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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this ___ day of May, 2000, by
and between FLEET CAPITAL CORPORATION ("Lender"), a Rhode Island corporation
with an office at 6100 Fairview Road, Suite 200, Charlotte, North Carolina
28210; and FRESH FOODS, INC. ("Borrower"), a North Carolina corporation with its
chief executive office and principal place of business at 9990 Princeton Road,
Cincinnati, Ohio 45246. Capitalized terms used in this Agreement have the
meanings assigned to them in Appendix A, General Definitions, attached hereto.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a total credit facility of $25,000,000
available upon Borrower's request therefor as follows:
1.1 Revolver Loans. Lender agrees, for so long as no Default or Event
of Default exists and subject to the provisions of Section 10 below, to make
Revolver Loans to Borrower from time to time, as requested by Borrower in the
manner set forth in Section 3.1 hereof, up to a maximum principal amount at any
time outstanding equal to the lesser of the Revolver Facility Amount or the
Borrowing Base at such time. The Revolver Loans may be repaid and reborrowed in
accordance with the provisions of this Agreement. Each Revolver Loan shall, at
the option of Borrower, be made or continued as, or converted into, an Alternate
Base Rate Loan or a LIBOR Rate Loan, upon the terms set forth herein.
1.2 Letters of Credit; Letter of Credit Guaranties.
1.2.1 Issuance of Letters of Credit and Letter of Credit
Guaranties. Lender agrees, for so long as no Default or Event of Default exists
and subject to the provisions of Section 10 below, to issue its, or cause to be
issued its Affiliate's, Letters of Credit and Letter of Credit Guaranties, as
requested by Borrower, provided that the Letter of Credit Amount at any time
shall not exceed $5,000,000 and no Letter of Credit or Letter of Credit Guaranty
may have an expiration date that is after the last day of the Original Term or
the then applicable Renewal Term. Any amounts paid by Lender under any Letter of
Credit Guaranty or in connection with any Letter of Credit shall be treated as
Revolver Loans, shall be secured by all of the Collateral and shall bear
interest and be payable at the same rate and in the same manner as Revolver
Loans that are Alternate Base Rate Loans.
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1.2.2 Reimbursement Obligations. All indebtedness, liabilities
or obligations whatsoever arising or incurred in connection with any Letters of
Credit or Letter of Credit Guaranties shall be incurred solely as an
accommodation to Borrower and for Borrower's account. Borrower hereby
unconditionally agrees to reimburse Lender for the total amount of all sums paid
by Lender on Borrower's behalf under the terms of any Letter of Credit or Letter
of Credit Guaranty, any drawing or demand under any Letter of Credit or Letter
of Credit Guaranty or any additional or further liability which may accrue
against Lender in connection with the same, immediately upon the date of payment
by Lender. Any such sum paid or liability incurred by Lender in connection with
any Letter of Credit or Letter of Credit Guaranty shall, if not reimbursed by
Borrower on the date paid or incurred by Lender, be treated for all purposes and
shall have the same force and effect as if such amount had been loaned by Lender
to Borrower as a Revolver Loan, shall be secured by all of the Collateral and
shall bear interest and be payable at the same rate and in the same manner as
Revolver Loans that are Alternate Base Rate Loans.
1.2.3 Rights and Remedies. In the event that, coincident with
or subsequent to the occurrence of a Default or an Event of Default, Lender
becomes aware of the possibility of a draw, or enforcement of Lender's
obligations, under a Letter of Credit or Letter of Credit Guaranty, Lender, at
its option, may, but shall not be required to, pay Borrower's obligations to the
beneficiary or holder of such Letter of Credit or Letter of Credit Guaranty
directly to such beneficiary or holder, and, in such event, the amount of any
such payment made by Lender shall be treated for all purposes and shall have the
same force and effect as if such amount had been loaned by Lender to Borrower as
a Revolver Loan, shall be secured by all of the Collateral and shall bear
interest and be payable at the same rate and in the same manner as Revolver
Loans that are Alternate Base Rate Loans. Additionally, in the event of
Borrower's failure to reimburse Lender for the total amount of all sums paid by
Lender on Borrower's behalf under the terms of any Letter of Credit or Letter of
Credit Guaranty, any drawing or demand under any Letter of Credit or Letter of
Credit Guaranty or any additional or further liability which may accrue against
Lender in connection therewith, Lender, in addition to its rights under the Code
and under this Agreement, shall be fully subrogated to the rights and remedies
of the issuer of the Letter of Credit under any agreement made with Borrower
relating to the issuance of such Letter of Credit, each such agreement being
incorporated herein by reference, and Lender shall be entitled to exercise all
such rights and remedies thereunder and under law in such regard as fully as if
it were the issuer of the Letter of Credit. If any Letter of Credit is drawn
upon to discharge any obligation of Borrower to the beneficiary of such Letter
of Credit, in whole or in part, Lender shall be fully subrogated to the rights
of such beneficiary with respect to the obligation of Borrower to such
beneficiary discharged with the proceeds of such Letter of Credit.
1.2.4 Indemnification. Borrower hereby unconditionally agrees
to indemnify Lender and hold Lender harmless from any and all losses, claims or
liabilities arising from any transactions or occurrences relating to Letters of
Credit or Letter of Credit Guaranties issued, established, opened or accepted
for Borrower's account, and any drafts or acceptances thereunder, and all Letter
of Credit Obligations incurred in connection therewith.
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1.2.5 Termination. In the event that this Agreement is
terminated for any reason by either party as herein provided, in addition to
Lender's other rights under this Agreement, unless all outstanding Letters of
Credit and Letter of Credit Guaranties are terminated or canceled and Lender and
its Affiliates released from all liability thereunder, Lender shall be entitled
to pay and discharge all Letter of Credit Obligations with respect to all
outstanding Letters of Credit and Letter of Credit Guaranties which are not
terminated or canceled, whether such Letter of Credit Obligations are absolute
or contingent, and all sums paid by Lender in connection therewith shall be
deemed to have been loaned by Lender to Borrower as a Revolver Loan, shall be
secured by all of the Collateral and shall bear interest and be payable at the
same rate and in the same manner as Revolver Loans that are Alternate Revolver
Loans.
1.3 Use of Proceeds of Loans. On and after the Closing Date, all
Revolver Loans shall be used solely for Borrower's general working capital needs
in a manner consistent with the provisions of this Agreement and Applicable Law
and for any other purposes not inconsistent with this Agreement.
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Rates of Interest - Revolver Loans. Subject to the
provisions of Section 2.1.6 of this Agreement, Borrower agrees to pay interest
on the unpaid principal amount of the Revolver Loans outstanding from the
respective dates such principal amounts are advanced until paid (whether at
stated maturity, on acceleration, or otherwise) at a variable rate per annum
equal to the applicable rate indicated below:
(i) For Revolver Loans made or outstanding as
Alternate Base Rate Loans, the Alternate Base Rate in effect from time
to time plus the Applicable Margin then in effect; or
(ii) For Revolver Loans made or outstanding as LIBOR
Rate Loans, the relevant Adjusted LIBOR Rate for the applicable
Interest Period selected by Borrower in conformity with this Agreement
plus the Applicable Margin then in effect.
2.1.2 Computation of Interest. Upon determining the Adjusted
LIBOR Rate for any Interest Period requested by Borrower, Lender shall promptly
notify Borrower thereof by telephone or in writing. Such determination shall,
absent manifest error, be final, conclusive and binding on all parties and for
all purposes. The applicable rates of interest with respect to all Alternate
Base Rate Loans shall be increased or decreased, as the case may be, by an
amount equal to any increase or decrease in the Base Rate and the Federal Funds
Effective Rate, with such adjustments to be effective as of the opening of
business on the day that any such change in the Base Rate or the Federal Funds
Effective Rate becomes effective. Interest on each Loan shall accrue from and
including the date of such Loan to but excluding the date of any repayment
thereof.
2.1.3 Conversions and Continuations.
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(i) Borrower may on any Business Day, subject to the
giving of a proper Notice of Conversion/Continuation, elect to (a)
continue all or any part of the principal amount of a LIBOR Rate Loan
by selecting a new Interest Period therefor, to commence on the last
day of the immediately preceding Interest Period, or (b) convert all or
any part of a Loan of one Type into a Loan of another Type; provided,
however, that no outstanding Loans may be converted into or continued
as LIBOR Rate Loans when any Default or Event of Default has occurred
and is continuing, and no conversion of any LIBOR Rate Loans into
Alternate Base Rate Loans shall be made except on the last day of the
Interest Period for such LIBOR Rate Loans.
(ii) Whenever Borrower desires to convert or to
continue Loans under Section 2.1.3(i) hereof, Borrower shall give
Lender written notice (or telephonic notice promptly confirmed in
writing), substantially in the form of EXHIBIT A attached hereto (a
"Notice of Conversion/Continuation"), signed by an authorized officer
of Borrower, at least one (1) Business Day before the requested
conversion into an Alternate Base Rate Loan and at least two (2)
Business Days before the requested conversion into or continuation of a
LIBOR Rate Loan. Each such Notice of Conversion/Continuation shall be
irrevocable and shall specify the aggregate principal amount of the
Loans to be converted or continued, the date of such conversion or
continuation (which shall be a Business Day), and whether the Loans are
being converted into or continued as LIBOR Rate Loans (and, if so, the
duration of the Interest Period to be applicable thereto) or Alternate
Base Rate Loans. If, upon the expiration of any Interest Period in
respect of any LIBOR Rate Loans, Borrower shall have failed to deliver
a Notice of Conversion/Continuation, Borrower shall be deemed to have
elected to convert such LIBOR Rate Loans to Alternate Base Rate Loans.
2.1.4 Interest Periods. In connection with the making or
continuation of, or conversion into, each Borrowing of LIBOR Rate Loans,
Borrower shall select an interest period (each an "Interest Period") to be
applicable to such LIBOR Rate Loan, which interest period shall commence on the
date such LIBOR Rate Loan is made and shall end on a numerically corresponding
day in the first (1st), second (2nd) or third (3rd) month thereafter; provided,
however, that:
(i) The initial Interest Period for a LIBOR Rate Loan
shall commence on the date of such Borrowing (including the date of any
conversion from an Interest Period occurring thereafter in respect of a
Loan of another Type) and each such Loan shall commence on the date on
which the next preceding Interest Period expires;
(ii) If any Interest Period would otherwise expire on
a day which is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day, provided that if any Interest Period
in respect of LIBOR Rate Loans would otherwise expire on a day which is
not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire on
the next preceding Business Day;
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(iii) Any Interest Period which begins on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period shall expire on the last Business
Day of such calendar month;
(iv) No Interest Period shall extend beyond the last
day of the Original Term or the last day of any Renewal Term; and
(v) No Interest Period with respect to any portion of
principal of a Loan shall extend beyond a date on which Borrower is
required to make a scheduled payment of such portion of principal.
2.1.5 Interest Rate Not Ascertainable. If Lender shall
determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) that on any date for determining the
Adjusted LIBOR Rate for any Interest Period, by reason of any changes affecting
the London interbank market or Lender's or Bank's position in such market,
adequate and fair means do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of Adjusted LIBOR Rate, then,
and in any such event, Lender shall forthwith give notice (by telephone
confirmed in writing) to Borrower of such determination. Until Lender notifies
Borrower that the circumstances giving rise to the suspension described herein
no longer exist, the obligation of Lender to make LIBOR Rate Loans shall be
suspended, and such affected Loans then outstanding shall, at the end of the
then applicable Interest Period or at such earlier time as may be required by
Applicable Law, bear the same interest as Alternate Base Rate Loans.
2.1.6 Default Rate of Interest. During the existence of an
Event of Default, the principal amount of all Loans (and, to the extent
permitted by Applicable Law, all accrued interest that is past due) shall bear
interest at a rate per annum equal to two percent (2%) above the interest rate
otherwise applicable thereto (the "Default Rate").
2.2 Fees.
2.2.1 Closing Fee. Borrower shall pay to Lender a closing fee
of $125,000, of which $50,000 has been paid to Lender, which shall be fully
earned and non-refundable on the Closing Date and shall be paid concurrently
with and from the proceeds of the initial Loan hereunder.
2.2.2 Unused Line Fee. Borrower shall pay to Lender a fee
equal to the Applicable Margin then in effect for the unused line fee times the
amount by which the Revolver Facility Amount less the amount of Availability, if
any, required to be maintained pursuant to Section 9.3.3 hereof, exceeds the
Average Monthly Loan Balance. The unused line fee shall begin to accrue on the
Closing Date and shall be payable monthly in arrears on the first day of each
calendar month after the Closing Date and upon the termination of this
Agreement.
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2.2.3 Letter of Credit and Letter of Credit Guaranty Fees.
Borrower shall pay to Lender a fee equal to (a) one and one-half percent (1.5%)
per annum of the undrawn face amount of each Letter of Credit and Letter of
Credit Guaranty issued from time to time pursuant to Section 1.2 of this
Agreement for all Letters of Credit and Letter of Credit Guaranties outstanding
up to the aggregate amount outstanding of $2,500,000, and (b) the Applicable
Margin for LIBOR Rate Loans per annum of the undrawn face amount of each Letter
of Credit and Letter of Credit Guaranty issued from time to time pursuant to
Section 1.2 of this Agreement for all Letters of Credit and Letter of Credit
Guaranties outstanding for amounts outstanding in excess of $2,500,000, plus one
eighth of one percent (0.125%) of the undrawn face amount of each Letter of
Credit which shall be payable to Bank and all normal and customary charges
associated with the issuance thereof, which fees and charges shall be deemed
fully earned upon issuance of each such Letter of Credit and Letter of Credit
Guaranty, shall be due and payable in advance upon the issuance of each Letter
of Credit or Letter of Credit Guaranty and shall not be subject to rebate or
proration upon the termination of this Agreement for any reason.
2.2.4 Audit and Appraisal Fees. Borrower shall pay to Lender
an audit fee of Six Hundred Fifty Dollars ($650) per Person for each day spent
by such Person employed by Lender plus all reasonable out-of-pocket costs and
expenses from time to time incurred by Lender in connection with all audits and
appraisals of Borrower's books and records and of the Collateral and such other
matters related thereto as Lender shall deem appropriate.
2.3 Computation of Interest and Fees. All interest, fees and other
charges provided for in this Agreement shall be calculated daily and shall be
computed on the actual number of days elapsed over a year of 360 days. For the
purpose of computing interest hereunder, all items of payment received by Lender
shall be deemed applied by Lender on account of the Obligations (subject to
final payment of such items) on the Business Day of receipt by Lender of such
items in immediately available funds in Lender's account located at Fleet
National Bank in Hartford, Connecticut, and Lender shall be deemed to have
received such item of payment on the date specified in Section 4.5 hereof.
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2.4 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Lender or any Participating
Lender incurs legal or accounting expenses or any other costs or out-of-pocket
expenses in connection with (i) any amendment of or modification of this
Agreement or any of the other Loan Documents; (ii) the administration of this
Agreement or any of the other Loan Documents and the transactions contemplated
hereby and thereby, including reasonable charges for appraisers, examiners,
auditors or similar Persons (but specifically excluding any overhead costs of
Lender) whom Lender may engage from time to time to audit, inspect or render
opinions concerning the books, records and financial condition of Borrower and
the condition and value of the Collateral; (iii) any litigation, contest,
dispute, suit, proceeding or action (whether instituted by Lender, Borrower or
any other Person) in any way relating to the Collateral, this Agreement or any
of the other Loan Documents or Borrower's affairs; (iv) any attempt to enforce
any rights of Lender or any Participating Lender against Borrower or any other
Person which may be obligated to Lender by virtue of this Agreement or any of
the other Loan Documents, including, without limitation, the Account Debtors;
(v) any attempt to inspect, verify, protect, preserve, restore, collect, sell,
liquidate or otherwise dispose of or realize upon the Collateral; or (vi) any
filing and recording of the financing statements and all other documents
required by Lender to perfect or continue the perfection of Lender's Lien in the
Collateral which may occur after the Closing Date, including, without
limitation, any documentary stamp tax or any other taxes incurred because of
such filing or recording, and the conducting of searches after the Closing Date
in all filing offices at such intervals as Lender may determine to confirm the
priority of Lender's Lien in the Collateral; then all such legal and accounting
expenses, other costs and out of pocket expenses of Lender shall be charged to
Borrower. All amounts chargeable to Borrower under this Section 2.4 shall be
Obligations secured by all of the Collateral, shall be payable in accordance
with Section 3.1.1(ii) hereof as a request for a Revolver Loan on the due date
thereof, and if not so paid, shall be payable to Lender on demand, and shall
thereafter bear interest from the date such demand is made until paid in full at
the rate applicable to Revolver Loans constituting Alternate Base Rate Loans.
Borrower shall also reimburse Lender for expenses incurred by Lender in its
administration of the Collateral to the extent and in the manner provided in
Section 7 hereof or in any of the Loan Documents.
2.5 Bank Charges. Borrower shall pay to Lender, on demand, any and all
fees, costs or expenses which Lender or any Participating Lender pays to a bank
or other similar institution arising out of or in connection with (i) the
forwarding to Borrower or any other Person on behalf of Borrower by Lender or
any Participating Lender of proceeds of Loans made by Lender to Borrower
pursuant to this Agreement and (ii) the depositing for collection, by Lender or
any Participating Lender, of any Payment Item received or delivered to Lender or
any Participating Lender on account of the Obligations. Borrower acknowledges
and agrees that Lender may charge such costs, fees and expenses to Borrower
based upon Lender's good faith estimate of such costs, fees and expenses as they
are incurred by Lender.
2.6 Illegality. Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if (i) any change in any law or regulation or in
the interpretation thereof by any governmental authority charged with the
administration thereof shall make it unlawful for Lender or any Participating
Lender to make or maintain a LIBOR Rate Loan or to give effect to its
obligations as contemplated hereby with respect to a LIBOR Rate Loan or (ii) at
any time Lender or any Participating Lender determines that the making or
continuance of any LIBOR Rate Loan has become impracticable as a result of a
contingency occurring after the date hereof which adversely effects the London
interbank market or the position of Lender or Bank or any Participating Lender
in such market, then, by written notice to Borrower, Lender may (1) declare that
LIBOR Rate Loans will not thereafter be made by Lender, whereupon any request by
Borrower for a LIBOR Rate Loan shall be deemed a request for an Alternate Base
Rate Loan unless Lender's declaration shall be subsequently withdrawn; and (2)
require that all outstanding LIBOR Rate Loans made by Lender be converted to
Alternate Base Rate Loans, in which event all such LIBOR Rate Loans shall be
automatically converted to Alternate Base Rate Loans as of the date of
Borrower's receipt of the aforesaid notice from Lender.
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2.7 Increased Costs. If, by reason of (i) after the date hereof, the
introduction of or any change (including, without limitation, any change by way
of imposition or increase of Statutory Reserves or other reserve requirements)
in or in the interpretation of any law or regulation, or (ii) the compliance
with any guideline or request from any central bank or other governmental
authority or quasi-governmental authority exercising control over banks or
financial institutions generally (whether or not having the force of law):
(a) Lender shall be subject to any tax, duty or other
charge with respect to any LIBOR Rate Loan or its obligation to make
LIBOR Rate Loans, or shall change the basis of taxation of payment to
Lender of the principal of or interest on its LIBOR Rate Loans or its
obligation to make LIBOR Rate Loans (except for changes in the rate of
tax on the overall net income of Lender imposed by the jurisdiction in
which Lender's principal executive office is located); or
(b) any reserve (including, without limitation, any
imposed by the Board of Governors of the Federal Reserve System),
special deposits or similar requirement against assets of, deposits
with or for the account of, or credit extended by, Lender shall be
imposed or deemed applicable or any other condition affecting the LIBOR
Rate Loans or the obligation of Lender to make LIBOR Rate Loans shall
be imposed on Lender or the London interbank market;
and as a result thereof there shall be any increase in the cost to Lender of
agreeing to make or making, funding or maintaining LIBOR Rate Loans (except to
the extent already included in the determination of the applicable Adjusted
LIBOR Rate for LIBOR Rate Loans), or there shall be a reduction in the amount
received or receivable by Lender, then Borrower shall from time to time, upon
written notice from and demand by Lender, pay to Lender, within five (5)
Business Days after the date specified in such notice and demand, an additional
amount sufficient to indemnify Lender against such increased cost. A certificate
as to the amount of such increased cost, submitted to Borrower by Lender, shall,
except for manifest error, be final, conclusive and binding for all purposes.
If Lender shall advise Borrower at any time that, because of the
circumstances described in this Section 2.7 or any other circumstances affecting
Lender or the London interbank market or Lender's or Bank's position in such
market, the Adjusted LIBOR Rate, as determined by Lender, will not adequately
and fairly reflect the cost to Lender of funding LIBOR Rate Advances, then, and
in any such event:
(1) Lender shall forthwith give notice (by telephone
confirmed in writing) to Borrower of such advice;
(2) Borrower's right to request and Lender's
obligation to make LIBOR Rate Loans shall be immediately suspended and
Borrower's right to continue a LIBOR Rate Loan as such beyond the then
applicable Interest Period shall also be suspended, until each
condition giving rise to such suspension no longer exists; and
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(3) Lender shall make a Loan as part of the requested
Borrowing of LIBOR Rate Loans as an Alternate Base Rate Loan, which
Alternate Base Rate Loan shall, for all purposes, be considered part of
such Borrowing.
For purposes of this Section 2.7, all references to Lender shall be
deemed to include any bank Participating Lender and holding company or bank
parent of Lender or any Participating Lender.
2.8 Capital Adequacy. If after the date hereof Lender determines that
(i) the adoption of any Applicable Law regarding capital requirements for banks
or bank holding companies or the subsidiaries thereof, (ii) any change in the
interpretation or administration of any such law, rule or regulation by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or (iii) compliance by Lender or its
holding company with any request or directive of any such governmental
authority, central bank or comparable agency regarding capital adequacy (whether
or not having the force of law), has the effect of reducing the return on
Lender's capital to a level below that which Lender could have achieved (taking
into consideration Lender's and its holding company's policies with respect to
capital adequacy immediately before such adoption, change or compliance and
assuming that Lender's capital was fully utilized prior to such adoption, change
or compliance) but for such adoption, change or compliance as a consequence of
Lender's commitment to make the Loans pursuant hereto by any amount deemed by
Lender to be material:
(a) Lender shall promptly, after Lender's
determination of such occurrence, give notice thereof to Borrower; and
(b) Borrower shall pay to Lender, as an additional
fee from time to time, within five (5) Business Days after Lender's
demand therefor, such amount as Lender certifies to be the amount that
will compensate Lender for such reduction.
A certificate of Lender claiming entitlement to compensation as set
forth above shall, except for manifest error, be final, conclusive and binding.
Such certificate will set forth the nature of the occurrence giving rise to such
compensation, the additional amount or amounts to be paid to Lender, and the
method by which such amounts were determined. In determining such amount, Lender
may use any reasonable averaging and attribution method. For purposes of this
Section 2.8 all references to Lender shall be deemed to include any
Participating Lender and bank holding company or bank parent of Lender or any
Participating Lender.
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2.9 Funding Losses. Borrower shall reimburse Lender for any loss, cost,
expense or liability (including, without limitation, any interest paid by Lender
to lenders of funds borrowed by Lender to make or carry the LIBOR Rate Loans to
the extent not recovered by Lender in connection with the re-employment of such
funds) sustained or incurred by Lender if for any reason (other than a default
by Lender): (i) a Borrowing of, or conversion to or continuation of, a LIBOR
Rate Loan does not occur on the date specified therefor in a Notice of Borrowing
or Notice of Conversion/Continuation (whether or not withdrawn); (ii) any
repayment (including any conversions pursuant to Section 2.1.3 hereof) of any
LIBOR Rate Loans occurs on a date that is not the last day of an Interest Period
applicable thereto; or (iii) Borrower defaults in its obligation to repay LIBOR
Rate Loans when required by the terms of this Agreement. Borrower shall pay such
amount within five (5) Business Days after presentation by Lender of a statement
setting forth the amount and Lender's calculation thereof pursuant hereto, which
statement shall, except for manifest error, be final, conclusive and binding.
For purposes of this Section 2.9, all references to Lender shall be deemed to
include any Participating Lender and bank holding company or bank parent of
Lender or any Participating Lender.
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2.10 Maximum Interest. Regardless of any provision contained in this
Agreement or any of the other Loan Documents, in no contingency or event
whatsoever shall the aggregate of all amounts that are contracted for, charged
or collected pursuant to the terms of this Agreement or any of the other Loan
Documents and that are deemed interest under Applicable Law exceed the highest
rate permissible under any Applicable Law. No agreements, conditions, provisions
or stipulations contained in this Agreement or any of the other Loan Documents,
or the exercise by Lender of the right to accelerate the payment or the maturity
of all or any portion of the Obligations, or the exercise of any option
whatsoever contained in any of the Loan Documents, or the prepayment by Borrower
of any of the Obligations, or the occurrence of any contingency whatsoever,
shall entitle Lender to charge or receive in any event, interest or any charges,
amounts, premiums or fees deemed interest by Applicable Law (such interest,
charges, amounts, premiums and fees referred to herein collectively as
"Interest") in excess of the Maximum Rate and in no event shall Borrower be
obligated to pay Interest exceeding such Maximum Rate, and all agreements,
conditions or stipulations, if any, which may in any event or contingency
whatsoever operate to bind, obligate or compel Borrower to pay Interest
exceeding the Maximum Rate shall be without binding force or effect, at law or
in equity, to the extent only of the excess of Interest over such Maximum Rate.
If any Interest is charged or received in excess of the Maximum Rate ("Excess"),
Borrower acknowledges and stipulates that any such charge or receipt shall be
the result of an accident and bona fide error, and such Excess, to the extent
received, shall be applied first to reduce the principal Obligations and the
balance, if any, returned to Borrower, it being the intent of the parties hereto
not to enter into a usurious or otherwise illegal relationship. The right to
accelerate the maturity of any of the Obligations does not include the right to
accelerate any interest that has not otherwise accrued on the date of such
acceleration, and Lender does not intend to collect any unearned interest in the
event of any such acceleration. Borrower recognizes that, with fluctuations in
the rates of interest set forth in Section 2.1.1 of this Agreement, and in the
Maximum Rate, such an unintentional result could inadvertently occur. All monies
paid to Lender hereunder or under any of the other Loan Documents, whether at
maturity or by prepayment, shall be subject to any rebate of unearned interest
as and to the extent required by Applicable Law. By the execution of this
Agreement, Borrower covenants that (i) the credit or return of any Excess shall
constitute the acceptance by Borrower of such Excess, and (ii) Borrower shall
not seek or pursue any other remedy, legal or equitable, against Lender, based
in whole or in part upon contracting for, charging or receiving any Interest in
excess of the Maximum Rate. For the purpose of determining whether or not any
Excess has been contracted for, charged or received by Lender, all interest at
any time contracted for, charged or received from Borrower in connection with
any of the Loan Documents shall, to the extent permitted by Applicable Law, be
amortized, prorated, allocated and spread in equal parts throughout the full
term of the Obligations. Borrower and Lender shall, to the maximum extent
permitted under Applicable Law, (i) characterize any non-principal payment as an
expense, fee or premium rather than as Interest and (ii) exclude voluntary
prepayments and the effects thereof. The provisions of this Section shall be
deemed to be incorporated into every Loan Document (whether or not any provision
of this Section is referred to therein). All such Loan Documents and
communications relating to any Interest owed by Borrower and all figures set
forth therein shall, for the sole purpose of computing the extent of
Obligations, be automatically recomputed by Borrower, and by any court
considering the same, to give effect to the adjustments or credits required by
this Section.
SECTION 3. LOAN ADMINISTRATION.
3.1 Manner of Borrowing Revolver Loans and Disbursements. Borrowings
pursuant to Section 1.1.1 shall be made and funded as follows:
3.1.1 Notice of Borrowing.
(i) Whenever Borrower desires to make a
Borrowing under Section 1.1.1 of this Agreement (other than a Borrowing
resulting from a conversion or continuation pursuant to Section 2.1.3
hereof), Borrower shall give Lender prior written notice (or telephonic
notice promptly confirmed in writing) of such Borrowing request (a
"Notice of Borrowing"), which shall be in the form of EXHIBIT B hereto
and signed by an authorized officer of Borrower. Such Notice of
Borrowing shall be given by Borrower no later than 11:00 a.m.,
Charlotte, North Carolina time, at the office of Lender designated by
Lender from time to time (a) on the Business Day of the requested date
of such Borrowing in the case of all Alternate Base Rate Loans, and (b)
at least three (3) Business Days prior to the requested date of such
Borrowing in the case of LIBOR Rate Loan. Notices received after 11:00
a.m. shall be deemed received on the next Business Day. All Loans made
on the Closing Date shall be made as Alternate Base Rate Loans and
thereafter may be made, continued as or converted into Alternate Base
Rate Loans or LIBOR Rate Loans. Each Notice of Borrowing shall be
irrevocable and shall specify (a) the principal amount of the
Borrowing, (b) the date of Borrowing (which shall be a Business Day),
(c) whether the Borrowing is to consist of Alternate Base Rate Loans or
LIBOR Rate Loans and the amount of each such Loan, and (d) in the case
of LIBOR Rate Loans, the duration of the Interest Period to be
applicable thereto. Borrower may not request any LIBOR Rate Loans if a
Default or Event of Default exists or if there are four (4) LIBOR Rate
Loans outstanding at such time.
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(ii) Unless payment is otherwise timely made by
Borrower, the becoming due of any amount required to be paid under this
Agreement or any of the other Loan Documents as principal, accrued
interest, fees or other charges shall be deemed irrevocably to be a
request by Borrower for a Revolver Loan on the due date of, and in an
aggregate amount required to pay, such principal, accrued interest,
fees or other charges, and the proceeds of each such Revolver Loan may
be disbursed by Lender by way of direct payment of the relevant
Obligation and shall bear interest as an Alternate Base Rate Loan.
Lender shall have no obligation to Borrower to honor any deemed request
for a Revolver Loan when an Overadvance Condition exists or would
result therefrom, but may do so in its sole discretion and without
regard to the existence of, and without being deemed to have waived,
any Default or Event of Default. If an Overadvance Condition exists and
Lender does not intend to make a Revolver Loan pursuant to this Section
to pay any installment of principal, accrued interest, fees or other
charges then owing, Lender shall exercise reasonable efforts to notify
Borrower of Lender's intention not to make such Revolver Loan.
(iii) As an accommodation to Borrower, Lender may
permit telephonic requests for Borrowings and electronic transmittal of
instructions, authorizations, agreements or reports to Lender by
Borrower or any other Person designated by Borrower; provided, however,
that Borrower shall confirm each telephonic request for a Borrowing of
a LIBOR Rate Loan by delivery of the required Notice of Borrowing to
Lender by facsimile transmission promptly, but in no event later than
5:00 p.m. on the same day. Unless Borrower specifically directs Lender
in writing not to accept or act upon telephonic or electronic
communications from Borrower or such designated Person, Lender shall
have no liability to Borrower for any loss or damage suffered by
Borrower as a result of Lender's honoring of any requests, execution of
any instructions, authorizations or agreements or reliance on any
reports communicated to it telephonically or electronically and
purporting to have been sent to Lender by Borrower or such designated
Person and Lender shall have no duty to verify the origin of any such
communication or the identity or authority of the Person sending it.
3.1.2 Disbursement Authorization. Borrower hereby irrevocably
authorizes Lender to disburse the proceeds of each Revolver Loan requested by
Borrower, or deemed to be requested, pursuant to Section 3.1.1 hereof, as
follows: (i) the proceeds of each Revolver Loan requested under Section 3.1.1(i)
shall be disbursed by Lender, in the case of the initial Borrowing, in
accordance with the terms of the written disbursement letter from Borrower, and
in the case of each subsequent Borrowing, by wire transfer to such bank account
as may be agreed upon by Borrower and Lender from time to time or elsewhere if
pursuant to a written direction from Borrower; and (ii) the proceeds of each
Revolver Loan requested under Section 3.1.1(ii) shall be disbursed by Lender by
way of direct payment of the relevant interest or other Obligation.
3.2 Special Provisions Governing LIBOR Rate Loans.
3.2.1 Number of LIBOR Rate Loans. In no event may the number
of LIBOR Rate Loans outstanding at any time exceed four (4).
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3.2.2 Minimum Amount of each LIBOR Rate Loan. Each election of
a LIBOR Rate Loan pursuant to Section 3.1.1(i), and each continuation of or
conversion into a LIBOR Rate Loan pursuant to Section 2.1.3 hereof, shall be in
a minimum amount of $1,000,000 and integral multiples of $100,000 in excess of
that amount.
3.2.3 LIBOR Lending Office. Lender's initial LIBOR Lending
Office is set forth opposite its name on the signature pages hereof. Lender
shall have the right at any time and from time to time to designate a different
office of itself or any Affiliate as Lender's LIBOR Lending Office, and to
transfer any outstanding LIBOR Loans to such LIBOR Lending Office. No such
designation or transfer shall result in any liability on the part of Borrower
for increased costs or expenses resulting solely from such designation or
transfer (except any such transfer that is made by Lender pursuant to Sections
2.6 or 2.7 hereof, or otherwise for the purpose of complying with Applicable
Law). Increased costs for expenses resulting from a change in Applicable Law
occurring subsequent to any such designation or transfer shall be deemed not to
result solely from such designation or transfer.
SECTION 4. PAYMENTS
4.1 General Payment Provisions. All payments (including all
prepayments) of the principal of, and interest on, the Loans and all of the
other Obligations that are payable to Lender shall be made to Lender in Dollars
without any offset or counterclaim and free and clear of (and without deduction
for) any present or future Taxes, and, with respect to payments made other than
by application of balances in the Payment Account, in immediately available
funds no later than 12:00 noon, Charlotte, North Carolina time, on the due date
(and payment made after such time, on the due date shall be deemed to have been
made on the next succeeding Business Day). If any payment under this Agreement
or the other Loan Documents shall be specified to be made upon a day which is
not a Business Day, it shall be made on the next succeeding day which is a
Business Day, and such extension of time shall in such case be included in
computing interest and fees, if any, in connection with such payment.
4.2 Payment of Principal of Revolver Loans.
4.2.1 Payment of Principal of Revolver Loans. The outstanding
principal amounts of the Revolver Loans shall be due and payable as follows:
(i) Any portion of the Revolver Loans consisting of
the principal amount of Alternate Base Rate Loans shall be paid by
Borrower to Lender unless converted to a LIBOR Rate Loan in accordance
with this Agreement, immediately upon the earlier of (a) the receipt by
Lender or Borrower of any proceeds of any of the Collateral, to the
extent of such proceeds or (b) the termination of this Agreement by
Borrower or Lender pursuant to Section 5 hereof.
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(ii) Any portion of the Revolver Loans consisting of
the principal amount of LIBOR Rate Loans shall be paid by Borrower to
Lender, unless converted to an Alternate Base Rate Loan or continued as
a LIBOR Rate Loan in accordance with the terms of this Agreement, upon
the earlier of (a) the last day of the Interest Period applicable
thereto or (b) the termination of this Agreement by Borrower or Lender
pursuant to Section 5 hereof. In no event shall Borrower be authorized
to pay any LIBOR Rate Loan prior to the last day of the Interest Period
applicable thereto unless otherwise agreed in writing by Lender or
Borrower is otherwise expressly authorized or required by any other
provision of this Agreement to pay any LIBOR Rate Loan outstanding on a
date other than the last day of the Interest Period applicable thereto,
and Borrower pays to Lender concurrently with any prepayment of a LIBOR
Rate Loan the amount due Lender under Section 2.9 hereof as a result of
such prepayment.
(iii) Notwithstanding anything to the contrary
contained elsewhere in this Agreement, if an Overadvance Condition
shall exist, Borrower shall, without the necessity of a demand, repay
the outstanding Revolver Loans that are Alternate Base Rate Loans in an
amount sufficient to reduce the aggregate unpaid principal amount of
all such Revolver Loans by an amount equal to such excess; and, if such
payment of Alternate Base Rate Loans is not sufficient to cure the
Overadvance Condition, then Borrower shall immediately either (a)
deposit with Lender, for application to any outstanding Revolver Loans
bearing interest as LIBOR Rate Loans as the same become due and payable
at the end of the applicable Interest Periods, cash in an amount
sufficient to cure such Overadvance Condition and the amount of any
such cash shall be credited by Lender to the Cash Collateral Account,
pending disbursement of same to Lender, but subject to Lender's Lien
therein and rights of offset with respect thereto, or (b) pay the
Revolver Loans that are LIBOR Rate Loans to the extent necessary to
cure such Overadvance Condition and also pay to Lender any and all
amounts required by Section 2.9 hereof to be paid by reason of the
prepayment of a LIBOR Rate Loan prior to the last day of the Interest
Period applicable thereto.
4.3 Payment of Interest. Interest accrued on all of the Loans shall be
paid upon the earlier of (i) the first calendar day of each month for the
immediately preceding month, computed through the last calendar day of the
preceding month, or (ii) the termination of this Agreement by Borrower or Lender
pursuant to Section 5 hereof.
4.4 Payment of Other Obligations. Borrower shall pay all costs, fees
and charges pursuant to this Agreement as and when provided in Section 2.2
hereof, to Lender, or to any other Person designated by Lender in writing. The
balance of the Obligations requiring the payment of money shall be payable by
Borrower to Lender as and when provided in this Agreement, the Other Agreements
or the Security Documents, or, if no date of payment is otherwise specified in
the Loan Documents, on demand.
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4.5 Application of Payments and Collections. All items of payment
received by Lender by 12:00 noon, Charlotte, North Carolina time, in immediately
available funds on any Business Day shall be deemed received on that Business
Day. All items of payment received after 12:00 noon, Charlotte, North Carolina
time, in immediately available funds on any Business Day shall be deemed
received on the following Business Day. Borrower irrevocably waives the right to
direct the application of any and all payments and collections at any time or
times hereafter received by Lender from or on behalf of Borrower, and Borrower
does hereby irrevocably agree that Lender shall have the continuing exclusive
right to apply and reapply any and all such payments and collections received at
any time or times hereafter by Lender or its agent against the Obligations, in
such manner as Lender may deem advisable, notwithstanding any entry by Lender
upon any of its books and records. If as the result of collections of Accounts
as authorized by Section 7.2.6 hereof a credit balance exists in the Loan
Account, such credit balance shall not accrue interest in favor of Borrower, but
shall be available to Borrower at any time or times for so long as no Default or
Event of Default exists. Lender may, at its option, offset such credit balance
against any of the Obligations during the existence of an Event of Default.
4.6 Marshalling; Payments Set Aside. Lender shall be under no
obligation to marshall any assets in favor of Borrower or any other Person or
against or in payment of any or all of the Obligations. To the extent that
Borrower makes a payment or payments to Lender or Lender receives payment from
the proceeds of any Collateral or exercises its right of setoff, and such
payment or payments or the proceeds of such setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party, then, to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred. The provisions of the immediately
preceding sentence of this Section 4.6 shall survive any termination of this
Agreement and payment in full of the Obligations.
4.7 Loan Account. Lender shall enter all Revolver Loans as debits to
Borrower's Loan Account and shall also record in the Loan Account all payments
made by Borrower on the Revolver Loans and all proceeds of Collateral which are
finally paid to Lender, and may record therein, in accordance with customary
accounting practice, other debits and credits, including interest and all
charges and expenses properly chargeable to Borrower.
4.8 Statements of Account. Lender will account to Borrower monthly with
a statement of Loans, charges and payments made pursuant to this Agreement, and
such account rendered by Lender shall be deemed final, binding and conclusive
upon Borrower unless Lender is notified by Borrower in writing to the contrary
within thirty (30) days after the date on which such accounting is deemed to
have been sent pursuant to section 12.9. Such notice shall only be deemed an
objection to those items specifically objected to therein.
SECTION 5. TERM AND TERMINATION OF AGREEMENT
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5.1 Term of Agreement. Subject to Lender's right to cease making Loans
to Borrower during the existence of any Default or Event of Default, this
Agreement shall be in effect for through and including June 1, 2003 (the
"Original Term"), and this Agreement shall automatically renew itself for one
(1) year periods thereafter (each a "Renewal Term"), unless terminated as
provided in Section 5.2 hereof.
5.2 Termination.
5.2.1 Termination by Lender. Upon at least ninety (90) days
prior written notice to Borrower, Lender may terminate this Agreement as of the
last day of the Original Term or the then current Renewal Term and Lender may
terminate this Agreement without notice during the existence of an Event of
Default.
5.2.2 Termination by Borrower. Upon at least ninety (90) days
prior written notice to Lender, Borrower may, at its option, terminate this
Agreement; provided, however, no such termination shall be effective until
Borrower has paid all of the Obligations in immediately available funds. Any
notice of termination given by Borrower shall be irrevocable unless Lender
otherwise agrees in writing, and Lender shall have no obligation to make any
Loans on or after the termination date stated in such notice and thereafter,
provided the Obligations are paid and satisfied in full and Lender has no
commitment to make any loans or advances hereunder, no further fees shall accrue
under Section 2.2.2 hereof. Borrower may elect to terminate this Agreement in
its entirety only. No Section of this Agreement or Type of Loan available
hereunder may be terminated singly.
5.2.3 Termination Charges. On the effective date of
termination of this Agreement for any reason, Borrower shall pay to Lender (in
addition to the then outstanding principal, accrued interest and other charges
owing under the terms of this Agreement and any of the other Loan Documents) as
liquidated damages for the loss of the bargain and not as a penalty, an amount
equal to the product obtained by multiplying the Revolver Facility Amount times
one percent (1%) if termination occurs during the period from the Closing Date
through June 1, 2001; provided, however, in the event Borrower terminates this
Agreement prior to June 1, 2001 as a result of a sale of material part of its
Property or the majority of its issued and outstanding stock and pays the
Obligations in full in connection therewith, such termination charge shall be
reduced to one-half of one percent (0.5%); and provided further, in the event
Borrower terminates this Agreement and pays the Obligations in full in
connection with (i) a public offering of its stock (whether common stock or
other form of equity), pursuant to an effective registration statement, or (ii)
a refinancing of Indebtedness owing by Borrower which pays and satisfies in full
not less than fifty percent (50%) of the Indebtedness then outstanding owing to
State Street Bank and Trust Company, as trustee, no such termination charge
shall be payable.
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5.2.4 Effect of Termination. On the effective date of
termination of this Agreement, all of the Obligations shall be immediately due
and payable. All undertakings, agreements, covenants, warranties and
representations of Borrower contained in the Loan Documents shall survive any
such termination and Lender shall retain its Liens in the Collateral and all of
its rights and remedies under the Loan Documents notwithstanding such
termination until Borrower has paid the Obligations to Lender, in full, in the
manner set forth in Section 5.2.2. Notwithstanding the payment in full of the
Obligations, Lender shall not be required to terminate its Liens in the
Collateral unless, with respect to any loss or damage Lender may incur as a
result of the dishonor or return of any Payment Item applied to the Obligations,
Lender shall, at its option, (i) have received a written agreement, executed by
Borrower and by any Person whose loans or other advances to Borrower are used in
whole or in part to satisfy the Obligations, indemnifying Lender from any such
loss or damage, or (ii) have retained such monetary reserves and Liens on the
Collateral for such period of time as Lender, in its reasonable discretion, may
deem necessary to protect Lender from any such loss or damage.
SECTION 6. SECURITY INTERESTS
6.1 Security Interest in Collateral. To secure the prompt payment and
performance of the Obligations, Borrower hereby grants to Lender a continuing
Lien upon all of the following Property and interests in Property of Borrower,
whether now owned or existing or hereafter created, acquired or arising and
wheresoever located:
(i) All Accounts;
(ii) All Inventory;
(iii) All General Intangibles;
(iv) All Documents;
(v) All Instruments;
(vi) All Chattel Paper;
(vii) All Deposit Accounts;
(viii) All monies and other Property of any kind now or at any
time or times hereafter in the possession or under the control of
Lender or a bailee or Affiliate of Lender;
(ix) All accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of (i) through
(viii) above, including, without limitation, proceeds of and unearned
premiums with respect to insurance policies insuring any of the
Collateral; and
(x) All books and records (including, without limitation,
customer lists, credit files, computer programs, print-outs, and other computer
materials and records) of Borrower pertaining to any of (i) through (ix) above.
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6.2 Other Collateral. In addition to the items of Property referred to
in Section 6.1 above, the Obligations shall also be secured by the Cash
Collateral to the extent provided herein and all of the other items of Property
from time to time described in any of the Security Documents as security for any
of the Obligations.
6.3 Lien Perfection; Further Assurances. Borrower shall execute such
UCC-1 financing statements as are required by the Code and such other
instruments, assignments or documents as are necessary to perfect Lender's Lien
upon any of the Collateral and shall take such other action as may be required
to perfect or to continue the perfection of Lender's Lien upon the Collateral;
provided, however, until an Event of Default has occurred and upon Lender's
request therefor, Borrower shall have no obligation to execute any additional
instruments, assignments or documents or take any other action to perfect the
Lien of Lender in the Deposit Accounts. Unless prohibited by Applicable Law,
Borrower hereby authorizes Lender to execute and file any such financing
statement on Borrower's behalf. The parties agree that a carbon, photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement and may be filed in any appropriate office in lieu thereof. At
Lender's request, Borrower shall also promptly execute or cause to be executed
and shall deliver to Lender any and all documents, instruments and agreements
deemed necessary by Lender to give effect to or carry out the terms or intent of
the Loan Documents.
SECTION 7. COLLATERAL ADMINISTRATION
7.1 General Provisions
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7.1.1 Location of Collateral. All tangible items of
Collateral, other than Inventory in transit, shall at all times be kept by
Borrower at one or more of the business locations set forth in SCHEDULE 7.1.1
hereto and shall not, without the prior written approval of Lender, be moved
therefrom except, prior to an Event of Default and Lender's acceleration of the
maturity of the Obligations in consequence thereof, for (i) sales of Inventory
in the ordinary course of business; and (ii) the storage of Collateral at
locations within the continental United States other than those shown in
SCHEDULE 7.1.1 hereto if, (a) Borrower gives Lender written notice of such a
location at least sixty (60) days prior to storing Collateral at such location,
(b) Lender's Lien in such Collateral is and continues to be a duly perfected
Lien thereon (and Borrower shall have taken such action as may be required
pursuant to Section 6.3 hereof to perfect Lender's Lien thereon) subject to no
other Lien thereon except for Permitted Liens, (c) neither Borrower's nor
Lender's right of entry upon the premises where such Collateral is stored, or
its right to remove the Collateral therefrom, is in any way restricted, and (d)
the owner of such premises agrees with Lender not to assert any landlord's,
bailee's or other Lien in respect of the Collateral for unpaid rent or storage
charges; provided, however, clauses (a), (c) and (d) above shall not apply to
new locations at which Collateral is located which are established after the
Closing Date if (1) no Default or Event of Default has occurred and is
continuing, (2) such locations are disclosed to Lender in the Borrowing Base
Certificates required to be provided to Lender, and (3) the aggregate value of
the Inventory, calculated at the lower of cost or market (on a first-in,
first-out basis), at such locations does not exceed $3,500,000 at any one time;
and provided further, clause (b) above shall not apply to new locations at which
Collateral is located which are established after the Closing Date if (1) no
Default or Event of Default has occurred and is continuing, (2) such locations
are disclosed to Lender in the Borrowing Base Certificates required to be
provided to Lender, and (3) the aggregate value of the Inventory, calculated at
the lower of cost or market (on a first-in, first-out basis), at such locations
does not exceed $250,000 at any one time.
7.1.2 Insurance of Collateral. Borrower shall maintain and pay
for insurance upon all Collateral wherever located and with respect to
Borrower's business, covering casualty, hazard, public liability, product recall
and such other risks in such amounts and with such insurance companies as are
reasonably satisfactory to Lender. Borrower shall deliver the originals or
certified copies of such policies to Lender with satisfactory lender's loss
payable endorsements naming Lender as sole loss payee, assignee or additional
insured, as appropriate. Each policy of insurance or endorsement shall contain a
clause requiring the insurer to give not less than thirty (30) days prior
written notice to Lender in the event of cancellation of the policy for any
reason whatsoever other than non-payment and ten (10) days prior written notice
to Lender in the even of cancellation of the policy for non-payment of premium
and a clause specifying that the interest of Lender shall not be impaired or
invalidated by any act or neglect of Borrower or the owner of the Property or by
the occupation of the premises for purposes more hazardous than are permitted by
said policy. If Borrower fails to provide and pay for such insurance, Lender
may, at its option, but shall not be required to, procure the same and charge
Borrower therefor. Borrower agrees to deliver to Lender, promptly as rendered,
true copies of all reports made in any reporting forms to insurance companies.
In addition to the insurance required herein with respect to the Collateral,
Borrower shall maintain, with financially sound and reputable insurers,
insurance with respect to its Property and business against such casualties and
contingencies of such type (including product liability, product recall,
business interruption, larceny, embezzlement, or other criminal misappropriation
insurance) and in such amounts as is customary in the business of Borrower, or
as otherwise required by Lender. All proceeds of insurance received by Borrower
or Lender on account of any casualty to the Collateral or other insured risk in
which Lender has an insurable interest shall be applied as follows:
(i) if an Event of Default exists, all such insurance
proceeds shall, at Lender's option, be deemed Net Proceeds and paid to
Lender as a mandatory prepayment of the Loans; and
(ii) if no Event of Default exists, all such
insurance proceeds of any claim of less than $25,000 shall be released
to Borrower for the purpose of Borrower's repairing, replacing or
restoring the damaged or destroyed Collateral (and, if replaced, the
replacement Collateral shall be subject to Lender's duly perfected Lien
therein and no other Liens), and all such insurance proceeds of any
claim of more than $25,000 shall be, in Lender's sole discretion, (a)
remitted to Lender for application to the Obligations, or (b) released
to Borrower for the aforesaid purpose.
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7.1.3 Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, all Taxes imposed by any Applicable Law on any of the Collateral or
in respect of the sale thereof, and all other payments required to be made by
Lender to any Person to realize upon the Collateral, shall be borne and paid by
Borrower. If Borrower fails to promptly pay any portion thereof when due, Lender
may, at its option, but shall not be required to, pay the same and charge
Borrower therefor. Lender shall not be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto (except
for reasonable care in the custody thereof while any Collateral is in Lender's
actual possession) or for any diminution in the value thereof, or for any act or
default of any warehouseman, carrier, forwarding agency, or other person
whomsoever, but the same shall be at Borrower's sole risk.
7.1.4 Borrowing Base Certificate. On such periodic basis as
Lender shall request but no less frequently than monthly, Borrower shall submit
to Lender a Borrowing Base Certificate in the form of EXHIBIT C as of the last
day of the month or the end of such reporting period, executed by the Chief
Financial Officer of Borrower.
7.2 Administration of Accounts.
7.2.1 Records and Schedules of Accounts. Borrower shall keep
accurate and complete records of its Accounts and all payments and collections
thereon and shall submit to Lender:
(i) On such periodic basis as Lender shall request
but no less frequently than monthly, a sales and collections report for
the preceding period;
(ii) On or before the twentieth (20th) day of each
monthly period, a detailed aged trial balance of all Accounts which are
existing as of the last day of the preceding monthly period, specifying
the names, addresses, face value, dates of invoices and due dates for
each Account Debtor obligated on an Account so listed ("Schedule of
Accounts"); and
(iii) Upon Lender's request therefor, copies of proof
of delivery, invoices or invoice registers and the original copies of
all documents, including, without limitation, repayment histories and
present status reports, relating to the Accounts so scheduled and such
other matters and information relating to the Accounts as Lender shall
reasonably request.
In addition, if Accounts owing by any Account Debtor in an aggregate
amount in excess of $100,000 cease to be Eligible Accounts in whole or in part,
Borrower shall notify Lender of such occurrence no later than the fifth (5th)
Business Day following such occurrence and the Borrowing Base shall thereupon be
adjusted to reflect such occurrence.
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7.2.2 Discounts, Allowances, Disputes. If Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrower shall report such discounts, allowances or
credits, as the case may be, to Lender as part of the next required Schedule of
Accounts. In the event any amounts due and owing in excess of $100,000 are in
dispute between Borrower and any Account Debtor, Borrower shall provide Lender
with written notice thereof at the time of submission of the next Schedule of
Accounts, explaining in detail the reason for the dispute, all claims related
thereto and the amount in controversy.
7.2.3 Taxes. If an Account includes a charge for any Tax
payable to any governmental taxing authority, Lender is authorized, in its sole
discretion, to pay the amount thereof to the proper taxing authority for the
account of Borrower and to charge Borrower therefor; provided, however, that
Lender shall not be liable for any Taxes that may be due by Borrower.
7.2.4 Account Verification. Whether or not a Default or an
Event of Default exists, Lender shall have the right, at any time, in the name
of Lender, any designee of Lender or Borrower, to verify the validity, amount or
any other matter relating to any Accounts of Borrower by verbal or written
communications. Borrower shall cooperate fully with Lender in an effort to
facilitate and promptly conclude any such verification process.
7.2.5 Maintenance of Dominion Account. Borrower shall maintain
a Dominion Account pursuant to a lockbox arrangement with such bank as may be
selected by Borrower and be acceptable to Lender. Borrower shall deposit all
proceeds of the Collateral or cause the same to be deposited in kind in the
Dominion Account. All funds deposited in the Dominion Account shall be subject
to Lender's Lien, and Borrower shall obtain the agreement by such banks in favor
of Lender to waive any offset rights against the funds so deposited. Lender
assumes no responsibility for such lockbox arrangement, including, without
limitation, any claim of accord and satisfaction or release with respect to
deposits accepted by any bank thereunder.
7.2.6 Collection of Accounts, Proceeds of Collateral. To
expedite collection, Borrower shall endeavor in the first instance to make
collection of its Accounts for Lender. All remittances received by Borrower on
account of Accounts, together with the proceeds of any other Collateral, shall
be held as Lender's property by Borrower as trustee of an express trust for
Lender's benefit and Borrower shall immediately deposit the same in kind in the
Dominion Account. Lender retains the right at all times during the existence of
an Event of Default to notify Account Debtors that Accounts have been assigned
to Lender and to collect Accounts directly in its own name and to charge the
collection costs and expenses, including reasonable attorneys' fees, to
Borrower.
7.3 Administration of Inventory.
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7.3.1 Records and Reports of Inventory. Borrower shall keep
accurate and complete records of its Inventory. Borrower shall furnish to Lender
Inventory reports in form and detail satisfactory to Lender at such times as
Lender may request, but at least once each monthly period, not later than the
twentieth (20) day of such monthly period for Inventory of Borrower as of the
end of the preceding monthly period. Borrower shall conduct a physical inventory
no less frequently than annually and shall provide to Lender a report based on
each such physical inventory promptly thereafter, together with such supporting
information as Lender shall request.
7.3.2 Returns of Inventory by Account Debtor. If at any time
or times hereafter any Account Debtor returns any Inventory to Borrower the
shipment of which generated an Account on which such Account Debtor is obligated
in excess of $50,000, Borrower shall notify Lender of the same, specifying the
reason for such return and the location, condition and intended disposition of
the returned Inventory, no later than the fifth (5th) Business Day following
such return and the Borrowing Base shall thereupon be adjusted accordingly.
7.3.3 Returns of Inventory by Borrower. Borrower shall not
return any of its Inventory to a supplier or vendor thereof, or any other
Person, whether for cash, credit against future purchases or then existing
payables, or otherwise which has a value in excess of $100,000 during any
monthly period.
7.4 Payment of Charges. All amounts chargeable to Borrower under
Section 7 hereof shall be Obligations secured by all of the Collateral, shall be
payable on demand and shall bear interest from the date such advance was made
until paid in full at the rate applicable to Revolver Loans that are Alternate
Base Rate Loans from time to time.
SECTION 8. REPRESENTATIONS AND WARRANTIES
8.1 General Representations and Warranties. To induce Lender to enter
into this Agreement and to make Loans hereunder, Borrower warrants, represents
and covenants to Lender that:
8.1.1 Organization and Qualification. Each of Borrower and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each of
Borrower and its Subsidiaries is duly qualified and is authorized to do business
and is in good standing as a foreign corporation in each state or jurisdiction
listed on SCHEDULE 8.1.1 hereto and in all other states and jurisdictions where
the character of its Property or the nature of its activities make such
qualification necessary or in which the failure of Borrower or any of its
Subsidiaries to be so qualified would have a Material Adverse Effect.
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8.1.2 Corporate Power and Authority. Each of Borrower and its
Subsidiaries is duly authorized and empowered to enter into, execute, deliver
and perform this Agreement and each of the other Loan Documents to which it is a
party. The execution, delivery and performance of this Agreement and each of the
other Loan Documents by Borrower and its Subsidiaries that are parties thereto
have been duly authorized by all necessary corporate action and do not and will
not (i) require any consent or approval of the shareholders of Borrower or any
of its Subsidiaries which has not been obtained; (ii) contravene Borrower's or
any of its Subsidiaries' charter, articles or certificate of incorporation or
by-laws; (iii) violate, or cause Borrower or any of its Subsidiaries to be in
default under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect having
applicability to Borrower or any of its Subsidiaries; (iv) result in a breach of
or constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which Borrower or any of its
Subsidiaries is a party or by which it or its Property may be bound or affected;
or (v) result in, or require, the creation or imposition of any Lien (other than
Permitted Liens) upon or with respect to any of the Property now owned or
hereafter acquired by Borrower or any of its Subsidiaries.
8.1.3 Legally Enforceable Agreement. This Agreement is, and
each of the other Loan Documents when delivered under this Agreement will be, a
legal, valid and binding obligation of each of Borrower and its Subsidiaries
enforceable against it in accordance with its respective terms.
8.1.4 Capital Structure. As of the date hereof, SCHEDULE 8.1.4
hereto states (i) the correct name of each of the Subsidiaries of Borrower, its
jurisdiction of incorporation and the percentage of its Voting Stock owned by
Borrower, (ii) the name of each of Borrower's corporate or joint venture
Affiliates and the nature of the affiliation, and (iii) the number of
authorized, issued and treasury shares of Borrower and each Subsidiary of
Borrower. Borrower has good title to all of the shares it purports to own of the
stock of each of its Subsidiaries, free and clear in each case of any Lien other
than Permitted Liens. All such shares have been duly issued and are fully paid
and non-assessable.
8.1.5 Corporate Names. Neither Borrower nor any of its
Subsidiaries has been known as or used any corporate, fictitious or trade names
except those listed on SCHEDULE 8.1.5 hereto. Except as set forth on SCHEDULE
8.1.5, neither Borrower nor any of its Subsidiaries has been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person.
8.1.6 Business Locations; Agent for Process. Each of
Borrower's and its Subsidiaries' chief executive office and other places of
business are as listed on SCHEDULE 7.1.1 hereto. During the preceding five-year
period, neither Borrower nor any of its Subsidiaries has had an office, place of
business or agent for service of process other than as listed on SCHEDULE 7.1.1
hereto. Except as shown on SCHEDULE 7.1.1 hereto, no Inventory is stored with a
bailee, warehouseman or similar party, nor is any Inventory consigned to any
Person.
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8.1.7 Title to Property; Priority of Liens. Each of Borrower
and its Subsidiaries has good, indefeasible and marketable title to and fee
simple ownership of, or valid and subsisting leasehold interests in, all of its
real Property, and good title to all of the Collateral and all of its other
Property, in each case, free and clear of all Liens except Permitted Liens.
Borrower has paid or discharged all lawful claims which, if unpaid, might become
a Lien against any of Borrower's Property that is not a Permitted Lien. The
Liens granted to Lender under Section 6 hereof are first priority Liens, subject
only to those Permitted Liens that are expressly stated to have priority over
the Liens of Lender.
8.1.8 Accounts. Lender may rely, in determining which Accounts
are Eligible Accounts, on all statements and representations made by Borrower
with respect to any Account or Accounts. Unless otherwise indicated in writing
to Lender, with respect to each Account:
(i) It is genuine and in all respects what it
purports to be, and it is not evidenced by a judgment, Instrument,
Document or Chattel Paper;
(ii) It arises out of a completed, bona fide sale and
delivery of goods by Borrower in the ordinary course of its business
and in accordance with the terms and conditions of all purchase orders,
contracts or other documents relating thereto and forming a part of the
contract between Borrower and the Account Debtor;
(iii) It is for a liquidated amount maturing as
stated in the duplicate invoice covering such sale, a copy of which has
been furnished or is available to Lender;
(iv) To the best knowledge of Borrower, such Account,
and Lender's Lien therein, is not, and will not (by voluntary act or
omission of Borrower) be in the future, subject to any offset,
deduction, defense, dispute, counterclaim or any other adverse
condition except for disputes resulting in returned goods where the
amount in controversy is deemed by Lender to be immaterial, and each
such Account is absolutely owing to Borrower and is not contingent in
any respect or for any reason;
(v) Borrower has made no agreement with any Account
Debtor thereunder for any extension, compromise, settlement or
modification of any such Account or any deduction therefrom, except
discounts or allowances which are granted by Borrower in the ordinary
course of its business for prompt payment and which are reflected in
the calculation of the net amount of each respective invoice related
thereto and are reflected in the Schedules of Accounts submitted to
Lender pursuant to Section 7.2.1 hereof;
(vi) To the best knowledge of Borrower, there are no
facts, events or occurrences which in any way impair the validity or
enforceability of any Accounts or tend to reduce the amount payable
thereunder from the face amount of the invoice and statements delivered
to Lender with respect thereto;
(vii) To the best of Borrower's knowledge, the
Account Debtor thereunder (a) had the capacity to contract at the time
any contract or other document giving rise to the Account was executed
and (b) such Account Debtor is Solvent;
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(viii) To the best of Borrower's knowledge, there are
no proceedings or actions which are threatened or pending against any
Account Debtor thereunder which might result in any material adverse
change in such Account Debtor's financial condition or the
collectibility of such Account; and
(ix) Any contract under which such Account arose does
not condition or restrict Borrower's right to assign to Lender the
right to payment thereunder unless Borrower has obtained the Account
Debtor's consent to such collateral assignment or complied with
conditions to such assignment (regardless of whether under the Code or
other Applicable Law any such restrictions are ineffective to prevent
the grant of a Lien upon such Account in favor of Lender).
8.1.9 Financial Statements; Fiscal Year.
(i) The Consolidated and consolidating balance sheets
of Borrower and its Subsidiaries as of February 28, 1997, February 27,
1998 and March 6, 1999 and the related statements of income, changes in
stockholder's equity, and changes in financial position for the periods
ended on such dates, have been prepared in accordance with GAAP, and
present fairly the financial position of Borrower and its Subsidiaries
at such dates and the results of operations of Borrower and its
Subsidiaries for such periods. Since April 30, 2000, there has been no
material change in the condition, financial or otherwise, of Borrower
and its Subsidiaries as shown on the Consolidated balance sheet as of
such date, and the related statements of income, changes in
stockholder's equity, and changes in financial position for the period
then ending, and no change in the aggregate value of Equipment and real
Property owned by Borrower and its Subsidiaries, except changes in the
ordinary course of business, none of which individually or in the
aggregate has been materially adverse;
(ii) The Consolidated and consolidating balances
sheets of Borrower and its Subsidiaries, and the related statements of
income, changes in stockholder's equity, and changes in financial
position, which are from time to time delivered by Borrower to Lender
pursuant to Section 9.1.3 of this Agreement fairly present the
financial position of Borrower and its Subsidiaries at such dates and
the results of the operations of Borrower and its Subsidiaries for the
periods set forth therein; and
(iii) The fiscal year of Borrower and each of
Borrower's Subsidiaries ends on first Saturday of March of each year.
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8.1.10 Full Disclosure. The financial statements referred to
in Section 8.1.9 hereof do not, nor does this Agreement or any other written
statement of Borrower to Lender, contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading. To the best of Borrower's knowledge, there is no fact
which Borrower has failed to disclose to Lender in writing which materially
affects adversely or, so far as Borrower can now foresee, will materially affect
adversely the Property, business, prospects, profits or condition (financial or
otherwise) of Borrower or any of its Subsidiaries or the ability of Borrower or
its Subsidiaries to perform this Agreement or the other Loan Documents.
8.1.11 Solvent Financial Condition. Each of Borrower and its
Subsidiaries is now and, after giving effect to the Loans to be made hereunder,
at all times will be, Solvent.
8.1.12 Surety Obligations. Neither Borrower nor any of its
Subsidiaries is obligated as surety or indemnitor under any surety or similar
bond or other contract issued or entered into to assure payment, performance or
completion of performance of any undertaking or obligation of any Person, other
than indemnity and surety agreements issued in support of commodity processing
contracts which are executed by Borrower in the normal course of its business.
8.1.13 Taxes. The federal tax identification number of
Borrower and each of its Subsidiaries is shown on SCHEDULE 8.1.13 hereto.
Borrower and each of its Subsidiaries have filed all federal, state and local
tax returns and other reports it is required by law to file and has paid, or
made provision for the payment of, all Taxes upon it, its income and Property as
and when such Taxes are due and payable, except to the extent being Properly
Contested. The provision for Taxes on the books of Borrower and each of its
Subsidiaries is adequate for all years not closed by applicable statutes, and
for its current fiscal year.
8.1.14 Brokers. There are no claims for brokerage commissions,
finder's fees or investment banking fees in connection with the transactions
contemplated by this Agreement.
8.1.15 Patents, Trademarks, Copyrights and Licenses. Each of
Borrower and its Subsidiaries owns or possesses all the patents, trademarks,
service marks, trade names, copyrights and licenses necessary for the present
and, to the best of Borrower's knowledge, planned future conduct of its
business, without any known conflict with the rights of others. All such
patents, trademarks, service marks, tradenames, copyrights, licenses and other
similar rights are listed on SCHEDULE 8.1.15 hereto.
8.1.16 Governmental Consents. Each of Borrower and its
Subsidiaries has, and is in good standing with respect to, all governmental
consents, approvals, licenses, authorizations, permits, certificates,
inspections and franchises necessary to continue to conduct its business as
heretofore or proposed to be conducted by it and to own or lease and operate its
Property as now owned or leased by it.
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8.1.17 Compliance with Laws. Each of Borrower and its
Subsidiaries has duly complied with, and its Property, business operations and
leaseholds are in compliance in all material respects with, the provisions of
all Applicable Law and there have been no citations, notices or orders of
noncompliance issued to Borrower or any of its Subsidiaries under any such law,
rule or regulation where such non-compliance could reasonably be expected to
have a Material Adverse Effect. Each of Borrower and its Subsidiaries has
established and maintains an adequate monitoring system to insure that it
remains in compliance with all federal, state and local laws, rules and
regulations applicable to it, including, without limitation, the Fair Labor
Standards Act (29 U.S.C. sec. 201 et seq.), as amended.
8.1.18 Restrictions. Neither Borrower nor any of its
Subsidiaries is a party or subject to any contract, agreement, or charter or
other corporate restriction, which materially and adversely affects its business
or the use or ownership of any of its Property. Except as set forth on SCHEDULE
8.1.18 hereto, neither Borrower nor any of its Subsidiaries is a party or
subject to any contract or agreement which restricts its right or ability to
incur Indebtedness, none of which prohibit the execution of or compliance with
this Agreement or the other Loan Documents by Borrower or any of its
Subsidiaries, as applicable.
8.1.19 Litigation. Except as set forth on SCHEDULE 8.1.19
hereto, there are no actions, suits, proceedings or investigations pending on
the date hereof, or to the knowledge of Borrower, threatened on the date hereof,
against or affecting Borrower or any of its Subsidiaries, or the business,
operations, Property, prospects, profits or condition of Borrower or any of its
Subsidiaries, and no such action, suit or proceeding will, if decided adversely,
have a Material Adverse Effect. Neither Borrower nor any of its Subsidiaries is
in default on the date hereof with respect to any order, writ, injunction,
judgment, decree or rule of any court, governmental authority or arbitration
board or tribunal.
8.1.20 No Defaults. No event has occurred and no condition
exists which would, upon or after the execution and delivery of this Agreement
or Borrower's performance hereunder, constitute a Default or an Event of
Default. Neither Borrower nor any of its Subsidiaries is in default, and no
event has occurred and no condition exists which constitutes, or which with the
passage of time or the giving of notice or both would constitute, a default in
the payment of any Indebtedness to any Person for Money Borrowed.
8.1.21 Leases. SCHEDULE 8.1.21 hereto is a complete listing of
all capitalized and operating leases of Borrower and its Subsidiaries on the
date hereof. Each of Borrower and its Subsidiaries is in full compliance with
all of the terms of each of its respective capitalized and operating leases.
8.1.22 Pension Plans. Except as disclosed on SCHEDULE 8.1.22
hereto, neither Borrower nor any of its Subsidiaries has any Plan on the date
hereof. Borrower and each of its Subsidiaries is in full compliance with the
requirements of ERISA and the regulations promulgated thereunder with respect to
each Plan. No fact or situation that could result in a Material Adverse Effect
exists in connection with any Plan. Neither Borrower nor any of its Subsidiaries
has any withdrawal liability in connection with a Multiemployer Plan.
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8.1.23 Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower or any of its Subsidiaries and any
customer or any group of customers whose purchases individually or in the
aggregate are material to the business of Borrower or any of its Subsidiaries,
or with any material supplier, and, to the best of Borrower's knowledge, there
exists no present condition or state of facts or circumstances which would
materially affect adversely Borrower or any of its Subsidiaries or prevent
Borrower or any of its Subsidiaries from conducting such business after the
consummation of the transactions contemplated by this Agreement in substantially
the same manner in which it has heretofore been conducted.
8.1.24 Labor Relations. Except as described on SCHEDULE 8.1.24
hereto, neither Borrower nor any of its Subsidiaries is a party on the date
hereof to any collective bargaining agreement. There are no material grievances,
disputes or controversies with any union or any other organization of Borrower's
or any of its Subsidiaries' employees, or threats of strikes, work stoppages or
any asserted pending demands for collective bargaining by any union or
organization.
8.1.25 Investment Company Act; Public Utility Holding Company
Act. Borrower is not an "investment company" or "person directly or indirectly
controlled by or acting on behalf of an investment company" within the meaning
of the Investment Company Act of 1940, or a "holding company" or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935.
8.1.26 Margin Stock. Neither Borrower nor any of its
Subsidiaries is 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.
8.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of Borrower's or any of its Subsidiary's business or
operations that may occur after the date hereof, so long as Lender has consented
to such changes or such changes are not prohibited by the terms of this
Agreement.
8.3 Survival of Representations and Warranties. All representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Lender
and the parties thereto and the closing of the transactions described therein or
related thereto.
SECTION 9. COVENANTS AND CONTINUING AGREEMENTS
9.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:
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9.1.1 Visits and Inspections. Permit representatives of
Lender, from time to time, as often as may be reasonably requested, but only
during normal business hours, to visit and inspect the Property of Borrower and
each of its Subsidiaries, inspect, audit and make extracts from its books and
records, and discuss with its officers, its employees and its independent
accountants, Borrower's and each of its Subsidiaries' business, assets,
liabilities, financial condition, business prospects and results of operations.
9.1.2 Notices. Notify Lender in writing (i) of the occurrence
of any event or the existence of any fact which renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete or misleading in any material respect; (ii) promptly after Borrower's
learning thereof, of the commencement of any litigation affecting Borrower or
any of its Subsidiaries or any of its Property, whether or not the claim is
considered by Borrower to be covered by insurance, and of the institution of any
administrative proceeding which, in either case, may have a Material Adverse
Effect; (iii) at least sixty (60) days prior thereto, of Borrower's opening of
any new office or place of business or Borrower's closing of any existing office
or place of business; (iv) promptly after Borrower's learning thereof, of any
organized labor dispute to which Borrower may become a party, any strikes or
walkouts by organized labor relating to any of its plants or other facilities,
and the expiration of any collective bargaining agreement to which it is a party
or by which it is bound; (v) promptly after Borrower's learning thereof, of any
material default by Borrower under any note, indenture, loan agreement,
mortgage, lease, deed, guaranty or other similar agreement relating to any
Indebtedness of Borrower exceeding $250,000; (vi) promptly after the occurrence
thereof, of any Default or Event of Default; (vii) promptly after the occurrence
thereof, of any default by any obligor under any note or other evidence of
Indebtedness in excess of $100,000 payable to Borrower; and (viii) promptly
after the rendition thereof, of any judgment rendered against Borrower in an
amount exceeding $50,000 which is not fully covered by insurance.
9.1.3 Financial Statements. Keep, and cause each Subsidiary to
keep, adequate records and books of account with respect to its business
activities in which proper entries are made in accordance with GAAP reflecting
all its financial transactions; and cause to be prepared and furnished to Lender
the following (all to be prepared in accordance with GAAP applied on a
consistent basis, unless Borrower's certified public accountants concur in any
change therein and such change is disclosed to Lender and is consistent with
GAAP):
(i) not later than ninety (90) days after the close
of each fiscal year of Borrower, audited financial statements of
Borrower and its Subsidiaries as of the end of such year, on a
Consolidated and consolidating basis, certified by a firm of
independent certified public accountants of recognized standing
selected by Borrower but acceptable to Lender (except for a
qualification for a change in accounting principles with which the
accountant concurs);
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(ii) not later than (a) thirty (30) days after the
end of each fiscal monthly period within a fiscal quarter hereafter,
and (b) the earlier of (i) forty-five (45) days after the end of each
fiscal quarter hereafter, or (ii) the filing of any quarterly or annual
statement pursuant to clause (iii) below, unaudited interim financial
statements of Borrower and its Subsidiaries as of the end of such month
and of the portion of Borrower's financial year then elapsed, on a
Consolidated and consolidating basis, certified by the chief financial
officer of Borrower as prepared in accordance with GAAP and fairly
presenting the Consolidated financial position and results of
operations of Borrower and its Subsidiaries for such month and period
subject only to changes from audit and year-end adjustments and except
that such statements need not contain notes;
(iii) promptly after the sending or filing thereof,
as the case may be, copies of any proxy statements, financial
statements or reports which Borrower has made available to its
shareholders and copies of any regular, periodic and special reports or
registration statements which Borrower files with the Securities and
Exchange Commission or any governmental authority which may be
substituted therefor, or any national securities exchange;
(iv) not later than twenty (20) days after the end of
each monthly period hereafter, an accurate and complete report of the
accounts payable of Borrower and its Subsidiaries, in form and
substance satisfactory to Lender;
(v) promptly after the filing thereof, copies of any
annual report to be filed with ERISA in connection with each Plan; and
(vi) such other data and information (financial and
otherwise) as Lender, from time to time, may reasonably request,
bearing upon or related to the Collateral or Borrower's and each of its
Subsidiaries' financial condition or results of operations.
Concurrently with the delivery of the financial statements
described in clause (i) of this Section 9.1.3, Borrower shall forward to Lender
a copy of the accountants' letter to Borrower's management that is prepared in
connection with such financial statements. Within forty-five (45) days of the
end of each quarterly period and concurrently with the delivery of the financial
statements to be delivered pursuant to clause (i) of this Section 9.1.3, or more
frequently if requested by Lender, Borrower shall cause to be prepared and
furnished to Lender a Compliance Certificate in the form of EXHIBIT D hereto
executed by the Chief Financial Officer of Borrower.
9.1.4 Landlord and Storage Agreements. Provide Lender with
copies of all agreements between Borrower or any of its Subsidiaries and any
landlord or warehouseman which owns any premises at which any Inventory may,
from time to time, be kept.
9.1.5 Projections. No later than thirty (30) days prior to the
end of each fiscal year of Borrower, deliver to Lender Projections of Borrower
for the forthcoming fiscal year, by monthly period.
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9.1.6 Taxes and Liens. Pay and discharge, and cause each
Subsidiary to pay and discharge, all Taxes prior to the date on which such Taxes
become delinquent or penalties attach thereto, except and only to the extent
that such Taxes are being Properly Contested. Borrower shall also pay, discharge
or provide a bond with respect to, any lawful claims which, if unpaid or
unbonded, might become a Lien against any of Borrower's Property except for
Permitted Liens.
9.1.7 Tax Returns. File, and cause each Subsidiary to file,
all federal, state and local tax returns and other reports Borrower or such
Subsidiary is required by law to file and maintain adequate reserves for the
payment of all Taxes imposed upon it, its income or its profits, or upon any
Property belonging to it.
9.1.8 Compliance with Applicable Laws. Comply, and cause each
Subsidiary to comply, with all Applicable Laws, and obtain and keep in force any
and all licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its Property or to the conduct of its business,
which violation or failure to obtain might have a Material Adverse Effect.
9.1.9 Subordinations. Provide Lender with a debt subordination
agreement, in form and substance satisfactory to Lender, executed by Borrower
and any Person who is an officer, director or Affiliate of Borrower to whom
Borrower is or hereafter becomes indebted for Money Borrowed, subordinating in
right of payment and claim all of such Indebtedness to the full and final
payment and performance of the Obligations.
9.1.10 Administration of Equipment. Keep accurate records
itemizing and describing the kind, type, quality, quantity and value of its
Equipment, and maintain the Equipment in good operating condition and repair,
and make all necessary replacements of and repairs thereto so that the value and
operating efficiency of the Equipment shall be maintained and preserved,
reasonable wear and tear excepted.
9.1.11 Conduct of Business; Maintenance of Existence. Conduct,
and cause each Subsidiary to conduct, its business substantially as now
conducted or as otherwise permitted hereunder and preserve all of its rights,
privileges and franchises necessary and desirable in connection therewith.
9.2. Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless Lender has first consented thereto in writing, it will
not:
9.2.1 Fundamental Changes. Merge or consolidate, or permit any
Subsidiary of Borrower to merge or consolidate, with any Person; nor acquire,
nor permit any of its Subsidiaries to acquire, all or any substantial part of
the Property of any Person.
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9.2.2 Loans. After the Closing Date, make, or permit any
Subsidiary of Borrower to make, any loans or other advances of money (other than
for travel advances, advances against commissions and other similar advances in
the ordinary course of business) to any Person provided, however, Borrower may
make loans or other advances of money to its shareholders from and after the
Closing Date if, and only if, and only to the extent that (i) no Default or
Event of Default exists, (ii) immediately after giving effect to such loan or
other advance of money, no Default or Event of Default shall occur, (iii)
immediately after giving effect to such loan or other advance of money,
Availability is not less than $8,000,000, (iv) such loan or other advance of
money has been duly authorized by all necessary corporate action and is
permitted by Applicable Law, (v) such loans and advances, when added to the
Distributions made pursuant to the proviso of Section 9.2.7 hereof and the
Restricted Investments made pursuant to the proviso of Section 9.2.10 hereof, do
not exceed $5,000,000 in the aggregate, and (vi) the Consolidated Fixed Charge
Coverage Ratio for the most recently ended six (6) fiscal monthly periods is not
less than 1.0 to 1.0.
9.2.3 Affiliate Transactions. Enter into, or be a party to, or
permit any Subsidiary of Borrower to enter into or be a party to, any
transaction with any Affiliate of Borrower, except (i) in the ordinary course of
and pursuant to the reasonable requirements of Borrower's or such Subsidiary's
business, (ii) upon fair and reasonable terms which are fully disclosed to
Lender and are no less favorable to Borrower or such Subsidiary than would be
obtained in a comparable arm's length transaction with a Person not an Affiliate
of Borrower or such Subsidiary, and (iii) as approved by Borrower's board of
directors and a copy of such approval which contains a description of such
transaction shall be forwarded to Lender.
9.2.4 Limitation on Liens. Create or suffer to exist, or
permit any Subsidiary of Borrower to create or suffer to exist, any Lien upon
any of its Property, income or profits, whether now owned or hereafter acquired,
except:
(i) Liens at any time granted in favor of Lender;
(ii) Liens for taxes (excluding any Lien imposed
pursuant to any of the provisions of ERISA) not yet due or that are
being Properly Contested;
(iii) statutory Liens arising in the ordinary course
of Borrower's or such Subsidiary's business by operation of law or
regulation, but only if payment in respect of any such Lien is not at
the time required or such Liens are being Properly Contested and do
not, in the aggregate, materially detract from the value of the
Property of Borrower or such Subsidiary or materially impair the use
thereof in the operation of Borrower's or such Subsidiary's business;
(iv) Purchase Money Liens securing Permitted Purchase
Money Indebtedness;
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(v) Liens securing Indebtedness of one of Borrower's
Subsidiaries to Borrower or another such Subsidiary;
(vi) Liens on Equipment;
(vii) such other Liens as appear on SCHEDULE 9.2.4
hereto; and
(viii) reservations, exceptions, easements,
rights-of-way and other similar encumbrances affecting the real
Property of Borrowers and their Subsidiaries that do not interfere with
the ordinary conduct of the business of any Borrower and its
Subsidiaries;
(ix) interests of lessors under leases which are
required to be capitalized for financial reporting purposes in
accordance with GAAP;
(x) Liens in favor of warehousemen, processors,
fillers and packers arising in the ordinary course of Borrower's or
such Subsidiary's business, but only if payment in respect of any such
Lien is not at the time required or such Liens are being Properly
Contested and do not, in the aggregate, materially detract from the
value of the Property of Borrower or such Subsidiary or materially
impair the use thereof in the operation of Borrower's or such
Subsidiary's business;
(xi) such other Liens as Lender may hereafter approve
in writing.
9.2.5 Total Indebtedness. Create, incur, assume, or suffer to
exist, or permit any Subsidiary of Borrower to create, incur or suffer to exist,
any Indebtedness for Money Borrowed, except (i) Obligations owing to Lender;
(ii) Subordinated Debt; (iii) Permitted Purchase Money Indebtedness; and (iv)
provided no Default or Event of Default has occurred and is continuing, (a)
Indebtedness for Money Borrowed (which for purposes of this Section 9.2.5 shall
not include Permitted Purchase Money Indebtedness) not in excess of $1,000,000
in the aggregate at any one time outstanding, and (b) Indebtedness for Money
Borrowed in excess of $1,000,000 in the aggregate at any one time outstanding
but not in excess of $10,000,000 in the aggregate at any one time outstanding if
the Indebtedness and any Liens granted pursuant to the incurring of such
Indebtedness are subject to an intercreditor agreement or subordination
agreement, in form and substance satisfactory to Lender in its sole discretion.
9.2.6 Subordinated Debt. Make, or permit any Subsidiary of
Borrower to make, any payment of any Subordinated Debt or take any other action
or omit to take any other action in respect of any Subordinated Debt, except in
accordance with the agreement relative to such Subordinated Debt.
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9.2.7 Distributions. Declare or make, or permit any Subsidiary
of Borrower to declare or make, any Distributions; provided, however, Borrower
may make Distributions from and after the Closing Date if, and only if, and only
to the extent that (i) no Default or Event of Default exists, (ii) immediately
after giving effect to such Distribution, no Default or Event of Default shall
occur, (iii) immediately after giving effect to such Distribution, Availability
is not less than $8,000,000, (iv) such Distribution has been duly authorized by
all necessary corporate action and is permitted by Applicable Law, and (v)
Distributions, when added to the loans and advances of money made pursuant to
the proviso of Section 9.2.2 hereof and the Restricted Investments made pursuant
to the proviso of Section 9.2.10 hereof, do not exceed $5,000,000 in the
aggregate.
9.2.8 Disposition of Assets. Sell, lease or otherwise dispose
of any of, or permit any Subsidiary of Borrower to sell, lease or otherwise
dispose any of, the Collateral, to or in favor of any Person, except (i) sales
of Inventory in the ordinary course of business for so long as no Event of
Default exists hereunder, or (iii) dispositions expressly authorized by this
Agreement.
9.2.9 Bill-and-Hold Sales, Etc. Make a sale to any customer on
a bill-and-hold, guaranteed sale, sale and return, sale on approval or
consignment basis, or any sale on a repurchase or return basis.
9.2.10 Restricted Investment. After the Closing Date, make, or
permit any Subsidiary of Borrower to make, any Restricted Investment; provided,
however, Borrower may make Restricted Investments from and after the Closing
Date if, and only if, and only to the extent that (i) no Default or Event of
Default exists, (ii) immediately after giving effect to such Restricted
Investment, no Default or Event of Default shall occur, (iii) immediately after
giving effect to such Restricted Investment, Availability is not less than
$8,000,000, (iv) such Restricted Investment has been duly authorized by all
necessary corporate action and is permitted by Applicable Law, and (v)
Restricted Investments, when added to the loans and advances of money made
pursuant to the proviso of Section 9.2.2 hereof and the Distributions made
pursuant to the proviso of Section 9.2.7 hereof, do not exceed $5,000,000 in the
aggregate.
9.2.11 Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary of
Borrower.
9.2.12 Fiscal Year. Change its fiscal year from the first
Saturday in March of each year.
9.2.13 Guaranties. Become liable upon the obligations of any
Person, by assumption, endorsement or guaranty thereto or otherwise (other than
to Lender), except (i) the endorsement of checks in the ordinary course of
business and (ii) guarantees of Indebtedness in the aggregate amount not in
excess of $100,000 in the aggregate issued by Borrower in the ordinary course of
its business.
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9.3 Specific Financial Covenants. During the term of this Agreement,
and thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall
comply with the following financial covenants:
9.3.1 Consolidated Net Worth. Borrower and its Subsidiaries
shall maintain at all times during the then current fiscal year, Net Worth of
not less than the sum of Net Worth for fiscal year ending March 4, 2000, as
reflected on the financial statements required to be provided to Lender pursuant
to Section 9.1.3(i) hereof, less $5,000,000, plus seventy-five percent (75%) of
Consolidated Net Income for each fiscal year ending after March 4, 2000 (with no
reduction for negative Consolidated Net Income).
9.3.2 EBITDA. Borrower and its Subsidiaries shall achieve
EBITDA of not less than the amount shown below for the period corresponding
thereto:
Period EBITDA
------ ------
First fiscal quarter of fiscal year $ 2,500,000
ending March 3, 2001
Second fiscal quarter of fiscal year $ 3,100,000
ending March 3, 2001
Third fiscal quarter of fiscal year $ 4,500,000
ending March 3, 2001
Fourth fiscal quarter of fiscal year $ 4,000,000
ending March 3, 2001
Four fiscal quarters ending with the $14,000,000
first fiscal quarter of fiscal year
ending March 2, 2002
Four fiscal quarters ending with the $14,000,000
second fiscal quarter of fiscal year
ending March 2, 2002
Four fiscal quarters ending with the $14,000,000
third fiscal quarter of fiscal year
ending March 2, 2002
Fiscal year ending March 2, 2002 $14,000,000
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Period EBITDA
------ ------
Four fiscal quarters ending with the $16,000,000
first fiscal quarter of fiscal year
ending March 1, 2003 and for
each four fiscal quarters ending
thereafter
9.3.3 Availability. Borrower shall have Availability of not
less than $5,000,000 until such time as Lender has received the financial
statements for fiscal year ending March 4, 2000 which are required to be
delivered by Borrower to Lender pursuant to Section 9.1.3(i) hereof, and not
less than $3,000,000 at all times thereafter.
SECTION 10. CONDITIONS PRECEDENT
10.1. Conditions Precedent to Initial Revolver Loan on Closing Date.
Notwithstanding any other provision of this Agreement or any of the other Loan
Documents, and without affecting in any manner the rights of Lender under the
other Sections of this Agreement, it is understood and agreed that Lender will
have no obligation to make the initial Revolver Loan under Section 1 of this
Agreement on the Closing Date unless and until, in addition to each of the
conditions set forth in Section 10.2 hereof, each of the following conditions
has been satisfied:
10.1.1 Documentation. Lender shall have received the following
documents, each to be in form and substance satisfactory to Lender and its
counsel:
(i) Certified copies of casualty insurance policies
of Borrower, together with loss payable endorsements on Lender's
standard form of Loss Payee Endorsement naming Lender as loss payee as
its interests may appear, and certified copies of the liability
insurance policies of Borrower, together with endorsements naming
Lender as a coinsured;
(ii) Copies of all filing receipts or acknowledgments
issued by any governmental authority to evidence any filing or
recordation necessary to perfect the Liens of Lender in the Collateral
and evidence in a form acceptable to Lender that such Liens constitute
valid and perfected first priority security interests and Liens,
subject only to those Permitted Liens which are expressly stated to
have priority over the Liens of Lender;
(iii) Copies of the Articles of Incorporation of
Borrower, and all amendments thereto, certified by the Secretary of
State or other appropriate official of its jurisdiction of
incorporation;
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(iv) Good standing certificates for Borrower issued
by the Secretary of State or other appropriate official of Borrower's
jurisdiction of incorporation and each jurisdiction where the conduct
of Borrower's business activities necessitates qualification and in
which the failure of Borrower to be so qualified would have a Material
Adverse Effect;
(v) A closing certificate signed by an authorized
officer of Borrower, dated as of the Closing Date, stating that (a) the
representations and warranties set forth in Section 8 hereof are true
and correct in all material respects on and as of such date, (b)
Borrower is on such date in compliance in all material respects with
all the terms and provisions set forth in this Agreement and the other
Loan Documents and (c) on such date no Default or Event of Default
exists;
(vi) The Security Documents duly executed, accepted
and acknowledged by or on behalf of each of the signatories thereto;
(vii) The Other Agreements duly executed and
delivered by Borrower;
(viii) The favorable, written opinion of counsel to
Borrower and Properties as to the transactions contemplated by this
Agreement and the other Loan Documents;
(ix) Written instructions from Borrower directing the
application of proceeds of the initial Revolver Loan made to Borrower
pursuant to this Agreement on the Closing Date;
(x) Certificates of the Secretary or an Assistant
Secretary of Borrower certifying (a) that attached thereto is a true
and complete copy of the Bylaws of Borrower, as in effect on the date
of such certification, (b) that attached thereto is a true and complete
copy of the resolutions adopted by the Board of Directors of Borrower,
authorizing the execution, delivery and performance of this Agreement
and the other Loan Documents to which Borrower is a party and the
consummation of the transactions contemplated hereby and thereby, and
(c) as to the incumbency and genuineness of the signature of each
officer of Borrower executing this Agreement or any of the Loan
Documents;
(xi) Duly executed agreement for the establishment of
the Dominion Account;
(xii) Copies of the Articles of Organization of
Properties, and all amendments thereto, certified by the Secretary of
State or other appropriate official of its jurisdiction of
incorporation;
(xiii) Good standing certificates for Properties
issued by the Secretary of State or other appropriate official of
Properties' jurisdiction of incorporation and each jurisdiction where
the conduct of Properties' business activities necessitates
qualification and in which the failure of Properties to be so qualified
would have a Material Adverse Effect;
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(xiv) Certificates of the members or manager of
Properties certifying (a) that attached thereto is a true and complete
copy of the operating agreement of Properties, as in effect on the date
of such certification, (b) that attached thereto is a true and complete
copy of the resolutions adopted by the members of Properties,
authorizing the execution, delivery and performance of the Guaranty,
the Trademark Security Agreement and the other Loan Documents to which
Properties is a party and the consummation of the transactions
contemplated thereby, and (c) as to the incumbency and genuineness of
the signature of each member or manager of Properties executing this
the Guaranty, the Trademark Security Agreement and the other Loan
Documents to which Properties is a party;
(xv) Landlord or warehouseman agreements with respect
to certain premises leased by Borrower, which are disclosed on SCHEDULE
7.1.1 hereto by the designation "primary location";
(xvi) Written confirmations from all Persons which
have been granted Liens (other than Permitted Liens) in any Collateral
of the balance due on the Indebtedness owed to them as of the Closing
Date and that simultaneously with the receipt thereof such Persons will
execute and deliver to Lender such releases and terminations as may be
necessary to release and cancel of record their Liens in any
Collateral; and
(xvii) Such other documents, instruments and
agreements as Lender shall reasonably request in connection with the
foregoing matters.
10.1.2 No Injunction, etc. No action, proceeding,
investigation, regulation or legislation shall have been instituted, threatened
or proposed before any court, governmental agency or legislative body to enjoin,
restrain or prohibit, or to obtain damages in respect of, or which is related to
or arises out of this Agreement or the Loan Documents or the consummation of the
transactions contemplated hereby or which, in Lender's sole judgment, would make
it inadvisable to consummate the transactions contemplated by this Agreement or
any of the other Loan Documents.
10.1.3 Consents. All approvals, licenses, consents and filings
necessary to permit the transactions contemplated by this Agreement shall have
been obtained and made.
10.1.4 Material Adverse Change. There shall not have occurred
any material adverse change in the financial condition, results of operations or
business of Borrower or the value of the Collateral from April 30, 2000 to the
Closing Date, or any event, condition or state of facts which would reasonably
be expected to have a Material Adverse Effect, as reasonably determined by
Lender.
10.1.5 No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing.
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10.1.6 Availability. On the Closing Date, after giving effect
to the initial Revolver Loan and the transactions contemplated by this Agreement
and the other Loan Documents, Borrower shall have Availability of not less than
$15,000,000.
10.1.7 Liens. Lender shall be satisfied that this Agreement
and the other Loan Documents create or will create, as security for the
Obligations, a valid and enforceable perfected first priority security interest
in and Lien upon all of the Collateral in favor of Lender, subject to no other
Liens other than Permitted Liens which are expressly stated to have priority
over the Liens of Lender.
10.1.8 Interim Financial Statements. Lender shall have
received copies of the Consolidated financial statements of Borrower and its
Subsidiaries for the monthly period ending May 6, 2000 and for the portion of
the fiscal year then elapsed.
10.2 Conditions Precedent to All Loans and Letters of Credit and Letter
of Credit Guaranties. Notwithstanding any of the provisions of this Agreement or
the other Loan Documents, and without affecting in any manner the rights of
Lender under the other Sections of this Agreement, it is understood and agreed
that Lender will have no obligation to make any Loan (including the initial
Revolver Loan) or issue any Letter of Credit or Letter of Credit Guaranty unless
and until, in addition to the conditions set forth in Section 10.1, each of the
following conditions has been and continues to be satisfied:
10.2.1 Events of Default. No Default, Event of Default or
Overadvance Condition shall exist.
10.2.2 Delivery of Documents. Lender shall have received
copies of all documents, reports and information required to be delivered to
Lender hereunder.
10.2.3 Representations and Warranties. The representations and
warranties contained in Section 8 of this Agreement and in the Loan Documents
shall be true and correct in all material respects except for changes in the
nature of Borrower's or any of its Subsidiary's business or operations after the
date of this Agreement, so long as Lender has consented to such changes or such
changes are not prohibited by this Agreement.
10.2.4 Performance of Agreement. All covenants and agreements
on the part of Borrower and its Subsidiaries to be performed under this
Agreement and the other Loan Documents shall have been performed and, unless
otherwise expressly agreed, any conditions precedent set forth in Section 10.1
hereof shall have been fulfilled.
10.2.5 Subordinated Debt. The Loan, if made, would enjoy the
benefits and privileges of being senior in right of payment to all Subordinated
Debt then outstanding.
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10.3 Waiver of Conditions Precedent. If Lender makes any Loan prior to
the fulfillment of any of the conditions precedent set forth in Sections 10.1
and 10.2 hereof, the making of such Loan shall constitute only an extension of
time for the fulfillment of such condition and not a waiver thereof, and
Borrower shall thereafter use its best efforts to fulfill such condition
promptly.
SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
11.1 Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
11.1.1 Payment of Loans. Borrower shall fail to make any
payment of principal, interest or premium, if any, owing on the Loans on the due
date thereof (whether due at stated maturity, on demand, upon acceleration or
otherwise).
11.1.2 Payment of Other Obligations. Borrower shall fail to
pay any of the other Obligations (other than those dealt with specifically in
Section 11.1.1 hereof) on the due date thereof (whether due at stated maturity,
on demand, upon acceleration or otherwise) and such failure shall continue for a
period of five (5) Business Days after Lender's giving Borrower written notice
thereof.
11.1.3 Misrepresentations. Any representation, warranty or
other statement made or furnished to Lender by or on behalf of Borrower or any
Subsidiary of Borrower in this Agreement, any of the other Loan Documents or any
instrument, certificate or financial statement furnished in compliance with or
in reference thereto proves to have been false or misleading in any material
respect when made or furnished or when reaffirmed pursuant to Section 8.2
hereof.
11.1.4 Breach of Specific Covenants. Borrower shall fail or
neglect to perform, keep or observe any covenant contained in Sections 6.3,
7.1.1, 7.2.5, 9.1.1, 9.1.3, 9.2 or 9.3 hereof on the date that Borrower is
required to perform, keep or observe such covenant.
11.1.5 Breach of Other Covenants/Other Agreements. Borrower
shall fail or neglect to perform, keep or observe any covenant contained in this
Agreement (other than a covenant which is dealt with specifically elsewhere in
Section 11.1 hereof) or the Other Agreements and the breach of such other
covenant or the Other Agreements is not cured to Lender's satisfaction within
fifteen (15) days after the sooner to occur of Borrower's receipt of notice of
such breach from Lender or the date on which such failure or neglect first
becomes known to any officer of Borrower.
11.1.6 Default Under Security Documents. Any event of default
shall occur under, or Borrower shall default in the performance or observance of
any term, covenant, condition or agreement contained in, any of the Security
Documents and such default shall continue uncured beyond any applicable grace
period.
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11.1.7 Other Defaults. There shall occur any default or event
of default on the part of Borrower under any agreement, document or instrument
to which Borrower is a party or by which Borrower or any of its Property is
bound, creating or relating to any Indebtedness (other than the Obligations) and
such default or event of default shall continue uncured beyond any grace period
applicable thereto.
11.1.8 Uninsured Losses. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Lender shall have permitted) by insurance.
11.1.9 Insolvency and Related Proceedings. Borrower shall
cease to be Solvent or shall suffer the appointment of a receiver, trustee,
custodian or similar fiduciary, or shall make an assignment for the benefit of
creditors, or any petition for an order for relief shall be filed by or against
Borrower under the Federal Bankruptcy Code (if against Borrower, the
continuation of such proceeding for more than sixty (60) days), or Borrower
shall make any offer of settlement, extension or composition to its unsecured
creditors generally.
11.1.10 Business Disruption; Condemnation. Borrower or any
Subsidiary of Borrower shall suffer the loss or revocation of any license or
permit now held or hereafter acquired by Borrower which is necessary to the
continued or lawful operation of its business; or Borrower shall be enjoined,
restrained or in any way prevented by court, governmental or administrative
order from conducting all or any material part of its business affairs; or any
material lease or agreement pursuant to which Borrower leases, uses or occupies
any Property shall be canceled or terminated prior to the expiration of its
stated term; or any material part of the Collateral shall be taken through
condemnation or the value of such Property shall be materially impaired through
condemnation.
11.1.11 ERISA. A Reportable Event shall occur which Lender, in
its sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if Borrower or any Subsidiary of Borrower is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from Borrower's or such Subsidiary's complete or
partial withdrawal from such Plan.
11.1.12 Challenge to Agreement. Borrower, any Subsidiary of
Borrower, or any Affiliate of any of them, shall challenge or contest in any
action, suit or proceeding the validity or enforceability of this Agreement, or
any of the other Loan Documents, the legality or enforceability of any of the
Obligations or the perfection or priority of any Lien granted to Lender.
11.1.13 Criminal Forfeiture. Borrower or any Subsidiary of
Borrower shall be criminally indicted or convicted under any law that could lead
to a forfeiture of any Property of Borrower or any Subsidiary of Borrower.
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11.1.14 Judgments. One or more money judgments, writs of
attachment or similar process is filed against Borrower or any Subsidiary of
Borrower or any of their respective Property which require the payment of money
in excess of $50,000 in the aggregate, and the same is not released, discharged
or bonded within thirty (30) days after the same becomes a Lien.
11.1.15 Repudiation of or Default Under Guaranty Agreement.
Any Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed by
such Guarantor, or shall repudiate such Guarantor's liability thereunder or
shall be in default under the terms thereof.
11.2 Acceleration of the Obligations. Without in any way limiting the
right of Lender to demand payment of any portion of the Obligations payable on
demand in accordance with the provisions of this Agreement, upon or at any time
after the occurrence of an Event of Default, all or any portion of the
Obligations shall, at the option of Lender and without presentment, demand,
protest or further notice by Lender, become at once due and payable and Borrower
shall forthwith pay to Lender the full amount of such Obligations, provided,
that upon the occurrence of an Event of Default specified in Section 11.1.9
hereof, all of the Obligations shall become automatically due and payable
without declaration, notice or demand by Lender.
11.3 Other Remedies. Upon and after the occurrence of an Event of
Default, Lender shall have and may exercise from time to time the following
rights and remedies:
11.3.1 All of the rights and remedies of a secured party under
the Code or under other applicable law, and all other legal and equitable rights
to which Lender may be entitled, all of which rights and remedies shall be
cumulative and shall be in addition to any other rights or remedies contained in
this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
11.3.2 The right to terminate this Agreement as provided in
Section 5.2.1 hereof.
11.3.3 The right to notify Account Debtors to make remittance
to Lender of all sums due on Accounts of Borrower, collect such Accounts
directly from the Account Debtors, and take such other and further action with
respect thereto as set forth in Section 12.1.2 hereof.
11.3.4 The right to take immediate possession of the
Collateral, and to (i) require Borrower to assemble the Collateral, at
Borrower's expense, and make it available to Lender at a place designated by
Lender which is reasonably convenient to both parties, and (ii) enter any
premises where any of the Collateral shall be located and to keep and store the
Collateral on said premises until sold (and if said premises be the Property of
Borrower, Borrower agrees not to charge Lender for storage thereof).
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11.3.5 The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Lender, in
its sole discretion, may deem advisable. Borrower agrees that ten (10) days
written notice to Borrower of any public or private sale or other disposition of
Collateral shall be reasonable notice thereof, and such sale shall be at such
locations as Lender may designate in said notice. Lender shall have the right to
conduct such sales on Borrower's premises, without charge therefor, and such
sales may be adjourned from time to time in accordance with applicable law.
Lender shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof,
and Lender may purchase all or any part of the Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of such purchase
price, may set off the amount of such price against the Obligations. The
proceeds realized from the sale of any Collateral may be applied, after allowing
two (2) Business Days for collection, first, to the costs, expenses and
attorneys' fees incurred by Lender in collecting the Obligations, enforcing the
rights of Lender under the Loan Documents and collecting, retaking, completing,
protecting, removing, storing, advertising for sale, selling and delivering any
Collateral; second, to the interest due upon any of the Obligations; and third,
to the principal of the Obligations. If any deficiency shall arise, Borrower
shall remain liable to Lender therefor.
11.3.6 Lender is hereby granted a license or other right to
use, without charge, Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral, and Borrower's rights, subject to the
rights of the licensor or franchisor, under all licenses and all franchise
agreements shall inure to Lender's benefit.
11.3.7 With respect to the face amount of all Letters of
Credit and Letter of Credit Guaranties then outstanding, Lender may, at its
option, require Borrower to deposit with Lender funds equal to such undrawn face
amount, and if Borrower fails promptly to make such deposit, Lender may advance
such amount as a Revolver Loan. Any such deposit or advance shall be held by
Lender in the Cash Collateral Account as a reserve to fund future payments on
such Letters of Credit or Letter of Credit Guaranties. At such time as all
Letters of Credit and Letter of Credit Guaranties have expired or have been
canceled or terminated and Lender and its Affiliates released from all liability
thereunder, any amounts remaining in such reserves shall be applied against any
outstanding Obligations, or, to the extent all Obligations have been
indefeasibly paid in full, returned to Borrower.
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11.4 Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule or contained in any other agreement between Lender and
Borrower, heretofore, concurrently, or hereafter entered into, shall be deemed
cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions, or agreements of Borrower herein contained. The failure
or delay of Lender to require strict performance by Borrower of any provision of
this Agreement or to exercise or enforce any rights, Liens, powers, or remedies
hereunder or under any of the aforesaid agreements or other documents or
security or Collateral shall not operate as a waiver of such performance, Liens,
rights, powers and remedies, but all such requirements, Liens, rights, powers,
and remedies shall continue in full force and effect until all Loans and all
other Obligations owing or to become owing from Borrower to Lender shall have
been fully satisfied. None of the undertakings, agreements, warranties,
covenants and representations of Borrower contained in this Agreement or any of
the other Loan Documents and no Event of Default by Borrower under this
Agreement or any other Loan Documents shall be deemed to have been suspended or
waived by Lender, unless such suspension or waiver is by an instrument in
writing specifying such suspension or waiver and is signed by a duly authorized
representative of Lender and directed to Borrower.
SECTION 12. MISCELLANEOUS
12.1 Power of Attorney. Borrower hereby irrevocably designates, makes,
constitutes and appoints Lender (and all Persons designated by Lender) as
Borrower's true and lawful attorney (and agent-in-fact) and Lender, or Lender's
agent, may, without notice to Borrower and in either Borrower's or Lender's
name, but at the cost and expense of Borrower:
12.1.1 At such time or times as Lender or said agent, in its
sole discretion, may determine, endorse Borrower's name on any checks, notes,
acceptances, drafts, money orders or any other evidence of payment or proceeds
of the Collateral which come into the possession of Lender or under Lender's
control.
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12.1.2 At such time or times upon or after the occurrence of an
Event of Default as Lender or its agent in its sole discretion may determine:
(i) demand payment of the Accounts from the Account Debtors, enforce payment of
the Accounts by legal proceedings or otherwise, and generally exercise all of
Borrower's rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Lender
deems advisable; (iv) take control, in any manner, of any item of payment or
proceeds relating to any Collateral; (v) prepare, file and sign Borrower's name
to a proof of claim in bankruptcy or similar document against any Account Debtor
or to any notice of lien, assignment or satisfaction of lien or similar document
in connection with any of the Collateral; (vi) receive, open and dispose of all
mail addressed to Borrower and notify postal authorities to change the address
for delivery thereof to such address as Lender may designate; (vii) endorse the
name of Borrower upon any of the items of payment or proceeds relating to any
Collateral and deposit the same to the account of Lender on account of the
Obligations; (viii) endorse the name of Borrower upon any Chattel Paper,
Document, Instrument, invoice, freight bill, bill of lading or similar document
or agreement relating to the Accounts, Inventory and any other Collateral; (ix)
use Borrower's stationery and sign the name of Borrower to verifications of the
Accounts and notices thereof to Account Debtors; (x) use the information
recorded on or contained in any data processing equipment and computer hardware
and software relating to the Accounts, Inventory and any other Collateral; (xi)
make and adjust claims under policies of insurance; and (xii) do all other acts
and things necessary, in Lender's determination, to fulfill Borrower's
obligations under this Agreement.
12.2 Indemnity. Borrower hereby agrees to indemnify Lender and hold
Lender harmless from and against any liability, loss, damage, suit, action or
proceeding ever suffered or incurred by Lender (including reasonable attorneys
fees and legal expenses) as the result of Borrower's or any of its Subsidiary's
failure to observe, perform or discharge Borrower's duties hereunder or under
any of the Loan Documents. In addition, Borrower shall defend Lender against and
save it harmless from all claims of any Person with respect to the Collateral.
Without limiting the generality of the foregoing, these indemnities shall extend
to any claims asserted against Lender by any Person under any Environmental Laws
or similar laws by reason of Borrower's or any other Person's failure to comply
with laws applicable to solid or hazardous waste materials or other toxic
substances. Additionally, if any Taxes (excluding Taxes imposed upon or measured
by the net income of Lender, but including, without limitation, any intangibles
tax, stamp tax, recording tax or franchise tax) shall be payable by Lender or by
Borrower or any of its Subsidiaries on account of the execution or delivery of
this Agreement, or the execution, delivery, issuance or recording of any of the
other Loan Documents, or the creation of any of the Obligations, by reason of
any Applicable Law now or hereafter in effect, Borrower will pay (or will
promptly reimburse Lender for the payment of) all such Taxes, including, without
limitation, any interest and penalties thereon, and will indemnify and hold
Lender harmless from and against all liability in connection therewith.
12.3 Survival of Indemnities. Notwithstanding any contrary provision in
this Agreement, the obligation of Borrower with respect to each indemnity given
by it in this Agreement or any of the other Loan Documents shall survive the
payment in full of the Obligations and the termination of this Agreement.
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12.4 Modification of Agreement; Sale of Interest. This Agreement may
not be modified, altered or amended, except by an agreement in writing signed by
Borrower and Lender. Borrower may not sell, assign or transfer any interest in
this Agreement, any of the other Loan Documents, or any of the Obligations, or
any portion thereof, including, without limitation, Borrower's rights, title,
interests, remedies, powers, and duties hereunder or thereunder. Borrower hereby
consents to Lender's participation, sale, assignment, transfer or other
disposition, at any time or times hereafter, of this Agreement and any of the
other Loan Documents, or of any portion hereof or thereof, including, without
limitation, Lender's rights, title, interests, remedies, powers, and duties
hereunder or thereunder. In the case of an assignment, the assignee shall have,
to the extent of such assignment, the same rights, benefits and obligations as
it would if it were "Lender" hereunder and Lender shall be relieved of all
obligations hereunder upon any such assignments. Borrower agrees that it will
use its best efforts to assist and cooperate with Lender in any manner
reasonably requested by Lender to effect the sale of participations in or
assignments of any of the Loan Documents or any portion thereof or interest
therein, including, without limitation, assisting in the preparation of
appropriate disclosure documents. Borrower further agrees that Lender may
disclose credit information regarding Borrower and its Subsidiaries to any
potential participant or assignee.
12.5 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement shall be prohibited by or
invalid under Applicable Law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
12.6 Successors and Assigns. This Agreement, the Other Agreements and
the Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Lender.
12.7 Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in any of the other
Loan Documents by specific reference to the applicable provision of this
Agreement, if any provision contained in this Agreement is in direct conflict
with, or inconsistent with, any provision in any of the other Loan Documents,
the provision contained in this Agreement shall govern and control.
12.8 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
12.9 Notice. All notices, requests and demands to or upon a party
hereto, to be effective, shall be in writing and shall be sent by certified or
registered mail, return receipt requested, by personal delivery against receipt,
by overnight courier or by facsimile transmission and, unless otherwise
expressly provided herein, shall be deemed to have been validly served, given or
delivered immediately when delivered against receipt, three (3) Business Days
after deposit in the mail, postage prepaid, or, in the case of facsimile
transmission, when received (if on a Business Day and, if not received on a
Business Day, then on the next Business Day after receipt), addressed as
follows:
If to Lender: Fleet Capital Corporation
6100 Fairview Road, Suite 200
Charlotte, North Carolina 28210
Attention: Southeast Loan Administration
Facsimile No. 704-553-6738
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With a copy to: Carruthers & Roth, P.A.
235 North Edgeworth Street
Greensboro, North Carolina 27401
Attention: Kenneth M. Greene, Esq.
Facsimile No. 336-273-7885
If to Borrower: Fresh Foods, Inc.
9990 Princeton Road
Cincinnati, Ohio 45246
Attention: Chief Financial Officer
Facsimile No. 513-682-7158
With a copy to: Battle, Winslow, Scott & Wiley, P.A.
2343 Professional Drive
Rocky Mount, North Carolina 27804
Attention: T. Stewart Gibson
Facsimile No. 252-937-8100
or to such other address as each party may designate for itself by notice given
in accordance with this Section 12.9; provided, however, that any notice,
request or demand to or upon Lender pursuant to Section 3.1.1 or 5.2.2 hereof
shall not be effective until received by Lender. Any written notice or demand
that is not sent in conformity with the provisions hereof shall nevertheless be
effective on the date that such notice is actually received by the noticed
party.
12.10 Lender's Consent. Whenever Lender's consent is required to be
obtained under this Agreement, any of the Other Agreements or any of the
Security Documents as a condition to any action, inaction, condition or event,
Lender shall be authorized to give or withhold such consent in its sole and
absolute discretion and to condition its consent upon the giving of additional
collateral security for the Obligations, the payment of money or any other
matter.
12.11 Credit Inquiries. Borrower hereby authorizes and permits Lender,
at its discretion and without any obligation to do so, to respond to credit
inquiries from third parties concerning Borrower or any of its Subsidiaries.
12.12 Time of Essence. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
12.13 Entire Agreement; Appendix A and Exhibits. This Agreement and the
other Loan Documents, together with all other instruments, agreements and
certificates executed by the parties in connection therewith or with reference
thereto, embody the entire understanding and agreement between the parties
hereto and thereto with respect to the subject matter hereof and thereof and
supersede all prior agreements, understandings and inducements, whether express
or implied, oral or written. Appendix A and each of the exhibits attached hereto
are incorporated into this Agreement and by this reference made a part hereof.
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12.14 Interpretation. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
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12.15 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
CHARLOTTE, NORTH CAROLINA. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA; PROVIDED, HOWEVER, THAT
IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN NORTH
CAROLINA, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND
PROCEDURE FOR FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE
ENFORCEMENT OF LENDER'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE
EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT
WITH THE LAWS OF NORTH CAROLINA. AS PART OF THE CONSIDERATION FOR NEW VALUE
RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF
BUSINESS OF BORROWER OR LENDER, BORROWER HEREBY CONSENTS AND AGREES THAT THE
SUPERIOR COURT OF MECKLENBURG COUNTY, NORTH CAROLINA, OR, AT LENDER'S OPTION,
THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA,
CHARLOTTE DIVISION, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS AGREEMENT OR
TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH
BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR THREE (3)
DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE
ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE
TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER
APPROPRIATE FORUM OR JURISDICTION.
12.16 WAIVERS BY BORROWER. BORROWER WAIVES (i) TO THE FULLEST EXTENT
PROVIDED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY (WHICH LENDER HEREBY ALSO
WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT
OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL;
(ii) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST,
DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR
RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS,
INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY LENDER ON WHICH
BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER
LENDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL
OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT
PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES; (iv) THE BENEFIT
OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND (v) NOTICE OF ACCEPTANCE
HEREOF. BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL
INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS RELYING
UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS
LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
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IN WITNESS WHEREOF, this Agreement has been duly executed under seal on
the day and year specified at the beginning of this Agreement.
ATTEST: FRESH FOODS, INC.
("BORROWER")
__________________________________ By:_________________________________
____________Secretary Title:___________________________
[CORPORATE SEAL]
FLEET CAPITAL CORPORATION
("LENDER")
By:_________________________________
Title:___________________________
LIBOR LENDING OFFICE:
6100 Fairview Road, Suite 200
Charlotte, North Carolina 28210
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APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement, dated of even
date herewith, by and between FLEET CAPITAL CORPORATION and FRESH FOODS, INC.,
the following terms shall have the following meanings (terms defined in the
singular to have the same meaning when used in the plural and vice versa):
Account - shall have the meaning ascribed to the term
"account" under the Code.
Account Debtor - any Person who is or may become obligated
under or on account of an Account.
Adjusted LIBOR Rate - with respect to each Interest Period for
a LIBOR Rate Loan, an interest rate per annum (rounded to the nearest
1/8 of 1% or, if there is no nearest 1/8 of 1%, the next higher 1/8 of
1%) equal to the quotient of (i) the LIBOR Rate in effect for such
Interest Period divided by (ii) a percentage (expressed as a decimal)
equal to 100% minus Statutory Reserves.
Affiliate - as to any Person, any other Person (other than a
Subsidiary): (i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common
control with, such Person; (ii) which beneficially owns or holds 5% or
more of any class of the Voting Stock of such Person; or (iii) 5% or
more of the Voting Stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of which is
beneficially owned or held by such Person or a Subsidiary of such
Person.
Agreement - the Loan and Security Agreement referred to in the
first sentence of this Appendix A, as the same may hereafter be
amended, modified, supplemented or restated from time to time, all
exhibits hereto and this Appendix A.
Alternate Base Rate - on any date, the higher of (i) the Base
Rate or (ii) the sum of the Federal Funds Effective Rate plus one-half
of one percent (0.5%) per annum.
Alternate Base Rate Loan - a Loan, or portion thereof, during
any period in which it bears interest at a rate based upon the
Alternate Base Rate.
Applicable Law - all laws, rules and regulations applicable to
the Person, conduct, transaction, covenant or Loan Documents in
question, including, but not limited to, all applicable common law and
equitable principles; all provisions of all applicable state and
federal constitutions, statutes, rules, regulations and orders of
governmental bodies; orders, judgments and decrees of all courts and
arbitrators.
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Applicable Margin - for any day, the rate per annum set forth
below opposite the applicable Level then in effect, it being understood
that the Applicable Margin for (i) the Revolver Loans that are LIBOR
Rate Loans shall be the percentage set forth under the column
Applicable Margin for LIBOR Rate Loans, (ii) the Revolver Loans that
are Alternate Base Rate Loans shall be the percentage set forth under
the column Applicable Margin for Alternate Base Rate Loans, and (iii)
the unused line fee shall be the percentage set forth under the column
Applicable Margin for Unused Line Fee:
Applicable Margin Applicable Margin Applicable
for LIBOR for Alternate Base Margin for
Level Rate Loans Rate Loans Unused Line Fee
----- ---------- ---------- ---------------
Level I 2.50% 0.50% 0.375%
Level II 2.25% 0.25% 0.375%
Level III 2.00% 0.00% 0.375%
Level IV 1.75% 0.00% 0.250%
The Applicable Margin shall, in each case, be determined after
receipt by Lender of the financial statements as of the end of each
fiscal quarter of Borrower and its Subsidiaries and for that portion of
the fiscal year of Borrower and its Subsidiaries then ended which are
required to be delivered to Lender in accordance with the provisions of
Section 9.1.3(ii) of the Agreement, commencing with the fiscal quarter
ending December 2, 2000, and shall be adjusted effective on the third
(3rd) Business Day following the receipt by Lender of such financial
statements and the Compliance Certificate in the form of EXHIBIT D to
the Agreement executed by the Chief Financial Officer of Borrower
(each, an "Adjustment Date"). Such Applicable Margin shall be effective
from such Adjustment Date until the next such Adjustment Date. The
initial Applicable Margins shall be based on Level I until receipt of
the financial statements and Compliance Certificates referred to above.
If an Event of Default shall have occurred, the Applicable Margin shall
be based on Level I.
Availability - the amount of money which Borrower is entitled
to borrow from time to time as Revolver Loans, such amount being the
difference derived when the sum of the principal amount of Revolver
Loans then outstanding (including any amounts which Lender may have
paid for the account of Borrower pursuant to any of the Loan Documents
and which have not been reimbursed by Borrower) is subtracted from the
lesser of the Revolver Facility Amount or the Borrowing Base. If the
amount outstanding is equal to or greater than the Borrowing Base,
Availability is zero (0).
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Availability Reserve - on any date of determination thereof,
an amount equal to the sum of (i) all amounts of past due rent or other
charges owing at such time by Borrower to any landlord of any premises
where any of the Collateral is located; (ii) any amounts which Borrower
is obligated to pay pursuant to the provisions of the Loan Documents
but does not pay when due and which Lender elects to pay pursuant to
any of the Loan Documents for the account of Borrower; (iii) an amount
equal to the Letter of Credit Obligations outstanding on such date; and
(iv) such additional reserves established by Lender in such amounts,
and with respect to such matters, events, conditions or contingencies
as to which Lender, in its credit judgment based upon its usual and
customary credit and collateral considerations, determines reserves
should be established from time to time, including, without limitation,
with respect to (1) price adjustments, damages, unearned discounts,
returned products or other matters for which credit memoranda are
issued in the ordinary course of Borrower's business, (2) shrinkage,
spoilage and obsolescence of Inventory, (3) slow moving Inventory, (4)
any diminution in the quantity, quality or value of any of the
Collateral, and (5) other sums chargeable against Borrower's Loan
Account as Revolver Loans under any Section of the Agreement.
Average Monthly Loan Balance - the amount obtained by adding
the aggregate unpaid balance of all Loans and Letter of Credit
Obligations owing by Borrower to Lender at the end of each day during
the month in question and by dividing that sum by the number of days in
such month.
Bank - Fleet National Bank, a national banking association,
and its successors and assigns.
Base Rate - the rate of interest generally announced or quoted
by Bank from time to time as its base rate for commercial loans,
whether or not such rate is the lowest rate charged by Bank to its most
preferred borrowers; and, if such base rate for commercial loans is
discontinued by Bank as a standard, a comparable reference rate
designated by Bank as a substitute therefor shall be the Base Rate.
Board of Governors - the Board of Governors of the Federal
Reserve System of the United States.
Borrowing - a borrowing of one or more Loans made on the same
day by Lender.
Borrowing Base - as at any date of determination thereof, an
amount equal to the sum of:
(i) eighty-five percent (85%) (or such
lesser percentage as Lender, in its sole credit judgment,
determine from time to time) of the net amount of Eligible
Accounts outstanding at such date; provided, however, that if
dilution of Borrower's Accounts for any month exceeds five
percent (5%) then Lender may, in its sole and unfettered
discretion, reduce the foregoing percentage;
PLUS
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(ii) The lesser of (a) $15,000,000 or (b)
sixty percent (60%) (or such lesser percentage as Lender, in
its sole credit judgment, determine from time to time) of the
value of Borrower's Eligible Inventory at such date,
calculated on the basis of lower of cost or market with cost
calculated on a first-in, first-out basis;
MINUS
(iii) the Availability Reserve.
For purposes hereof, the net amount of Eligible Accounts at
any time shall be the face amount of such Eligible Accounts less any
and all returns, rebates, discounts (which may, at Lender's option, be
calculated on shortest terms), sales taxes, credits, allowances or
excise taxes of any nature at any time issued, owing, claimed by
Account Debtors, granted, outstanding or payable in connection with
such Accounts at such time.
Business Day - any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of North Carolina
or the State of Illinois or is a day on which banking institutions
located in such states are closed, provided, however, that when used
with reference to a LIBOR Rate Loan (including the making, continuing,
prepaying or repaying of any LIBOR Rate Loan for an Interest Period),
the term "Business Day" shall also exclude any day on which banks are
not opened for dealings in dollar deposits on the London interbank
market.
Capital Expenditures - expenditures made or liabilities
incurred for the acquisition of any fixed assets or improvements,
replacements, substitutions or additions thereto which have a useful
life of more than one year, including the total principal portion of
Capitalized Lease Obligations.
Capitalized Lease Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
Cash Collateral - cash or Cash Equivalents, and interest
earned thereon, deposited with Lender in accordance with the Agreement
as security for the Obligations to the extent provided in the
Agreement.
Cash Collateral Account - an account established by Lender on
its books and to which Lender shall credit all Cash Collateral
deposited with Lender in accordance with the Agreement.
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Cash Equivalents - (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government and backed
by the full faith and credit of the United States Government having
maturities of not more than twelve (12) months from the date of
acquisition; (ii) domestic certificates of deposit and time deposits
having maturities of not more than twelve (12) months from the date of
acquisition, banker's acceptances having maturities of not more than
twelve (12) months from the date of acquisition and overnight bank
deposits, in each case issued by any commercial bank organized under
the laws of the United States, any state thereof or the District of
Columbia, which at the time of acquisition are rated A-1 or better by
Standard & Poor's Corporation or P-1 or better by Moody's Investors
Services, Inc., and (unless issued by Lender) not subject to offset
rights in favor of such bank arising from any banking relationship with
such bank; (iii) repurchase obligations with a term of not more than
thirty (30) days for underlying securities of the types described in
clauses (i) and (ii) entered into with any financial institution
meeting the qualifications specified in clause (ii); and (iv)
commercial paper having at the time of investment therein or a
contractual commitment to invest therein a rating of A-1 or better by
Standard & Poor's Corporation or P-1 or better by Moody's Investors
Services, Inc., and having a maturity within nine (9) months after the
date of acquisition thereof.
Chattel Paper - shall have the meaning ascribed to "chattel
paper" under the Code.
Closing Date - the date on which all of the conditions
precedent in Section 10 of the Agreement are satisfied and the initial
Loan is made under the Agreement.
Code - the Uniform Commercial Code as adopted and in force in
the State of North Carolina, as from time to time in effect.
Collateral - all of the Property and interests in Property
described in Section 6 of the Agreement, and all other Property and
interests in Property that now or hereafter secure the payment and
performance of any of the Obligations.
Consolidated - the consolidation in accordance with GAAP of
the accounts or other items as to which such term applies.
Consolidated Adjusted Net Earnings From Operations - with
respect to any fiscal period, means the net earnings (or loss) after
provision for income taxes for such fiscal period of Borrower and its
Subsidiaries, as reflected on the financial statement of Borrower
supplied to Lender pursuant to Section 9.1.3 of the Agreement, but
excluding:
(i) any gain or loss arising from the sale
of capital assets;
(ii) any gain arising from any write-up of
assets;
(iii) earnings of any Subsidiary of Borrower
accrued prior to the date it became a Subsidiary;
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(iv) earnings of any corporation,
substantially all the assets of which have been acquired in
any manner by Borrower, realized by such corporation prior to
the date of such acquisition;
(v) net earnings of any business entity
(other than a Subsidiary of Borrower) in which Borrower has an
ownership interest unless such net earnings shall have
actually been received by Borrower in the form of cash
distributions;
(vi) any portion of the net earnings of any
Subsidiary of Borrower which for any reason is unavailable for
payment of dividends to Borrower;
(vii) the earnings of any Person to which
any assets of Borrower shall have been sold, transferred or
disposed of, or into which Borrower shall have merged, or been
a party to any consolidation or other form of reorganization,
prior to the date of such transaction;
(viii) any gain arising from the acquisition
of any Securities of Borrower; and
(ix) any gain or loss arising from
extraordinary or non-recurring items, which amount has been
agreed to by Lender.
Consolidated EBITDA - with respect to any fiscal period, the
sum of (i) Consolidated Adjusted Net Earnings From Operations for such
fiscal period, plus (ii) interest, taxes, depreciation and amortization
expenses of Borrower and its Subsidiaries for such fiscal period which
were subtracted from earnings in calculating Consolidated Adjusted Net
Earnings From Operations for such fiscal period.
Consolidated Fixed Charge Coverage Ratio - with respect to any
period of determination, the ratio of (i) the sum of (a) Consolidated
EBITDA for such period minus (b) Capital Expenditures not financed by
Permitted Purchase Money Indebtedness which are incurred by Borrower
and its Subsidiaries during such fiscal period minus (c) federal and
state income taxes actually paid during such period to (ii) the sum of
(a) payments on Indebtedness for Money Borrowed of Borrower and its
Subsidiaries made during such period plus (b) Consolidated Interest
Expense for such period.
Consolidated Interest Expense - for any fiscal period, the
total interest expense of Borrower and its Subsidiaries on a
Consolidated basis, as determined in accordance with GAAP.
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Consolidated Leverage Ratio - at any date means the ratio of
(i) Indebtedness for Money Borrowed at such date to (ii) Consolidated
EBITDA for the four (4) fiscal quarters then ended.
Consolidated Net Income - with respect to any fiscal period,
the Consolidated net income (or loss) after taxes of such Person for
such period, determined in accordance with GAAP.
Consolidated Net Worth - at any date means the total
shareholders' equity (including capital stock, additional paid-in
capital and retained earnings after deducting treasury stock) appearing
on a Consolidated balance sheet of Borrower and its Subsidiaries
prepared as of such date in accordance with GAAP.
Default - an event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, become an
Event of Default.
Default Rate - as defined in Section 2.1.6 of the Agreement.
Deposit Accounts - all of a Person's demand, time, savings,
passbook, money market or other depository accounts, and all
certificates of deposit, maintained by such Person with any bank,
savings and loan association, credit union or other depository
institution.
Distribution - in respect of any corporation means and
includes: (i) the payment of any dividends or other distributions on
capital stock of the corporation (except distributions in such stock)
and (ii) the redemption or acquisition of Securities (or any warrant or
option for the purchase of any such Securities) unless made
contemporaneously from the net proceeds of the sale of Securities.
Document - shall have the meaning ascribed to the term
"document" under the Code.
Dollars - and the sign $ shall refer to currency of the United
States of America.
Dominion Account - a special account of Lender established by
Borrower at a bank selected by Borrower, but acceptable to Lender in
its discretion, and over which Lender shall have sole and exclusive
access and control for withdrawal purposes.
Eligible Account - an Account of Borrower arising in the
ordinary course of Borrower's business from the sale of goods or
rendition of services which is payable in Dollars and which Lender, in
its sole credit judgment, based upon its usual and customary credit and
collateral considerations, deems to be an Eligible Account. Without
limiting the generality of the foregoing, no Account shall be an
Eligible Account if:
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(i) it arises out of a sale made by Borrower
to a Subsidiary, or an Affiliate of Borrower, or to a Person
controlled by an Affiliate of Borrower; or
(ii) it is unpaid for more than sixty (60)
days after the original due date shown on the invoice; or
(iii) it is due or unpaid more than ninety
(90) days after the original invoice date; provided, however,
Accounts in the aggregate amount of up to $1,175,000 which
satisfy all other eligibility criteria and which are not due
or unpaid more than one hundred fifty (150) days after the
respective invoice dates shall be considered Eligible
Accounts; or
(iv) fifty percent (50%) or more of the
Accounts from the Account Debtor are not deemed Eligible
Accounts hereunder; or
(v) the total unpaid Accounts of the Account
Debtor exceed twenty percent (20%) of the net amount of all
Eligible Accounts, to the extent of such excess; or
(vi) any covenant, representation or
warranty contained in the Agreement with respect to such
Account has been breached; or
(vii) the Account Debtor is also Borrower's
creditor or supplier, or the Account Debtor has disputed
liability with respect to such Account, or the Account Debtor
has made any claim with respect to any other Account due from
such Account Debtor to Borrower, or the Account otherwise is
or may become subject to any right of setoff by the Account
Debtor; or
(viii) the Account Debtor has commenced a
voluntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or made an assignment for
the benefit of creditors, or a decree or order for relief has
been entered by a court having jurisdiction in the premises in
respect of the Account Debtor in an involuntary case under the
federal bankruptcy laws, as now constituted or hereafter
amended, or any other petition or other application for relief
under the federal bankruptcy laws has been filed against the
Account Debtor, or if the Account Debtor has failed, suspended
business, ceased to be Solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for
it or for all or a significant portion of its assets or
affairs; or
(ix) it arises from a sale to an Account
Debtor outside the United States or Canada, unless the sale is
on letter of credit, guaranty or acceptance terms, in each
case acceptable to Lender in its sole discretion and the
proceeds thereof are assigned to Lender; or
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(x) it arises from a sale to the Account
Debtor on a bill-and-hold, guaranteed sale, sale-or-return,
sale-on-approval, consignment or any other repurchase or
return basis; or
(xi) the Account Debtor is the United States
of America or any department, agency or instrumentality
thereof, unless Borrower assigns its right to payment of such
Account to Lender, in a manner satisfactory to Lender, so as
to comply with the Assignment of Claims Act of 1940 (31 U.S.C.
?203 et seq., as amended); or
(xii) the Account is subject to a Lien other
than a Permitted Lien; or
(xiii) the goods giving rise to such Account
have not been delivered to and accepted by the Account Debtor
or the services giving rise to such Account have not been
performed by Borrower and accepted by the Account Debtor or
the Account otherwise does not represent a final sale; or
(xiv) the Account is evidenced by Chattel
Paper or an Instrument of any kind, or has been reduced to
judgment; or
(xv) Borrower has made any agreement with
the Account Debtor for any deduction therefrom, except for
discounts or allowances which are made in the ordinary course
of business for prompt payment and which discounts or
allowances are reflected in the calculation of the face value
of each invoice related to such Account; or
(xvi) Borrower has made an agreement with
the Account Debtor to extend the time of payment thereof; or
(xvii) Borrower has failed to comply with
the provisions of Section 7.2.1 with respect to such Account
and the Account Debtor obligated thereon; or
(xviii) the Account Debtor is located in a
state in which Borrower is deemed to be doing business under
the laws of such state and which denies creditors access to
its courts in the absence of qualification to transact
business in such state or of the filing of any reports with
such state, unless Borrower has qualified as a foreign
corporation authorized to transact business in such state or
has filed all required reports; or
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(xix) the Account Debtor is located in the
States of New Jersey, Minnesota, Indiana or any other state
imposing similar conditions on the right of a creditor to
collect Accounts, unless Borrower has either qualified to
transact business in such state as a foreign corporation or
has filed a Notice of Business Activities Report with the
appropriate officials in those states for the then current
year; or
(xx) the Accounts of the Account Debtor
exceed a credit limit established by Lender, in its sole
credit judgment, to the extent such Accounts exceed such
limit.
Eligible Inventory - such Inventory of Borrower (other than
packaging materials and supplies) which Lender, in its sole credit
judgment, based upon its usual and customary credit and collateral
considerations, deems to be Eligible Inventory. Without limiting the
generality of the foregoing, no Inventory shall be Eligible Inventory
unless:
(i) it is, in Lender's opinion, readily
marketable in its current form;
(ii) it is in good, new and saleable
condition;
(iii) it is not slow-moving, obsolete or
unmerchantable;
(iv) it meets all standards imposed by any
governmental agency or authority;
(v) it conforms in all respects to the
warranties and representations set forth in the Agreement;
(vi) it is at all times subject to Lender's
duly perfected Lien and no other Lien except a Permitted Lien;
(vii) it is situated at a location in
compliance with the Agreement or is in transit;
(viii) it is stored on premises owned by
Borrower or stored with, or located on premises owned by, a
landlord, warehouseman or other Person from whom Borrower has
procured for Lender's benefit a written agreement of such
Person, in form and substance acceptable to Lender, to afford
Lender access to and the right to repossess or take possession
of such Inventory at any time free of any Lien of such Person
and to use any such proceeds for a reasonable period of time,
without any obligation to such Person (other than regular rent
on a per diem basis, to store or dispose of such Inventory);
(ix) is not the subject of any Document that
has not been assigned to, and in the possession of, Lender;
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(x) it is owned outright by Borrower and not
held by Borrower on consignment or other sale or return basis;
(xi) it is not subject to any license or
other agreement that would condition or restrict Borrower's or
Lender's right to sell or otherwise dispose of such Inventory;
and
(xii) it is not work-in-process Inventory.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and
consent decrees relating to health, safety and environmental matters.
Equipment - all machinery, apparatus, equipment, fittings,
furniture, fixtures, motor vehicles and all other tangible personal
Property (other than Inventory) of every kind and description used in
Borrower's operations or owned by Borrower or in which Borrower has an
interest.
ERISA - the Employee Retirement Income Security Act of 1974,
as amended, and all rules and regulations from time to time promulgated
thereunder.
Eurocurrency Liabilities - shall have the meaning ascribed
thereto in Regulation D issued by the Board of Governors.
Event of Default - as defined in Section 11.1 of the
Agreement.
Federal Funds Effective Rate - for any period, a fluctuating
interest rate per annum equal for each date during such period to the
weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) in Charlotte, North Carolina,
by the Federal Reserve Bank of Charlotte, or if such rate is not so
published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by Lender from
three (3) federal funds brokers of recognized standing selected by
Lender.
GAAP - generally accepted accounting principles in the United
States of America in effect from time to time.
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General Intangibles - all general intangibles of Borrower,
including, without limitation, all choses in action, causes of action,
corporate or other business records, deposit accounts, inventions,
blueprints, designs, patents, patent applications, trademarks,
trademark applications, trade names, trade secrets, service marks,
goodwill, brand names, copyrights, registrations, licenses, franchises,
customer lists, tax refund claims, computer programs, operational
manuals, all claims under guaranties, security interests or other
security held by or granted to Borrower to secure payment of any of the
Accounts by an Account Debtor, all rights to indemnification and all
other intangible property of every kind and nature (other than
Accounts).
Guarantor - Properties and any other Person who may hereafter
guarantee payment or performance of the whole or any part of the
Obligations.
Guaranty Agreement - the Guaranty Agreement executed by each
Guarantor in form and substance satisfactory to Lender.
Indebtedness - as applied to a Person means, without
duplication
(i) all items which in accordance with GAAP
would be included in determining total liabilities as shown on
the liability side of a balance sheet of such Person as at the
date as of which Indebtedness is to be determined, including,
without limitation, Capitalized Lease Obligations,
(ii) all obligations of other Persons which
such Person has guaranteed,
(iii) all reimbursement obligations in
connection with letters of credit or letter of credit
guaranties issued for the account of such Person, and
(iv) in the case of Borrower (without
duplication), the Obligations.
Instrument - shall have the meaning ascribed to the term
"instrument" under the Code.
Interest Period - as defined in Section 2.1.4 of the
Agreement.
Internal Revenue Code - the Internal Revenue Code of 1986, as
amended from time to time.
Inventory - all of Borrower's inventory, including, but not
limited to, all goods intended for sale or lease by Borrower, or for
display or demonstration; all work in process; all raw materials and
other materials and supplies of every nature and description used or
which might be used in connection with the manufacture, printing,
packing, shipping, advertising, selling, leasing or furnishing of such
goods or otherwise used or consumed in Borrower's business; and all
documents evidencing and General Intangibles relating to any of the
foregoing, whether now owned or hereafter acquired by Borrower.
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Letter of Credit - any letter of credit issued by Lender or
any of Lender's Affiliates for the account of Borrower.
Letter of Credit Amount - at any time, the aggregate undrawn
face amount of all Letters of Credit and Letter of Credit Guaranties
then outstanding.
Letter of Credit Guaranty - any guaranty issued by Lender
pursuant to which Lender shall guarantee the payment or performance by
Borrower of its reimbursement obligations under a Letter of Credit.
Letter of Credit Obligations - that portion of the Obligations
constituting Borrower's obligation to reimburse Lender for all amounts
paid by Lender under or with respect to a Letter of Credit Guaranty.
Level - as at the determination thereof at the end of each
fiscal month of Borrower and its Subsidiaries, the level set forth
below corresponding to the Consolidated Leverage Ratio as of the end of
such fiscal month:
Level Ratio
----- -----
Level I >5.25
Level II <5.25 but >4.50
-
Level III <4.50 but >3.75
-
Level IV <3.75
-
LIBOR Lending Office - with respect to Lender, the office
designated as the LIBOR Lending Office for Lender on the signature
pages hereof and such other office of Lender or any of its Affiliates
that is hereafter designated by notice to Borrower.
LIBOR Rate - with respect to an Interest Period, the rate per
annum determined by Lender at which deposits of Dollars of amounts
equal to or comparable to the amount of the LIBOR Rate Loan to which
such Interest Period relates and for a term comparable to such Interest
Period are offered to Bank by prime banks in the London interbank
foreign currency deposits market at approximately 11:00 a.m., London
time, two (2) Business Days prior to the first day of such Interest
Period. Each determination by Lender of any LIBOR Rate shall, in the
absence of manifest error, be conclusive.
LIBOR Rate Loan - a Loan, or portion thereof, during any
period in which it bears interest at a rate based upon the applicable
Adjusted LIBOR Rate.
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Lien - any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on common law, statute or contract. The
term "Lien" shall also include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases
and other title exceptions and encumbrances affecting Property. For the
purpose of the Agreement, Borrower shall be deemed to be the owner of
any Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for
security purposes.
Loan - a Revolver Loan.
Loan Account - the loan account established on the books of
Lender pursuant to Section 4.7 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the
Security Documents.
Margin Stock - shall have the meaning ascribed to it in
Regulation U and Regulation G of the Board of Governors.
Material Adverse Effect - the effect of any event or condition
which, alone or when taken together with other events or conditions
occurring or existing concurrently therewith, (i) has or may be
reasonably expected to have a material adverse effect upon the
business, operations, Property, condition (financial or otherwise) of
Borrower or its Subsidiaries; (ii) has or may be reasonably expected to
have any material adverse effect whatsoever upon the validity or
enforceability of the Agreement or any of the other Loan Documents;
(iii) has or may be reasonably expected to have any material adverse
effect upon the Collateral, the Liens of Lender with respect to the
Collateral or the priority of such Liens; or (iv) materially impairs
the ability of Borrower or any of its Subsidiaries or any Guarantor to
perform its obligations under the Agreement, any Guaranty Agreement or
any of the other Loan Documents or of Lender to enforce or collect the
Obligations or realize upon any of the Collateral in accordance with
the Loan Documents and Applicable Law.
Maximum Rate - the maximum non-usurious rate of interest
permitted by Applicable Law that at any time, or from time to time, may
be contracted for, taken, reserved, charged or received on the
Indebtedness in question or, to the extent permitted by Applicable Law,
under such Applicable Law that may hereafter be in effect and which
allow a higher maximum non-usurious interest rate than Applicable Law
now allows. Notwithstanding any other provision hereof, the Maximum
Rate shall be calculated on a daily basis (computed on the actual
number of days elapsed over a year of 365 or 366 days, as the case may
be).
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Money Borrowed - means (i) Indebtedness arising from the
lending of money by any Person to Borrower; (ii) Indebtedness, whether
or not in any such case arising from the lending by any Person of money
to Borrower, (a) which is represented by notes payable or drafts
accepted that evidence extensions of credit, (b) which constitutes
obligations evidenced by bonds, debentures, notes or similar
instruments, or (c) upon which interest charges are customarily paid
(other than accounts payable) or that was issued or assumed as full or
partial payment for Property; (iii) Indebtedness that constitutes a
Capitalized Lease Obligation; (iv) reimbursement obligations with
respect to letters of credit or guaranties of letters of credit and (v)
Indebtedness of Borrower under any guaranty of obligations that would
constitute Indebtedness for Money Borrowed under clauses (i) through
(iii) hereof, if owed directly by Borrower.
Multiemployer Plan - has the meaning set forth in Section
4001(a)(3) of ERISA.
Net Proceeds - proceeds (including cash receivable (when
received) by way of deferred payment) received by Borrower from the
sale, lease, transfer or other disposition of any Collateral,
including, without limitation, insurance proceeds and awards of
compensation received with respect to the destruction or condemnation
of all or part of such Collateral, net of: (i) the reasonable costs of
such sale, lease, transfer or other disposition; (ii) any tax liability
arising from such transaction; and (iii) amounts applied to repayment
of Indebtedness (other than the Obligations) secured by a Permitted
Lien on the Collateral disposed of that is senior to Lender's Liens.
Notice of Borrowing - as defined in Section 3.1.1(i) of the
Agreement.
Notice of Conversion/Continuation - as defined in Section
2.1.3(ii) of the Agreement.
Obligations - all Loans and all other advances, debts,
liabilities, obligations, covenants and duties, together with all
interest, fees and other charges thereon, owing, arising, due or
payable from Borrower to Lender of any kind or nature, present or
future, whether or not evidenced by any note, guaranty or other
instrument, whether arising under the Agreement or any of the other
Loan Documents or otherwise, whether direct or indirect (including
those acquired by assignment), absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising and
however acquired.
Original Term - as defined in Section 5.1 of the Agreement.
Other Agreements - any and all agreements, instruments and
documents (other than the Agreement and the Security Documents),
heretofore, now or hereafter executed by Borrower, any Subsidiary of
Borrower or any other third party and delivered to Lender in respect of
the transactions contemplated by the Agreement.
Overadvance - a Revolver Loan made by Lender when an
Overadvance Condition exists or would result from the making of such
Revolver Loan.
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Overadvance Condition - at any date, a condition such that the
principal amount of the Revolver Loans outstanding to Borrower on such
date exceeds the Borrowing Base on such date.
Participating Lender - any Person who shall be granted the
right by Lender to participate in any of the Loans described in the
Agreement and who shall have entered into a participation agreement in
form and substance satisfactory to Lender.
Payment Account - an account maintained by Lender (currently
at Fleet National Bank in Hartford, Connecticut) to which all monies
from time to time deposited to a Dominion Account shall be transferred
and all other payments shall be sent in immediately available federal
funds.
Payment Item - all checks, drafts or other items of payment
payable to Borrower, including proceeds of any of the Collateral.
Permitted Liens - any Lien of a kind specified in Section
9.2.4 of the Agreement.
Permitted Purchase Money Indebtedness - Purchase Money
Indebtedness of Borrower incurred after the date hereof which is
secured by a Purchase Money Lien and which, when aggregated with the
principal amount of all other Purchase Money Indebtedness and
Capitalized Lease Obligations of Borrower and its Subsidiaries, does
not exceed $5,000,000 in the aggregate. For the purposes of this
definition, the principal amount of any Purchase Money Indebtedness
consisting of capitalized leases shall be computed as a Capitalized
Lease Obligation.
Person - an individual, partnership, corporation, limited
liability company, joint stock company, land trust, business trust,
unincorporated organization, or a government or agency or political
subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained
for employees of Borrower that is covered by Title IV of ERISA.
Projections - Borrower's forecasted Consolidated and
consolidating (i) balance sheets, (ii) profit and loss statements,
(iii) cash flow statements, and (iv) capitalization statements, all
prepared on a consistent basis with Borrower's historical financial
statements, together with appropriate supporting details and a
statement of underlying assumptions.
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Properly Contested - in the case of any Indebtedness of
Borrower or any of its Subsidiaries (including, but not limited to, any
Taxes) that is not paid as and when due or payable by reason of
Borrower's or any Subsidiary's bona fide dispute concerning its
liability to pay same or concerning the amount thereof, that (i) such
Indebtedness is being properly contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, (ii) Borrower
has established appropriate reserves as shall be required in conformity
with GAAP, (iii) the non-payment of such Indebtedness will not have a
Material Adverse Effect; (iv) no Lien is imposed upon Borrower's or any
Subsidiary's Property with respect to such Indebtedness unless such
Lien is at all times junior and subordinate in priority to the Liens in
favor of Lender (except only with respect to Taxes that have priority
as a matter of any state's Applicable Laws) and enforcement of such
Lien is stayed during the period prior to the final resolution or
disposition of such dispute; (iv) if the Indebtedness results in the
entry, rendition or issuance against Borrower or any of its
Subsidiaries or any of their respective assets of a judgment, writ,
order or decree, such judgment, writ, order or decree is stayed or
bonded pending a timely appeal or other judicial review; and (v) if
such contest is abandoned, settled or determined adversely to Borrower
or any of its Subsidiaries, Borrower forthwith pays such Indebtedness
and all penalties and interest in connection therewith.
Property - any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
Properties - Fresh Foods Properties, LLC, a North Carolina
limited liability company, and a wholly-owned Subsidiary of Borrower.
Purchase Money Indebtedness - means and includes (i)
Indebtedness (other than the Obligations) for the payment of all or any
part of the purchase price of any fixed assets, (ii) any Indebtedness
(other than the Obligations) incurred at the time of or within 10 days
prior to or after the acquisition of any fixed assets for the purpose
of financing all or any part of the purchase price thereof, and (iii)
any renewals, extensions or refinancings thereof, but not any increases
in the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures
Purchase Money Indebtedness, but only if such Lien shall at all times
be confined solely to the fixed assets the purchase price of which was
financed through the incurrence of the Purchase Money Indebtedness
secured by such Lien.
Regulation D - Regulation D of the Board of Governors.
Renewal Term - as defined in Section 5.1 of the Agreement.
Reportable Event - any of the events set forth in Section
4043(b) of ERISA.
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Restricted Investment - any acquisition of Property by
Borrower or any of its Subsidiaries in exchange for cash or other
Property, whether in the form of an acquisition of Securities or other
Indebtedness or obligations, or the purchase or acquisition by Borrower
or any of its Subsidiaries of any other Property, or a loan, advance,
capital contribution or subscription, except acquisitions of the
following:
(i) investments in one or more Subsidiaries
of Borrower to the extent existing on the Closing Date;
(ii) Fixed assets to be used in the business
of Borrower and its Subsidiaries so long as the acquisition
costs thereunder constitute Capital Expenditures permitted
hereunder;
(iii) Goods held for sale or lease or to be
used in the manufacture of goods or the rendition of services
by Borrower or any of its Subsidiaries in the ordinary course
of business; and
(iv) Cash Equivalents.
Revolver Facility Amount - $25,000,000.
Revolver Loan - a Loan made by Lender as provided in Section
1.1.1 of the Agreement.
Schedule of Accounts - as defined in Section 7.2.1 of the
Agreement.
Security - shall have the same meaning as in Section 2(1) of
the Securities Act of 1933, as amended.
Security Agreements - Intellectual Property - the Security
Agreements to be executed by Properties on or about the Closing Date by
which Properties shall assign to Lender, and grant to Lender a security
interest in, as security for its obligations, labilities and
indebtedness owing to Lender under the Guaranty to which it is a party,
all of Properties' right, title and interest in and to all of its
patents, trademarks, trade names, copyrights, licenses and goodwill.
Security Documents - each Guaranty Agreement, the Security
Agreements - Intellectual Property and all other instruments and
agreements now or at any time hereafter securing the whole or any part
of the Obligations.
Solvent - as to any Person, such Person (i) owns Property
whose fair saleable value is greater than the amount required to pay
all of such Person's Indebtedness (including contingent debts), (ii) is
able to pay all of its Indebtedness as such Indebtedness matures and
(iii) has capital sufficient to carry on its business and transactions
and all business and transactions in which it is about to engage.
A-18
<PAGE> 69
Statutory Reserves - on any date, the percentage (expressed as
a decimal) established by the Board of Governors which is the then
stated maximum rate for all reserves (including, but not limited to,
any emergency, supplemental or other marginal reserve requirements)
applicable to any member bank of the Federal Reserve System in respect
to Eurocurrency Liabilities (or any successor category of liabilities
under Regulation D). Such reserve percentage shall include, without
limitation, those imposed pursuant to said Regulation D. The Statutory
Reserves shall be adjusted automatically on and as of the effective
date of any change in such percentage.
Subordinated Debt - any Indebtedness of Borrower or any of its
Subsidiaries that is subordinated to the Obligations in a manner and
upon terms satisfactory to Lender.
Subsidiary - any corporation of which a Person owns, directly
or indirectly through one or more intermediaries, more than 50% of the
Voting Stock at the time of determination.
Taxes - any present or future taxes, levies, imposts, duties,
fees, assessments, deductions, withholdings or other charges of
whatever nature, including income, receipts, excise, property, sales,
use, transfer, license, payroll, withholding, social security and
franchise taxes now or hereafter imposed or levied by the United
States, or any state, local or foreign government or by any department,
agency or other political subdivision or taxing authority thereof or
therein and all interest, penalties, additions to tax and similar
liabilities with respect thereto, but excluding, in the case of Lender,
taxes imposed on or measured by the net income or overall gross
receipts of Lender.
Type - the type of Loan, which shall either be a LIBOR Rate
Loan or an Alternate Base Rate Loan.
Voting Stock - Securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors
(or Persons performing similar functions).
A-19
<PAGE> 70
ACCOUNTING TERMS - Unless otherwise specified herein, all
terms of an accounting character used in the Agreement shall be interpreted, all
accounting determinations in the Agreement shall be made, and all financial
statements required to be delivered under the Agreement shall be prepared in
accordance with GAAP, applied on a basis consistent with the most recent audited
Consolidated financial statements of Borrower and its Subsidiaries heretofore
delivered to Lender and using the same method for inventory valuation as used in
such audited financial statements, except for any change in which Borrower's
independent public accountant's concur or as required by GAAP unless (i)
Borrower shall have objected to determining such compliance on such basis at the
time of delivery of such financial statements or (ii) Lender shall so object in
writing within thirty (30) days after the delivery of such financial statements,
in either of which events such calculation shall be made on a basis consistent
with those used in the preparation of the latest financial statement as to which
such objection shall not have been made. In the event of any change in GAAP that
occurs after the date of the Agreement and that is material to Borrower, Lender
shall have the right to require either that conforming adjustments be made to
any financial covenants set forth in the Agreement, or the components thereof,
that are affected by such change or that Borrower report its financial condition
based on GAAP as in effect immediately prior to the occurrence of such change.
OTHER TERMS. All other terms contained in the Agreement shall
have, when the context so indicates, the meanings provided for by the Code to
the extent the same are used or defined therein.
CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof"
and "hereunder" and other words of similar import refer to the Agreement as a
whole and not to any particular section, paragraph or subdivision. Whenever in
the Agreement the word "including" is used, it is understood to mean "including,
without limitation". Any pronoun used shall be deemed to cover all genders. The
section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of the Agreement. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references to any of the
Loan Documents shall include any and all modifications thereto and any and all
extensions or renewals thereof. All references to any Person shall mean and
include successors and permitted assigns of such Person. All references to
"including" and "include" shall be understood to mean "including, without
limitation".
IN WITNESS WHEREOF, the parties have caused this Appendix to be duly
executed by their duly authorized officers on this ______ day of May, 2000.
FRESH FOODS, INC.
("BORROWER")
__________________________________ By:___________________________________
____________Secretary Title:_____________________________
[CORPORATE SEAL]
FLEET CAPITAL CORPORATION
("LENDER")
By:___________________________________
Title:_____________________________
A-20
<PAGE> 71
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Form of Notice of Conversion/Continuation
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Borrowing Base Certificate
Exhibit D Form of Compliance Certificate
Schedule 7.1.1 Business Locations
Schedule 8.1.1 Jurisdictions in which Borrower and each Subsidiary is
Authorized to do Business
Schedule 8.1.4 Capital Structure of Borrower
Schedule 8.1.5 Corporate Names
Schedule 8.1.13 Tax Identification Numbers of Borrower and Subsidiaries
Schedule 8.1.15 Patents, Trademarks, Copyrights and Licenses
Schedule 8.1.18 Contracts Restricting Borrower's Right to Incur Debts
Schedule 8.1.19 Litigation
Schedule 8.1.21 Capitalized and Operating Leases
Schedule 8.1.22 Pension Plans
Schedule 8.1.24 Labor Contracts
Schedule 9.2.4 Permitted Liens
<PAGE> 72
EXHIBIT A
FORM OF NOTICE OF CONVERSION/CONTINUATION
Date ________________, ____
Fleet Capital Corporation
6100 Fairview Road, Suite 200
Charlotte, North Carolina 28210
Attention: Southeast Loan Administration
Re: Loan and Security Agreement dated May _____, 2000, by and
between Fresh Foods, Inc. ("Borrower") and Fleet Capital
Corporation (as at any time amended, the "Loan Agreement")
Gentlemen:
This Notice of Conversion/Continuation is delivered to you pursuant to
Section 2.1.4(ii) of the Loan Agreement. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings assigned thereto in the
Loan Agreement. Borrower hereby gives notice of its request as follows:
Check as applicable:
[ ] A conversion of Loans from one Type to another, as follows:
(i) The requested date of the proposed conversion is
_______________, 20___ (the "Conversion Date");
(ii) The Type of Loans to be converted pursuant hereto are
presently ____________ _____________________ [select
either LIBOR Rate Loans or Alternate Base Rate Loans] in
the principal amount of $_________________ outstanding
as of the Conversion Date;
(iii) The portion of the aforesaid Loans to be converted on
the Conversion Date is $________________ (the
"Conversion Amount");
(iv) The Conversion Amount is to be converted into a
__________________ [select either a LIBOR Rate Loan or
an Alternate Base Rate Loan] (the "Converted Loan") on
the Conversion Date.
A-1
<PAGE> 73
(v) [In the event Borrower selects a LIBOR Rate Loan:]
Borrower hereby requests that the Interest Period for
such Converted Loan be for a duration of ________
[insert length of Interest Period].
[ ] A continuation of LIBOR Rate Loans for a new Interest Period, as
follows:
(i) The requested date of the proposed continuation is
_______________, 20___;
(ii) The aggregate amount of the LIBOR Rate Loans subject
to such continuation is $_______________;
(iii) The duration of the selected Interest Period for the
LIBOR Rate Loans which are the subject of such
continuation is ________________ [select duration of
applicable Interest Period].
Borrower hereby ratifies and reaffirms all of its liabilities and
obligations under the Loan Documents and certifies that no Default or Event of
Default exists on the date hereof.
Borrower has caused this Notice of Conversion/Continuation to be
executed and delivered by its duly authorized officer, this ____ day of
__________________, 20___.
FRESH FOODS, INC.
("BORROWER")
By:_____________________________________
Title:__________________________________
A-2
<PAGE> 74
EXHIBIT B
FORM OF NOTICE OF BORROWING
Date ________________, ____
Fleet Capital Corporation
6100 Fairview Road, Suite 200
Charlotte, North Carolina 28210
Attention: Southeast Loan Administration
Re: Loan and Security Agreement dated May _____, 2000, by and
between Fresh Foods, Inc. ("Borrower") and Fleet Capital
Corporation (as at any time amended, the "Loan Agreement")
Gentlemen:
This Notice of Borrowing is delivered to you pursuant to Section
3.1.1(i) of the Loan Agreement. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings assigned thereto in the Loan
Agreement. Borrower hereby requests a ____________ Loan [insert name of Loan] in
the aggregate principal amount of $______________ to be made on
________________, ____, and to consist of:
Check as applicable: [ ] Alternate Base Rate Loans in the aggregate
principal amount of $____________.
[ ] LIBOR Rate Loans in the aggregate principal
amount of $______________, with Interest
Periods as follows:
(i) As to $_____________, an Interest
Period of _______________ month(s);
(ii) As to $_____________, an Interest
Period of _______________ month(s);
(iii) As to $_____________, an Interest
Period of _______________ month(s).
Borrower hereby ratifies and reaffirms all of its liabilities and
obligations under the Loan Documents and Borrower hereby certifies that no
Default or Event of Default exists on the date hereof.
B-1
<PAGE> 75
Borrower has caused this Notice of Borrowing to be executed and
delivered by its duly authorized officer, this ____ day of ________________,
20_____.
FRESH FOODS, INC.
("BORROWER")
By:___________________________________
Title:_____________________________
B-2
<PAGE> 76
EXHIBIT C
FORM OF BORROWING BASE CERTIFICATE
See three (3) attached pages.
C-1
<PAGE> 77
EXHIBIT D
COMPLIANCE CERTIFICATE
[Letterhead of Borrower]
Date ________________, ____
Fleet Capital Corporation
6100 Fairview Road, Suite 200
Charlotte, North Carolina 28210
Attention: Southeast Loan Administration
Ladies and Gentlemen:
The undersigned, the chief financial officer of Fresh Foods,
Inc., a North Carolina corporation ("Borrower"), gives this certificate to Fleet
Capital Corporation ("Lender") in accordance with the requirements of Section
9.1.3 of that certain Loan and Security Agreement dated May _____, 2000, between
Borrower and Lender ("Loan Agreement"). Capitalized terms used in this
Certificate, unless otherwise defined herein, shall have the meanings ascribed
to them in the Loan Agreement.
1. Based upon my review of the Consolidated balance sheets and
statements of income of Borrower and its Subsidiaries for the [fiscal year]
[quarterly period] ending __________________, 20___, copies of which are
attached hereto, I hereby certify that:
(a) Consolidated Net Worth for the period is
$_______________;
(b) Consolidated EBITDA for the period was
$_______________ (calculated for quarterly period and fiscal
year only);
(c) Availability for the period is
$__________________; and
(d) Consolidated Leverage Ratio for the period is
_____ to 1 (calculated for quarterly period and fiscal year
only);.
2. No Default exists on the date hereof, other than:
__________________________________________________________________ [if none, so
state]; and
D-1
<PAGE> 78
3. Borrower is in compliance in all material respects with all
Applicable Laws, including, without limitation, the laws and regulations
promulgated by and for and applicable to the United States Department of
Agriculture.
4. No Event of Default exists on the date hereof, other than
____________________________________________________________ [if none, so
state].
Very truly yours,
---------------------------------
Chief Financial Officer
D-2
<PAGE> 79
SCHEDULE 7.1.1
BUSINESS LOCATIONS
1. Borrower currently has the following business locations, and no others:
Chief Executive Office:
9990 Princeton Road primary location
Cincinnati, Ohio 45246
Other Locations:
361 2nd Street, N.W. primary location
Hickory, North Carolina 28603
3437 East Main Street
Claremont, North Carolina 28610
Warehouser's and Bailee's Locations:
Cloverleaf Cold Storage
3110 Homeward Way
Fairfield, Ohio 45018-0550
CS Integrated LLC primary location
2750 Orbitor Drive
Brea, California 92621
CS Integrated LLC primary location
8 Lee Boulevard
Malvern, Pennsylvania 19355
Costco Wholesale Consignment Center
7635 Cent. Industrial Drive, #18
Riviera Beach, Florida 33404
US Cold Storage/Dallas Sams
3300 East Park Row
Arlington, Texas 76010
Trenton Cold Storage Limited primary location
Post Office Box 100
Trenton, Ontario, Canada K8V 5R1
<PAGE> 80
Polar Cold Storage
3776 Taylorsville Highway
Statesville, North Carolina 28625
Columbia Farms/Price Costco
16 Sutton Road
Webster, Massachusetts 01570
Burris Maryland/Price Costco
Route 3, 313 North Federalsburg Road
Federalsburg, Maryland 21632
C&S Wholesale Grocers/BJ's
Old Ferry Road
Brattleboro, Vermont 05301
Colorado Boxed Beef/Cost-U-Less
501 NE 183rd Street
Miami, Florida 33269
Interstate Distribution
110 Distribution Drive
Hamilton, Ohio 45014
PFS West Sacramento
Post Office Box 1325
West Sacramento, California 95691
Walmart/Americold Logistics primary location
1651 South Airport Road
West Memphis, Arkansas 72301
Cincinnati Freezer
2881 East Sharon Road
Cincinnati, Ohio 45241
Americold Charlotte primary location
1000 Exchange Street
Charlotte, North Carolina 28208
Merchants
240 Shorland Drive
Walton, Kentucky 41094
<PAGE> 81
Burris Refrigerated Services
600 Centerpoint Boulevard
New Castle, Delaware 19720
Hudson Company
1460 Sibley Memo Highway
Mendota Heights, Minnesota 55120
Oregon Cold Storage
2550 23rd Street
Forest Grove, Oregon 97015
Americold Logistics
3801 East Princess Anne Road
Norfolk, Virginia 23502-15392.
United Refrigerated Services
RD#2 Orchard Lane
Leesport, Pennsylvania 19533
Henderson Cold Storage
830 Horizon Drive
Henderson, Nevada 89014
Rochelle Cold Storage
(Wiscold Inc.)
600 Wiscold Drive
Rochelle, Illinois 61068
2. Borrower maintains its books and records relating to Accounts and
General Intangibles at:
9990 Princeton Road
Cincinnati, Ohio 45246
3. Borrower has had no office, place of business or agent for process
located in any county other than as set forth above, except:
361 2nd Street N.W.
Hickory, North Carolina 28601
<PAGE> 82
4. Each Subsidiary currently has the following business locations, and no
others:
Chief Executive Office:
9990 Princeton Road
Cincinnati, Ohio 45246
Other Locations:
361 2nd Street N.W.
Hickory, North Carolina 28601
5. Each Subsidiary maintains its books and records relating to Accounts
and General Intangibles at:
9990 Princeton Road
Cincinnati, Ohio 45246
6. Each Subsidiary has had no office, place of business or agent for
process located in any county other than as set forth above, except:
361 2nd Street N.W.
Hickory, North Carolina 28601
7. The following bailees, warehouseman, similar parties and consignees
hold inventory of Borrower or any of its Subsidiaries:
See list of locations above.
<PAGE> 83
SCHEDULE 8.1.1
JURISDICTIONS IN WHICH BORROWER
AND ITS SUBSIDIARIES
ARE AUTHORIZED TO DO BUSINESS
Name of Entity Jurisdictions
-------------- -------------
Borrower North Carolina
Ohio
Properties North Carolina
<PAGE> 84
SCHEDULE 8.1.4
CAPITAL STRUCTURE
1. The classes and number of authorized shares of Borrower and each
Subsidiary and the record owner of such shares are as follows:
Borrower:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
Number of Shares Number of Shares
Class of Stock Issued and Outstanding Record Owners Authorized but Unissued
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common 5,871,000 public 94,129,000
---------------------------------------------------------------------------------------------
Preferred None 2,500,000
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
</TABLE>
Subsidiaries: Borrower owns one hundred percent (100%) of the membership
interests of Properties.
2. The number, nature and holder of all other outstanding Securities of
Borrower and each Subsidiary are as follows:
See attached list of holders of $115,000,000 10% Senior Notes due
2006.
3. The correct name and jurisdiction of incorporation of each Subsidiary
of Borrower and the percentage of its issued and outstanding membership
interests owned by Borrower are as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Percentage of Membership
Name Jurisdiction of Incorporation Interests Owned by Borrower
------------------------------------------------------------------------------------------------
<S> <C> <C>
Fresh Foods Properties, LLC North Carolina 100%
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 85
4. The name of each of Borrower's corporate or joint venture Affiliates
and the nature of the affiliation are as follows:
See attached Schedule 13D filed with the Securities and Exchange
Commission on February 18, 2000 (attached without exhibits).
<PAGE> 86
SCHEDULE 8.1.5
CORPORATE NAMES
1. Borrower's correct corporate name, as registered with the Secretary of
State of the State of North Carolina is:
Fresh Foods, Inc.
2. In the conduct of its business, Borrower has used the following names:
Fresh Foods, Inc.
WSMP, Inc.
Western Steer Mom 'n' Pops, Inc.
Mom 'n' Pops Ham House, Inc.
3. Each Subsidiaries' correct limited liability company or corporate name,
as registered with the Secretary of State of the State of its
incorporation, is:
Fresh Foods Properties, LLC
4. In the conduct of its business, each Subsidiary has used the following
names:
Fresh Foods Properties, LLC
<PAGE> 87
SCHEDULE 8.1.13
TAX IDENTIFICATION NUMBERS OF BORROWER AND ITS SUBSIDIARIES
Entity Number
------ ------
Borrower 56-0945643
Properties 56-2081730
<PAGE> 88
SCHEDULE 8.1.15
PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
1. Borrower's and its Subsidiaries' patents: none
2. Borrower's and its Subsidiaries' trademarks:
Borrower:
The federally registered United States trademarks and service marks
owned by Borrower are indicated in the following table.
<TABLE>
<CAPTION>
--------------------------------------- -------------------- ---------------------------- ---------------------------
MARK SERIAL REGISTRATION REGISTRATION
NUMBER NUMBER DATE
--------------------------------------- -------------------- ---------------------------- ---------------------------
<S> <C> <C> <C>
BREAKFAST ON THE GO! And Design 74/695,460 2,005,805 10/08/1996
--------------------------------------- -------------------- ---------------------------- ---------------------------
CAFE PIERRE 74/364,057 1,876,055 01/24/1995
--------------------------------------- -------------------- ---------------------------- ---------------------------
COMMODITY MAGIC 73/496,943 1,331,238 04/16/1985
--------------------------------------- -------------------- ---------------------------- ---------------------------
DINE 'N' WITH 74/507,554 1,912,699 08/15/1995
--------------------------------------- -------------------- ---------------------------- ---------------------------
FASTBITES 75/513,223 2,261,726 07/13/1999
--------------------------------------- -------------------- ---------------------------- ---------------------------
FAST CHOICE 75/076,168 2,052,455 04/15/1997
--------------------------------------- -------------------- ---------------------------- ---------------------------
FAST CHOICE 75/076,172 2,152,895 04/21/1998
--------------------------------------- -------------------- ---------------------------- ---------------------------
FRENCH TOAST BOAT 73/766,865 1,554,935 09/05/1989
--------------------------------------- -------------------- ---------------------------- ---------------------------
FRENCH TOAST BOAT and Design 73/774,889 1,626,155 12/04/1990
--------------------------------------- -------------------- ---------------------------- ---------------------------
GLOBAL GRILL 75/208,171 2,112,383 11/11/1997
--------------------------------------- -------------------- ---------------------------- ---------------------------
GOLDDIGGER 73/173,253 1,121,101 06/26/1979
--------------------------------------- -------------------- ---------------------------- ---------------------------
GOLDDIGGER BEEF NUGGET 73/711,223 1,521,147 01/17/1989
--------------------------------------- -------------------- ---------------------------- ---------------------------
HAM N GO 75/641,478 2,345,081 04/25/2000
--------------------------------------- -------------------- ---------------------------- ---------------------------
H.E.L.P.S. HEALTHCARE ENTREE LOW PREP 75/392,520 2,273,614 08/31/1999
SOLUTIONS
--------------------------------------- -------------------- ---------------------------- ---------------------------
HOT DIGGITY SUBS 73/464,251 1,388,435 04/01/1986
--------------------------------------- -------------------- ---------------------------- ---------------------------
HOT DIGGITY SUBS and Design 73/464,161 1,387,648 03/25/1986
--------------------------------------- -------------------- ---------------------------- ---------------------------
LEAN MAGIC 74/140,493 1,677,773 03/03/1992
--------------------------------------- -------------------- ---------------------------- ---------------------------
LIKE MOM'S and Design 73/720,859 1,517,327 12/20/1988
--------------------------------------- -------------------- ---------------------------- ---------------------------
</TABLE>
<PAGE> 89
<TABLE>
<CAPTION>
--------------------------------------- -------------------- ---------------------------- ---------------------------
MARK SERIAL REGISTRATION REGISTRATION
NUMBER NUMBER DATE
--------------------------------------- -------------------- ---------------------------- ---------------------------
<S> <C> <C> <C>
LINK-N-DOG 74/507,074 1,917,400 09/05/1995
--------------------------------------- -------------------- ---------------------------- ---------------------------
MICRO-WICHES 73/703,228 1,505,035 09/20/1988
--------------------------------------- -------------------- ---------------------------- ---------------------------
PIERRE CLASSICS 75/076,169 2,052,456 04/15/1997
--------------------------------------- -------------------- ---------------------------- ---------------------------
PIERRE MAIN STREET DINER 74/613,401 2,016,292 11/12/1996
--------------------------------------- -------------------- ---------------------------- ---------------------------
PIZZA PARLOR SANDWICH 73/366,680 1,270,140 03/13/1984
--------------------------------------- -------------------- ---------------------------- ---------------------------
PIZZA PARLOR SANDWICH 74/058,325 1,642,199 04/23/1991
--------------------------------------- -------------------- ---------------------------- ---------------------------
PIZZA PARLOR SUB 74/521,385 1,926,623 10/10/1995
--------------------------------------- -------------------- ---------------------------- ---------------------------
PROUD TO SERVE 75/597,580 2,330,338 03/14/2000
--------------------------------------- -------------------- ---------------------------- ---------------------------
PROUD TO SERVE 75/597,581 2,327,379 03/07/2000
--------------------------------------- -------------------- ---------------------------- ---------------------------
PROUD TO SERVE AMERICA'S HEROS 75/591,729 2,327,377 03/07/2000
--------------------------------------- -------------------- ---------------------------- ---------------------------
QUICK-WICHES 74/334,074 1,784,320 07/27/1993
--------------------------------------- -------------------- ---------------------------- ---------------------------
RIB-B-Q 73/373,463 1,257,730 11/15/1983
--------------------------------------- -------------------- ---------------------------- ---------------------------
RIB-B-Q 73/408,608 1,270,954 03/20/1984
--------------------------------------- -------------------- ---------------------------- ---------------------------
RIB-B-Q 73/822,522 1,598,832 05/29/1990
--------------------------------------- -------------------- ---------------------------- ---------------------------
RIB-B-Q and Design 73/400,038 1,276,424 05/01/1984
--------------------------------------- -------------------- ---------------------------- ---------------------------
RIB-B-Q and Design 73/408,773 1,275,419 04/24/1984
--------------------------------------- -------------------- ---------------------------- ---------------------------
RIB-B-Q and Design 75/252,821 2,132,710 01/27/1998
--------------------------------------- -------------------- ---------------------------- ---------------------------
RIB NIBBLERS 75/641,477 2,319,248 02/15/2000
--------------------------------------- -------------------- ---------------------------- ---------------------------
SAUS-A-RAGE 74/507,127 1,928,706 10/17/1995
--------------------------------------- -------------------- ---------------------------- ---------------------------
SELECT RECIPE 75/610,898 2,322,506 02/22/2000
--------------------------------------- -------------------- ---------------------------- ---------------------------
SHOESTRINGS 75/641,476 2,302,272 12/21/1999
--------------------------------------- -------------------- ---------------------------- ---------------------------
TWO-FERS 73/690,934 1,505,013 09/20/1988
--------------------------------------- -------------------- ---------------------------- ---------------------------
TWO-FERS 73/822,571 1,599,764 06/05/1990
--------------------------------------- -------------------- ---------------------------- ---------------------------
WONDERBITES 74/291,428 1,781,595 07/13/1993
--------------------------------------- -------------------- ---------------------------- ---------------------------
</TABLE>
<PAGE> 90
The trademarks and service marks owned by Borrower., for which an
application for United States federal registration is currently
pending, are indicated in the following table.
--------------------------------------------------------------------------------
MARK SERIAL FILING
NUMBER DATE
--------------------------------------------------------------------------------
CAFETERIA ADVENTURES 75/816,574 10/06/1999
--------------------------------------------------------------------------------
HEARTHSIDE SELECT 75/676,610 04/07/1999
--------------------------------------------------------------------------------
MAIN STREET DINER 75/928,450 02/25/2000
--------------------------------------------------------------------------------
PIERRE SELECT 75/617,210 01/08/1999
--------------------------------------------------------------------------------
PIERRE SELECT 75/617,209 01/08/1999
--------------------------------------------------------------------------------
ROCKIN' BURGER 75/641,475 02/18/1999
--------------------------------------------------------------------------------
<PAGE> 91
The foreign trademarks and service marks owned by Borrower are
indicated in the following table.
----------------------- ----------- -------------- -------------- -------------
MARK COUNTRY SERIAL REGISTRATION REGISTRATION
NUMBER NUMBER DATE
----------------------- ----------- -------------- -------------- -------------
PIERRE Mexico
----------------------- ----------- -------------- -------------- -------------
PIERRE and Design Mexico
----------------------- ----------- -------------- -------------- -------------
RIB-B-Q Canada 049,496,500 TMA 305,055 07/19/1985
----------------------- ----------- -------------- -------------- -------------
RIB-B-Q and Design Canada 049,496,600 TMA 305,056 07/19/1985
----------------------- ----------- -------------- -------------- -------------
RIB-B-Q Japan 34,094/89
----------------------- ----------- -------------- -------------- -------------
RIB-B-Q and Design Japan 34,095/89
----------------------- ----------- -------------- -------------- -------------
RIB-B-Q Mexico
----------------------- ----------- -------------- -------------- -------------
RIB-B-Q and Design Mexico
----------------------- ----------- -------------- -------------- -------------
The state trademark owned by Borrower is indicated in the following
table.
--------------------- ------- --------------- ---------------
MARK STATE REGISTRATION REGISTRATION
NUMBER DATE
--------------------- ------- --------------- ---------------
PIERRE and Design Ohio TM 7315 05/07/1975
--------------------- ------- --------------- ---------------
Borrower may have common law rights in additional trademarks or service
marks.
Record title to the foregoing marks is held by Pierre Foods, LLC,
although ownership to such marks was transferred to Fresh Foods, Inc.
as a result of the merger that occurred on December 27, 1999.
Documentation of the merger of Pierre Foods, LLC into Fresh Foods, Inc.
was submitted to the Assignment Branch of the United States Patent and
Trademark Office for recordation on March 6, 2000.
<PAGE> 92
Properties:
The federally registered United States trademarks and service marks
owned by Properties are indicated in the following table.
---------------------------- -------------- ------------------- ----------------
MARK SERIAL REGISTRATION REGISTRATION
NUMBER NUMBER DATE
---------------------------- -------------- ------------------- ----------------
FLUFFY and Design 73/411,034 1,272,996 04/03/1984
---------------------------- -------------- ------------------- ----------------
MOM 'N' POP'S 73/102,603 1,065,988 05/17/1977
---------------------------- -------------- ------------------- ----------------
MOM 'N' POP'S 73/102,602 1,071,065 08/09/1977
---------------------------- -------------- ------------------- ----------------
MOM 'N' POP'S 73/455,993 1,341,236 06/11/1985
---------------------------- -------------- ------------------- ----------------
MOM 'N' POP'S and Design 73/457,697 1,335,749 05/14/1985
---------------------------- -------------- ------------------- ----------------
MOM 'N' POP'S and Design 73/457,698 1,341,238 06/11/1985
---------------------------- -------------- ------------------- ----------------
MOM 'N' POP'S and Design 73/121,892 1,095,364 07/04/1978
---------------------------- -------------- ------------------- ----------------
MOM'S KITCHEN 73/209,212 1,146,516 01/27/1981
---------------------------- -------------- ------------------- ----------------
The state service marks owned by Properties are indicated in the
following table.
<TABLE>
<CAPTION>
------------------------------ ------------------ ------------------- --------------------
MARK STATE REGISTRATION REGISTRATION
NUMBER DATE
------------------------------ ------------------ ------------------- --------------------
<S> <C> <C> <C>
MOM 'N' POP'S BUFFET & BAKERY Florida T931,247 10/08/1993
------------------------------ ------------------ ------------------- --------------------
MOM 'N' POP'S BUFFET & BAKERY Georgia S13,027 09/24/1993
------------------------------ ------------------ ------------------- --------------------
MOM 'N' POP'S BUFFET & BAKERY South Carolina 930,902 09/02/1993
------------------------------ ------------------ ------------------- --------------------
</TABLE>
Properties may have common law rights in additional trademarks or
service marks.
<PAGE> 93
3. Borrower's and its Subsidiaries' copyrights:
Borrower:
The registered copyrights owned by Borrower are indicated in the
following table.
<TABLE>
<CAPTION>
------------------------------------------------------------ ---------------------------- ---------------------------
TITLE OF WORK REGISTRATION NUMBER REGISTRATION DATE
------------------------------------------------------------ ---------------------------- ---------------------------
<S> <C> <C>
Barnyard Basics of Good Nutrition For TX3291538 04/02/1992
Grades 1 & 2: Educator's Guide
------------------------------------------------------------ ---------------------------- ---------------------------
Barnyard Basics of Good Nutrition For TX3380555 08/07/1992
Grades 1 & 2: Educator's Guide
------------------------------------------------------------ ---------------------------- ---------------------------
Barnyard Basics of Good Nutrition Punch-Out Toys VA524973 08/07/1992
------------------------------------------------------------ ---------------------------- ---------------------------
Barnyard Basics of Good Nutrition Questions and Answers TX3390603 08/07/1992
------------------------------------------------------------ ---------------------------- ---------------------------
Barnyard Scene Bulletin Board Display: Barnyard Basics of VA519989 08/07/1992
Good Nutrition
------------------------------------------------------------ ---------------------------- ---------------------------
Today's Nutritious Lunch: It's Barnyard Bonus Day! VA519990 08/07/1992
------------------------------------------------------------ ---------------------------- ---------------------------
------------------------------------------------------------ ---------------------------- ---------------------------
Cafeteria Adventures Hamburger Man VA528348 10/08/1992
------------------------------------------------------------ ---------------------------- ---------------------------
Cafeteria Adventures Radical Chicken VA528350 10/08/1992
------------------------------------------------------------ ---------------------------- ---------------------------
Cafeteria Adventures Radical Promotion Program TX3421699 10/08/1992
------------------------------------------------------------ ---------------------------- ---------------------------
Cafeteria Adventures Rock 'n Roll Promotion Program TX3421700 10/08/1992
------------------------------------------------------------ ---------------------------- ---------------------------
Cafeteria Adventures Stars and Stripes General VA528349 10/08/1992
------------------------------------------------------------ ---------------------------- ---------------------------
Cafeteria Adventures Stars and Stripes Promotion Program VA528348 10/08/1992
------------------------------------------------------------ ---------------------------- ---------------------------
Cafeteria Adventures Tastes of the World Logo VA613418 12/16/1993
------------------------------------------------------------ ---------------------------- ---------------------------
Tastes of the World Promotion Program: Manager's Kit TX3738877 12/27/1993
------------------------------------------------------------ ---------------------------- ---------------------------
</TABLE>
Record title to the foregoing registered copyrights is held by Pierre
Foods, LLC, although ownership to such marks was transferred to Fresh
Foods, Inc. as a result of the merger that occurred on December 27,
1999.
Subsidiaries: None
<PAGE> 94
4. Borrower's and its Subsidiaries' licenses (other than routine business
licenses, authorizing them to transact business in local
jurisdictions):
Properties has licensed Mom 'n' Pop's Country Ham, LLC to use two of
the registered trademarks owned by Properties in connection with the
sale of cured ham, sliced ham, and frozen cured ham. This licensing
arrangement is documented by a Trademark License Agreement dated as of
August 6, 1999.
<PAGE> 95
SCHEDULE 8.1.18
CONTRACTS RESTRICTING BORROWER'S RIGHT TO INCUR DEBTS
1. Indenture dated June 9, 1998 between Fresh Foods, Inc. and State Street Bank
and Trust Company securing $115,000,00 10% Senior Notes due June 1, 2006 limits
the incurring of Indebtedness as follows:
Fresh Foods, Inc. (the "Company") may not incur Indebtedness other than
Permitted Indebtedness, with exception for certain incurrences which do
not violate certain consolidated coverage ratios. "Permitted
Indebtedness" is defined in the Indenture on the attached pages 12 and
13 thereof.
<PAGE> 96
SCHEDULE 8.1.19
LITIGATION
1. Actions, suits, proceedings and investigations pending on the date of
the Agreement against Borrower or any Subsidiary: None
2. The only actions, suits, proceedings or investigations threatened on
the date of the Agreement of which Borrower or any Subsidiary is aware
are as follows: None
<PAGE> 97
SCHEDULE 8.1.21
CAPITALIZED AND OPERATING LEASES
1. Borrower and its Subsidiaries have the following capitalized leases:
<TABLE>
<CAPTION>
------------------------------ ---------------------------- --------------------------- ----------------------------
Lessee Lessor Term of Lease Property Covered
------------------------------ ---------------------------- --------------------------- ----------------------------
<S> <C> <C> <C>
Fresh Foods, Inc. Siemens Credit Corp I Expires 12/2000 Telephone equipment
------------------------------ ---------------------------- --------------------------- ----------------------------
Fresh Foods, Inc. Siemens Credit Corp II Expires 12/2000 Telephone upgrade
------------------------------ ---------------------------- --------------------------- ----------------------------
Fresh Foods, Inc. Textron I Expires 2/2004 Bakery equipment
------------------------------ ---------------------------- --------------------------- ----------------------------
Fresh Foods, Inc. Textron II Expires 5/2004 Bakery equipment
------------------------------ ---------------------------- --------------------------- ----------------------------
Fresh Foods, Inc. Textron III Expires 12/2000 Bakery equipment
------------------------------ ---------------------------- --------------------------- ----------------------------
Fresh Foods, Inc. Amplicon II Expires 6/2001 Bakery equipment
------------------------------ ---------------------------- --------------------------- ----------------------------
</TABLE>
2. Borrower and its Subsidiaries have the following operating leases:
<TABLE>
<CAPTION>
------------------------------ ---------------------------- --------------------------- ----------------------------
Lessee Lessor Term of Lease Property Covered
------------------------------ ---------------------------- --------------------------- ----------------------------
<S> <C> <C> <C>
------------------------------ ---------------------------- --------------------------- ----------------------------
------------------------------ ---------------------------- --------------------------- ----------------------------
------------------------------ ---------------------------- --------------------------- ----------------------------
</TABLE>
<PAGE> 98
SCHEDULE 8.1.22
PENSION PLANS
Borrower and its Subsidiaries have the following Plans:
Fresh Foods, Inc. Flexible Benefits Plan
Fresh Foods, Inc. Employee Health Plan (including health, life, and dental)
Fresh Foods Employee Stock Purchase Plan
Fresh Foods 401(k) Profit Sharing Plan
Pierre Foods Life Insurance AD&D Plan
Pierre Foods Short-Term Disability Plan
Pierre Foods Long-Term Disability Plan
Pierre Foods Business Travel Insurance Plan
Pierre Foods Dental Plan
Pierre Foods Health Plan
Fresh Foods Long Term Disability Plan (Claremont and Hickory only)
Pierre Fodos Cafeteria 125 Plan (Cincinnati only)
<PAGE> 99
SCHEDULE 8.1.24
COLLECTIVE BARGAINING AGREEMENTS; LABOR CONTROVERSIES
1. Borrower and its Subsidiaries are parties to the following collective
bargaining agreements: None
2. Material grievances, disputes of controversies with employees are as
follows: None
3. Threatened strikes, work stoppages and asserted pending demands for
collective bargaining are as follows: None
<PAGE> 100
SCHEDULE 9.2.4
PERMITTED LIENS
<TABLE>
<CAPTION>
Secured Party Filing Location File Number Property Encumbered
------------- --------------- ---------- -------------------
<S> <C> <C> <C>
Siemens Credit Secretary of State 19991073 Specific Equipment
Corporation of North Carolina (telephone)
Information Leasing Secretary of State 199946239 Specific Equipment
Corporation of North Carolina
Siemens Credit Register of Deeds 990081 Specific Equipment
Corporation of Catawba Co., NC (telephone)
Information Leasing Register of Deeds 991259 Specific Equipment
Corporation of North Carolina
Crown Credit Company Secretary of State AP0098902 Specific Equipment
of Ohio (batteries, chargers, etc.)
Crown Credit Company Secretary of State AP0121466 Specific Equipment
of Ohio (lift truck)
Crown Credit Company Secretary of State AP0146453 Specific Equipment
of Ohio (lift truck)
Crown Credit Company Secretary of State AP0176786 Specific Equipment
of Ohio (lift truck)
Crown Credit Company County Recorder of 9802006421 Specific Equipment
Butler Co., Ohio (batteries, chargers, etc.)
Crown Credit Company County Recorder of 9902000751 Specific Equipment
Butler Co., Ohio (lift truck)
</TABLE>
<PAGE> 101
<TABLE>
<CAPTION>
Secured Party Filing Location File Number Property Encumbered
------------- --------------- ---------- -------------------
<S> <C> <C> <C>
Crown Credit Company County Recorder of 9902002373 Specific Equipment
Butler Co., Ohio (lift truck)
Crown Credit Company County Recorder of 9902004541 Specific Equipment
Butler Co., Ohio (lift truck)
</TABLE>
<PAGE> 102
-----------------------------------------
FRESH FOODS, INC.
-----------------------------------------
==========================================
LOAN AND SECURITY AGREEMENT
Date: May _____, 2000
$25,000,000
==========================================
------------------------------------------
FLEET CAPITAL CORPORATION
------------------------------------------
<PAGE> 103
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
SECTION 1. CREDIT FACILITY...........................................................................1
1.1 Revolver Loans..................................................................................1
1.2 Letters of Credit; Letter of Credit Guaranties..................................................1
1.3 Use of Proceeds of Loans........................................................................3
SECTION 2. INTEREST, FEES AND CHARGES................................................................3
2.1 Interest........................................................................................3
2.2 Fees............................................................................................5
2.3 Computation of Interest and Fees................................................................6
2.4 Reimbursement of Expenses.......................................................................6
2.5 Bank Charges....................................................................................7
2.6 Illegality......................................................................................7
2.7 Increased Costs.................................................................................8
2.8 Capital Adequacy................................................................................9
2.9 Funding Losses..................................................................................9
2.10 Maximum Interest...............................................................................10
SECTION 3. LOAN ADMINISTRATION......................................................................11
3.1 Manner of Borrowing Revolver Loans and Disbursements...........................................11
3.2 Special Provisions Governing LIBOR Rate Loans..................................................12
SECTION 4. PAYMENTS.................................................................................13
4.1 General Payment Provisions.....................................................................13
4.2 Payment of Principal of Revolver Loans.........................................................13
4.3 Payment of Interest............................................................................14
4.4 Payment of Other Obligations...................................................................14
4.5 Application of Payments and Collections........................................................14
4.6 Marshalling; Payments Set Aside................................................................15
4.7 Loan Account...................................................................................15
4.8 Statements of Account..........................................................................15
SECTION 5. TERM AND TERMINATION OF AGREEMENT........................................................15
5.1 Term of Agreement..............................................................................15
5.2 Termination....................................................................................16
SECTION 6. SECURITY INTERESTS.......................................................................17
6.1 Security Interest in Collateral................................................................17
6.2 Other Collateral...............................................................................18
6.3 Lien Perfection; Further Assurances............................................................18
</TABLE>
i
<PAGE> 104
<TABLE>
<S> <C> <C> <C>
SECTION 7. COLLATERAL ADMINISTRATION................................................................18
7.1 General Provisions.............................................................................18
7.2 Administration of Accounts.....................................................................20
7.3 Administration of Inventory....................................................................21
7.4 Payment of Charges.............................................................................22
SECTION 8. REPRESENTATIONS AND WARRANTIES...........................................................22
8.1 General Representations and Warranties.........................................................22
8.2 Continuous Nature of Representations and Warranties............................................28
8.3 Survival of Representations and Warranties.....................................................28
SECTION 9. COVENANTS AND CONTINUING AGREEMENTS......................................................28
9.1 Affirmative Covenants..........................................................................28
9.2. Negative Covenants.............................................................................31
9.3 Specific Financial Covenants...................................................................35
SECTION 10. CONDITIONS PRECEDENT.....................................................................36
10.1. Conditions Precedent to Initial Revolver Loan on Closing Date..................................36
10.2 Conditions Precedent to All Loans and Letters of Credit and Letter of Credit Guaranties........39
10.3 Waiver of Conditions Precedent.................................................................39
SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT........................................40
11.1 Events of Default..............................................................................40
11.2 Acceleration of the Obligations................................................................42
11.3 Other Remedies.................................................................................42
11.4 Remedies Cumulative; No Waiver.................................................................43
SECTION 12. MISCELLANEOUS............................................................................44
12.1 Power of Attorney..............................................................................44
12.2 Indemnity......................................................................................45
12.3 Survival of Indemnities........................................................................45
12.4 Modification of Agreement; Sale of Interest....................................................45
12.5 Severability...................................................................................46
12.6 Successors and Assigns.........................................................................46
12.7 Cumulative Effect; Conflict of Terms...........................................................46
12.8 Execution in Counterparts......................................................................46
12.9 Notice.........................................................................................46
12.10 Lender's Consent...............................................................................47
12.11 Credit Inquiries...............................................................................47
12.12 Time of Essence................................................................................47
12.13 Entire Agreement...............................................................................47
12.14 Interpretation.................................................................................48
12.15 GOVERNING LAW; CONSENT TO FORUM................................................................48
12.16 WAIVERS BY BORROWER............................................................................49
</TABLE>
ii
