond B. Smith and Ann T. Smith, dated July 14, 1980, and
recorded in the Clerk's Office of the Circuit Court of the City
of Portsmouth, Virginia, in Deed Book 786, at page 321.
PARCEL FOUR:
All that certain piece or parcel of land, with the
buildings and improvements thereon, situate, lying and being in
the City of Portsmouth, Virginia, and being more particularly
bounded and described as follows:
A parcel of land 35 feet in width and 400 feet in length
lying in front and east of the aforesaid lots [Parcel Three],
being the western one-half of Virginia Avenue, as shown on the
plat of the Port Norfolk Land Company, recorded in the Clerk's
Office of the Circuit Court of the City of Chesapeake (formerly
Norfolk County), Virginia, in Map Book 4, pages 70 and 71; said
portion of Virginia Avenue having been closed and vacated as a
public street by an ordinance adopted by the City Council of the
City of Portsmouth on November 23, 1965, a copy of which
ordinance is recorded in the Clerk's Office of the Circuit Court
of the City of Portsmouth, in Deed Book 574, at page 263.
IT BEING the same property conveyed to DOUGHTIE'S FOODS
INC. by deed from W. Eugene White, General Receiver for The Port
Norfolk Land Co., dated May 27, 1981, recorded in Deed Book 807,
page 686; and
IT BEING part of the same property conveyed to DOUGHTIE'S
FOODS INC. by deed from Raymond B. Smith and Ann T. Smith, his
wife, dated July 14, 1980, recorded in Deed Book 786, page 321.
<PAGE>
Indemnity Deed Of Trust
This Indemnity Deed of Trust is made and entered into this
12th day of June, 1996, by and among DUTTERER'S OF MANCHESTER
CORPORATION, a Maryland corporation (herein "Grantor"); DAVID A.
DURHAM (a resident of Virginia Beach, Virginia) and DAVID
SINGLETON (a resident of Virginia Beach, Virginia) (either of
whom may act and who are referred to herein as "Trustee"); and
CRESTAR BANK (herein "Lender").
RECITALS
The Lender has made loans to Doughtie's Foods, Inc., a
Virginia corporation (herein "Debtor"), in the aggregate
principal sum of Nine Million Two Hundred and Fifty Thousand and
no/100 Dollars ($9,250,000.00), as evidenced by the Note, as
defined below.
The Grantor has guaranteed the "Secured Indebtedness" (as
defined below) and has agreed to secure the Secured Indebtedness
of the Debtor, including the Note, by conveying, in trust, the
hereinafter described property of the Grantor to the Trustee;
provided, however, that the total outstanding principal amount of
the Secured Indebtedness secured hereby shall not exceed
$1,200,000.00.
THE OBLIGATIONS OF THE GRANTOR HEREUNDER REPRESENT A
FUTURE CONTINGENT LIABILITY AND NOT A PRESENT LIABILITY.
For and in consideration of the indebtedness herein
recited and the trust herein created, Grantor hereby grants,
bargains, mortgages, assigns, sells and conveys unto Trustee, in
trust with power of sale and with general warranty of title, all
of Grantor's present and future right title and interest in and
to certain real estate located in the State of Maryland, and more
particularly described on Exhibit A, together with all easements
and appurtenances thereto, all of the rights of Grantor in and to
the streets, alleys, and rights-of-way appurtenant to and
adjoining or adjacent to the land hereinabove described; and
together with any and all right, title and interest of Grantor in
and to the improvements which shall include any and all buildings
and structures now or at any time hereafter erected, constructed
or situated upon the premises or any part thereof, together with
all fixtures, machinery, apparatus, fittings and equipment now or
hereafter located in or upon the premises and now owned or which
may hereafter be owned by Grantor, in and upon said land and
premises, or which may hereafter be placed thereon, including but
not limited to, any equity which may be acquired by Grantor in
such property as a result of the making of instalment payments on
account of the purchase thereof, including but not limited to
elevators, escalators, boilers, engines, heating, ventilating and
air conditioning systems, sprinkler or fire extinguishing
systems, plumbing, partitions, wiring, storm doors and windows,
wire screens, awnings, carpeting, drapes, window shades,
switchboards, communications apparatus, floor tiling, linoleum,
attached cabinets, wall panels and decorations attached to walls
and ceilings, gas and electrical fixtures, chattels, attached
appliances, and material used and to be used in the buildings and
structures. Reference in this Deed of Trust to "Property" shall
be deemed to include, in addition to the described land,
improvements now or hereafter located thereon and rights
appurtenant thereto, all the equipment, furnishings, fixtures,
goods and chattels, above-mentioned and conveyed, all of which
are deemed part and parcel of the real estate and appropriated to
the use of the real estate and, whether affixed or not shall for
the purposes of this Deed of Trust be deemed conclusively to be
real estate and conveyed hereby, together with the proceeds of
all the foregoing.
TO HAVE AND TO HOLD the Property to the Trustee, and the
Trustee's successors and assigns in fee simple forever.
In Trust (a) to secure the prompt payment of Secured
Indebtedness (as hereinafter defined), payable to Lender, and (b)
to secure performance and observance of the terms and conditions
of this Deed of Trust, any Note (as hereinafter defined) or any
Agreement (as hereinafter defined); provided, however, that if
all of the Secured Indebtedness is paid and all of the terms and
conditions under this Deed of Trust, the Note, any Agreement are
performed, completed and satisfied, then all interests of the
Trustee in the Property shall cease and be void and the Trustee
shall release and reconvey the Property to the Grantor and
terminate this Deed of Trust at the sole cost and expense of the
Grantor.
Lender has extended credit, or may in the future extend
credit to the Debtor. The term "Secured Indebtedness" as used
herein shall mean all indebtedness of Debtor to Lender, whether
now existing or hereinafter arising, direct or indirect, fixed or
contingent, due or to become due, joint or several, for whatever
purpose whether or not related to the Note or Agreement,
irrespective of how such indebtedness is evidenced, whether by
notes, bonds, letters of credit, advances, overdrafts, accounting
entries or otherwise, or by the endorsement or guaranty by Debtor
of the obligations of another; provided, however, that the
aggregate outstanding amount of the Secured Indebtedness shall
not at any one time exceed the total outstanding principal amount
stated above, plus interest thereon (at the rate or rates set
forth in the Note or Agreement or other evidences of such
indebtedness), fees due with respect to any such indebtedness,
and, to the extent permitted by applicable law, all costs of
collection with respect thereto, including without limitation,
any costs and expenses incurred by Trustee or Lender in
connection with the enforcement of this Deed of Trust or as
otherwise provided herein. Secured Indebtedness shall include,
but not limited to, the principal of, interest on and all other
amounts due under or in connection with a note from Debtor to
Lender dated June 14, 1996, in the amount of $1,750,000, and a
note from Debtor to Lender dated June 14, 1996, in the amount of
$7,500,000.
As used herein the term "Note" shall mean each note from
Debtor to Lender and specifically referred to above and any and
all other notes or obligations executed and delivered by Debtor
to Lender, whether joint or several or joint and several to repay
the Secured Indebtedness or any part thereof and any renewals,
amendments, extensions, modifications or replacements thereof.
The term "Agreement" used herein shall mean any and each
agreement between Debtor and Lender specifically referred to
above and any and all other agreements of whatever nature
executed and delivered by Debtor to Lender in connection with any
Note or the Secured Indebtedness or any part thereof.
It is understood and agreed that the Secured Indebtedness
will be advanced from time to time by Lender in accordance with
the provisions of any Note or any Agreement, each of which is
incorporated herein and made a part hereof by reference to the
same extent as if fully set forth herein, and it is further
understood and agreed that, from time to time repayments on
account of the Secured Indebtedness may be made and Lender may
thereafter make additional advances including re-advances of sums
previously repaid, as provided in any Note or any Agreement, it
being understood and agreed that each and every advance made at
the present or hereafter to Debtor on behalf of Debtor or Grantor
shall be deemed to be an advance made on account of the Secured
Indebtedness and secured hereby unless otherwise specifically
provided in the Note, Agreement or other documents evidencing
such advance.
Grantor represents, warrants, covenants and agrees as
follows:
A. Payment and Performance. Grantor shall perform its
obligations under and comply with the provisions of this Deed of
Trust and any Note and any Agreement to which it is a party.
B. Warranty of Title; Payment of Taxes and Assessments;
Prior Deeds of Trust or Mortgages. Grantor is lawfully seized of
the Property in fee simple absolute or the leasehold estate if
this Deed of Trust is on a leasehold and has the right to convey
the same. The Trustee hereunder shall quietly enjoy the
property. At the time of recordation, this Deed of Trust shall
be a first priority lien and encumbrance on the Property.
Grantor will execute such further assurances as Trustee or Lender
deems necessary or desirable in order to more fully vest title in
Trustee. So long as any part of the Secured Indebtedness shall
be unpaid, Grantor will protect the title and possession of the
Property and will pay when the same become due all taxes and
assessments now existing or hereafter levied or assessed upon the
Property or the interest therein created by this Deed of Trust,
or which by the laws of the jurisdiction where the Property is
located may be levied or assessed against Trustee or its
successors, or Lender, for or on account of the Secured
Indebtedness upon this Deed of Trust or the interest in the
Property thereby created, together with all sums now or hereafter
owing on any senior deeds of trust or mortgages. Grantor will
provide Lender with evidence of any such payments which from time
to time may be required by Lender. Grantor will, at its expense,
take such other action and execute such other instruments as may
be necessary or desirable in the sole discretion of Lender to
preserve and protect the lien and priority of this Deed of Trust
and all other instruments evidencing or securing payment of the
sums secured hereby.
C. Preservation and
Maintenance of Property; Environmental Requirements. No building
or other improvement shall be substantially altered, removed a
demolished, except for changes which enhance its value, nor shall
any fixtures or attached appliances on, in or about said
buildings or improvements be severed, removed, sold or mortgaged
without the prior written consent of Lender (provided, however,
that minor non-structural changes costing not more than $10,000
may be undertaken without such consent, and that replacement of
such appliances or fixtures of equivalent value and function may
be undertaken without such consent). Grantor will not commit or
suffer any waste, nor permit or suffer any impairment or
deterioration of the Property, or any part thereof. Grantor will
at all times keep and maintain the Property and every part
thereof in good condition, fit and proper for the respective
purposes for which they were originally erected or installed.
Grantor will comply in all material respects with all statutes,
orders, requirements or degrees relating to the Property, whether
under federal, state, county or municipal authority, and will
observe and comply in all material respects with all conditions
and requirements necessary to preserve and extend any and all
rights, licenses, permits (including, but not limited to, zoning
variances, special exceptions and nonconforming uses),
privileges, franchises and concessions which are applicable to
the Property or which have been granted to or contracted for by
Grantor in connection with any existing or presently contemplated
use of Property. Grantor will permit Lender or its agents to
enter upon and inspect the Property at all reasonable times. Grantor
represents and
warrants that the Property never has been, and never will be so
long as this Deed of Trust remains in effect, used for the
generation, collection, manufacture, storage, treatment,
disposal, release or threatened release of any hazardous
substance, as those terms are defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), Superfund
Amendments and Reauthorization Act ("SARA"), applicable state
laws, or regulations adopted pursuant to any of the foregoing.
Grantor agrees to comply with any federal, state or local law,
statute, ordinance or regulation, court or administrative order
or decree or private agreement regarding materials which require
special handling in collection, storage, treatment or disposal
because of their impact on the environment ("Environmental
Requirements"). Grantor agrees to indemnify and hold Lender
harmless against any and all claims and losses and expenses
resulting from a breach of this paragraph and Grantor will pay or
reimburse Lender for all costs and expenses for expert opinions,
inspections or investigations required or requested by Lender
which, in Lender's sole discretion, are necessary to ensure
compliance with this paragraph. This obligation to indemnify
shall survive the payment of the Secured Indebtedness and the
release of this Deed of Trust.
D. Insurance.
Grantor will keep the Property and the improvements thereon
insured against loss by fire, casualty and other hazard
(including flood damage, if the improvements are located in a
special flood hazard area) as may from time to time be required
by Lender for the benefit of Lender. If permitted by applicable
law, Grantor will maintain such public liability and indemnity
insurance as may from time to time be required by Lender. To the
extent permitted by applicable law, all such insurance shall be
written in forms, amounts and by companies satisfactory to Lender
and losses thereunder shall be payable to Lender pursuant to a
standard noncontributing mortgagee's clause. Certificates or
other proof of insurance shall be delivered to Lender and Grantor
shall provide Lender with such evidence of payment of premiums
due on account of such insurance as from time to time may be
required by Lender. All such policies shall provide for at least
thirty (30) days' prior written notice to Lender of any
cancellation or modification thereof, including without
limitation, cancellation for nonpayment of premium. Grantor
shall give Lender prompt notice of any loss covered by such
insurance and Lender shall have the right to join Grantor in
adjusting any loss. Grantor hereby authorizes Lender, at
Lender's option to collect, adjust and compromise any losses
under any such insurance policies herein referred to. Any funds
received as payment for any loss under any such insurance shall
be paid over to Lender and shall be applied, after deducting the
costs of collection, at the option of Lender, either to the
prepayment of the Secured Indebtedness or to the reimbursement of
Grantor for expenses actually incurred by Grantor in the
restoration or replacement of Property, or any part thereof. In
the event of foreclosure of this Deed of Trust or other transfer
of title to the Property conveyed hereby, all right title and
interest of Grantor, in and to any insurance policies then in
force, shall pass to the purchaser or grantee, which may be, but
shall not be limited to, Lender.
E. Lender's Right
to Remedy Defaults. In the event Grantor shall neglect or refuse
(a) to keep the Property in good repair and condition; (b) to pay
promptly when due all taxes and assessments as aforesaid; (c) to
remove any statutory liens on the Property; (d) to keep the
buildings, improvements and chattels insured as aforesaid; (e) to
deliver certificates or other proof of the policies or policy of
insurance or the renewals thereof to Lender as aforesaid; (f) or
if all amounts owed under any Note, Agreement or other obligation
secured by this Deed of Trust or any other deed of trust or other
lien on the Property are not paid promptly when due or all
obligations, covenants, conditions and agreements under such deed
of trust or other lien are not observed, then Lender may, if it
shall so elect in addition to any other rights it may have under
this Deed of Trust, take possession of the Property, make such
repairs, pay such taxes and assessments with the accrued
penalties and/or interest, pay any necessary expenses, redeem the
Property which may have been sold or forfeited for taxes or
assessments thereon, purchase any tax title thereon, remove any
statutory liens or encumbrances and prosecute or defend any suit
in relation thereto, or insure and keep insured said buildings,
improvements and chattels as provided herein, or make any
payments as may be necessary to cure any default. Any sums
including, without limitation, costs, expenses and attorneys'
fees which may be expended by Lender or Trustee in so doing or
otherwise for the protection or preservation of the Property
hereby or the lien of this Deed of Trust thereon, shall bear
interest from the dates of such payments at the highest rate of
interest being paid on any Secured Indebtedness (but in no event
higher than the rate or rates permitted under applicable law)
shall be paid by Grantor to Lender upon demand, shall become a
part of the Secured Indebtedness and shall be recoverable as such
in all respects. Any such liens, claims, taxes, expenses,
assessments or tax titles so purchased, paid or redeemed by
Lender shall, as between the parties hereto and their successors
in interest be deemed valid, so that in no event shall the
necessity or validity of any such
payment be disputed.
F. Default, Acceleration of
Payments; Trustee's Sale or Lease; Advertisement Required. The
occurrence of an "Event of Default" as defined in the Amended and
Restated Credit Agreement of even date herewith between the
Debtor and the Lender shall constitute an event of default under
this Deed of Trust. Upon the occurrence of any event of default
regardless of whether Lender shall have cured such event of
default on behalf of Grantor in accordance with the terms of this
Deed of Trust, Lender may elect without notice, to cause all the
Secured Indebtedness to be at once due and payable in full, and
the Trustee, or its successor in trust, as soon as reasonably
practicable after requested to do so by Lender (i) may make any
repairs or replacements to the Property deemed necessary by
Trustee or Lender, and/or elect to institute foreclosure
proceedings, and the Grantor hereby expressly assents to the
passage of a decree for the sale of the Property, and any such
sale of the Property, whether by way of the assent to decree or
power of sale, and whether (in the Trustee's discretion) of the
whole or any part of the Property, shall be made in accordance
with the provisions of Section 7-105, Real Property Article,
Annotated Code of Maryland, as amended, and Rules W70 and W77 of
the Maryland Rules of Procedure, as amended, or other applicable
general or local laws of the State of Maryland or judicial rules
of procedure relating to the foreclosure of deeds of trust, with
the terms of the sale being cash upon settlement of the sale or
such other and additional terms as the Trustee deems necessary,
proper or convenient, except as specifically limited by
applicable law or court rule; or (ii) may lease the Property
either pending sale or until the amount of the Secured
Indebtedness is paid and deduct from rents received all costs of
collection, repair, replacement and administration and apply the
net proceeds to the Secured Indebtedness. The Trustee is hereby
empowered to bring in its name, or in the name of the Grantor,
any suit or action it deems advisable for the enforcement of the
provisions of this clause, but the Trustee and the Lender shall
be in no way personally liable under any of the provisions of
such lease or of this clause, and shall not be personally liable
to any person by virtue of their possession of the Property or by
virtue of their acting under any provisions of this clause,
except to the extent of accounting for
rents actually received by them.
The
proceeds of any sale of the Property by Trustee shall be applied
by Trustee: First, to pay all proper costs and charges,
including but not limited to court costs, advertising expenses,
auctioneers' allowances, the expenses, if any, required to
correct any irregularity in the title, premium for Trustee's
bond, auditors' fees, attorneys' fees, cost of repairs or
replacements, and all other expenses of sale incurred in and
about the protection and execution of this Deed of Trust and all
moneys advanced for taxes, assessments, insurance, and with
interest thereon at the highest rate of interest being paid on
any Secured Indebtedness (but in no event higher than the rate or
rates permitted under applicable law), and all taxes and
assessments due upon said land and premises at time of sale, and
to retain as compensation a trustee's commission of five percent
(5%) on the amount of said sale or sales unless a larger
percentage or amount is agreed upon in writing by Lender, but in
no event more than the commission allowed to the for making sales
of property by virtue of a decree of a court of equity in the
State of Maryland, and attorneys' fees and expenses of any
litigation which may arise on account of the execution and
enforcement of this Deed of Trust or any Note or Agreement;
Second, to pay and satisfy all Secured Indebtedness, interest and
all other charges hereby secured then remaining unpaid, and
interest thereon to date of payment, whether the same shall be
due or not, it being understood and agreed by Grantor that the
amounts due under any Note or Agreement shall, upon such sale
being made before the maturity thereof, be and become immediately
due and payable at the election of Lender, and Third, to pay the
remainder of said proceeds, if any, to Grantor, its heirs,
personal representatives, successors or assigns or any other
person lawfully entitled thereto upon the delivery and surrender
to the purchaser, his, her or their heirs and assigns, of
possession of the Property and premises, less costs and expenses
of obtaining possession. If after so applying such proceeds, any
portion of the Secured Indebtedness shall remain unpaid, such
balances shall continue to be due and payable, and shall be
subject to collection by Lender by suit or otherwise. In the
event the Secured Indebtedness shall be paid after the filing of
a foreclosure proceeding with the appropriate court, but before
sale of the Property, the Grantor shall also be required to pay
all of the expenses of any advertisement or notice, all court
costs, and all other expenses incident to or resulting from the
foreclosure proceedings under this Deed of Trust and a commission
on the total amount of the Secured Indebtedness owed at such
time, both principal and interest, remaining unpaid, equal to
one-half (1/2) of the percentage allowed as commission to
trustees making a sale under a decree of a court of equity in
Maryland and a counsel fee of Five Thousand Dollars ($5,000.00),
but if legal services are rendered to the Trustee or the Lender
in connection with any contested matter with respect to the
foreclosure proceeding, the status or priority of the lien and
security interest of this Deed of Trust or otherwise, then such
reasonable and necessary counsel fees and expenses as the Trustee
or the Lender may have incurred, even if greater than the
aforementioned amount; provided, however, that the sale may be
proceeded with unless, prior to the date on which the sale is
scheduled, payment is made by the Grantor of the Secured
Indebtedness then due (including payment of all costs, expenses,
commissions and fees, as
provided herein).
Upon any sale made
under or by virtue of this Deed of Trust, whether made under the
power of sale herein granted or under or by virtue of judicial
proceedings or a judgment or decree of foreclosure and sale, the
Lender may bid for and acquire the Property or any part thereof
and, in lieu of paying cash therefor may make settlement for the
purchase price by crediting the Secured Indebtedness against the
net sales price after deducting therefrom the expenses and costs
of the sale and any other sums which the Lender is authorized to
deduct under this Deed of
Trust.
In the event of a
sale of the Property under either the power of sale or assent to
decree, such sale may be made, at the option of the Lender
subject to one or more of the tenancies entered into subsequent
to the recording of this Deed of Trust, in accordance with the
provisions of Section 7-105(f)(2), Real Property Article,
Annotated Code of
Maryland, as amended.
The Trustee in any
foreclosure proceedings under the provisions of this Deed of
Trust shall be entitled, without regard to the adequacy or
inadequacy of any security for the Secured Indebtedness, to the
appointment of a receiver to collect the rents and account
therefor as the court may direct and to take possession of the
Property and
operate the same.
In addition, in the event of
default hereunder, Lender shall have all rights and remedies
permitted by law and by any document evidencing, governing, or
securing the obligations secured hereby.
G.
Substitute Trustee. Lender has the irrevocable right and power
to substitute without cause or notice a trustee or trustees in
the place of any Trustee named under this Deed of Trust by filing
for record among the land records where this Deed of Trust is
recorded a deed of appointment, and upon the filing of a deed of
appointment all of the title and estate, powers, rights, and
duties of the Trustee or the Trustees thus superseded shall
terminate and shall be vested in the successor trustee or
trustees. Such power of appointment and substitution may be
exercised at any time hereafter and as many times as Lender, its
successors or assigns, may desire. The Grantor, the Lender and
the Trustee, their substitutes and successors, expressly waive
notice of the exercise of this power, the giving of bond by any
Trustee, and any requirement for application to any court for
removal, substitution or appointment of a Trustee hereunder. In
addition, the act of any one (1) Trustee, whether such Trustee is
a sole acting Trustee or whether there is more than one (1)
acting Trustee, shall be sufficient and effective for all
purposes set forth herein and any person may rely upon any
document or instrument executed and delivered by one (1) Trustee
to the same extent as though the document had been executed by
all of the Trustees. Nothing herein contained shall deprive
Lender of its right to apply for and receive any relief regarding
the Trustee hereunder which is now, or which may hereafter be,
provided for by the internal laws of the jurisdiction where the
Property is located or applicable federal
law.
H. Condemnation. Grantor hereby irrevocably
grants, assigns, transfers and sets over unto Lender all right,
title and interest of Grantor in and to any award or payment made
(not to exceed the outstanding Secured Indebtedness including,
without limitation, accrued interest, and costs, expenses,
reasonable attorneys' fees, and disbursements incurred by Lender
in connection with collection of such award and payment) in
respect of (a) any taking of the Property or any part thereof as
a result of, or by agreement in anticipation or in lieu of, any
exercise of the power of eminent domain or condemnation; and (b)
any such taking of any appurtenances to the Property; and (c) any
damage to the Property or any part thereof due to governmental
action affecting, but not resulting in a taking of, the Property,
including, by way of example and not by way of limitation, the
changing of the grade of a street adjacent or proximate to the
Property. Grantor agrees to promptly notify Lender of the
commencement of any condemnation or eminent domain proceeding.
Grantor further agrees, upon request, to make, execute and
delivery any assignments or other instruments necessary for the
purpose of assigning or transferring any such award or awards to
Lender free and clear of any encumbrances whatsoever. The excess
amount of such award over and above sums due Lender on account of
the Secured Indebtedness, interest and other charges, shall be
paid to Grantor, its successors
and assigns.
I. Restrictions on Transfer of
Property; No Secondary Financing; Mechanics' Liens.
NOTICE - THE DEBT SECURED HEREBY IS SUBJECT TO CALL IN FULL OR
THE TERMS THEREOF BEING MODIFIED IN THE EVENT
OF SALE OR CONVEYANCE OF THE PROPERTY.
(1) If all or any part of the Property is sold,
transferred, conveyed or encumbered without Lender's prior
written consent, Lender may, at its option, require immediate
payment in full of all sums secured by this Deed of Trust and
exercise all remedies provided in this Deed of Trust in the event
of default. However, this option shall not be exercised by
Lender if exercise is prohibited by federal law as of the date of
this Deed of Trust. Lender reserves the absolute option and
right, if permitted by applicable law, among other things, to:
require the agreement by Grantor and Grantor's transferee to any
terms and conditions that Lender may require upon transfer,
increase the rate of interest upon transfer, and charge an
assumption fee.
(2) To the extent
permitted by applicable law, Grantor shall not voluntarily or
otherwise permit to be created or filed against the Property,
without the prior written consent of Lender in each instance, any
other deed of trust or mortgage or other lien or liens inferior
or superior to the lien of this Deed of Trust.
(3) Grantor will keep and maintain the Property free from
all liens arising by virtue of all persons supplying labor or
materials performed thereon or incorporated therein,
notwithstanding by whom such labor or materials may have been
contracted, and if any liens in respect to any such labor or
materials are filed against the Property, Grantor shall cause the
same to be released completely of record either by payment and
discharge or by the posting of substitute collateral therefore in
accordance with applicable laws within twenty (20) days of the
filing thereof, and Grantor will make all payments on all liens
permitted herein (if any), when due.
J. Assignment
of Rents. Grantor hereby assigns unto Lender or its successors,
the rents, issues and profits accrued and to accrue from all
tenants of the Property or any part thereof during the term of
this Deed of Trust, or any extensions thereof, it being
understood that as long as there is no event of default hereunder
Grantor shall have the privilege of collecting and receiving all
rents, issue, and profits (but no more than one (1) month in
advance) accruing under leases or contracts of tenancy for the
Property or any part thereof. Upon the occurrence of an event of
default, Lender may immediately collect such rents, issues and
profits as they become due and apply the same, less the costs and
expenses of collection thereof, toward the payment of any of the
Secured Indebtedness. Grantor will not execute any assignment of
the rents issues and profits from the Property or any part
thereof unless such assignment shall provide that it is
subordinate to the assignment of rents set forth in this Deed of
Trust and any other assignments executed pursuant hereto or in
conjunction herewith.
K. Notice of Adverse Claim
of Lien. If Grantor shall receive any notice or other instrument
which might materially adversely affect the Property or the lien
of this Deed of Trust thereon, Grantor will furnish, within three
(3) days following such receipt, by certified mail, a copy of
such notice or other instrument to Lender. The notices referred
to herein shall include, but not be limited to, notices from any
tenant or lessee claiming a default by Grantor under any lease or
occupancy agreement; any notice by any public authority
concerning any tax or special assessment; and any notice of any
alleged violation of any building, zoning, fire or other law
or regulation affecting the
Property.
L. Remedies Cumulative; Forbearance by
Lender/Trustee Not a Waiver. All remedies available to Lender or
the Trustee with respect to this Deed of Trust or under any
instrument evidencing, governing, or securing the Secured
Indebtedness, including, but not limited to, any other deeds
conveying other property in trust to secure payment of the
obligations secured hereunder, or provided by law or in equity or
by any statute, otherwise, shall be cumulative and may be pursued
concurrently or successively. Grantor, for itself and all who
claim under it, waives to the extent that it lawfully may, all
right to have the Property marshalled upon any sale or
foreclosure hereunder. No delay or omission of Trustee or Lender
to exercise any right, power or remedy shall impair any such
right, power or remedy,, or shall be construed to be a waiver of
any default or any acquiescence therein. No delay or omission on
the part of Lender to exercise any option granted for
acceleration of the maturity of the Secured Indebtedness or for
foreclosure following any default or any other option granted to
Lender hereunder in any one or more instances, or tender to
and/or acceptance by Lender of any partial payment on account of
Grantor's or Debtor's obligations shall constitute a waiver of
any such default or operate to rescind any such acceleration and
each such option shall remain continuously in full force and
effect.
M. Covenants Running with the Land. All
covenants hereof shall run with and be binding on the land and
improvements conveyed hereby until this Deed of Trust shall be
released of record.
N. Hold Harmless. Grantor
shall save Lender and Trustee harmless from all costs and
expenses, including reasonable attorneys' fees and costs incurred
by reason of any action, suit, proceeding, hearing, motion or
application before any court or administrative body in and to
which Lender and/or Trustee may be or become party by reason of
this Deed of Trust, including but not limited to, condemnation,
bankruptcy, probate and administration proceedings, as well as
any of the foregoing wherein proof of claim is by law required to
be filed or in which it becomes necessary to defend or uphold the
terms or priority of this Deed of Trust, and all money paid or
expended by Lender or Trustee in that regard, shall be
immediately and without notice due and payable by Grantor and
shall become a part of the Secured Indebtedness and shall bear
interest from the date of payment at the highest rate of interest
being charged on any Secured Indebtedness but in no event higher
than the rate or rates permitted by
applicable law.
O.
Trustee's Authority. Trustee or any person acting in its stead
shall have, at its discretion, authority to employ all proper
agents and attorneys in the execution of this Deed of Trust and
pay for such services rendered out of the proceeds of the sale of
the Property conveyed hereby, should any be realized; and if no
sale be made, then Grantor hereby undertakes and agrees to pay to
Trustee the cost of such services rendered. If from time to time
more than one Trustee or Substitute Trustee shall have been
appointed hereunder, then any one Trustee or Substitute Trustee
may act for all such Trustees and/or Substitute Trustee(s).
P. Governing Law. This Deed of Trust, without regard for
the place of contact, advance of funds or payment, shall be
governed, construed and enforced according to the laws of the
jurisdiction in which the Property
is located.
Q.
Severability of Provisions. In the event any one or more of the
provisions hereof or of any Note or Agreement shall for any
reason be held to be invalid, illegal, or unenforceable, in whole
or in part or in any respect, or in the event any one or more of
the provisions hereof or of any Note or Agreement operate or
would prospectively operate to invalidate this Deed of Trust,
then and in any of those events, at the option of Lender, such
provision or provisions shall be severable and shall not affect
any other provision hereof or of such Note or Agreement or the
validity of Grantor's or Debtor's other obligations and the
remaining provisions hereof or of the Note or Agreement shall
remain operative and in full force and effect and shall in no way
be affected, prejudiced,
or disturbed thereby.
R. Waiver of
Notice of Future Advances and Consent to Extensions,
Modifications and Release. If Grantor (or any one or more of the
parties constituting Grantor) is not the Debtor, then Grantor
expressly (a) waives notice of any and all loans and/or advances
made from time to time during the continuance of this Deed of
Trust by the Lender to Debtor (or any one or more of the parties
constituting Debtor); (b) agrees that modifications of the terms
of any Note or Agreement, including without limitation,
modifications extending the term for payment or adjusting the
interest rate applicable to any Secured Indebtedness, may be made
from time to time between Lender and Debtor without notice to or
consent of Grantor (c) agrees that Lender, without notice to or
further consent of Grantor, may grant extension of time and other
indulgences to and renew any of the obligations of Debtor without
regard to the number and length of such extensions, renewals or
other indulgences. Grantor further agrees that Lender without
notice to or further consent of Grantor, may release or discharge
any persons who are or may be liable for the payment of any Note
or Agreement or release or discharge any collateral for payment
of the Secured Indebtedness and that any such release or
discharge shall not alter, modify, release or limit the liability
of Grantor (or any one or more of the parties constituting
Grantor) or the validity or the enforceability of this Deed of
Trust, and (d) agrees that Lender may exercise its rights under
this Deed of Trust prior to taking
any action against the Debtor.
S. Time
is of the Essence. Time shall be of the essence for each and
every provision of any Note, any Agreement, this Deed of Trust
and all other documents, agreements and contracts evidencing,
securing, or governing the
obligations secured hereby.
T. References;
Applicability. All references in the foregoing covenants to
Lender shall apply equally to any subsequent holder or
assignee of any Note or any Agreement.
U. Titles.
The paragraph titles contained in this Deed of Trust are for
reference purposes only and shall not affect the meaning or
interpretation of this Deed of Trust.
V.
Designations. In any designation hereunder, the use of one
gender shall include any other gender wherever same may be
appropriate, and the plural shall be substituted for the singular
or the singular substituted for the plural in any place herein in
which the context may require such substitution.
W.
Riders to this Deed of Trust. If a rider is executed by Grantor
and recorded together with this Deed of Trust, the covenants and
agreements of such rider shall be incorporated into and shall
amend and supplement the covenants and agreements of this Deed of
Trust as if the rider is a part of this Deed of Trust. [] If
checked, a Condominium Rider is attached to
this Deed of Trust.
IN WITNESS WHEREOF, Grantor on
the year and day first written above, has caused this Deed of
Trust to be signed,
sealed and delivered.
DUTTERER'S OF MANCHESTER CORPORATION
By: Mary Beth Balog
-------------------
(Signature)
Secretary/Treasurer
State of Maryland, To Wit:
City/County of Baltimore,
I, Susan M. Ruppert, a Notary Public
in and for the aforesaid jurisdiction, do hereby certify that
Mary Beth Balog, who is personally well known to me as the
Secty/Treasurer of Dutterer's of Manchester Corporation, a
Maryland corporation, named in the foregoing Deed of Trust
bearing date as of the 12 day of June, 1996, and hereunto
annexed, personally appeared before me in said jurisdiction, and
as Secty/Treasurer of Dutterer's of Manchester Corporation, a
Maryland corporation, as aforesaid, acknowledged the same to be
the act and deed of said corporation.
Given under my hand and seal this 12 day of June, 1996.
My Commission Expires: August 1, 1998 Susan M. Ruppert
------------------
(Signature)
Notary Public
(Notary Seal)
<PAGE>
EXHIBIT A
All that certain land situate in Town of Manchester, County of
Carroll, State of Maryland, and more particularly described as
follows:
PARCEL 1 (ORIGINALLY DESCRIBED IN DEED RECORDED IN LIBER 522, AT
FOLIO 568, AS THE FOURTH PARCEL.):
TRACT ONE (1):
All that lot or parcel of land containing 18 square perches of
land, more or less, being all and the same land secondly
described in an Assignment from George W. Steger and wife, to
Clarence F. Renoll and wife, dated April 27, 1945, and recorded
in Liber E.A.S. No. 186, Folio 325, the reversion in which was
conveyed unto Clarence R. Renoll and wife, by Deed of Harold C.
Frankforter, unmarried, dated April 22, 1953, and recorded among
said land records in Liber E.A.S. No. 219, Folio 240.
TRACT TWO (2):
All that parcel of land containing 2 acres, 1 rood and 7 perches
of land, more or less, being all and the same land thirdly
described in an Assignment from George W. Steger and wife, to
Clarence F. Renoll and wife, dated April 27, 1945, and recorded
in Liber E.A.S. No. 186, Folio 325.
SAVING AND EXCEPTING therefrom, all that piece of the above
parcel conveyed unto John A. Myers and wife, by Clarence F.
Renoll and wife, in a Deed of Exchange, dated May 15, 1947 and
recorded among the said land records in Liber E.A.S. No. 194,
Folio 433, and granting and conveying unto the Grantors therein
said piece of parcel on the north side of the line described
therein, conveyed by the said John A. Myers and wife, to the said
Clarence F. Renoll and wife.
(THE ABOVE TWO PARCELS OF LAND BEING INTENDED TO BE IN THE REAR
OF NOS. 115 AND 117 OF S. MAIN STREET, MANCHESTER.)
PARCEL 2 (ORIGINALLY DESCRIBED IN DEED RECORDED IN LIBER 522, AT
FOLIO 568 AS THE FIFTH PARCEL.):
All that lot or parcel containing 1 acre 1 rood and 14 square
perches of land, more or less, with an outlet along the south 48
half degrees west line to an alley leading to the original Church
Street; and being all and the same land that said granted and
assigned by Harvey H. Nott and wife, to Charles W. Schuckle, by
deed, dated April 22, 1955 and recorded among the land records of
Carroll County in Liber E.A.S. No. 245, folio 66.
PARCEL THREE (ORIGINALLY DESCRIBED IN DEED RECORDED IN LIBER 522,
AT FOLIO 568 AS PARCEL SEVEN.):
All that tract or parcel of land situate near the Town of
Manchester, and according to an unrecorded certificate of survey
made by J.H. Rife, Registered Surveyor, on April 11, 1962, is
more particularly described as follows:
BEGINNING for a corner at a steel pin at the end of line 3 in the
deed from Joseph M. Parks, et al., to Daniel Bowman, dated
January 7, 1882 and recorded among the land records of Carroll
County, Maryland in Liber F.T.S. No. 56, Folio 215, then with
said line reversely, (1) north 52 degrees 49 minutes 40 seconds
east 180.35 feet to a steel pin; then (2) north 39 degrees 43
minutes 10 seconds west 212.06 feet to a steel pin at a stone;
then (3) north 46 degrees 21 minutes 30 seconds east 395.35 feet
to a steel pin at the southwest corner of the portion of the
Daniel Riley parcel now to be conveyed to him; then binding on
the south line of said Daniel Riley parcel and a lot of John L.
Riley (4) south 48 degrees 19 minutes 05 seconds east 189.05 feet
to a steel pin; then binding on the east side of John L. Riley
lot and lands of Hamilton Singer; (5) north 44 degrees 25 minutes
30 seconds east 1000.10 feet to a marble stone corner on the
north side of a gravel and earth road, an extension of Locust
Street; thence binding on lands of the cemetery and Town of
Manchester (6) north 44 degrees 13 minutes 10 seconds east
1482.50 feet to a stone at a steel pin; then by lands of the Town
of Manchester; (7) south 70 degrees 51 minutes 25 seconds east
385.56 feet to a steel pin on the north side of a small stream;
then by lands of Engman the five following courses: (8) south 46
degrees 30 minutes 20 seconds west 1639.48 feet to a steel pin;
then (9) south 46 degrees 02 minutes 45 seconds west 352.64 feet
to a steel pin; then (10) south 24 degrees 43 minutes 05 seconds
west 175.32 feet to a steel pin; then (11) south 60 degrees 18
minutes 15 seconds east 505.16 feet to a steel pin; then (12)
south 30 degrees 32 minutes 05 seconds west 704.60 feet to a
stone at a steel pin at lands of Walter Brilhart; thence binding
on said Brilhart land the two following courses: (13) north 50
degrees 45 minutes 00 seconds west 386.60 feet to a 36 inch oak
tree; then (14) south 22 degrees 45 minutes 55 seconds west
640.79 feet to a steel pin at lands of Oscar Garrett; thence by
said Garrett land the following two courses: (15) north 40
degrees 03 minutes 45 seconds west 587.91 feet to a stone at a
steel pin; thence (16) north 38 degrees 31 minutes 20 seconds
west 276.63 feet to a steel pin, the place of beginning,
containing 38.7655 acres of land, more or less.
TOGETHER WITH a right of way for ingress, egress and regress to
and from said above described tract of land to York Street,
Manchester, Maryland, across the land reserved as a right of way
in a Deed from Martha L. Riley, et al., to Daniel C. Riley and
wife, dated April 28, 1955 and recorded among the land records
aforesaid in Liber E.A.S. No. 245, Folio 274.
PARCEL FOUR (ORIGINALLY DESCRIBED IN DEED RECORDED IN LIBER 522,
FOLIO 570 AS PARCEL EIGHT.):
All that certain piece or parcel of land, lying, situate and
being in the Town of Manchester, Carroll County, Maryland, and
being more particularly described as:
BEGINNING at the seventh, or south 76 degrees west 10.4 roods
line as described in a Deed, dated October 29, 1946 and recorded
among the land records of Carroll County in Liber E.A.S. No. 192,
Folio 443, was granted and conveyed by Harold C. Frankforter to
John A Myers and wife, at a point distant 50.02 feet from the end
thereof, said place of beginning being on the northeast side of
Monroe Street (now laid out 50 feet wide) and running thence (1)
north 67 degrees 54 minutes 21 seconds east binding reversely on
said seventh line 108.73 feet, thence running (2) south 82
degrees 21 minutes 52 seconds east 313.76 feet binding on the
line established in an Agreement between John A. Myers and wife
and Clarence F. Renoll and wife, dated May 15, 1947 and recorded
among the land records aforesaid in Liber E.A.S. No. 194, folio
433, to the end of the first line of the aforesaid Deed from
Frankforter to Myers, thence binding reversely on said first line
(3) south 38 degrees 38 minutes 01 second east 276.18 feet to a
steel pin set at the beginning thereof, thence running (4) south
40 degrees 04 minutes 59 seconds east binding in part reversely
on the fourth line of the second parcel of land in a Deed, dated
July 6, 1935 and recorded among the land records aforesaid in
Liber E.M.M. No. 162, folio 343, was granted and conveyed by Wm.
N. Gettier and wife to C. Robert Brillhart and wife, 184.44 feet,
thence running for a new line of division and in part binding on
the rear lines of Lots Nos. 1 and 2 Block C on the Plat of
Manchester South, an unrecorded plat prepared by J. H. Rife,
Surveyor, dated October 20, 1964, (5) south 66 degrees 27 minutes
10 seconds west 501.50 feet to the northeast side of the above
mentioned Monroe Street, thence binding on the east side of said
Street (6) north 23 degrees 32 minutes 50 seconds west 608.69
feet to the place of beginning, containing 5.3671 acres of land
(neat measure). The above property is shown on a plat by J. H.
Rife, entitled "Town of Manchester Election District No. 6,
Carroll County, Maryland", recorded in Liber 423, Folio 267.
PARCEL FIVE (DESCRIBED IN DEED RECORDED IN LIBER 1159, FOLIO
855):
All that lot or parcel of land situate, lying and being on the
North side of Beaver Street, situated in the Town of Manchester,
Sixth Election District of Carroll County, State of Maryland, and
more particularly described in an unrecorded certificate of
survey prepared by BPR, Incorporated, dated May 10, 1989, as
follows:
BEGINNING for the same at an iron pin found on the northern
right-of-way line of Beaver Street (60 foot wide right-of-way),
said iron pin found also being at the end of the Second or South
23 degrees 32 minutes 50 seconds East, 153.34 foot line as
described in Lot Two of a conveyance from the Town of Manchester
to Dorothy G. Shaffer by deed dated June 15, 1967, and recorded
among the land records of Carroll County in Liber CCC 423, folio
220; thence leaving the north side of Beaver Street and running
reversely with and binding on the second line in said conveyance
to Dorothy G. Shaffer, as now surveyed by BPR, Incorporated,
bearings herein being referred to Magnetic North, dated April,
1977, (1) North 13 degrees 59 minutes 25 seconds West, 153.32
feet to an iron pin found on the fifth or South 66 degrees 27
minutes 10 seconds West, 501.50 foot line as described in a
conveyance from the Town of Manchester to Dutterer's of
Manchester, Inc., by deed dated June 28, 1967, and recorded among
the land records of Carroll County in Liber CCC 423, folio 263,
at a distance of 200.00 feet measured reversely along said line
from the end thereof; thence leaving the outline as described in
Lot No. Two of said conveyance to Dorothy G. Shaffer and running
reversely with and binding on a part of said fifth line as
described in said conveyance to Dutterer's of Manchester, Inc.,
(2) North 75 degrees 36 minutes 37 seconds East, 50.00 feet to a
rebar now set; thence leaving the outline as described in said
conveyance to Dutterer's of Manchester, Inc. and running for two
new lines of division through the lands as described in a
conveyance from Oscar W. Garrett and Cora E. Garrett, his wife,
and Charles C. Ruby and Hilda D. Ruby, his wife, to the Town of
Manchester by deed dated December 23, 1963, and recorded among
the land records of Carroll County in Liber CCC 368, folio 271,
which the land now being described is a part, (3) South 13
degrees 59 minutes 25 seconds East, 140.67 feet to a rebar now
set on the aforementioned northern right-of-way line of Beaver
Street (60 foot wide right-of-way); thence running with and
binding on the northern right-of-way line of Beaver Street, (4)
by a curve to the right, southwesterly, 51.81 feet, said curve
having a radius of 234.16 feet and a chord bearing and distance
of South 61 degrees 14 minutes 49 seconds West, 51.71 feet to the
place of beginning, containing 7,403.58 square feet or 0.16996
acres of land, more or less.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) OF
DOUGHTIE'S FOODS, INC. FOR THE SIX MONTHS ENDED JUNE 29, 1996,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> JUN-29-1996
<CASH> 550
<SECURITIES> 0
<RECEIVABLES> 7,587
<ALLOWANCES> 371
<INVENTORY> 5,861
<CURRENT-ASSETS> 14,153
<PP&E> 9,710
<DEPRECIATION> 6,030
<TOTAL-ASSETS> 18,429
<CURRENT-LIABILITIES> 2,686
<BONDS> 8,057
<COMMON> 1,001
0
0
<OTHER-SE> 6,636
<TOTAL-LIABILITY-AND-EQUITY> 18,429
<SALES> 38,438
<TOTAL-REVENUES> 38,438
<CGS> 31,852
<TOTAL-COSTS> 37,531
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 234
<INCOME-PRETAX> 673
<INCOME-TAX> 253
<INCOME-CONTINUING> 420
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 420
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
