EXHIBIT 4.1
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "Agreement")
is made as of the 15th day of August, 2001, by and between AMERICAN NATIONAL
BANK AND TRUST COMPANY OF CHICAGO ("Lender") and VITA FOOD PRODUCTS, INC., a
Nevada corporation ("Vita") and VIRGINIA HONEY COMPANY, INC., a Virginia
corporation ("Virginia Honey") (Vita and Virginia Honey are collectively
hereinafter referred to as the "Borrowers" and each individually a "Borrower").
W I T N E S S E T H:
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WHEREAS, Vita Food Products, Inc. and Lender entered into that certain
Loan and Security Agreement dated as of March 20, 1995, as thereafter amended
from time to time (collectively, the "Existing Loan Agreement"); and
WHEREAS, Vita, is, or will be, the sole shareholder of Virginia Honey
and Vita will be providing extension financial management services to Virginia
Honey, and has determined that it is in the best interests of both Borrowers to
amend and restate the Existing Loan Agreement and enter in to a single loan
agreement with Lender;
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and of any loans or extension of credit heretofore, now or hereafter
made to or for the benefit of Borrowers by Lender, the parties hereto hereby
agree as follows:
1. GENERAL DEFINITIONS
When used herein, the following terms shall have the following meanings:
1.1 "Accounts" shall mean accounts, contract rights, chattel paper,
instruments and documents, whether now owned or hereafter acquired by Borrowers.
1.2 "Account Debtor" shall mean any Person who is or who may become
obligated to either Borrower under, with respect to, or on account of an
Account.
1.3 "Accounts Report" shall mean a report delivered to Lender by
Borrowers, as required by Section 6.2 of this Agreement, consisting of an aged
trial balance of all of Borrowers' Accounts existing as of the date of such
Accounts Report, specifying for each Account Debtor obligated on the Accounts,
such Account Debtor's name and outstanding balance and the aging of such
outstanding balance.
1.4 "Adjusted EBITDA" means, with respect to the Borrowers for any
period, the consolidated net income (or loss) of the Borrowers on a consolidated
basis for such period, excluding (a) any gains from Asset Sales, (b) any
extraordinary gains and (c) any gains from discontinued operations, plus, to the
extent deducted in determining such consolidated net income, (i) interest
expense (including but not limited to imputed interest on capitalized leases),
(ii) income tax expense, (iii) depreciation and (iv) amortization for such
period, less all internally funded Capital Expenditures.
1.5 "Affiliates" shall mean (a) any and all Persons which, directly or
indirectly control, are controlled by or are under common control with such
Person, and (b) any officer or director of such Person. For the purpose of this
definition, "control" means the possession, directly or indirectly, of the power
to direct or cause the direction of management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
1.6 "Ancillary Agreements" shall mean the Notes, all Security Documents
and all agreements, instruments and documents, including without limitation,
notes, guaranties, mortgages, deeds of trusts, chattel mortgages, pledges,
powers of attorney, consents, assignments, contracts, notices, security
agreements, leases, financing statements, subordination agreements, trust
account agreements, dominion of funds agreements and all other written matter
whether heretofore, now, or hereafter executed by or on behalf of either
Borrower or any other Person and/or delivered to Lender or any Participant with
respect to this Agreement.
1.7 "Applicable Margin" means: (a) with respect to Prime Rate Loans and
with respect to LIBOR Rate Loans, respectively the applicable LIBOR margin,
Prime Rate margin, in effect from time to time determined based upon the
applicable ratio of Funded Debt to Adjusted EBITDA then in effect pursuant to
the appropriate column under the table below:
Revolving Revolving Term
Funded Debt to LIBOR Prime LIBOR Term Prime
Adjusted EBITDA Margin Rate Margin Margin Rate Margin
---------------- --------- ----------- ------ ------------
4.50 to 1.0 or greater 3.45% .70% 3.70% .95%
(LEVEL V)
3.50 to 1.0 or greater,
but less than
4.50 to 1.0 2.95% .45% 3.20% .45%
(LEVEL IV)
2.75 to 1.0 or greater,
but less than 3.50 to 1.0 2.70% -.05% 2.95% -.05%
(LEVEL III)
2.25 to 1.0 or greater,
but less than 2.75 to 1.0 2.25% -.25% 2.50% -.25%
(LEVEL II)
less than 2.25 to 1.0 1.75% -.50% 2.00% -.50%
(LEVEL I)
The Applicable Margin shall be adjusted from time to time upon delivery to the
Lender of the annual and semiannual financial statements required to be
delivered pursuant to Sections 10.1(D) (i) and (ii) hereof accompanied by a
written calculation of the Funded Debt to Adjusted EBITDA Ratio certified by a
chief financial officer as of the end of the fiscal period for which such
financial statements are delivered. If such calculation indicates that the
Applicable Margin shall increase or decrease, then one (1) Business Day after
the date of delivery of such financial statements and written calculation the
Applicable Margin shall be adjusted in accordance therewith; provided, however,
that if Borrowers shall fail to deliver any such financial statements for any
such fiscal period by the date required pursuant to Sections 10.1(D) (i) and
(ii), then, effective as of the first Business Day following the end of the
fiscal period for which such
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financial statements were to have been delivered, and continuing through the
date which is one (1) Business Days after the date (if ever) when such financial
statements and such written calculation are finally delivered, the Applicable
Margin shall be conclusively presumed to equal the highest Applicable Margin
specified in the pricing table set forth above. Notwithstanding anything to the
contrary above, Subject to Sections 2.5 and 2.10 below, until at least April 1,
2002, the Applicable Margin shall be fixed at the Level III margins.
1.8 "Asset Sale" means the sale, lease, assignment or other transfer for
value by either Borrower to any Person (other than the other Borrower) of any
asset or right of such Borrower other than (a) the disposition of any asset
which is to be replaced, and is in fact replaced, within 30 days with another
asset performing the same or a similar function, and (b) the sale of inventory
in the ordinary course of business and (c) other dispositions in any fiscal year
the proceeds of which do not in the aggregate exceed $10,000.
1.9 "Blocked Account" shall have the meaning ascribed to it in Section
4.4(A).
1.10 "Borrowing Base Certificate" shall mean a borrowing base
certificate in the form attached hereto as Exhibit A, executed by an authorized
officer of Borrowers.
1.11 "Business Day" shall mean any day on which the Lender is open for
business.
1.12 "Capital Expenditures" shall mean, for any period, the aggregate of
all expenditures made or incurred by Borrowers during such period that are
required by generally acceptable accounting principles to be capitalized and
reflected in the property and equipment or similar fixed asset accounts on the
balance sheet of Borrowers.
1.13 "Charges" shall mean all national, federal, state, county, city,
municipal, and/or other governmental (including, without limitation, the Pension
Benefit Guaranty Corporation) taxes, levies, assessments, charges, liens, claims
or encumbrances upon and/or relating to (i) the Collateral, (ii) the
Liabilities, (iii) Borrowers' employees, payroll, income and/or gross receipts,
(iv) Borrowers' ownership and/or use of any of its assets, or (v) any other
aspect of Borrowers' business.
1.14 "Collateral" shall mean all of the property and interests in
property described in Section 5.1 of this Agreement and all other property and
interests in property which shall, from time to time, secure the Liabilities.
1.15 "Contaminant" shall mean any waste, pollutant (as that term is
defined in 42 U.S.C. 960l(33) or in 33 U.S.C. l362(l3)), hazardous substance (as
that term is defined by 29 CFR Section l9l0.l200(c)), toxic substance, hazardous
waste (as that term is defined in 42 U.S.C. 690l), radioactive material, special
waste, petroleum, including crude oil or any petroleum-derived substance, waste,
or breakdown or decomposition product thereof, or any constituent of any such
substance or waste, including, but not limited to, polychlorinated biphenyls.
1.16 "Current Assets" shall mean the aggregate net book value of the
current assets of Borrowers as determined in accordance with generally accepted
accounting principles, excluding any Accounts owing to either Borrower from any
Affiliate of the Borrowers.
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1.17 "Current Liabilities" shall mean the aggregate amount of all
liabilities of Borrowers which would be classified as current liabilities under
generally accepted accounting principles.
1.18 "Default" shall mean the occurrence or existence of any one or more
of the events described in Section 13.1 of this Agreement.
1.19 "Default Rate" shall mean three percent (3%) per annum above the
Prime Rate.
1.20 "Eligible Accounts" shall mean those Accounts included in an
Accounts Report or a borrowing base certificate which, as of the date of such
Accounts Report or Borrowing Base Certificate and at all times thereafter, (i)
satisfy the requirements for eligibility as described in Section 3.1 of this
Agreement, and (ii) do not violate the negative covenants and other provisions
of this Agreement and do satisfy the affirmative covenants and other provisions
of this Agreement and (iii) are deemed by Lender, in its sole and absolute
credit judgment, to be Eligible Accounts.
1.21 "Eligible Inventory" shall mean that Inventory included in an
Inventory Certification Report which, as of the date of such Inventory
Certification Report and at all time thereafter, satisfies the requirements for
eligibility as described in Section 3.2 of this Agreement and which are deemed
by Lender, in its sole and absolute credit judgment, to be Eligible Inventory.
1.22 "Environmental Lien" shall mean a Lien in favor of any Governmental
Authority for (i) any liability under Federal, state or local environmental laws
or regulations, or (ii) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of a
Contaminant into the environment.
1.23 "Equipment" shall mean all of Borrowers' now owned and hereafter
acquired equipment and fixtures, including without limitation, furniture,
machinery, vehicles and trade fixtures, together with any and all accessories,
parts and appurtenances thereto, substitutions therefor and replacements
thereof.
1.24 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
1.25 "ERISA Affiliate" shall mean each trade or business, including
Borrowers, whether or not incorporated, which together with Borrowers would be
treated as a single employee under Section 4001 of ERISA.
1.26 "Event of Default" shall mean any event or condition which, upon
occurrence or with the passage of time, or upon the giving of notice, or both,
would constitute a Default.
1.27 "Financials" shall collectively mean (a) the audited financial
statement of Vita for the fiscal year ended December 31, 2000, (b) the unaudited
financial statements of Vita for the month ended June 30, 2001, (c) the audited
financial statement of Virginia Honey for the fiscal
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year ended December 31, 2000, and (d) the unaudited financial statements of
Virginia Honey for the month ended June 30, 2001.
1.28 "Funded Debt" means all Indebtedness of the Borrowers, less all
current account and trade payables.
1.29 "General Intangibles" shall mean all choses in action, causes of
action and all other intangible personal property of Borrowers of every kind and
nature (other than Accounts) now owned or hereafter acquired by Borrowers,
including, without limitation, corporate or other business records, deposit
accounts, inventions, designs, patents, patent applications, copyrights,
trademarks, trade names, trade secrets and trade styles (and applications for
any of the foregoing), goodwill, customer lists, registrations, licenses,
franchises, tax refund claims and any letters of credit, guarantee claims,
security interests or other security held by or granted to Borrowers to secure
payment by an Account Debtor of any of Borrowers' Accounts.
1.30 "Governmental Authority" shall mean any nation or government, any
Federal, state, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
1.31 "Indebtedness" shall mean all of Borrowers' liabilities,
obligations and indebtedness to any Person of any and every kind and nature,
whether primary, secondary, direct, indirect, absolute, contingent, fixed, or
otherwise, heretofore, now or hereafter owing, due, or payable, however
evidenced, created, incurred, acquired or owing and however arising, whether
under written or oral agreement, by operation of law, or otherwise. Without in
any way limiting the generality of the foregoing, Indebtedness specifically
includes (i) the Liabilities, (ii) all obligations or liabilities of any Person
that are secured by any lien, claim, encumbrance, or security interest upon
property owned by Borrowers, even though Borrowers have not assumed or become
liable for the payment thereof, (iii) all obligations or liabilities created or
arising under any lease of real or personal property, or conditional sale or
other title retention agreement with respect to property used and/or acquired by
Borrowers, even though the rights and remedies of the lessor, seller and/or
lender thereunder are limited to repossession of such property, (iv) all
unfunded pension fund obligations and liabilities and (v) deferred taxes.
1.32 "Interest Period" means a period chosen by Borrowers of one, two,
three or six months effective as of the first day of each Interest Period and
ending on the last day of each Interest Period, provided that if any Interest
Period is scheduled to end on a date for which there is no numerical equivalent
to the date on which the Interest Period commenced, then it shall end instead on
the last day of such calender month.
1.33 "Inventory" shall mean any and all goods, merchandise and other
personal property, including, without limitation, goods in transit, goods
covered by warehouse receipts, purchase orders or contracts, or in the
possession of any carrier, vendor or other Person, wheresoever located and
whether now owned or hereafter acquired by Borrowers which is or may at any time
be held for sale or lease, furnished under any contract of service or held as
raw materials, work in process, finished goods, supplies or materials used or
consumed in Borrowers' business, and all such property the sale or other
disposition of which has given rise to Accounts and which has been returned to
or repossessed or stopped in transit by Borrowers.
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1.34 "Inventory Certification Report" shall mean a report delivered to
Lender by Borrowers, as required by Section 7.3 of this Agreement, consisting of
a summary listing of all of Borrowers' Inventory as of the date of such Report
describing the brand, type, quality, quantity, location and the lower of cost
(computed on the basis of a last-in, first-out cost flow assumption) or market
value of such Inventory. Lender reserves the right to request a detailed listing
of the inventory at any time.
1.35 "Lender" shall mean American National Bank and Trust Company of
Chicago, its successors and assigns.
a. "L/C Facility" shall have the meaning ascribed to it in Section 2.3.
b. "Letter of Credit" shall mean a standby letter of credit issued by
Lender, in its discretion, pursuant to an application made by Borrower in form
and substance satisfactory to Lender.
c. "Letter of Credit Draft" shall mean a draft drawn on Lender under a
Letter of Credit.
d. "Letter of Credit Obligations" shall mean, at any time, an amount
equal to the sum of (i) the aggregate outstanding stated amounts of all Letters
of Credit and (ii) the aggregate outstanding face amounts of all accepted but
unpaid Letter of Credit Drafts.
1.40 "Liabilities" shall mean all of Borrowers' liabilities, obligations
and indebtedness to Lender and/or any of Lender's Affiliates of any and every
kind and nature, whether primary, secondary, direct, indirect, absolute,
contingent, fixed, or otherwise, (including, without limitation, interest,
charges, expenses, attorneys' fees and other sums chargeable to Borrowers by
Lender, future advances made to or for the benefit of Borrowers and obligations
of performance), whether arising under this Agreement, under any of the
Ancillary Agreements or otherwise or acquired by Lender from any other source,
whether heretofore, now or hereafter owing, arising, due or payable from
Borrowers to Lender, however evidenced, created, incurred, acquired or owing and
however arising, whether under written or oral agreement, operation of law, or
otherwise. "Liabilities" shall also include any and all amendments, extensions
and/or renewals of any of the foregoing.
1.41 "LIBOR Rate" shall mean the offered rate for U.S. Dollar deposits
of not less than $1,000,000.00 for a period of time equal to each Interest
Period as of 11:00 A.M. City of London, England time two London Business Days
prior to the first date of each Interest Period of this Note as shown on the
display designated as "British Bankers Assoc. Interest Settlement Rates" on the
Telerate System ("Telerate"), Page 3750 or Page 3740, or such other page or
pages as may replace such pages on Telerate for the purpose of displaying such
rate. Provided, however, that if such rate is not available on Telerate then
such offered rate shall be otherwise independently determined by Lender from an
alternate, substantially similar independent source available to Lender or shall
be calculated by Lender by a substantially similar methodology as that
theretofore used to determine such offered rate in Telerate.
1.42 "LIBOR Rate Loan means any Loan which bears interest at or by
reference to the LIBOR Rate.
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1.43 "Loan Account" shall have the meaning ascribed to it in Section 4.1
of this Agreement.
e. "Loans" shall mean (i) all Revolving Loans, (ii) all Term Loans, and
(iii) all other loans, advances, extensions of credit or other financial
accommodations of any kind or nature made by Lender to, for the benefit of or at
the request of Borrowers pursuant to this Agreement or the Ancillary Agreements,
including, without limitation, the Letters of Credit.
f. "London Business Day" means any day other than a Saturday, Sunday or
a day on which banking institutions are generally authorized or obligated by law
or executive order to close in the City of London, England.
g. "Material Adverse Effect" means (a) a material adverse change in, or
a material adverse effect upon, the financial condition, operations, assets,
business, or properties of the Borrowers taken as a whole, (b) a material
impairment of the ability of the Borrowers to perform any of their obligations
under this Agreement or any Ancillary Agreements or (c) a material adverse
effect upon any substantial portion of the Collateral or upon the legality,
validity, binding effect or enforceability against the Borrowers of this
Agreement or any Ancillary Agreements.
h. "Maximum Revolving Amount" shall have the meaning ascribed to it in
Section 2.1.
i. "Notes" means, collectively, the Revolving Note and the Term Note.
1.49 "Participant" shall mean any Person, now or at any time or times
hereafter, participating with Lender in the loans made by Lender to Borrowers
pursuant to this Agreement and the Ancillary Agreements.
j. "Permitted Liens" shall mean such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) liens for taxes, assessments and governmental charges or
levies which are not delinquent or are being contested diligently and in good
faith by proper proceedings and as to which Borrowers have set aside reserves in
amounts satisfactory to Lender; (b) liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's liens and other similar liens
arising in the ordinary course of business securing obligations that are not
overdue for a period of more than 30 days or that are being contested diligently
and in good faith and by proper proceedings and as to which reserves in amounts
satisfactory to Lender are being maintained; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or to secure
public or statutory obligations; (d) easements, rights of way and other
encumbrances on title to real property that do not render title to the property
encumbered thereby unmarketable or materially adversely affect the use of such
property for its present purposes or materially detract from the value of such
property; (e) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of like nature incurred in the
ordinary course of business; (f) liens in favor of the United States of America
for amounts paid to either Borrower as progress payments under government
contracts entered into by such Borrower; (g) attachment,
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judgment or other similar liens arising in connection with court or arbitration
proceedings, provided that the same have been discharged, or that execution or
enforcement thereof has been stayed pending appeal; (h) liens securing any
Indebtedness permitted under this Agreement; and (i) liens described on Schedule
9.1(K).
1.51 "Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party, or government (whether national,
federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof).
1.52 "Prime Rate" shall mean the rate of interest publicly or internally
announced from time to time by the Lender as its "Prime Rate," which rate may
not be the lowest rate of interest charged by the Lender to any of its
customers.
1.53 "Prime Rate Loan" means any Loan which bears interest at or by
reference to the Prime Rate.
1.54 "Property" shall mean any real or personal property, plant,
building, facility, structure, equipment or unit, or other asset owned or leased
by Borrowers.
1.55 "RCRA" shall mean the Resource Conservation and Recovery Act, 42
U.S.C. Sections 690l et seq., and any successor statute of similar import, and
regulations promulgated thereunder, in each case as in effect from time to time.
k. "Real Estate Collateral" shall mean the real property located at ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.57 "Release" shall mean release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any Property, including the
movement of Contaminants through or in the air, soil, surface water, groundwater
or Property.
1.58 "Restatement Effective Date" shall mean the first date on which all
of the conditions set forth in Section 11.1 through Section 11.4 and Section
12.1 through Section 12.28 shall have been satisfied and this Agreement shall be
effective as of the Restatement Effective Date.
1.59 "Revolver Collateral Availability" shall mean and, at any
particular time and from time to time, be equal to the sum of the following:
(a) up to eighty percent (80%) of the net amount (after
deduction of such reserves as Lender deems proper and necessary) of
Eligible Accounts; plus
(b) up to sixty percent (60%) of the aggregate value of Eligible
Inventory (specifically excluding all Eligible Inventory which relates
to packaging material and determined on the basis of first-in,
first-out, lower of cost or market value net of such reserves as Lender
deems proper and necessary); plus
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(c) up to twenty-five percent (25%) of the aggregate value of
Eligible Inventory which relates solely to packaging material
(determined on the basis of first-in, first-out, lower of cost or market
value net of such reserves as Lender deems proper and necessary);
provided that (A) from January 1 through August 31 of each year, the
Revolver Collateral Availability as to Eligible Inventory shall not at
any time exceed $3,800,000 and (B) from September 1 through December 31
of each year, the Revolver Collateral Availability as to Eligible
Inventory shall not at any time exceed $4,400,000.
1.60 "Revolving Loan" shall have the meaning ascribed to it in Section
2.1.
1.61 "Revolving Loan Commitment" shall mean $7,000,000.
1.62 "Revolving Loan Facility" shall have the meaning ascribed to it in
Section 2.1.
1.63 "Revolving Loan Termination Date" shall mean July 31, 2002.
1.64 "Security Documents" shall mean this Agreement, other agreements,
instruments, documents, financing statements, warehouse receipts, bills of
lading, notices of assignment of accounts, schedules of accounts assigned,
mortgages and other written matter necessary or requested by Lender to perfect
and maintain perfected Lender's security interest in the Collateral.
1.65 "Special Collateral" shall have the meaning ascribed to it in
Section 5.3 of this Agreement.
1.66 "Subordinated Debt" means any unsecured Indebtedness of either
Borrower which has subordination terms, covenants, pricing and other terms which
have been approved in writing by Lender.
1.67 "Tangible Net Worth" shall mean, as of any particular date, the
difference between (a) the Borrower's total assets as defined as Current Assets
plus net fixed assets and (b) the Borrower's total liabilities and deferred
charges as they would normally be shown on such balance sheet, including as
liabilities all guaranties of the indebtedness of Affiliates, less Subordinated
Debt.
1.68 "Term Loan" shall have the meaning ascribed to it in Section 2.2.
1.69 "Term Loan Facility" shall have the meaning ascribed to it in
Section 2.2.
1.70 "Term Loan Maturity Date" shall mean July 31, 2006.
1.71 "Term Note" shall have the meaning ascribed to it in Section 2.2.
1.72 "Total Debt Service" shall mean all interest and principal paid
during the applicable measuring period on all Indebtedness to Lender,
Subordinated Debt, capitalized leases, Indebtedness to any the Borrowers,
Indebtedness to Arlington ▇. ▇▇▇▇▇▇, his successors and assigns, and any other
debt for borrowed money.
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1.73 "Virginia Honey" shall have the meaning ascribed to it in the first
paragraph hereof.
1.74 "Vita" shall have the meaning ascribed to it in the first paragraph
hereof.
1.75 Accounting Terms. Any accounting terms used in this Agreement which
are not specifically defined shall have the meanings customarily given them in
accordance with generally accepted accounting principles.
1.76 Other Terms. All other terms contained in this Agreement which are
not otherwise defined in this Section 1 or in any other section of this
Agreement shall, unless the context indicates otherwise, have the meanings
provided for by the Uniform Commercial Code of the State of Illinois (the
"Code") in effect from time to time, to the extent the same are used or defined
therein; provided, however, in the event that any such terms are hereafter
amended, the broadest meaning given thereto, whether before or subsequent to
such amendment, shall apply.
2. LOANS; GENERAL TERMS
2.1 Revolving Loan Facility. Lender shall make available for Borrowers'
use from time to time prior to the Revolving Loan Termination Date, upon
Borrowers' request therefor, certain loans (each a "Revolving Loan" and
collectively the "Revolving Loans") and other financial accommodations. The
Revolving Loans shall not at any time exceed, the lesser of (i) the Revolving
Loan Commitment less the Letter of Credit Obligations or (b) the current amount
of Revolver Collateral Availability less the Letter of Credit Obligations (such
lesser amount being hereinafter referred to as the "Maximum Revolving Amount").
The Revolving Loan shall be repayable on the Revolving Loan Termination Date and
as provided in Section 4.2 of this Agreement. Subject to the foregoing limits
and the other terms and conditions contained herein, and provided that no
Default then exists, funds out of the Revolving Loan may be advanced, repaid and
re-advanced. The Revolving Loan shall be evidenced by a Revolving Note (the
"Revolving Note") in form and substance acceptable to Lender.
2.2 Term Loan Facility. Lender shall extend to Borrowers a term loan
(the "Term Loan") in an amount of $5,555,000. The Term Loan Facility shall be
subject to the satisfaction of the terms and conditions of Sections 11 and 12
and all of the other terms and conditions of this Agreement. The Term Loan shall
be evidence by a Term Note (the "Term Note") in form and substance acceptable to
Lender. The Term Loan shall be repayable as provided in Section 4.2 hereof.
Borrowers shall not be entitled to reborrow any portion of the principal balance
of a Term Loan that is repaid or prepaid.
2.3 Letters of Credit. In addition to the Loans made pursuant to
Sections 2.1 and 2.2, Lender may in its discretion, upon receipt of duly
executed letter of credit applications in form and substance reasonably
satisfactory to Lender and such other documents, instruments or agreements as
Lender may reasonably require, issue Letters of Credit on such terms as are
satisfactory to Lender prior to the Revolving Loan Termination Date (the "L/C
Facility"), provided, however, that no Letter of Credit shall be issued if,
before or after taking such Letter of Credit into account, the Letter of Credit
Obligations exceed the lesser of (i) $400,000 or (ii) Revolver Collateral
Availability at such time minus the outstanding principal balance of the
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Revolving Loans. If the aggregate outstanding Letter of Credit Obligations
exceed the lesser of (i) $400,000 or (ii) the Revolver Collateral Availability
at such time minus the outstanding principal balance of the Revolving Loans,
Borrowers shall, unless Lender shall otherwise consent, without notice or demand
of any kind, immediately make such repayments of the Revolving Loans or take
such other actions as shall be necessary to eliminate such excess, including,
without limitation, the posting of cash collateral in the amount of such excess.
Borrowers agree to pay Lender, on demand, Lender's standard administrative
operating fees and charges in effect from time to time for issuing and
administering any Letters of Credit. Borrowers further agree to pay to Lender a
Letter of Credit fee equal to one and one-half percent (1.5%) per annum on the
aggregate undrawn face amount of all Letters of Credit outstanding and on each
Letter of Credit Draft accepted by Lender. Such letter of credit fee shall be
payable annually in advance on the date of issuance of the applicable Letter of
Credit. Any reimbursement obligations for each payment made by Lender under or
pursuant to any Letter of Credit or Letter of Credit Draft and any fees or
interest accrued thereon shall be part of the Liabilities, shall be payable by
Borrower to Lender within two day of demand, and from the date of payment until
the date of reimbursement to Lender, shall bear interest at the rate then
applicable to the Revolving Loans hereunder.
2.4 Advances to Constitute One Loan; Loan Purpose. All loans and
advances by Lender to Borrowers under this Agreement and the Ancillary
Agreements (whether made as a Revolving Loan or otherwise), shall constitute one
loan and all indebtedness and obligations of Borrowers to Lender under this
Agreement and the Ancillary Agreements shall constitute one general obligation
secured by the Collateral. The loans and advances hereunder shall be used to (a)
purchase all of the outstanding capital stock of Virginia Honey and (b) to
provide ongoing working capital to Borrowers.
2.5 Interest Rate. So long as no monetary Default has occurred and is
continuing, Borrowers shall pay Lender interest on the outstanding principal
balance of the Revolving Loan at the Prime Rate plus the Applicable Margin or at
LIBOR plus the Applicable Margin. At the election of Lender, in its sole
discretion, from and after the occurrence of a monetary Default until such
monetary Default is cured or waived, Borrowers shall pay Lender interest on the
Revolving Loan and Term Loan at the Default Rate on overdue principal from the
date of Default until waived, cured and/or paid. Interest shall be based on the
average daily outstanding loans for each month and shall be computed on the
basis of a year of 360 days and actual days elapsed and shall be payable as
provided in Section 4.2 of this Agreement. Any change in the Prime Rate shall be
effective as of the effective date stated in the announcement by the Lender of
such change. In no contingency or event whatsoever shall the rate of interest
paid by Borrowers under this Agreement or any of the Ancillary Agreements exceed
the maximum amount permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the
event that such a court determines that Lender has received interest hereunder
in excess of the maximum rate permitted by any such law, (i) Lender shall apply
the excess amount of interest paid by Borrowers to any unpaid principal owed by
Borrowers to Lender or, if the amount of such excess exceeds the unpaid balance
of such principal, Lender shall promptly refund such excess interest to
Borrowers, and (ii) the provisions hereof shall be deemed amended to provide for
such permissible rate. All sums paid, or agreed to be paid, by Borrowers which
are, or hereafter may be construed to be, compensation for the use, forbearance
or detention of money shall, to the extent permitted by applicable law, be
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amortized, prorated, spread and allocated throughout the full term of all such
indebtedness until the indebtedness is paid in full.
2.6 LIBOR Rate Loans. Borrowers shall have a LIBOR Rate option with
respect to the Revolving Loan and the Term Loan and may elect an Interest Period
of one, two, three or six months, provided however, Borrowers shall not be
permitted to have LIBOR Rate Loans with more than four different Interest
Periods outstanding at any time.
2.7 Borrowing Procedure; Notice of Continuation/Conversion.
(A) Each Borrowing shall be made upon the Borrowers' irrevocable written
notice delivered to the Lender in the form of a Notice of Borrowing (which
notice must be received by the Lender prior to 11:00 a.m. on the Business Day of
the requested Borrowing date in the case of each LIBOR Rate Loan. Unless the
Lender shall otherwise agree, during the existence of a Default or an Event of
Default, the Borrowers may not elect to have a Revolving Loan be made as, or
converted into or continued as, a LIBOR Rate Loan.
(B) The Borrowers may upon irrevocable written notice to the Lender
elect to convert on any Business Day, any Prime Rate Loans into a LIBOR Rate
Loan or, elect to convert on the last day of the applicable Interest Period a
LIBOR Rate Loan having an Interest Period maturing on such day into Prime Rate
Loans, or elect to renew on the last day of the Interest Period a LIBOR Rate
Loan having an Interest Period maturing on such day.
(C) The Borrowers shall deliver a Notice of Conversion/Continuation to
be received by the Lender not later than 11:00 a.m. (Chicago time) on the
Business Day of the requested conversion date or continuation date, if the Loan
is to be converted into or continued as a LIBOR Rate Loan and on the requested
conversion date, if the Loans are to be converted into Prime Rate Loans,
specifying the proposed conversion date or continuation date.
(D) If upon the expiration of any Interest Period applicable to LIBOR
Rate Loans, the Borrowers have failed to select timely a new Interest Period to
be applicable to such LIBOR Rate Loans, as the case may be, or if any Default or
Event of Default shall then exist, the Borrowers shall be deemed to have elected
to convert such LIBOR Rate Loans into Prime Rate Loans effective as of the
expiration date of such current Interest Period.
(E) Unless Lender shall otherwise agree, during the existence of a
Default or Event of Default, the Borrowers may not elect to have a Loan
converted into or continued as a LIBOR Rate Loan.
2.8 No Right of Prepayment. Subject to Sections 2.12(B) and 4.2(C),
Borrowers shall have the right to prepay any portion of an advance which is
subject to a LIBOR Rate.
2.9 Interest Payment Dates on LIBOR Rate Loans. Interest on each LIBOR
Rate Loan shall be paid in arrears on the last day of each calendar month
hereafter and on the last day of the applicable Interest Period, and, during the
existence of any Default interest shall be payable on demand of Lender.
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2.10 Default Interest Rate on LIBOR Rate Loans. While any Default exists
and is continuing and/or after maturity of the Loans (whether by acceleration or
otherwise), unless Lender shall otherwise then agree, on and after the
expiration of any Interest Period applicable to a LIBOR Rate Loan outstanding on
the date of occurrence of such Default or maturity, the principal amount of such
Loan, during the continuation of such Default and/or after acceleration, shall
bear interest at a rate per annum equal to the Default Rate.
2.11 Illegality.
(A) If Lender shall determine that the introduction of any law, or any
change in any change of law or in the interpretation or administration thereof,
has made it unlawful, or that any central bank or other governmental authority
has asserted that it is unlawful, for Lender to make LIBOR Loans, then, on
notice thereof by the Lender to the Borrowers, the obligation of that Lender to
make LIBOR Rate Loans shall be suspended until the Lender shall have notified
the Borrowers that the circumstances giving rise to such determination no longer
exists.
(B) If a Lender shall determine that it is unlawful to maintain any
LIBOR Rate Loan, the Borrowers shall prepay in full all LIBOR Rate Loans of
Lender then outstanding, together with interest accrued thereon, either on the
last day of the Interest Period thereof if the Lender may lawfully continue to
maintain such LIBOR Rate Loans to such day, or immediately, if the Lender may
not lawfully continue to maintain such LIBOR Rate Loans, together with any
amounts required to be paid in connection therewith pursuant to Section 2.12.
(C) If the obligation of Lender to make or maintain LIBOR Rate Loans has
been terminated, the Borrowers may elect, by giving notice to the Lender that
all Loans which would otherwise be made by the Lender as LIBOR Rate Loans hall
be instead Prime Rate Loans.
2.12 Increased Costs and Reduction of Return.
(A) If Lender shall determine that, due to either (i) the introduction
of or any change 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 (whether or not having the force of law), there shall be
any increase in the cost to Lender of agreeing to make or making, funding or
maintaining any LIBOR Rate Loans, then the Borrowers shall be liable for, and
shall from time to time upon demand therefor by Lender, additional amounts as
are sufficient to compensate Lender for such increased costs.
(B) The Borrowers agree to reimburse Lender and to hold Lender harmless
from any loss or expense which Lender may sustain or incur as a consequence of
the failure of the Borrowers to make any payment of principal of any LIBOR Rate
Loan (including payments made after any acceleration thereof); the failure of
the Borrowers to borrow, continue or convert a Loan after the Borrowers have
given (or is deemed to have given) a Notice of Borrowing or a Notice of
Conversion/Continuation; the prepayment of a LIBOR Rate Loan on a day which is
not the last day of the Interest Period with respect thereto; or the conversion
of any LIBOR Rate Loan to a Prime Rate Loan on a day that is not the last day of
the applicable Interest Period, including any such loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain its LIBOR
Rate Loans hereunder or from fees payable to terminate the
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deposits from which such funds were obtained. Solely for purposes of calculating
amounts payable by the Borrowers to the Lenders under this Section, each LIBOR
Rate Loan made by Lender (and each related reserve, special deposit or similar
requirement) shall be conclusively deemed to have been funded at the LIBOR used
in determining the interest rate for such LIBOR Rate Loan by a matching deposit
or other borrowing in the interbank eurodollar market for a comparable amount
and for a comparable period, whether or not such LIBOR Rate Loan is in fact so
funded.
2.13 Reserves on LIBOR Rate Loans. The Borrowers shall pay to Lender, as
long as Lender shall be required under regulations of the Federal Reserve Board
to maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency funds or deposits (currently known as "Eurocurrency
liabilities"), additional costs on the unpaid principal amount of each LIBOR
Rate Loan equal to actual costs of such reserves allocated to such Loan by the
Lender (as determined by the Lender in good faith, which determination shall be
conclusive), payable on each date on which interest is payable on such Loan
provided the Borrowers shall have received at least fifteen (15) days' prior
written notice of such additional interest from the Lender. If Lender fails to
give notice fifteen (15) days prior to the relevant date on which interest is
payable, such additional interest shall be payable fifteen (15) days from
receipt of such notice. This covenant shall survive payment of all other
Liabilities.
3. ELIGIBLE ACCOUNTS; ELIGIBLE INVENTORY
3.1 Eligible Accounts. Upon Borrowers' delivery to Lender of an Accounts
Report, Lender shall determine, in its reasonable business judgment, which
Accounts listed thereon are "Eligible Accounts". In making this determination,
Lender will consider the following requirements:
(A) If the Account arises because of the sale of goods, such goods have
been shipped or delivered on open account and on an absolute sale basis and not
on consignment, on approval or on a sale-or-return basis or subject to any other
repurchase or return agreement (other than agreements to repurchase and return
any Inventory whose code dating has expired or which is deemed "unwholesome" by
the Account Debtor, and for which Borrowers have established reserves
satisfactory to Lender) and no material part of such goods has been returned
(other than returns described in Section 7.4 of this Agreement), repossessed,
rejected, lost or damaged;
(B) The Account is not evidenced by chattel paper or an instrument of
any kind;
(C) The Account Debtor obligated on such Account is not insolvent or the
subject of any bankruptcy or insolvency proceeding of any kind and Lender is
satisfied with the creditworthiness of such Account Debtor, in Lender's
reasonable discretion;
(D) (i) The Account is owing from an Account Debtor located within the
United States or Canada, or (ii) if the Account is owing from an Account Debtor
located outside the United States or Canada, such Account Debtor has furnished
Borrowers with an irrevocable letter of credit which has been issued or
confirmed by a financial institution acceptable to Lender (or such Account is
covered by foreign credit insurance), and said letter of credit (or credit
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insurance) is in form and substance acceptable to Lender, has been pledged to
Lender, and is payable in United States dollars in an amount not less than the
face value of the Account;
(E) The Account is a valid, legally enforceable obligation of the
relevant Account Debtor and such Account Debtor has not asserted any offset,
counterclaim or defense denying liability thereunder; provided, however, that if
such offset, counterclaim or defense has been asserted, such Account shall be
ineligible only to the extent of such asserted offset, counterclaim or defense;
(F) The Account is subject to and covered by Lender's perfected security
interest and is not subject to any other lien, claim, encumbrance or security
interest other than Permitted Liens;
(G) The Account is evidenced by an invoice or other documentation in
form acceptable to Lender;
(H) The Account has not remained unpaid for a period exceeding ninety
(90) days after the date of invoice and not more than fifty percent (50%) of the
balance of all Accounts owing from the Account Debtor obligated under such
Account has remained unpaid for more than ninety (90) days after the invoice
date;
(I) the Account is not owing from an (i) employee, officer, agent,
director or Affiliate of the Borrowers or (ii) from the United States of America
or Canada or any department, agency or instrumentality thereof unless, with
respect to an Account Debtor which is the United States or any department,
agency or instrumentality thereof, such Account has been validly assigned by
Borrowers to Lender in full compliance with the Assignment of Claims Act of
1940, as amended;
(J) Each of the warranties and representations set forth in Section 9.2
of this Agreement has been reaffirmed with respect to such Account at the time
the most recent Accounts Report was delivered to Lender; and
(K) The Account is one against which Lender is legally permitted to make
loans and advances.
Nothing contained in this Agreement or in the Ancillary Agreements shall
require Lender to advance funds or otherwise extend credit to Borrowers against
Accounts representing "progress billing" for work not yet completed.
3.2 Eligible Inventory. Upon Borrowers' delivery to Lender of an
Inventory Certification Report, Lender shall determine, in its reasonable
business judgment, which Inventory listed thereon is "Eligible Inventory." In
making this determination, Lender will consider the following requirements:
(A) With respect to Vita, the Inventory is in good condition,
constitutes finished goods or raw fish (excluding, however, ingredients (other
than raw fish) used to process finished goods Inventory)), meets all standards
imposed by any governmental agency, or department or division thereof, having
regulatory authority over such goods, is currently saleable in the
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ordinary course of Vita's business and is not otherwise unacceptable to Lender
due to age, type, category and/or quantity;
(B) With respect to Virginia Honey, the Inventory is in good condition,
meets all standards imposed by any governmental agency, or department or
division thereof, having regulatory authority over such goods, and is not
otherwise unacceptable to Lender due to age, type, category and/or quantity;
(C) The Inventory is located at one of the locations listed on Schedule
5.6 attached hereto, is subject to and covered by Lender's perfected security
interest and is not subject to any other lien, claim, encumbrance or security
interest other than Permitted Liens (all Inventory at other locations shall not
be considered to be Eligible Inventory);
(D) The Inventory has not been consigned to a customer of a Borrower
(Inventory which is subject to return due to expiration of code dates or due to
being deemed "unwholesome" by the Account Debtor shall not be considered to be
consigned Inventory);
(E) Each of the warranties and representations set forth in Section 9.3
of this Agreement has been reaffirmed with respect thereto at the time the most
recent Inventory Report was delivered to Lender; and
(F) The Inventory was not purchased by a Borrower in or as part of a
"bulk" transfer or sale of assets unless such Borrower has complied with all
applicable bulk sales or bulk transfer laws.
4. PAYMENTS
4.1 Borrowers' Loan Account; Method of Making Payments. Lender shall
maintain a loan account (the "Loan Account") on its books in which shall be
recorded (i) all loans and advances made by Lender to Borrowers pursuant to this
Agreement, (ii) all payments made by Borrowers on all such loans and advances
and (iii) all other appropriate debits and credits as provided in this
Agreement, including, without limitation, all fees, charges, expenses and
interest. All entries in the Borrowers' Loan Account shall be made in accordance
with Lender's customary accounting practices as in effect from time to time.
Unless otherwise agreed to in writing from time to time thereafter, Borrowers
promise to pay the amount reflected as owing by them under the Loan Account, and
all of their other obligations hereunder and under any of the other Ancillary
Agreements as such amounts become due or are declared due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) pursuant to
the terms of this Agreement and the other Ancillary Agreements. Furthermore,
Lender is hereby authorized to charge the Loan Account by debiting the Revolving
Loan for each payment of principal, interest, fees, and other Liabilities as it
becomes due hereunder, including Letters of Credit which have been paid by
Lender. All payments of the Liabilities shall be made, without setoff, deduction
or counterclaim, in immediately available funds to Lender at Lender's address
specified pursuant to Section 14.10 of this Agreement, or at any other address
of Lender specified in writing by Lender to Borrower, on the date when due or by
Lender debiting any of the Borrowers' general operating account on the date when
due.
4.2 Payment Terms.
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(A) Revolving Loan. Absent Default, (i) interest on the Revolving Loans
and the Letter of Credit Obligations shall be payable in arrears on the first
day of each month (for the immediately preceding month) out of the first
collections received with respect to any proceeds of Collateral, (ii) fees,
costs, expenses and similar charges shall be payable as and when provided in
this Agreement or the Ancillary Agreements and (iii) all outstanding Revolving
Loans shall be immediately due and payable on the Revolving Loan Termination
Date; provided, however, that if at any time the outstanding principal balance
of the Revolving Loans plus the Letter of Credit Obligations exceed the Maximum
Revolving Amount, Borrowers shall immediately pay to Lender such amount as is
necessary to eliminate such excess.
(B) Term Loan.
(i) Commencing on September 1, 2001, and on the first day of
each month thereafter, installments of principal each equal to
$90,041.67 and accrued and unpaid interest on the Term Loan shall be due
and payable.
(ii) Commencing on December 1, 2002, and on the first day of
each month thereafter, installments of principal each equal to
$40,041.67 and accrued and unpaid interest on the Term Loan shall be due
and payable.
(iii) The unpaid principal balance of the Term Loan, if not
sooner declared to be due in accordance with the terms hereof, together
with all accrued and unpaid interest, shall be due and payable in full
on the Term Loan Maturity Date.
(C) Prepayments.
(i) Term Loan Prepayments. Subject to Section 2.12, Borrowers
may from time to time voluntarily prepay the Term Loan in whole or in
part; provided that the Borrowers shall give the Lender notice thereof
not later than 11:00 A.M., Chicago time, on the day of such prepayment
(which shall be a Business Day), specifying the date and amount of
prepayment. Concurrently with the receipt by the Borrowers of the
aggregate cash proceeds received by the Borrowers from any Asset Sale,
Borrowers shall make prepayments of the Term Loan in the amount of such
proceeds. All prepayments of the Term Loan shall be applied in the
inverse order of maturity to the remaining installments thereof, and no
prepayments shall reduce the dollar amount of fixed principal
installments required to be paid, until such Term Loan is paid in full.
(ii) Prepayment Premium. If Borrowers refinance the Loans prior
to August 15, 2002, Borrowers shall be obligated to pay Lender a
prepayment premium equal to $125,550. If the principal balances of the
Revolving Loan and the Term Loan are accelerated in accordance with the
terms of the Agreement, the resulting balance due shall be considered a
prepayment due and payable as of the date of acceleration. Borrowers
agree that the prepayment premium is a reasonable estimate for the loss
of bargain, and such payment shall not in any way reduce, affect or
impair any other obligation of Borrowers hereunder.
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4.3 DISBURSEMENT OF PROCEEDS. All disbursements made by Lender to
Borrowers shall be deposited into Account No. 5980000089, unless Lender is
otherwise instructed by Borrowers.
4.4 Collection of Accounts and Payments.
(A) Blocked Account; Lockbox. Borrowers shall establish a special
account (a "Blocked Account") in Lender's name with Lender or one of Lender's
Affiliates or one or more other financial institutions satisfactory to Lender
(the "Depository Bank") to which Borrowers will immediately deposit all
remittances in the identical form in which such payment was made, whether by
cash or check. Borrowers also shall establish and maintain lockbox(es) with
Lender and shall direct all of its Account Debtors to make payments due it
directly to said lockbox(es). All remittances and items sent to such lockbox(es)
shall be transferred to the Blocked Account. The Depository Bank shall
acknowledge and agree, in a manner satisfactory to Lender, that all payments
made to such Blocked Account are the sole and exclusive property of Lender, that
the Depository Bank has no right of setoff against the funds in such account
(other than its rights as Lender hereunder) and that, if requested by Lender,
the Depository Bank will wire, or otherwise transfer immediately available funds
in a manner satisfactory to Lender, funds deposited in such Blocked Account to
Lender on a daily basis. Borrowers hereby agree that all payments made to such
Blocked Account, lockbox(es) or otherwise received by Lender, whether on the
Accounts or as proceeds of other Collateral or otherwise, shall be the sole and
exclusive property of Lender and neither Borrower shall have any right of
withdrawal from such lockbox(es) or Blocked Account. Remittances sent to such
lockbox(es) or Blocked Account will be applied on account of the Liabilities
owing under or with respect to the Revolving Loans and Letter of Credit
Obligations or, following a Default, to any of the Liabilities as Lender in its
sole discretion may elect. If, after application is made to the Revolving Loans
and Letter of Credit Obligations, and no Default exists, any amounts remain in
the Blocked Account, such excess amounts shall be remitted to Borrowers.
(B) Calculation of Interest; Remittances by Borrowers. For purposes of
calculating interest, Lender will credit (conditional upon final collection) all
payments received by Lender through the Blocked Account to Borrowers' Loan
Account two (2) Business Days after the date of receipt by Lender. For purposes
of determining availability under the Revolving Loan Facility and L/C Facility,
all payments received by Lender through the Blocked Account shall be credited to
Borrowers' Loan Account on the date of receipt by Lender. Borrowers and any of
their Affiliates, Subsidiaries, shareholders, directors, officers, employees,
agents or those Persons acting for or in concert with Borrowers shall, acting as
trustee for Lender, receive, as the sole exclusive property of Lender, any
monies, checks, notes, drafts or any other payment relating to and/or proceeds
of Accounts or other Collateral which come into their possession or under their
control and, immediately upon receipt thereof, remit the same or cause the same
to be remitted to the Depository Bank for deposit in such Blocked Account or, if
requested by Lender, to Lender at Lender's address set forth in Section 14.10 of
this Agreement. Borrowers agree to pay to Lender any and all fees, costs and
expenses which Lender incurs in connection with opening, operating and
maintaining the Blocked Account and depositing for collection by Lender any
check or item of payment received and/or delivered to the Depository Bank or
Lender on account of the Liabilities (which fees, costs and expenses shall be in
accordance with Lender's published
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fee schedule for Lender's regular cash management services), and Borrowers
further agree to reimburse Lender for any claims asserted by the Depository Bank
as proceeds of the Collateral.
t. Application of Payments and Collections. Except as otherwise provided
herein, and subsequent to Default, Borrowers irrevocably waive the right to
direct the application of payments and collections received by Lender from or on
behalf of Borrowers, and Borrowers agree that Lender shall have the continuing
exclusive right to apply and reapply any and all such payments and collections
against the Liabilities in such manner as Lender may deem appropriate,
notwithstanding any entry by Lender upon any of its books and records. To the
extent that either Borrower makes a payment to Lender or Lender receives any
payment or proceeds of the Collateral for either Borrower's benefit, which
payment or proceeds or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy act, state or federal
law, common law or equitable cause, then, to the extent of such payment or
proceeds received, the Liabilities or part thereof intended to be satisfied
shall be revived and shall continue in full force and effect, as if such
payments or proceeds had not been received by Lender.
u. Statements. All loans and advances to Borrowers, and all other debits
and credits provided for in this Agreement, shall be evidenced by entries made
by Lender in its internal data control systems showing the date, amount and
reason for each such debit or credit. Until such time as Lender shall have
rendered to Borrowers written statements of account as provided herein, the
balance in Borrowers' Loan Account, as set forth on Lender's most recent
statement, shall be rebuttably presumptive evidence of the amounts due and owing
to Lender by Borrowers. Not less than fifteen (15) days after the final day of
each calendar month, Lender shall render to Borrowers a statement setting forth
the balance of Borrowers' Loan Account, including principal, interest, expenses
and fees. Each such statement shall be subject to subsequent adjustment by
Lender and Lender's right to reapply payments in accordance with Section 4.4 of
this Agreement but shall, absent manifest errors or omissions, be presumed
correct and binding upon Borrowers and shall constitute an account stated,
unless, within forty-five (45) days after receipt of any statement from Lender,
Borrowers shall deliver to Lender written objection thereto specifying the error
or errors, if any, contained in such statement.
5. COLLATERAL: GENERAL TERMS
5.1 Security Interest. To secure the prompt payment to Lender of the
Liabilities, Vita has heretofore and along with Virginia Honey hereby grants to
Lender a continuing first priority security interest in and to all of the
following property and interests in property of each Borrower (subject to the
Permitted Liens), whether now owned or existing or hereafter acquired or arising
and wheresoever located: (i) Accounts, contract rights, General Intangibles, tax
refunds, chattel paper, instruments, notes, letters of credit, documents,
documents of title; (ii) Inventory; (iii) all of Borrowers' deposit accounts
(general or special) with and credits and other claims against Lender or any
other financial institutions with which each Borrower maintains deposits; (iv)
all of Borrowers' goods and Equipment; (v) the real estate commonly known as
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (vi) all of each Borrower's now owned or
hereafter acquired monies, and any and all other property and interests in
property of each Borrower now or hereafter coming into the actual possession,
custody or control of the Lender or any agent or Affiliate of the Lender in any
way or for any purpose (whether for safekeeping, deposit, custody, pledge,
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transmission, collection or otherwise); (vii) all insurance proceeds of or
relating to any of the foregoing; (viii) all of each Borrower's books and
records relating to any of the forgoing; and (ix) all accessions and additions
to, substitutions for, and replacements, products and proceeds of any of the
foregoing.
5.2 Disclosure of Security Interest. Each Borrower shall make
appropriate entries as required by generally accepted accounting principles upon
its financial statements and books and records disclosing Lender's security
interest in the Collateral.
5.3 Special Collateral. Immediately upon Borrowers' receipt of any
Collateral which is evidenced or secured by an agreement, letter of credit,
instrument and/or documents, including, without limitation, promissory notes,
documents of title and warehouse receipts (the "Special Collateral"), such
Borrower shall deliver the original thereof to Lender or to such agent of Lender
as Lender shall designate, together with appropriate endorsements, the documents
required to draw thereunder (as may be relevant to letters of credit) and/or
other specific evidence (in form and substance acceptable to Lender) of
assignment thereof to Lender.
5.4 Financing Statements. Each Borrower hereby authorizes Lender to
execute and file at any time or times hereafter, all financing statement that
Lender may reasonably believe to be necessary to perfect its lien in the
Collateral and Borrowers shall pay the costs of any recording or filing of the
same.
5.5 Inspection; Field Examinations. Lender (by any of its officer,
employees and/or agents) shall have the right, at any time or times during any
Borrower's usual business hours, upon reasonable prior notice, to inspect the
Collateral, all records related thereto (and to make extracts from such records)
and the premises upon which any of the Collateral is located, to discuss such
Borrower's affairs and finances with any Person and to verify the amount,
quality, quantity, value and condition of, or any other matter relating to, the
Collateral. Without limitation of the foregoing, Lender shall have the right to
conduct field examinations up to four times each year (or more frequently, if
Lender so elects in its sole discretion) and each Borrower agrees to cooperate
fully in connection therewith. Borrowers will reimburse Lender at the rate of
$500 per person per day, plus out of pocket expenses, for the field examinations
and collateral examinations conducted by Lender.
5.6 Perfection and Priority; Location of Collateral. Each Borrower's
chief executive office, principal place of business and all other offices and
locations of the collateral and books and records related thereto (including,
without limitation, computer programs, printouts and other computer materials
and records concerning the Collateral) are set forth on Schedule 5.6 attached
hereto and made a part hereof. No Borrower shall remove its books and records or
the Collateral from any such locations (except for removal of Inventory upon its
sale) and shall not open any new offices or relocate any of its books and
records or the Collateral except that such removal, opening or relocation may be
made to a place within the Continental United States of America with at least
thirty (30) days' prior written notice thereof to Lender.
5.7 Lender's Payment of Claims Asserted Against Borrowers. Lender may
but shall not be obligated to, at any time or times hereafter, in its sole and
absolute discretion, and without waiving any Default or waiving or releasing any
of the obligation, liability or duty of Borrowers
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under this Agreement or the Ancillary Agreements, pay, acquire and/or accept an
assignment of any security interest, lien, claim or other encumbrance asserted
by any Person against the Collateral. All sums paid by Lender under this Section
5.7, including all costs, fees and expenses, reasonable attorneys' and
paralegals' fees, be payable by Borrowers to Lender within five days of written
notice to Borrowers and shall be additional Liabilities secured by the
Collateral and shall accrue interest from the date paid by Lender.
5.8 Organizational Identification Numbers. Vita warrants and represents
to Lender that its corporate organizational number with the Nevada Secretary of
State is C18751-1996. Virginia Honey warrants and represents to Lender that its
corporate organizational number with the Virginia State Corporation Commission
is 0297107-5. Borrowers agree not to change such corporate organizational
numbers without the prior written consent of Lender.
6. COLLATERAL: ACCOUNTS
6.1 Verification of Accounts. Any of Lender's officers, employees or
agent shall have the right, at any time or times after Default, in Lender's name
or in the name of a firm of independent certified public accountants acceptable
to Lender, to verify the validity, amount or any other matter relating to any
Accounts by mail, telephone, telegraph or otherwise.
6.2 Assignments, Records and Accounts Report. Each Borrower shall keep
accurate and complete records of its Accounts and, as frequently as Lender shall
require, but not less frequently than monthly, each Borrower shall deliver to
Lender an Accounts Report and formal written assignments of all of its Accounts.
Each Borrower shall also deliver to Lender, upon demand, the original or a copy
(as requested by Lender) of all documents, including, without limitation,
repayment histories, present status reports and shipment reports, relating to
the Accounts included in any Accounts Report and such other matters and
information relating to the status of then existing Accounts as Lender shall
reasonably request.
6.3 Notice Regarding Disputed Accounts. Borrowers shall give Lender
prompt written notice of any Accounts in excess of $10,000.00 which are in
dispute between any Account Debtor and Borrowers. Each Accounts Report shall
identify all disputed accounts and disclose with respect thereto, in a
reasonable detail, the reason for the dispute, all claims related thereto and
the amount in controversy.
7. COLLATERAL: INVENTORY
7.1 Sale of Inventory. Unless a Default occurs, each Borrower may sell
Inventory in the ordinary course of its business (which does not include a
transfer in partial or total satisfaction of Indebtedness).
7.2 Safekeeping of Inventory; Inventory Covenants. Lender shall not be
responsible for (i) the safekeeping of the Inventory; (ii) any loss or damage
thereto or destruction thereof occurring or arising in any manner or fashion
from any cause; (iii) any diminution in the value of Inventory or (iv) any act
or default of any carrier, warehouseman, bailee or forwarding agency or any
other Person in any way dealing with or handling the Inventory. All risk of
loss, damage, distribution or diminution in value of the Inventory shall be
borne by the Borrowers.
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7.3 Records and Schedules of Inventory. Each Borrower shall keep correct
and accurate daily records concerning its Inventory, itemizing and describing
the kind, type, quality and quantity of Inventory, and each Borrower's cost
therefor, the daily withdrawals therefrom and additions thereto and Inventory
then on consignment, and shall furnish to Lender (i) upon request copies of the
working papers related thereto and (ii) monthly a current Inventory
Certification Report. A physical count of the Inventory shall be conducted no
less often than quarterly and a report based on such count of Inventory shall
promptly thereafter (but not later than twenty (20) days after the end of each
such quarter) be provided to Lender together with such supporting information
(including, without limitation, invoices relating to such Borrower's purchase of
goods listed in said report) as Lender shall, in its sole and absolute
discretion, request.
7.4 Returned and Repossessed Inventory. If at any time prior to the
occurrence of a Default, any Account Debtor returns any Inventory to any
Borrower, such Borrower shall promptly determine the reason for such return and,
if such Borrower accepts such return, issue a credit memorandum in the
appropriate amount to such Account Debtor; provided, however, that, subsequent
to the occurrence of a Default under this Agreement, no Borrower shall, without
the prior consent of Lender, accept on any single day, returned Inventory the
sale price of which was in excess of $10,000.00 in the aggregate. After the
occurrence of a Default, each Borrower shall hold all returned Inventory in
trust for Lender, shall segregate such Borrower's possession and shall
conspicuously label said returned cases, immediately notify Lender of the return
of any Inventory, specifying the reason for such return and the location and
condition of the returned Inventory.
8. COLLATERAL: EQUIPMENT
8.1 Maintenance of Equipment. Each Borrower shall keep and maintain its
Equipment in good operating condition and repair, ordinary wear and tear
excepted, and shall make all necessary replacements thereof so that the value,
utility, and operating efficiency thereof shall at all times be maintained and
preserved and shall promptly inform Lender of any material additions to or
deletions from the Equipment. No Borrower shall permit any such items to become
affixed to real estate in such manner that such Equipment will become a fixture
or an accession to other personal property.
8.2 Evidence of Ownership of Equipment. Each Borrower shall, upon
Lender's request, deliver to Lender all evidence of ownership of any of its
Equipment (including, without limitation, bills of sale, certificates of title,
and applications for title).
8.3 Proceeds of Equipment. Neither Borrower shall, without the prior
written consent of Lender, sell, lease, grant a security interest in or
otherwise dispose of or encumber the Equipment or any part thereof without, in
each case, the prior written consent of Lender (which consent shall not be
unreasonably withheld). In the event any Equipment is sold, transferred, or
otherwise disposed of as permitted in this Section 8.3, Borrowers shall deliver
all of the cash proceeds of such sale, transfer, or disposition to Lender, which
proceeds shall be applied to the repayment of the Liabilities; provided,
however, such Borrower may use the proceeds of such sale, transfer, or
disposition to finance the purchase of replacement Equipment in which Lender
will be provided with a valid perfected security interest therein. Such Borrower
shall deliver to
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Lender written evidence of the use of the proceeds for such purchase; all
replacement Equipment purchased by such Borrower shall be free and clear of all
liens, claims, security interests, and other encumbrances, except for the liens,
claims, security interests, and other encumbrances granted to Lender or the
Permitted Liens.
9. WARRANTIES AND REPRESENTATIONS
9.1 General Warranties and Representations. Each Borrower warrants and
represents to Lender that:
(A) It is a corporation duly organized and validly existing and in good
standing under the laws of the state of its organization, as represented at the
beginning of this Agreement, and is qualified or licensed to do business in all
other countries, states and provinces in which the laws thereof require it to be
so qualified and/or licensed, except where the failure to be so qualified would
not have a Material Adverse Effect;
(B) It has not used, during the five (5) year period preceding the date
of this Agreement, and does not intend to use any other corporate or fictitious
name, except as disclosed in Schedule 9.1(B) attached hereto and made a part
hereof;
(C) It has the right and power and is duly authorized and empowered to
enter into, execute, deliver and perform this Agreement and the Ancillary
Agreements executed concurrently herewith;
(D) The execution, delivery and performance by it of this Agreement and
the Ancillary Agreements shall not, by their execution or performance, the lapse
of time, the giving of notice or otherwise, constitute a violation of any
applicable law, rule or regulation or a breach of any provision contained in its
organizational document or By-Laws or contained in any agreement, instrument,
indenture or other document to which it is now a party or by which it is bound
which would have a Material Adverse Effect;
(E) Its use of the proceeds of any advances and readvances made by
Lender to it pursuant to this Agreement are, and will continue to be, legal and
proper uses (duly authorized) and such uses are consistent with all applicable
laws and statutes, as in effect as of the date hereof;
(F) It has, and is current and in good standing with respect to, all
governmental approvals, permits, certificates, inspections, consents and
franchises necessary to conduct or to continue to conduct its present or
intended business as heretofore conducted by it and to own or lease and operate
its properties as now owned or leases and operated by it or by the previous
owner of those properties where the failure to have such approvals, permits,
certificates, inspections, consents and franchises would not materially and
adversely affect its business, properties, assets, operations, or condition,
financial or otherwise;
(G) None of said approvals, permits, certificates, consents or
franchises contain any term, provision, condition or limitation more burdensome
than such as are generally applicable to Persons engaged in the same or similar
business in similar locations and under similar conditions and circumstances;
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(H) It now has capital sufficient to carry on its business and
transactions and all businesses and transactions in which it is about to engage
and is now solvent and able to pay its debts as they mature and it now owns
property the fair saleable value of which is greater than the amount required to
pay its debts;
(I) Except as disclosed on Schedule 9.1(I) attached hereto and in the
Financials, it has no litigation pending (except such litigation that would not
have a Material Adverse Effect) and no Indebtedness (except for trade payables
arising in the ordinary course of its business, operating leases or obligations
or indebtedness to other lenders since the dates reflected in the Financials)
and has not guaranteed the obligations of any other Person;
(J) It is not a party to any contract or agreement or subject to any
charge, corporate restriction, judgment, decree or order materially and
adversely affecting its business, property, assets, operations or condition,
financial or other, and is not a party to any labor dispute; there are no
strikes or walkouts relating to any labor contracts and no such contract is
scheduled to expire during the term hereof, except as disclosed on Schedule
9.1(J) attached hereto;
(K) It has good, indefeasible and merchantable title to and ownership of
the Collateral (other than the Real Estate Collateral), free and clear of all
liens, claims, security interests and other encumbrances except those of Lender
and the Permitted Liens;
(L) It is not in violation of any applicable statute, rule, regulation
or ordinance of any governmental entity, including, without limitation, the
United States of America, any state, city, town, municipality, county or of any
other jurisdiction, or of any agency thereof, except where such violation would
not have a Material Adverse Effect;
(M) It is not in default under any indenture, loan agreement, mortgage,
lease, trust deed, deed of trust or other similar agreement relating to the
borrowing of monies to which it is a party or by which it is bound;
(N) The Financials fairly present the assets, liabilities and financial
condition and results of operations of Vita and of Virginia Honey and such other
Persons described therein as of the dates thereof; there are no omissions or
other facts or circumstances which are or may be material and there has been no
material and adverse change in the assets, liabilities or financial or other
condition of Vita or Virginia Honey since the date of the Financials; there
exist no equity or long term investments in or outstanding advances to any
Person not reflected in the Financials; there are no actions or proceedings
which are pending or, to the best of its knowledge, threatened against it or any
other Person which might result in any material adverse change in its financial
condition or materially and adversely affect its operations, its assets or the
Collateral;
(O) It has received no notice to the effect that it is not in full
compliance with any of the requirements of the Employee Retirement Income
Security Action of 1974, as amended, ("ERISA") and the regulations promulgated
thereunder and, to the best of its knowledge there exists no event described in
Section 4043 of ERISA, excluding subsections 4043(b)(2) and 4043(b)(3) thereof
("Reportable Event");
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(P) It has filed all federal, state and local tax returns and other
reports, or has been included in consolidated returns or reports filed by an
Affiliate, which it is required by law, rule or regulation to file and all
Charges that are due and payable have been paid;
(Q) Its execution and delivery of this Agreement or any of the Ancillary
Agreements does not directly or indirectly violate or result in a violation of
the Securities Exchange Act of 1934, as amended, or any regulations issued
pursuant thereto, including without limitation, Regulation T, U or X of the
Board of Governors of the Federal Reserve System (12 CFR 220, 221 and 224,
respectively) and it does not own or intend to purchase or carry any "margin
security," as defined in said Regulations; and
(R) Except as disclosed on Schedule 9.1(R), and to each Borrower's
knowledge (i) its operations are in material compliance with all applicable
federal, state or local environmental, health and safety statutes, regulations
or orders including but not limited to the Clean Air Act, 42 U.S.C. Section 7401
et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., RCRA, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
Section 136 et seq., the Safe Drinking Water Act, 42 U.S.C. Section 300f et
seq., and the Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.
(collectively, "Requirements of Law"); (ii) it has obtained all environmental,
health and safety permits required under Requirements of Law for such
operations, and all such permits are in good standing and it is in material
compliance with all terms and conditions of such permits; (iii) neither it nor
any of its present Property or operations, and, to its knowledge (meaning the
knowledge of its officers, members, directors, employees and shareholders),
neither its past Property or operations, are subject to any (A) order from or
agreement with any Governmental Authority or any judicial or administrative
proceeding or investigations respecting any material Requirements of Law, any
remedial action or any Liabilities arising from the Release or threatened
Release of a Contaminant into the environment or (B) agreement with a private
party expressly providing for any investigation or remediation resulting from a
known Release or threatened Release of a Contaminant into the environment; (iv)
it has not filed any notice under any Requirement of Law indicating that past or
present "treatment," "storage" or "disposal" of a "hazardous waste," as such
terms are defined under RCRA, or any state equivalent on any Property presently
or heretofore owned, used, or operated by it has occurred; (v) it has not filed
any notice under any applicable Requirement of Law reporting a Release of 500
gallons or more of a Contaminant into the environment from any past or present
Property or its operations; (vi) there is not now on or in its the Property (A)
any "treatment", "storage" or "disposal" of any hazardous waste," as such terms
are defined under the RCRA, as amended, or any state equivalent; (B) more than
one (1) underground storage tank or (C) any surface impoundments, or (D) any
polychlorinated biphenyls (PCB's) used in hydraulic oils, electrical
transformers or other equipment; and (vii) it has not received any notice or
claim to the effect that it is or may be liable to any Person as a result of the
Release or threatened Release of a Contaminant into the environment; and (viii)
no Environmental Lien has attached to any of its Property.
9.2 Account Warranties and Representations. Each Borrower warrants and
represents that Lender may rely, in determining which Accounts listed on any
Accounts Report, Borrowing Base Certificate, or collateral activity report are
Eligible Accounts, without independent
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investigation on all statements or representations made by each Borrower on or
with respect to any such Accounts Report and, unless otherwise indicated in
writing by such Borrower, that;
(A) Such Accounts are genuine, are in all respects what they purport to
be, are not evidenced by a judgment and, if evidenced by any instrument,
agreement, contract or documents, are evidenced by only one executed original
instrument, agreement, contract, or document, which has been endorsed and
delivered to Lender;
(B) Such Accounts represent undisputed, bona fide transactions completed
in accordance with the terms and provisions contained in any documents related
thereto;
(C) Except for credits issued to any Account Debtor in the ordinary
course of its business for Inventory returned pursuant to Section 7.4 of this
Agreement (which includes returns and credits for Inventory whose code
expiration date has expired or which has been deemed "unwholesome" by the
Account Debtor), the amounts shown on the Accounts Report, and all invoices and
statements delivered to Lender with respect to any Account, are actually and
absolutely owing to it and are not contingent for any reason;
(D) To the best of its knowledge, except as may be disclosed on such
Accounts Report, there are no setoffs, counterclaims or disputes existing or
asserted with respect to any Accounts included on an Accounts Debtor for any
deduction from it in the ordinary course of its business for prompt payment, all
of which discounts or allowances are reflected in the calculation of the invoice
related to such Account;
(E) To the best of its knowledge, there are no facts, events or
occurrences which in any way impair the validity or enforcement of any of the
Accounts or tend to reduce the amount payable thereunder from the amount of the
invoice shown on any Accounts Report, and on all contracts, invoices and
statements delivered to Lender with respect thereto;
(F) To the best of its knowledge, all Account Debtors are solvent and
had the capacity to contract at the time any contract or other document giving
rise to the Account was executed;
(G) The goods, the sale of which gave rise to the Accounts are not, and
were not at the time of the sale thereof, subject to any lien, claim, security
interest or other encumbrance, except those of Lender, those removed or
terminated prior to the date hereof and those subordinate to Lender's security
interest;
(H) It has no knowledge of any fact or circumstances which would impair
the validity or collectibility of any of the Accounts;
(I) To the best of its knowledge, there are no proceedings or actions
which are threatened or pending against any Account Debtor which might result in
any material adverse change in its financial or other condition; and
(J) The Accounts have not been pledged to any other Person whose liens
shall be released no later than the date of the initial advance hereunder.
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9.3 Inventory Warranties and Representations. Each Borrower warrants and
represents that Lender may rely, in determining which items of Inventory listed
on any Inventory Certification Report are Eligible Inventory, without
independent investigation on all statements or representations made by it on or
with respect to any such Inventory Certification Report and, unless otherwise
indicated in writing by it, that:
(A) All Inventory is located on premises listed on Schedule 5.6 or is
Inventory which is in transit and is so identified on the relevant Inventory
Certification Report;
(B) No Inventory is subject to any lien, claim, security interest or
other encumbrance whatsoever, except for the security interest of Lender
hereunder, or other Permitted Liens; and
(C) Except as specified on Schedule 5.6, no Inventory is now, and shall
not at any time or times hereafter be, stored with a bailee, warehouseman or
similar party without Lender's prior written consent and, if Lender gives such
consent, it will concurrently therewith cause any such bailee, warehouseman or
similar party to issue and deliver to Lender, in form and substance acceptable
to Lender, warehouse receipts therefor in Lender's name.
9.4 Automatic Warranty and Reaffirmation of Warranties and
Representations. Each request for an advance or Letter of Credit made by
Borrowers pursuant to this Agreement or the Ancillary Agreements shall
constitute (i) an automatic warranty and representation by Borrowers to Lender
that there does not then exist a Default or an Event of Default and (ii) a
reaffirmation as of the date of said request of all of the representations and
warranties of Borrowers contained in this Agreement and/or the Ancillary
Agreements.
9.5 Survival of Warranties and Representations. Borrowers covenant,
warrant and represent to Lender that all representations and warranties of
Borrowers contained in this Agreement and the Ancillary Agreements shall be true
at the time of Borrowers' execution of this Agreement and the Ancillary
Agreements, and shall survive the execution, delivery and acceptance thereof by
the parties thereto and the closing of the transactions described therein or
related thereto. Borrowers and Lender expressly agree that any misrepresentation
or breach of any representation or warranty whatsoever contained in this
Agreement or the Ancillary Agreements shall be deemed material.
10. COVENANTS AND CONTINUING AGREEMENTS
10.1 Affirmative Covenants. Each Borrower covenants that it shall
(unless waived in writing by Lender):
(A) Pay to Lender, on demand, any and all fees, costs or expenses which
Lender or any Participant pays to a bank or other similar institution arising
out of or in connection with (i) the forwarding to Borrowers or any other Person
on behalf of Borrowers, by Lender or any Participant, of proceeds of loans made
by Lender to Borrowers pursuant to this Agreement and (ii) the depositing for
collection, by Lender or any Participant, of any check or item of payment
received and/or delivered to Lender or any Participant on account of the
Liabilities;
(B) At its sole cost and expense, keep and maintain the Collateral
insured for its full insurable value against loss or damage by fire, theft,
explosion, sprinklers and all other hazards
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and risks ordinarily insured against by other owners or users of such properties
in similar businesses in similar locations and notify Lender promptly of any
event or occurrence causing a material loss or decline in value of the
Collateral and the estimated (or actual, if available) amount of such loss or
decline;
(C) Promptly upon Borrowers' learning thereof, inform Lender, in
writing, of (i) any material delay in Borrowers' performance of any of its
material obligations to any Account Debtor and of any assertion of any claims,
offsets, defenses or counterclaims by any Account Debtor and of any allowances
or credits granted (including all credits issued for returned or repossessed
inventory) and/or other monies advanced by Borrowers to any Account Debtor and
(ii) all material adverse information relating to the financial or other
condition of any Account Debtor;
(D) Keep books of account and prepare financial statements and furnish
to Lender the following (all of the foregoing and following to be kept and
prepared in accordance with generally accepted accounting principles applied on
a consistent basis, unless Borrowers' independent certified public accountants
concur in any changes therein and such changes are disclosed to Lender and are
consistent with then generally accepted accounting principles);
(i) as soon as available, but not later than ninety (90) days
after the close of each fiscal year of Vita, audited consolidated and
consolidating financial statements of Vita and Virginia Honey (including
a balance sheet and profit and loss statement with supporting footnotes)
as of the end of such year and for the year then ended issued by
independent certified public accountants of recognized standing
acceptable to Lender and selected by Vita and containing the unqualified
opinion of such independent certified public accountants with respect to
the financial statements, together with a letter from such accountants
acknowledging that Lender may rely upon such financial statements. In
addition, Borrowers shall provide a copy of the management letter, if
any, delivered to Borrowers by such certified public accounting firm;
(ii) as soon as available, but not later than thirty (30) days
after the end of each calendar month hereafter, an unaudited financial
statement of each Borrower as at the end of the portion of such
Borrower's fiscal year then elapsed, certified by such Borrower's chief
financial officer as prepared in accordance with generally accepted
accounting principles and fairly presenting the financial position and
results of operations of such Borrower for such period;
(iii) Together with the financial statements furnished by each
Borrower under preceding clause (ii), a certificate of such Borrower's
chief financial officer, dated the date of such annual audit report or
such interim financial statements, as the case may be, to the effect
that no Default or Event of Default has occurred and is continuing and
which has not been waived in writing by Lender, or, if there is any such
event, describing it and the steps, if any, being taken to cure it, and
containing a computation of, and showing compliance with, each of the
financial ratios and restrictions, if any, contained in this Section 10;
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(iv) Borrowing Base Certificates, supported by a sales and cash
receipts journal, on reports acceptable to Lender, not less often than
each Tuesday for the prior week ending on Friday;
(v) collateral activity reports, and accounts receivable and
collection reports, on forms acceptable to Lender, not later than twenty
(20) days after the end of each month hereafter;
(vi) the Accounts Report (including agings) and the Inventory
Certification Report, supporting data, inventory run, and all related
reports and papers, each on a monthly basis, as soon as available, but
not later than twenty (20) days after the end of each calendar month
hereafter;
(vii) accounts payable listings on a monthly basis, as soon as
possible, but not later than twenty (20) days after the end of each
calendar month hereafter;
(viii) not later than thirty (30) days after the end of each
fiscal quarter, a certificate from Borrowers, signed by a chief
financial officer, calculating each of the financial covenants and
showing the method by which such calculation was made;
(ix) as soon as possible but not later than twenty (20) days
after and as of the end of each calendar year hereafter, a review and
report in reasonable detail of all insurance of Borrowers then in force;
(x) such other data and information (financial and other) as
Lender, from time to time, may reasonably request, bearing upon or
related to the Collateral, Borrowers' financial condition and/or results
of operations and any guarantor, if any;
(E) Notify Lender in writing, promptly upon, but in no event later than
three (3) business days after, Borrowers' learning thereof, that any material
Eligible Account or material Eligible Inventory has become ineligible and the
reasons(s) for such ineligibility;
(F) Notify Lender in writing, promptly upon Borrowers' learning thereof,
of any litigation or of the instigation of any suit or administrative proceeding
involving money or property or seeking damages in excess of $50,000.00 or which
may otherwise materially adversely affect the operations, financial condition or
business of any Borrower or any guarantor or Lender's security interest in the
Collateral, whether or not the claim is considered by such Borrower to be
covered by insurance;
(G) Provide Lender with copies of all agreements between Borrowers and
any warehouse at which Inventory may, from time to time, be kept and all lease
or similar agreements between any Borrower and any Person, whether either
Borrower is lessor or lessee thereunder;
(H) Maintain product liability and other liability insurance in an
amount customary for the business conducted by it;
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(I) Comply in all material respects with all applicable federal, state
and local laws and regulations, and foreign laws and regulations, including but
not limited to, environmental laws, labor and employment laws, income, sales,
unemployment and social security taxes, and pension funds and retirement benefit
programs as required by ERISA where the failure to so comply would materially
and adversely affect its business, property, assets, operations or condition,
financial or otherwise; and
(J) Notify Lender in writing, promptly upon its learning thereof, of any
notice or claim to the effect that (A) it may be liable to any Person as a
result of the Release or threatened Release of a Contaminant, (B) any of its
Property is subject to an Environmental Lien, or (C) its subject to the
commencement or threat of any judicial or administrative proceeding alleging a
violation of any Requirement of Law.
10.2 Negative Covenants. Borrowers covenant that they shall not, without
the prior written consent of Lender:
(A) Merge, permit a change of ownership or consolidate with or acquire
the stock or assets of any Person, or fail to maintain and preserve Borrowers'
good standing and qualification in each jurisdiction where Borrowers are
required to be in good standing and qualified, except where the failure to be in
good standing or so qualified would not have a Material Adverse Effect;
(B) Other than in the ordinary course of its business, make any
investment in the securities of any Person;
(C) Make any loans or other advances of money (other than salary) to
officers, directors, stockholders or Affiliates of Borrowers, or permit the
annual salary and all other direct and indirect compensation to its officers,
directors or stockholders, to exceed 115% of the prior years compensation in the
aggregate;
(D) Redeem, retire, purchase or otherwise acquire, directly or
indirectly, any of Borrowers' stock, or make any material change in Borrowers'
capital structure or in any of its business objectives, purposes and operations
which might in any way adversely affect the repayment of the Liabilities;
(E) Make any distribution to any of its shareholders;
(F) Enter into, or be a party to, any transaction with any Affiliate of
Borrowers, except in the ordinary course of and pursuant to the reasonable
requirements of such Borrower's business and upon fair and reasonable terms
which (i) are fully disclosed to Lender, (ii) are no less favorable to such
Borrower than would obtain in a comparable arm's length transaction with a
Person not an Affiliate of Borrowers; and (iii) do not involve sums in excess of
$50,000 in the aggregate;
(G) Guarantee or otherwise, in any way, become liable with respect to
the obligations or liabilities of any Person;
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(H) Except as otherwise expressly permitted herein or in the Ancillary
Agreements, encumber, pledge, mortgage, grant a security interest in, assign,
sell, lease or otherwise dispose of or transfer, whether by sale, merger,
consolidation, liquidation, dissolution, or otherwise, whether voluntarily or
involuntarily, any of Borrowers' assets;
(I) Incur any Indebtedness for borrowed money (other than the
Liabilities, existing Subordinated Debt, capitalized leases, operating leases,
payables in the ordinary course of business, and except for Indebtedness which
is unsecured and is to Persons who execute and deliver to Lender (in form and
substance acceptable to Lender and its counsel) subordination agreements
subordinating their claims against such Borrower to the payment of Liabilities;
(J) Permit any Accounts owing to any Borrower from any Affiliate to be
payable on terms which would not allow such Borrower to demand payment upon the
occurrence of a Default or permit the aggregate amount of all Accounts owing
from its Affiliates at any time to exceed $5,000 so long as no Default has
occurred (following a Default, Borrowers shall permit no Accounts to be owing
from their Affiliates;
(K) Adopt or agree to contribute to any funded tax qualified employee
pension benefit plan (as defined in ERISA); provided, however, nothing herein
shall be deemed to prohibit contributions to a tax qualified profit sharing
plan;
(L) Sell goods on consignment, ▇▇▇▇ and hold, or other unusual terms of
sale outside of such Borrower's existing methods of sale;
(M) Enter into or amend or prepay any other debt obligations, including,
but not limited to any capitalized lease obligations, any Industrial Revenue
Bonds, and the Indebtedness to Arlington ▇. ▇▇▇▇▇▇ his successors and assigns,
but not including unsecured trade debt;
(N) Enter any businesses unrelated to those presently conducted by
either Borrower;
(O) Change names or fiscal year or, without 30 days prior notice to
Lender, change locations of Collateral, facilities or offices;
(P) Make any loan, investment or advance to, or borrow from, any Person
(other than borrowings from Lender or Loans permitted by Section 10.2(D));
(Q) Form or acquire any subsidiary (except that Vita may purchase all of
the outstanding shares of Virginia Honey);
(R) Undergo a change of effective control including without limitation
as a result of issuance of stock or other securities or issuance or exercise of
options therefor;
(S) Permit the make up of the board of directors of Virginia Honey to be
any different than as in place immediately following the Restatement Effective
Date;
(T) Permit the aggregate share ownership of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, directly or indirectly, in Vita to decrease below twenty-five
percent (25%), on a fully diluted basis, of the shares of stock of Vita from
time to time outstanding.
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10.3 Financial Covenants. Borrowers covenant that they shall (unless
waived in writing by Lender):
(A) Maintain a minimum Tangible Net Worth, as determined at the end of
each month to be less than the minimum amount specified for such month:
Testing Period Minimum Amount
-------------- -------------
Restatement Effective Date through August 2001 ($3,000,000)
September 2001 through November 2001 ($2,700,000)
December 2001 through February 2002 ($2,000,000)
March 2002 through May 2002 ($1,800,000)
June 2002 through the Term Loan Maturity Date ($1,600,000)
(B) Not permit the ratio of Adjusted EBITDA for the previous twelve
months to Total Debt Service for the previous twelve months to be less than 1.15
to 1.00, as tested at the end of each month.
(C) Not make more than $1,000,000 of Capital Expenditures in any fiscal
year.
10.4 Contesting Charges. Notwithstanding anything to the contrary
herein, Borrowers may dispute any Charges without prior payment thereof, even if
such non-payment may cause a lien to attach to Borrowers' assets, provided that
any such Borrower shall give Lender notice of such dispute and shall be
diligently contesting the same in good faith, with due diligence and in an
appropriate proceeding and there is no danger of a loss or forfeiture of
Collateral and provided further that, if the same are in excess of $50,000.00 in
the aggregate at any time or times hereafter, such Borrower shall give Lender
such additional Collateral and assurances as Lender, in its sole discretion,
deems necessary under the circumstances.
10.5 Payment of Charges. Subject to the provisions of Section 10.4 of
this Agreement, Borrowers shall pay promptly when due all of the Charges. In the
event Borrowers, at any time or times hereafter, shall fail to pay the Charges,
Borrowers shall so advise Lender thereof in writing and Lender may, without
waiving or releasing any obligation or liability of Borrowers hereunder or any
Default, in its sole and absolute discretion, at any time or times thereafter,
make such payment or any part thereof (but shall not be obligated so to do), or
obtain such satisfaction and take any other action with respect thereto which
Lender deems advisable. All sums so paid by Lender and any expenses, including
reasonable attorneys' fees, court costs, expenses and other charges relating
thereto, shall be payable, upon demand, by Borrowers to Lender and shall be
additional Liabilities hereunder secured by the Collateral.
10.6 Insurance; Payment of Premiums. All policies of insurance on the
Collateral or otherwise required hereunder shall be in form and with insurers
recognized as adequate by prudent business persons and all such policies shall
be in such amounts as may be satisfactory to Lender. Borrowers shall deliver to
Lender the original (or copy) of each policy of insurance and evidence of
payment of all premiums therefor. Such policies of insurance shall contain an
endorsement, in form and substance acceptable to Lender, naming Lender as an
additional insured and showing Lender as the lender's loss payee, with respect
thereto. Such endorsement shall provide that the insurance companies will give
Lender at least thirty (30) days' prior notice
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before any such policy shall be altered or cancelled and that no act or default
of Borrowers or any other person shall affect the right of Lender to recover
under such policy in case of loss or damage. Borrowers hereby direct all
insurers under such policies to pay all proceeds payable thereunder directly to
Lender as Lender's loss payee subject to provisions of the Mortgage. Each
Borrower irrevocably makes, constitutes and appoints Lender (and all officers,
employees or agents designated by Lender) as such Borrower's true and lawful
attorney (and agent-in-fact) for the purpose of making, settling and adjusting
claims under such policies (provided that Lender shall consult with such
Borrower and make such reasonable accommodations as such Borrower shall request
prior to finally making, settling or adjusting claims under such policies),
endorsing the name of such Borrower in writing or by stamp on any check, draft,
instrument or other item of payment for the proceeds of such policies and for
making all determinations and decisions with respect to such policies. If any
Borrower shall fail to obtain or maintain any of the policies required by this
Section 10.6 or to pay any premium relating thereto, then Lender, without
waiving or releasing any obligation or default by such Borrower hereunder, may
(but shall be under no obligation to do so) obtain and maintain such policies of
insurance and pay such premium and take any other action with respect thereto
which Lender deems advisable. All sums so disbursed by Lender, including
reasonable attorneys' fees, court costs, expenses and other charges relating
thereto, shall be payable, on demand, by Borrowers to Lender and shall be
additional Liabilities hereunder secured by the Collateral.
10.7 Post Closing Covenants.
(A) Prior to October 15, 2001, Vita shall deliver an assignment of life
insurance policy, which collaterally assigns a reasonably acceptable life
insurance policy, insuring the life of ▇▇▇▇▇ ▇▇▇▇ for an amount not less than
$4,000,000 to Lender. Notwithstanding anything else to the contrary, this
provision does not prevent the Borrowers from obtaining any other additional
life insurance on ▇▇▇▇▇ ▇▇▇▇ which is not collaterally assigned to Lender.
(B) Prior to September 17, 2001, with respect to each parcel of real
property leased by either Borrower, such Borrower shall deliver landlord
waivers, in form and substance satisfactory to the Lender, from the owner of
such parcel (a) waiving any landlord's lien in respect of personal property kept
at the premises subject to such lease, and (b) permitted Lender access to such
premises and a reasonable time period to remove such Collateral following a
default under such applicable lease or this Agreement.
10.8 Survival of Obligations Upon Termination of Agreement. Except as
otherwise expressly provided for in this Agreement, cancellation (regardless of
cause or procedure) of this Agreement or the Ancillary Agreements shall not in
any way affect or impair the powers, obligations, duties, rights, and
liabilities of Borrowers or Lender in any way or respect relating to any
transaction or event occurring prior to such termination or cancellation, the
Collateral, or any of the undertakings, agreements, covenants, warranties and
representations of Borrowers or Lender contained in this Agreement or the
Ancillary Agreements. All such undertakings, agreements, covenants, warranties
and representations shall survive such termination or cancellation.
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11. CONDITIONS PRECEDENT TO ANY ADVANCES. The obligation of Lender to make any
advances hereunder on or after the Restatement Effective Date is subject to the
satisfaction of each of the following conditions precedent:
11.1 Notice. Lender shall have received timely notice of such Borrowing
in accordance with Section 2.5 hereof and such notice shall be accompanied by a
certificate of a chief financial officer or president to the effect that the
conditions in Sections 11.3 and 11.4 have been met at the time of each advance.
11.2 Other Documents. Such other documents as the Lender shall
reasonably determine to be necessary.
11.3 Default. Before and after giving effect to such advance, no Default
or Event of Default under this Agreement shall have occurred and be continuing.
11.4 Warranties. Before and after giving effect to such advance, the
representations and warranties in Section 9 (unless stated to relate to a
specific earlier date, in which case such representations and warranties shall
be true in all material respects as of such date) hereof shall be true and
correct in all material respects as though made on the date of such advance.
12. CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of Lender to make
the initial advances hereunder on or after the Restatement Effective Date is
subject to the satisfaction of the condition precedent, in addition to the
applicable conditions precedent set forth in Section 11 above, that the
Borrowers shall have delivered to Lender all of the following, each duly
executed and dated the date of the initial advance hereunder on or after the
Restatement Effective Date or such earlier date as is satisfactory to Lender and
in form and substance satisfactory to Lender, except as otherwise hereinbelow
specified:
12.1 Agreement. This Agreement, duly executed by Borrowers, together
with all schedules and exhibits hereto.
12.2 Notes. The Revolving Note evidencing the Revolving Loan and the
Term Note evidencing the Term Loan, duly executed by Borrowers.
12.3 Modification to Mortgage. A Modification to the Mortgage dated
March 20, 1995, pursuant to which the Mortgage secures the Revolving Note and
the Term Note (and an updated title insurance endorsement to Lender's existing
title insurance policy).
12.4 Intellectual Property Security Agreement. Intellectual Property
Security Agreements, in form and substance reasonably acceptable to Lender, are
executed and delivered by Borrowers to Lender.
12.5 Resolutions. A copy, duly certified by the secretary of the
applicable Borrower, of (i) the resolutions of such Borrower authorizing or
ratifying the execution and delivery of this Agreement, the Notes and the
Ancillary Agreements, authorizing the advances hereunder and authorizing the
incurrence of the Letter of Credit Obligations hereunder, (ii) all documents
evidencing other necessary Borrower action, and (iii) all approvals or consents,
if any, with respect to this Agreement, the Note and the Ancillary Agreements.
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12.6 Articles of Incorporation, By-Laws; Good Standing Certificates.
Each of Borrower's Articles of Incorporation, together with good standing
certificates from each Secretary of State in which the each Borrower is
registered to conduct its business, each to be dated a date at most twenty (20)
days prior to the date of this Agreement, and a certified copy of the by-laws of
each Borrower.
12.7 Incumbency. A certificate of the secretary of each Borrower
certifying the names of the officers authorized to sign this Agreement, the
Notes and all Ancillary Agreements or certificates to be delivered hereunder,
together with the true signatures of such officers.
12.8 Opinion of Counsel. An opinion of counsel for Borrowers, addressed
to Lender, in form and substance acceptable to Lender.
12.9 Financing Statements. UCC financing statements, in form and
substance acceptable to the Lender.
12.10 Excess Availability. Borrowers shall have excess borrowing
availability of not less than $575,000.
12.11 Due Diligence. Completion of due diligence by Lender and its
counsel satisfactory to Lender and its counsel with respect to the proposed
transaction and with respect to any and all agreements between Virginia Honey,
▇▇▇▇▇ ▇▇▇▇ and Arlington ▇. ▇▇▇▇▇▇ in connection with the redemption by Virginia
Honey of the shares of Virginia Honey owned by Arlington ▇. ▇▇▇▇▇▇.
12.12 Prior Audits of Virginia Honey. Lender shall have received the
audited financial statement of Virginia Honey for the fiscal year ended 2000.
12.13 Cash Flow Projections; Proforma Financial Statements. Lender shall
have received (a) detailed, monthly income, balance sheet and cash flow
projections for the fiscal year 2001 for Vita, (b) cash flow projections for the
fiscal year 2001 for Virginia Honey, and (c) shall have received a proforma
post-closing balance sheet reasonably acceptable to Lender.
12.14 Borrowing Base Certificate. A Borrowing Base Certificate duly
executed by Borrowers.
12.15 UCC Searches. Copies of UCC Search Reports on Borrowers.
12.16 Insurance. Certificate of Insurance showing Lender as an
additional insured and lender's loss payee.
12.17 Closing Fee. A Closing Fee of $20,000 shall have been paid to
Lender.
12.18 Purchase of Virginia Honey. Vita shall have consummated the Stock
Purchase Agreement dated June 29, 2001, between it and ▇▇▇▇▇ ▇▇▇▇ regarding the
purchase of Virginia Honey, with no modifications thereto.
12.19 Fees and Expenses. Payment of all fees and expenses then due, if
any.
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12.20 Appraisals. Appraisals requested by Lender.
12.21 No Material Adverse Change. No material adverse change in the
financial condition, operations, assets and prospects of the Borrowers, prior to
the initial Funding Date.
12.22 Perfection and Priority. Evidence satisfactory to Lender and its
counsel of the perfection and first priority status of all security interests
and liens granted to Lender, and that there are no other security interests in
any Collateral (except for Permitted Liens).
12.23 Third Party Waivers and Agreements. Such landlord and mortgagee
waivers, bailee and warehouse agreements, and consignment agreements as Lender
shall request, all in form and substance reasonably satisfactory to Lender and
its counsel.
12.24 Compliance with Laws. Evidence of compliance by the Borrowers in
all material respects with all federal, state, local and foreign laws and
regulations including, but not limited to, environmental laws, labor and
employment laws, income unemployment, social security taxes, and pension funds
and retirement benefit programs as required by ERISA.
12.25 No Material Litigation. Evidence that there is no material
litigation or claim involving Borrowers or any guarantor.
12.26 Working Capital Needs. Evidence of sufficient asset availability
to meet Borrowers' working capital needs.
12.27 Other Documents. Such other documents, agreements and instruments
as Lender shall determine to be necessary.
13. DEFAULT: RIGHTS AND REMEDIES ON DEFAULT
13.1 Default. The occurrence of any one or more of the following events
shall constitute a Default:
(A) Borrowers (i) fail to pay the Liabilities after when due and payable
or declared due and payable or (ii) is in default in the payment of any of the
Indebtedness (other than the Liabilities and Subordinated Debt);
(B) Borrowers or any Affiliate or any guarantor of the Liabilities fails
or neglects to perform, keep or observe any other term, provision, condition or
covenant contained in this Agreement or in the Ancillary Agreements, which is
required to be performed, kept or observed by such Borrower or such Affiliate or
guarantor (and not constituting a Default under any other subsection of this
Section 13.1) and the same is not cured to Lender's satisfaction within ten (10)
days after Lender gives Borrowers notice identifying such Default;
(C) Any statement, warranty, representation, report, financial
statement, or certificate made or delivered by any Borrower, or any of its
officers, employees or agents, to Lender is not true and correct in any material
respect;
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(D) There shall occur any material uninsured damage to or loss, theft,
or destruction of any of the Collateral;
(E) The Collateral or any of any Borrower's other assets are attached,
seized, levied upon or subjected to a writ or distress warrant, or come within
the possession of any receiver, trustee, custodian or assignee for the benefit
of creditors and the same is not cured within thirty (30) days thereafter; an
application is made by any Person other than either Borrower for the appointment
of a receiver, trustee, or custodian for the Collateral or any of any Borrower's
other assets and the same is not dismissed within thirty (30) days after the
application therefor;
(F) An application is made by any Borrower for the appointment of a
receiver, trustee or custodian for the Collateral or any of such Borrower's
other assets; a petition under any section of chapter of the Bankruptcy Code or
any similar law or regulation is filed by or against any Borrower or any
guarantor of the Liabilities and, if filed against any Borrower or such
guarantor, is not dismissed within thirty (30) days after filing; any Borrower
makes an assignment for the benefit of its creditors or any case or proceeding
is filed by or against any Borrower for its dissolution, liquidation or
termination; any Borrower ceases to conduct its business as now conducted or is
enjoined, restrained or in any way prevented by court order from conducting all
or any material part of its business affairs;
(G) Except as permitted in Section 10.3 of this Agreement, a notice of
lien, levy or assessment is filed of record with respect to all or any
substantial portion of any Borrower's assets by the United States, or any
department, agency or instrumentality thereof, or by any state, county,
municipal or other governmental agency, including, without limitation, the
Pension Benefit Guaranty Corporation, or any taxes or debts owing to any of the
foregoing becomes a lien or encumbrance upon the Collateral or any of any
Borrower's other assets and such lien or encumbrance is not released within
thirty (30) days after its creation;
(H) Judgment is rendered against any Borrower in excess of $25,000.00
and such Borrower fails either to commence appropriate proceedings to appeal
such judgment within the applicable appeal period or, after such appeal is
filed, such Borrower fails to diligently prosecute such appeal or such appeal is
denied;
(I) Any Borrower becomes insolvent or fails generally to pay its debts
as they become due; or
(J) Any Borrower fails within fifteen (15) days after the occurrence of
the respective event, to furnish Lender with appropriate notice of the
occurrence of any of the following events: (i) the happening of a Reportable
Event with respect to any profit sharing or pension plan governed by ERISA (such
notice shall contain the statement of a chief financial officer of Borrowers
setting forth details as to such Reportable Event and the action which Borrowers
propose to take with respect thereto and a copy of the notice of such Reportable
Event to the Pension Benefit Guaranty Corporation), (ii) the termination of any
such plan, (iii) the appointment of a trustee by an appropriate United States
District Court to administer any such plan, or (iv) the institution of any
proceedings by the Pension Benefit Guaranty Corporation to terminate any such
plan or to appoint a trustee to administer any such plan. Borrowers fail to: (v)
furnish to Lender a copy of each report which is filed by Borrowers with respect
to each such
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profit sharing or pension plan promptly after the filing thereof with the
Secretary of Labor or the Pension Benefit Guaranty Corporation; (vi) notify
Lender promptly upon receipt by any Borrower of any notice of the institution of
any proceeding or other actions which may result in the termination of such
plans; or (vii) acquire and maintain, when available, any contingent employer
liability coverage insurance required by ERISA in an amount satisfactory to
Lender; or
(K) A matured default occurs under any of the Ancillary Agreements.
13.2 Acceleration of the Liabilities. Upon and after the occurrence of a
Default, all of the Liabilities may, at the option of Lender and without further
demand, notice, or legal process of any kind, be declared, and immediately shall
become, due and payable.
13.3 Remedies. Upon and after the occurrence of a Default, Lender shall
have the following rights and remedies:
(A) All of the rights and remedies of a secured party under the Illinois
Uniform Commercial Code or other applicable law, all of which rights and
remedies shall be cumulative, and none exclusive, to the extent permitted by
law, in addition to any other rights and remedies contained in this Agreement
and in all of the Ancillary Agreements.
(B) The right to (i) peacefully enter upon the premises of Borrowers or
any other place or places where the Collateral is located and kept, without any
obligation to pay rent to Borrowers, through self-help and without judicial
process or first obtaining a final judgment or giving Borrowers notice and
opportunity for a hearing on the validity of Lender's claim, and remove the
Collateral from such premises and places to the premises of Lender or any agent
of Lender, for such time as Lender may require to collect or liquidate the
Collateral, and/or (ii) require Borrowers to deliver the Collateral to Lender at
a place to be designated by Lender.
(C) The right to (i) open Borrowers' mail and collect any and all
amounts due to Borrowers from Account Debtors, (ii) notify Account Debtors that
the Accounts have been assigned to Lender and that Lender has a security
interest therein and (iii) direct such Account Debtors to make all payments due
from them to Borrowers upon the Accounts, including the Special Collateral,
directly to Lender or to a lock box designated by Lender. Lender shall promptly
furnish Borrowers with a copy of any such notice, and Borrowers hereby agree
that any such notice, in Lender's sole and absolute discretion, may be sent on
Lender's stationery, in which event, Borrowers shall co-sign the appropriate
notice with Lender.
(D) The right to sell or to 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 provided in Section 13.4
of this Agreement, in lots or in bulk, for cash or on credit, all as Lender, in
its sole and absolute discretion, may deem advisable. Any such sale or sales of
the Collateral, the Collateral need not be in view of those present and
attending the sale, nor at the same location at which the sale is being
conducted. Lender shall have the right to conduct such sales on Borrowers'
premises or elsewhere and shall have the right to use Borrowers' premises
without charge for such sales for such time or times as Lender may see fit.
Lender is hereby granted a license or other right to use, without charge,
Borrowers' labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks and
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advertising matter, or any property of a similar nature, as it pertains to the
Collateral, in advertising for sale and selling any Collateral and Borrowers'
rights under all licenses and all franchise agreements shall insure to Lender's
benefit. 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 setoff the amount of such price against the Liabilities. The proceeds
realized from the sale of any Collateral shall be applied first to the
reasonable costs, expenses and attorneys' and paralegal fees and expenses
incurred by Lender for collection and for acquisition, completion, protection,
removal, storage, sale and delivery of the Collateral; second to interest due
upon any of the Liabilities; and third to the principal of the Liabilities. If
any deficiency shall arise, Borrowers shall remain liable to Lender therefor.
13.4 Notice. Any notice required to be given by Lender of a sale, lease,
other disposition of the Collateral or any other intended action by Lender,
which is personally delivered, sent by air courier, telecopied or deposited in
the United States mail, postage prepaid and duly addressed to Borrowers, at the
address set forth in Section 14.10 of this Agreement, seven (7) days prior to
such proposed action, shall constitute commercially reasonable and fair notice
thereof to Borrowers.
14. MISCELLANEOUS
14.1 Appointment of Lender as Borrowers' Lawful Attorney. Each Borrower
irrevocably designates, makes constitutes and appoints Lender (and all persons
designated by Lender) as its true and lawful attorney (and agent in-fact) and
Lender, or Lender's agent, may, without notice to it:
(A) At any time hereafter, endorse by writing or stamp its name on any
checks, notes, drafts or any other payment relating to and/or proceeds of the
Collateral which come into the possession of Lender or under Lender's control
and deposit the same to the account of Lender for application to the
Liabilities;
(B) At any time after the occurrence of a Default, in its or Lender's
name: (i) demand payment of the Accounts; (ii) enforce payment of the Accounts,
by legal proceedings or otherwise; (iii) exercise all of its rights and remedies
with respect to the collection of the Accounts and Special Collateral; (iv)
settle, adjust, compromise, extend or renew the Accounts; (v) settle, adjust or
compromise any legal proceedings brought to collect the Accounts; (vi) if
permitted by applicable law, sell or assign the Accounts and Special Collateral
upon such terms, for such amounts and at such time or times as Lender deems
advisable; (vii) discharge and release the Accounts and Special Collateral;
(viii) take control, in any manner, of any item of payment or proceeds referred
to in Section 4.3 of this Agreement; (ix) prepare, file and sign its name on any
Proof of Claim in Bankruptcy or similar document against any Account Debtor; (x)
prepare, file and sign its name on any notice of lien, assignment or
satisfaction of lien or similar document in connection with the Accounts and
Special Collateral; (xi) do all acts and things necessary, in Lender's sole
discretion, to fulfill its obligations under this Agreement; (xii) endorse by
writing or stamp its name upon any chattel paper, document, instrument, invoice,
freight ▇▇▇▇, ▇▇▇▇ of lading or similar document or agreement relating to the
Accounts, Inventory and Special Collateral; and (xiii) use the information
recorded on or contained in any data
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processing equipment and computer hardware and software relating to the
Accounts, Inventory and Special Collateral to which it has access; and
(C) At any time after the occurrence of a Default, notify the post
office authorities to change the address for delivery of its mail to an address
designated by Lender and receive, open and dispose of all mail addressed to it.
14.2 Modification of Agreement; Sale of Interest. This Agreement and the
Ancillary Agreements may not be modified, altered or amended, except by an
agreement in writing signed by Borrowers and Lender. No Borrower may sell,
assign or transfer this Agreement, or the Ancillary Agreements or any portion
thereof, including, without limitation, Borrowers' right, title, interest,
remedies, powers, and/or duties hereunder or thereunder. Each Borrower hereby
consents to Lender's participation, sale, assignment, transfer or other
disposition, at any time or times hereafter, of this Agreement, or the Ancillary
Agreements, or of any portion hereof or thereof, including, without limitation,
Lender's right, title, interest, remedies, powers, and/or duties hereunder or
thereunder, and each Borrower acknowledges and agrees that any and all such
assignees or participants may be provided with information concerning it, its
operations, business and financial condition and any guarantor and/or this
Agreement and the Ancillary Agreements which have been or would be provided to
Lender.
14.3 Attorneys' Fees and Expenses; Lender's Out-of-Pocket Expenses. If,
at any time or times, whether prior or subsequent to the date hereof, and
regardless of the existence of a Default or an Event of Default, and regardless
of whether any advances shall have been made hereunder, Lender employs counsel
for advice or other representation or incurs legal and/or other costs and
expenses in connection with:
(A) The preparation, negotiation, delivery and/or administration
execution of this Agreement, all Ancillary Agreements, any amendment of or
modification of this Agreement or the Ancillary Agreements or any sale or
attempted sale of any interest herein to an assignee or a Participant; or
(B) Any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Lender, Borrowers or any other Person) in any way
relating to the Collateral, this Agreement, the Ancillary Agreements or
Borrowers' affairs;
(C) Any attempt to enforce any rights of Lender or any Participant
against Borrowers or any other Person which may be obligated to Lender by virtue
of this Agreement or the Ancillary Agreements, including, without limitation,
the Account Debtors or any guarantor; and/or
(D) Any attempt to inspect, verify, protect, collect, sell, liquidate or
otherwise dispose of the Collateral; then, in any such event, the reasonable
attorneys' fees arising from such services and all reasonably incurred expenses,
costs, charges and other fees of such counsel or of Lender in any way or respect
arising in connection with or relating to any of the events or actions described
in this Section 14.3 shall be payable, on demand, by Borrowers to Lender and
shall be additional Liabilities hereunder secured by the Collateral. Without
limiting the generality of the foregoing, such expenses, costs, charges and fees
may include paralegals' fees, costs and
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expenses; accountants' fees, costs and expenses; court costs, fees and expenses;
photocopying and duplicating expenses; court reporter fees, costs and expenses;
long distance telephone charges; air express charges; telegram and telecopier
charges; secretarial overtime charges; and expenses for travel, lodging and food
paid or incurred in connection with the performance of such services; and all
documentation fees, filing fees, taxes, title expenses, collateral monitoring
expenses, appraisal fees, searches and other expenses.
14.4 Waiver by Lender. Lender's failure, at any time or times hereafter,
to require strict performance by Borrowers of any provision of this Agreement
shall not constitute a waiver, or affect or diminish any right of Lender
thereafter to demand strict compliance and performance therewith. Any suspension
or waiver by Lender of a Default by Borrowers under this Agreement or the
Ancillary Agreements shall not suspend, constitute a waiver of or affect any
other Default by Borrowers under this Agreement or Ancillary Agreement, whether
the same is prior or subsequent thereto and whether of the same or of a
different type. None of the undertakings, agreements, warranties and covenants
of Borrowers contained in this Agreement or the Ancillary Agreements and no
Default by the Borrowers under this Agreement or the Ancillary Agreements shall
be deemed to have been suspended or waived by Lender, unless such suspension or
waiver is by an instrument in writing signed by an officer of Lender and
directed to Borrowers specifying such suspension or waiver.
14.5 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 to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
14.6 Parties; Entire Agreement. This Agreement and the Ancillary
Agreements shall be binding upon and inure to the benefit of Borrowers and
Lender and their successors and assigns. Borrowers' successors and assigns shall
include, without limitation, a trustee, receiver or debtor-in-possession of or
for any Borrower. Nothing contained in this Section 14.6 shall be deemed to
modify Section 14.2 of this Agreement. This Agreement is the complete statement
of the agreement by and between Borrowers and the Lender and supersedes all
prior negotiations, understandings and representations between them with respect
to the subject matter of this Agreement.
14.7 Conflict of Terms. The provisions of the Ancillary Agreements are
incorporated in this Agreement by this reference thereto. Except as otherwise
provided in this Agreement and except as otherwise provided in the Ancillary
Agreements by specific reference to the applicable provision of this Agreement,
if any provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in the Ancillary Agreements, the provision
contained in this Agreement shall govern and control.
14.8 Waivers by Borrowers. Except as otherwise provided for in this
Agreement, each Borrower waives (i) presentment, demand and protest, notice of
protest, notice of presentment, 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 either Borrower may in any way be liable and
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hereby ratifies and confirms whatever Lender may do in this regard; (ii) all
rights to notice and a hearing prior to Lender's taking possession or control
of, or to Lender's replevy, attachment or levy upon, 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; and (iii) the benefit of all valuation,
appraisement, extension and exemption laws. Each Borrower acknowledges that it
has been advised by counsel of its choice with respect to this Agreement and the
transactions evidenced by this Agreement.
14.9 Governing Law. This Agreement shall be interpreted, and the rights
and liabilities of the parties hereto determined, in accordance with the
internal laws (as opposed to conflicts of law provision) of the State of
Illinois, and, as part of the consideration for new value this day received,
each Borrower hereby consents to the jurisdiction of any state or federal court
located within ▇▇▇▇ County, Illinois and waives personal service of any and all
process upon such Borrower, and consents that all such service of process be
made by messenger or registered mail directed to Borrowers at the address stated
in Section 14.10(b) of this Agreement and service so made shall be deemed to be
completed upon the earlier of actual receipt or three (3) days after the same
shall have been posted to Borrowers' address by Borrowers' agent as set forth
below. Each Borrower waives any objection which such Borrower may have based on
improper venue or forum non conveniens to the conduct of any proceeding
instituted hereunder and consents to the granting of such legal or equitable
relief as is deemed appropriate by the court. Nothing contained in this Section
14.9 shall affect the right of Lender to serve legal process in any other manner
permitted by law or affect the right of Lender to bring any action or proceeding
against any Borrower or its property in the courts of any other jurisdiction.
14.10 Notice. Except as otherwise provided herein, any notice required
hereunder shall be in writing and shall be deemed to have been validly served,
given or delivered by personal delivery, air courier, telecopier or upon deposit
in the United States mails, with proper postage prepaid, certified or registered
mail, addressed to the party to be notified as follows:
(a) If to Lender, at
American National Bank and Trust Company of Chicago
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
Schwartz, Cooper, ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Chartered
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(b) If to Borrowers, at
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c/o Vita Food Products, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
Much, Shelist, Freed ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, PC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
or to such other address as each party may designate for itself by like notice.
14.11 No Marshalling. The Borrowers, on their own behalf and on behalf
of its successors and assigns hereby expressly waives all rights, if any, to
require a marshalling of assets by the Lender or to require that the Lender
first resort to some or any portion of any collateral securing the Borrowers'
obligations before foreclosing upon, selling or otherwise realizing on any other
portion thereof.
14.12 Set-off. In addition to any rights and remedies of Lender provided
by law, Lender shall have the right, without prior written notice to Borrowers,
any such notice being expressly waived by Borrowers to the extent permitted by
applicable law, upon the occurrence of any Default and so long as such Default
is continuing, to set off and apply against any obligations, whether matured or
unmatured, of Borrowers to Lender, any amount owing by Lender to Borrowers, at
or at any time after the happening of any of the above-mentioned events, and
such right of set-off may be exercised by Lender against Borrowers or against
any assignee for the benefit of creditors, receiver, or execution, judgment or
attachment creditor of any Borrower, or against anyone else claiming through or
against any Borrower or such assignee for the benefit of creditors, receiver, or
execution, judgment or attachment creditor, notwithstanding the fact that such
right of set-off shall not have been exercised by Lender prior to the making,
filing or issuance or service upon Lender of, or of notice of, assignment for
the benefit of creditors, appointment or application for the appointment of a
receiver, or issuance of execution, subpoena or order or warrant. Lender agrees
promptly to notify Borrowers after any set-off and application made by Lender,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
14.13 ACKNOWLEDGMENT OF Borrowers. THIS AGREEMENT HAS BEEN FREELY AND
VOLUNTARILY ENTERED INTO WITH LENDER BY Borrowers, WITHOUT ANY DURESS OR
COERCION, AND AFTER Borrowers HAVE EITHER CONSULTED WITH COUNSEL OR HAS BEEN
GIVEN AN OPPORTUNITY TO DO SO, AND Borrowers ACKNOWLEDGE THAT IT HAS CAREFULLY
AND COMPLETELY READ ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT.
14.14 WAIVER OF JURY TRIAL AND CONSENT TO JURISDICTION.
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(a) THE Borrowers AND LENDER, AFTER CONSULTING OR HAVING HAD THE
OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY
WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT OR
ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT,
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF EITHER OF THEM.
NEITHER LENDER NOR Borrowers SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR
OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS
SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY
EITHER LENDER OR Borrowers EXCEPT BY A WRITTEN INSTRUMENT SIGNED BY BOTH OF
THEM.
(b) Borrowers AGREE THAT ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY MAY BE BROUGHT IN ANY
COURT OF THE UNITED STATES OF AMERICA OR OF THE STATE OF ILLINOIS, SITTING OR
HAVING JURISDICTION OVER THE COUNTY OF ▇▇▇▇, ILLINOIS AND EACH BORROWER HEREBY
SUBMITS TO AND ACCEPTS GENERALLY AND UNCONDITIONALLY THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS WITH RESPECT TO ITS PERSON AND PROPERTY AND
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN CONNECTION WITH ANY SUCH
ACTION OR PROCEEDING BY MAILING SUCH SERVICE OF PROCESS (CERTIFIED OR
REGISTERED, IF CAPABLE OF CERTIFICATION OR REGISTRATION) TO EACH BORROWER AT ITS
ADDRESS SET FORTH BELOW. EACH BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION
TO THE LAYING OF VENUE OF ANY SUCH SUIT OR PROCEEDING IN THE ABOVE-DESCRIBED
COURTS. NOTHING IN THIS PARAGRAPH SHALL AFFECT THE RIGHT OF LENDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR LIMIT THE RIGHT OF LENDER TO
BRING ANY SUCH ACTION OR PROCEEDING AGAINST ANY BORROWER OR ITS PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTION. EACH BORROWER IRREVOCABLY AND GENERALLY
CONSENTS IN RESPECT OF ANY PROCEEDINGS TO THE GIVING OF ANY RELIEF OR THE ISSUE
OF ANY PROCESS IN CONNECTION WITH THOSE PROCEEDINGS INCLUDING, WITHOUT
LIMITATION, THE MAKING, ENFORCEMENT OR EXECUTION AGAINST ANY ASSETS WHATSOEVER
OF ANY ORDER OR JUDGMENT WHICH MAY BE MADE OR GIVEN IN THOSE PROCEEDINGS.
14.15 Indemnification. To the maximum extent permitted by law, each
Borrower hereby indemnifies and holds harmless Lender and its directors,
officers, agents, affiliates, counsel and employees ("Indemnified Persons") from
and against all losses, claims, damages, costs, expenses and liabilities
("Losses") incurred by any of them (whether direct, indirect or consequential
and whether based on any federal or state laws or other statutory regulations,
including, without limitation, securities and commercial laws and regulations,
under common law or at equitable cause, or by contract or otherwise, including
any liability and costs under Federal, state or local environmental, health or
safety laws, regulations, or common law principles, arising from or in
connection with the past, present or future operations of each Borrower or its
predecessors in interest, or the past, present or future environmental condition
of
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the Property, the presence of asbestos-containing materials at the Property, the
presence of Contaminants in groundwater, or the Release or threatened Release of
any Contaminant into the environment from the Property, or otherwise) arising
out of or relating to this Agreement or the Ancillary Agreements or any other
transaction contemplated hereby or thereby or the use or intended use of the
proceeds of the loans hereunder or the operations of each Borrower's business
except for any such losses caused by the gross negligence or willful misconduct
of such Indemnified Persons, and, except as otherwise provided in the Ancillary
Agreements, Borrowers shall reimburse Lender and each other Indemnified Person
for any reasonable expenses (including the fees and disbursements of legal
counsel) incurred in connection with the investigation of, preparation for or
defense of any actual or threatened claim, action or proceeding arising
therefrom (including any such cost of responding to discovery requests or
subpoenas), regardless of whether Lender or such Indemnified Person is a party
thereto. This indemnity shall survive the termination of this Agreement and the
Ancillary Agreements.
14.16 Section Titles. The section titles contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever and
are not a part of the agreement between the parties hereto.
14.17 Prior Documents Any and all documents previously executed by
Borrowers, including notes, security agreements, financing statements,
subordination agreements, pledge agreements, guarantys, and the like, shall
remain in full force and effect. The Loan and Security Agreement dated March 25,
1995 and any amendments thereto are superseded by this Agreement.
14.18 Counterparts. This Agreement may be executed in one or more
counterparts, each of which together shall constitute the same agreement. One or
more counterparts of this Agreement may be delivered by facsimile, with the
intention that such delivery shall have the same effect as delivery of an
original counterpart thereof.
14.19 Subrogation and Contribution. If any Borrower ("Paying Borrower")
makes a payment in respect of principal and accrued interest hereunder and all
costs, fees and expenses owing hereunder, including, without limitation, fees
and disbursements of counsel (collectively, the "Joint Obligations") the
proceeds or benefit or which were received by another Borrower (the "Underpaying
Borrower"), such Paying Borrower shall be subrogated to the rights of the Lender
against the Underpaying Borrower to the extent of such proceeds or benefit and
shall have the right of contribution with respect to such payment set forth
below against the other Borrowers (other than the Underpaying Borrower);
provided that no Borrower shall enforce its rights of subrogation until all of
the Joint Obligations have been paid in full and all credit facilities related
thereto terminated. If any Paying Borrower makes a payment in respect of the
Joint Obligations the proceeds of which were received by an Underpaying Borrower
that is smaller in proportion to such Paying Borrower's Payment Share (as
hereinafter defined) than the payments made by the other Borrowers in repayment
of such Joint Obligations are in proportion to the amounts of their respective
Payment Shares, the Borrower making such proportionately smaller payment shall,
when permitted by the preceding sentence, pay to the other Borrowers (other than
the Underpaying Borrower) an amount such that the net payments made by the
Borrowers (other than the Underpaying Borrower) in respect of such Joint
Obligations shall be shared among such Borrowers (other than the Underpaying
Borrower) pro rata in proportion to their respective
-45-
Payment Shares. If any Borrower receives with respect to the Joint Obligations
of any Underpaying Borrower any payment by way of subrogation that is greater in
proportion to the amount of its Payment Share than the payments with respect to
such Joint Obligations received by way of subrogation by the other Borrowers
(other than the Underpaying Borrower), the Borrower receiving such
proportionately greater payment shall, when otherwise permitted by this Section
14.19, pay to such other Borrowers an amount such that the subrogation payments
received by all Borrowers (other than the Underpaying Borrower) shall be shared
by such Borrower pro rata in proportion to their respective Payment Shares. For
purposes hereof, "Payment Share" of any Borrower shall be the product of (a) the
aggregate amount of such Joint Obligations remaining unpaid on the date such
Joint Obligations become due and payable in full, whether at stated maturity,
acceleration, or otherwise (the "Determination Date"), times (b) a fraction, the
numerator of which is the balance of all moneys and consideration directly or
indirectly advanced to or received by such Borrower pursuant to this Agreement
net of all repayments thereof made by such Borrower, measured as of the
Determination Date, and the denominator of which is the aggregate of all moneys
and other consideration directly or indirectly advanced to or received by all
Borrowers (other than the Underpaying Borrower) under this Agreement, net of all
repayments thereof by all such Borrowers measured as of the Determination Date.
[Remainder of the page is intentionally blank; signature page on next page]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year specified at the beginning hereof.
VITA FOOD PRODUCTS, INC.
By:
-----------------------------
Title:
--------------------------
VIRGINIA HONEY COMPANY, INC.
By:
-----------------------------
Title:
--------------------------
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO
By:
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Assistant Vice
President
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EXHIBIT A
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
DATED: AUGUST 15, 2001
BORROWING BASE CERTIFICATE - see attached
-48-
SCHEDULE 5.6
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
DATED: AUGUST __, 2001
INVENTORY LOCATIONS
CHIEF EXECUTIVE OFFICE AND LOCATIONS
OF COLLATERAL
-49-
SCHEDULE 9.1(B)
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
DATED: AUGUST __, 2001
OTHER CORPORATE OR FICTITIOUS NAMES USED
-50-
SCHEDULE 9.1(I)
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
DATED: AUGUST __, 2001
PENDING LITIGATION, OTHER INDEBTEDNESS:
GUARANTIES
A. Pending Litigation
B. Other Indebtedness
C. Guaranties
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SCHEDULE 9.1(J)
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
DATED: AUGUST __, 2001
JUDGMENTS; ORDERS; LABOR DISPUTES;
LABOR PROBLEMS AND AGREEMENT
NONE
-52-
SCHEDULE 9.1(K)
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
DATED: AUGUST __, 2001
OTHER LIENS, CLAIMS, SECURITY INTERESTS
AND ENCUMBRANCES
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