Document prepared by
G. Andrew Nea, Jr.
Williams, Mullen, Christian & Xxxxxxx
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
AMENDED AND RESTATED
CREDIT LINE DEED OF TRUST AND SECURITY AGREEMENT
AMONG
SHERWOOD FOODS, INC.
AS GRANTOR;
AND
XXXXXXX X. XXXXXXXX AND G. ANDREW NEA, JR.
AS TRUSTEES (GRANTEES).
Dated as of May 1, 1997
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THIS IS A CREDIT LINE DEED OF TRUST within the meaning of Section 55-58.2
of the Code of Virginia (1950), as amended. For the purposes of and to the
extent required by such section, (i) the name of the noteholder secured by this
Deed of Trust is Central Fidelity National Bank, (ii) the address at which
communications may be mailed or delivered to such noteholder is set forth in
Article VII of this Deed of Trust and (iii) the maximum aggregate amount of
principal to be secured at any one time is One Million Five Hundred Forty
Thousand Seven Hundred Thirty Six Dollars ($1,540,736).
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This is an amendment and restatement of existing Credit Line Deed of Trust and
security agreement among the parties hereto dated June 1, 1996 and recorded in
the Clerk's Office, Circuit Court, Mecklenberg, Virginia, in Deed Book 504 at
page 18 as supplemented by first amendment to Credit Line Deed of Trust dated
November 20, 1996 and recorded in Deed Book 512 at page 264 (collectively the
"1996 Deed of Trust"). No novation is intended.
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The recording tax imposed by Virginia Code Section 58.1-803 has heretofore been
paid on the sum of $580,000.00. This is a supplemental writing within the
meaning of Section 58.1-809 of the Code of Virginia (1950) as amended. The new,
previously untaxed consideration is $9,853.00.
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1
TABLE OF CONTENTS
PARTIES PAGE
ARTICLE I
DEFINITIONS
Section 1.1 Definitions............................................. 2
Section 1.2 Interpretation.......................................... 6
ARTICLE II
CONVEYANCE OF SECURITY PROPERTY
Section 2.1 Grant to Trustees....................................... 6
Section 2.2 Security Agreement...................................... 7
ARTICLE III
COVENANTS
Section 3.1 Payment and Performance................................. 7
Section 3.2 Maintenance of the Project.............................. 7
Section 3.3 Use of Project; Compliance with Laws.................... 7
Section 3.4 Restrictive Covenants................................... 8
Section 3.5 Management of Project................................... 8
Section 3.6 Impositions............................................. 8
Section 3.7 Insurance............................................... 8
Section 3.8 Insurance and Tax Escrow................................ 11
Section 3.9 Sale or Encumbrance of the Project...................... 11
Section 3.10 Maintenance of Borrower's Existence.................... 11
Section 3.11 Estoppel Certificates.................................. 11
Section 3.12 Payment of Filing Fees and Taxes....................... 12
Section 3.13 Right of Inspection.................................... 12
Section 3.14 Books and Records...................................... 12
Section 3.15 Financial Statements................................... 12
Section 3.16 Taxation of Deed of Trust.............................. 12
Section 3.17 Environmental Compliance............................... 12
Section 3.18 Payment of Costs....................................... 13
Section 3.19 Further Assurances..................................... 13
Section 3.20 Alteration of Improvements............................. 14
Section 3.21 Change in Zoning....................................... 14
Section 3.22 Operation of Project................................... 14
ARTICLE IV
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 4.1 Notice.................................................. 14
Section 4.2 Restoration of the Project.............................. 14
Section 4.3 Application of Insurance Proceeds....................... 14
Section 4.4 Condemnation............................................ 15
ARTICLE V
DEFAULT; REMEDIES
Section 5.1 Events of Default....................................... 16
Section 5.2 Drafts under the Letter of Credit....................... 17
Section 5.3 Surrender of Possession................................. 17
Section 5.4 Right to Manage Project................................. 18
Section 5.5 Appointment of Receiver................................. 18
Section 5.6 Environmental Audit..................................... 18
Section 5.7 Right to Cure Defaults.................................. 19
Section 5.8 Foreclosure............................................. 19
Section 5.9 No Reinstatement........................................ 19
Section 5.10 Indemnification by Borrower............................ 19
Section 5.11 Remedies Cumulative.................................... 20
Section 5.12 Waiver Relating to Remedies............................ 20
Section 5.13 Costs Incurred by Bank and Trustees.................... 20
ARTICLE VI
THE TRUSTEES
Section 6.1 Any Trustees May Act; Substitution Permitted............ 21
Section 6.2 Compensation and Expenses............................... 21
Section 6.3 Performance of Duties; Liability........................ 21
ARTICLE VII
MISCELLANEOUS
Section 7.1 Successors and Assigns.................................. 21
Section 7.2 Severability............................................ 21
Section 7.3 Applicable Law.......................................... 21
Section 7.4 Notices, Demands and Requests........................... 21
Section 7.5 Approvals and Consents.................................. 22
Section 7.6 Amendments.............................................. 22
Section 7.7 No Partnership.......................................... 22
Section 7.8 Renewal or Extension, Etc............................... 22
Section 7.9 Failure to Exercise Rights.............................. 23
Section 7.10 No Duty to Expend Funds................................ 23
Section 7.11 Full Release........................................... 23
Section 7.12 Granting Easements..................................... 23
Section 7.13 Joinder................................................ 24
THIS IS A CREDIT LINE DEED OF TRUST
THIS AMENDED AND RESTATED CREDIT LINE DEED OF TRUST AND SECURITY AGREEMENT
(this "Deed of Trust") is made as of May 1, 1997, among SHERWOOD FOODS, INC., a
North Carolina corporation, Grantor (the "Borrower"), and XXXXXXX X. XXXXXXXX, a
resident of Albemarle County, Virginia and G. ANDREW NEA, JR., a resident of the
City of Richmond, Virginia, trustees, Grantees (the "Trustees").
RECITALS:
1. The Industrial Development Authority of Mecklenburg County, Virginia, a
political subdivision of the Commonwealth of Virginia (the "Authority") has
issued its Variable Rate Demand Revenue Bonds (Sherwood Foods, Inc. Project),
Series 1996, in the aggregate principal amount of Nine Hundred Thirty Five
Thousand Dollars ($935,000.00) (the 1996 "Bonds") for the acquisition of an
approximately 10 acre parcel of land and the renovation and equipping of an
approximately 67,000 square foot manufacturing facility at 000 X. Xxxx Xx.,
Xxxxx Xxxx, Xxxxxxxxxxx Xxxxxx, Xxxxxxxx pursuant to an Indenture of Trust dated
as of June 1, 1996 (the 1996 Indenture) among the Authority and Crestar Bank, as
trustee (the "Indenture Trustee"), including any amendments and supplements
thereto (the "1996 Indenture").
2. Central Fidelity National Bank (the "Bank") issued a letter of credit
for the benefit of the Indenture Trustee and the holder from time to time of the
1996 Bonds in the amount of Nine Hundred Fifty Thousand Eight Hundred Eighty
Three Dollars ($950,883.00) to provide for payment of the principal of and
interest and premium, if any, on the 1996 Bonds (the "1996 Letter of Credit").
3. The Bank, Sherwood Brands, Inc., and the Borrower have entered into a
reimbursement agreement dated as of June 1, 1996 (the "1996 Reimbursement
Agreement") and the Financing Documents, as defined in the 1996 Reimbursement
Agreement.
4. The Borrower's obligations under the 1996 Reimbursement Agreement are
secured by a Credit Line Deed of Trust and Security Agreement from the Borrower
to the Trustees dated as of June 1, 1996 and recorded in the Clerk's Office,
Circuit Court Mecklenberg County, Virginia (the "Clerk's Office") in Deed Book
504 at page 18 (the "1996 Deed of Trust").
5. The 1996 Deed of Trust was supplemented by a first amendment to Credit
Line Deed of Trust and Security Agreement dated as of November 20, 1996 and
recorded in the Clerk's office in Deed Book 512 at page 264 (the "First
Amendment").
6. The First Amendment secures the Borrower's Note payable to the order of
the Bank in the principal amount of Five Hundred Eighty Thousand Dollars
($580,000.00) (the "Note").
7. In order to refinance the Note, the Authority has issued its variable
Rate Demand Revenue Bonds (Sherwood Foods, Inc. Project), Series 1997 (the "1997
Bonds") for the further equipping of the Project pursuant to an Indenture of
Trust dated as
1
of the date hereof among the Authority and the Indenture Trustee, including any
amendments and supplements thereto (the "1997 Indenture").
8. The Bank has been requested to issue a letter of credit for the benefit
of the Indenture Trustee and the holders from time to time of the 1997 Bonds in
the amount of Five Hundred Eighty Nine Thousand Eight Hundred Fifty Three
Dollars ($589,853.00) to provide for the payment of the principal of and
interest and premium, if any, on the 1997 Bonds (the "1997 Letter of Credit").
9. The Bank, Sherwood Brands, Inc., and the Borrower have entered into an
amended and restated Reimbursement Agreement dated as of the date hereof,
restating the 1996 Reimbursement Agreement to provide for the 1996 Letter of
Credit and the 1997 Letter of Credit (the "Reimbursement Agreement").
10. The terms defined in the Reimbursement Agreement and used herein,
unless otherwise defined herein, shall have the same meaning as defined in the
Reimbursement Agreement.
11 This Deed of Trust shall secure the payment of the Obligations, as
hereinafter defined, and the performance by the Borrower of the Borrower's
obligations under the Financing Documents. No novation is intended.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Deed of Trust the terms listed
below shall have the indicated meanings unless otherwise required by the
context.
Accounts shall mean all now owned or hereinafter acquired accounts as
defined by the UCC arising out of the use or operation of the Project and all
proceeds thereof.
Assignment of Contracts shall mean the assignment of contracts and
documents between the Borrower and the Bank, dated as June 1, 1996, assigning
the contracts, licenses and operating agreements related to the Project as
security for the Obligations.
Authority shall mean the Industrial Development Authority of Mecklenburg
County, Virginia a political subdivision of the Commonwealth of Virginia, its
successors or assigns.
1996 Bond or Bonds shall mean the Variable Rate Demand Revenue Bonds
(Sherwood Foods, Inc. Project), Series 1996, in the aggregate principal sum of
Nine Hundred Thirty Five Thousand Dollars ($935,000.00).
1996 Commitment shall mean the commitment letter dated May 15, 1996 from
the Bank to the Borrower and all amendments thereto.
1997 Commitment shall mean the commitment letter dated February 6, 1997
from the Bank the Borrower and all amendments thereto.
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Commitments shall mean the 1996 Commitment and the 1997 Commitment.
Condemnation shall mean any taking of or damage to the Project or any
interest therein by sale in lieu of the exercise of such power.
Default shall mean any event or circumstance which, with the lapse of time,
the giving of notice, or both, would constitute an Event of Default.
Equipment shall mean all equipment, as defined by the UCC, together with
all proceeds thereof.
Event of Default shall mean any of the events set forth in Section 5.1 of
this Deed of Trust or in Section 7.1 of the Reimbursement Agreement.
Financing Documents shall mean this Deed of Trust, the Reimbursement
Agreement, the Commitments, the Assignment of Contracts, the Indentures, the
Pledge Agreements, the Guaranty and all other documents, whether now or
hereafter executed, evidencing or securing the Obligations or the reimbursement
of the Bank for sums expended or drafts paid on account of the Letter of Credit
or given by the Borrower in connection therewith, all as the same may be
amended, modified or supplemented from time to time.
General Intangibles shall mean all general intangibles, as defined by the
UCC, now owned or hereafter acquired by the Borrower and used in connection with
the ownership or operation of the Project together with all proceeds thereof.
Impositions shall mean all real estate and other taxes, fees, assessments,
levies, utility charges, insurance premiums payable on any insurance the
Borrower is required to maintain hereunder, amounts required to be paid to
obtain or renew Permits and other similar charges (whether or not required by a
governmental body) which are assessed, levied or imposed against the Project or
the Borrower's interest therein or incurred in the construction, ownership,
operation, occupancy, maintenance and use of the Project.
Improvements shall mean all buildings, improvements, structures and
fixtures now or hereafter located on the Land and all replacements thereof and
additions thereto.
Income shall mean all of the rents, benefits, accounts, revenues, profits
and other sums now or hereafter due, or to which the Borrower may now be or
hereafter become entitled, arising from or issuing out of the Leases, whether or
not yet earned by performance.
Indentures shall mean the 1996 Indenture and the 1997 Indenture.
1996 Indenture shall mean the Indenture of Trust, dated as of June 1, 1996
between the Authority and the Trustee, including any amendments and supplements
thereto.
1997 Indenture shall mean the Indenture of Trust dated as of the date
hereof
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between the Authority and the Trustee, including any amendments and supplements
thereto.
Indenture Trustee shall mean Crestar Bank, Corporate Trust Division, as
Indenture Trustee under the Indentures, and any successor to the Indenture
Trustee under the Indenture.
Land shall mean the real estate described on Schedule A attached hereto,
together with all easements, rights-of-way and appurtenances thereto belonging,
including, without limitation, all reversionary interests therein and all of the
Borrower's right, title and interest in any street, road, avenue or alley,
opened or proposed, which adjoins such real estate.
Leases shall mean all leases, tenant contracts, rental agreements,
franchise agreements or other occupancy agreements, whether oral or written, now
existing or hereafter entered into, for the use or occupancy of all or any part
of the Project, together with all modifications or renewals thereof.
1996 Letter of Credit shall mean the Letter of Credit issued by the Bank to
the Indenture Trustee, in the initial stated amount of Nine Hundred Fifty
Thousand Eight Hundred Eighty Three Dollars ($950,883.00) for the 1996 Bonds,
having an expiration date of June 10, 2006.
1997 Letter of Credit shall mean the Letter of Credit issued by the Bank to
the Indenture Trustee in the initial stated amount of Five Hundred Eighty Nine
Thousand Eight Hundred Fifty Three Dollars ($589,853.00) for the 1997 Bonds,
having an expiration date of June 10, 2002.
Letters of Credit shall mean the 1996 Letter of Credit and the 1997 Letter
of Credit.
Obligations shall mean (i) the duty of the Borrower to reimburse the Bank
for all drafts paid by the Bank under both Letters of Credit, any amounts
advanced or expenses incurred under the Reimbursement Agreement and the other
Financing Documents and to perform and comply with all of the terms and
conditions of the Financing Documents and (ii) all duties, obligations, debts
and liabilities of every kind and description owing by the Borrower to the Bank,
now or hereafter existing, whether matured or unmatured, direct or indirect,
otherwise secured or unsecured, original, extended or renewed, absolute or
contingent, originally contracted with or acquired by the Bank, contracted with
the Bank alone or jointly with others and whether or not evidenced by negotiable
instruments or other written agreements, including lines of credit and
obligations arising in connection with letters of credit or drafts presented in
connection therewith; provided, however, the total amount of the Obligations to
which the Project may be subjected for payment may not exceed the sum of the
aggregate principal amount outstanding of One Million Five Hundred Forty
Thousand Seven Hundred Thirty Six Dollars ($1,540,736), plus, without
limitation, as to amount, (A) interest on such principal amount at the Advance
Rate provided in the Reimbursement Agreement from time to time, and (B) all
costs, expenses and reasonable attorney's fees incurred by the Bank in
connection with the collection of any of the foregoing or the protection of any
of the Bank's rights or the protection of any of the Security Property, or the
enforcement of any of the Bank's remedies under any of the Financing Documents.
4
Obligors shall mean the Borrower, any guarantor and any co-maker, endorser,
surety or other party obligated to pay any sum pursuant to the provisions of or
to perform any act in order to comply with the provisions of any of the
Financing Documents.
Permits shall mean all permits, licenses, registrations, certificates,
authorizations and approvals now or hereafter issued or required to be issued by
any governmental or quasi-governmental authority in connection with the
ownership, use, or operation of the Project.
1996 Pledge Agreement shall mean the Pledge Agreement dated as June 1, 1996
hereof between the Borrower and the Bank pledging certain 1996 Bonds to the
Bank.
1997 Pledge Agreement shall mean the Pledge Agreement dated as of the date
hereof between the Borrower and the Bank pledging certain 1997 Bonds to the
Bank.
Pledge Agreements shall mean the 1996 Pledge Agreement and the 1997 Pledge
Agreement.
Project shall mean the Land, the Improvements and the Equipment.
Reimbursement Agreement shall mean the amended and restated reimbursement
agreement dated as of the date hereof between the Bank, Sherwood Brands, Inc.
and the Borrower, pursuant to which the Bank has agreed to issue the Letters of
Credit to finance the Project.
Security Agreement shall mean the Security Agreement from the Borrower in
favor of the Bank dated November 20, 1996.
Security Property shall mean any and all of the property of the Borrower
referred to in Section 2.1.
UCC shall mean the Uniform Commercial Code as adopted in Virginia, as it
may be amended from time to time.
UCC Property shall mean (i) the Equipment, (ii) all materials intended for
the construction, alteration, repair or restoration of the Improvements, (iii)
the General Intangibles, including, without limitation, all intellectual
property, including names, logos, trademarks and service marks, whether or not
registered, or used or to be used by the Borrower in connection with the
ownership or operation of the Project, (iv) the Accounts, (v) the Inventory, and
(vi) all proceeds of the foregoing.
Section 1.2 Interpretation. For the purpose of construing this Deed of
Trust, unless the context indicates otherwise, words in the singular number
shall be deemed to include words in the plural number, and vice versa, and words
in one gender shall be deemed to include words in the other genders. The table
of contents, titles to articles and section headings are for convenience only
and neither limit nor amplify the provisions of this Deed of Trust itself. The
Recitals are incorporated in this Deed of Trust.
5
ARTICLE II
CONVEYANCE OF SECURITY PROPERTY
Section 2.1 Grant to Trustees. The Borrower hereby grants and conveys to
the Trustees with General Warranty and English Covenants of Title in trust to
secure the Obligations, the following described property, whether now owned or
hereafter acquired, together with any substitutions or replacements therefor and
any additions thereto:
(i) the Land on Schedule A attached hereto;
(ii) the Improvements;
(iii) the Equipment;
(iv) the General Intangibles;
(v) the Accounts;
(vi) the Income;
(vii) the Leases;
(viii) the Permits;
(ix) the UCC Property; and
(x) the proceeds of the conversion, voluntary or involuntary, of any
of the foregoing into cash or liquidated claims, including, without
limitation, all proceeds payable under any policy of insurance with respect
to the damage or destruction of all or any part of the Project, all
proceeds from any Condemnation and all proceeds as defined by the UCC.
Section 2.2 Security Agreement. The Borrower hereby assigns, conveys,
transfers and grants a continuing security interest to the Bank in the UCC
Property, and this Deed of Trust shall be a security agreement between the
Borrower and the Bank encumbering each and every item of the UCC Property to
secure the Obligations. The Borrower agrees to execute and file in the
appropriate office in the jurisdiction in which the Project is located, and in
such other offices or jurisdictions as the Bank may require, financing or
continuation statements meeting the requirements of the UCC to perfect the
security interests hereby granted. The remedies for any violation of this
security agreement shall be, at the option of the Bank, (i) those hereinafter
set forth in this Deed of Trust, (ii) those prescribed by general law, (iii)
those contained in the UCC or (iv) any combination of the foregoing, it being
the understanding of the parties that upon the occurrence of an Event of
Default, the Bank may proceed as to both real and personal property in
accordance with the rights and remedies granted herein with respect to real
property. All substitutions for, replacements of and additions to the UCC
Property, and the proceeds thereof and of the UCC Property, shall immediately be
subject to the security interest hereinabove granted, and the Borrower agrees to
maintain such property free and clear of liens, encumbrances and security
interests of others.
6
ARTICLE III
COVENANTS
Section 3.1 Payment and Performance. The Borrower shall (i) reimburse the
Bank without offset or deduction for all required amounts provided in the
Reimbursement Agreement, (ii) pay all amounts owed and perform all other
obligations secured by any other lien now or hereafter placed on the Project,
(iii) pay all other sums due under the Financing Documents and (iv) comply with
all of the other Obligations.
Section 3.2 Maintenance of the Project. The Borrower shall keep the Project
in good condition and repair and shall not (i) commit or permit waste to be
committed thereon, (ii) make or allow any alterations thereto without the prior
written consent of the Bank or (iii) do or suffer to be done any act which will
or may render the Project less valuable, including, without limitation, the
abandonment of all or any portion of the Project.
Section 3.3 Use of Project; Compliance with Laws. The Borrower shall cause
the Project to be used and operated as set forth in the Reimbursement Agreement,
and shall comply with all lawful requirements of any governmental authority
affecting the Project, including, without limitation, the Chesapeake Bay Act,
the Environmental Protection Act, the Resource Conservation and Recovery Act,
the Comprehensive Environmental Response Compensation Act, the Americans with
Disabilities Act, the Occupational Safety and Health Act and all other
environmental, land use or subdivision laws, rules and regulations, whether now
existing or later enacted, whether foreseen or unforeseen, and whether involving
any change in governmental policy or requiring structural or other changes to
the Project, irrespective of the cost of making the same.
Section 3.4 Restrictive Covenants. The Borrower shall at all times comply
with its obligations under all recorded restrictions, conditions, easements and
covenants ("Restrictive Covenants") encumbering the Project and shall duly
enforce the Borrower's rights under all Restrictive Covenants encumbering other
property for the benefit of the Land and/or the Improvements. If the Borrower
receives any notice (whether oral or written) that any Restrictive Covenant has
been violated, the Borrower shall promptly notify the Bank.
Section 3.5 Management of Project. If the Project is not managed by the
Borrower, the Borrower shall cause the Project to be managed by a professional
property manager experienced in the management of properties similar to the
Project, reasonably acceptable to the Bank.
Section 3.6 Impositions. The Borrower shall pay when due all Impositions.
However, after giving the Bank ten (10) days' notice of its intention to do so
and evidence satisfactory to the Bank of its ability to pay such Imposition in
the event of an adverse ruling, the Borrower may, in good faith, at the
Borrower's own expense and in the Borrower's own name, contest any Impositions
other than an insurance premium. In the event of such a contest, the Borrower
may permit the Imposition being contested to remain unpaid during the period of
the contest and any subsequent appeal unless, in the reasonable opinion of the
Bank, such action may impair the lien of this Deed of Trust or any security
interest hereby granted, in which event the Borrower shall satisfy such
Imposition promptly or the payment thereof shall be secured by posting with the
Bank a
7
bond with surety or a letter of credit, either of which must be issued by an
institution approved by and in a form and amount approved by the Bank. Upon
request, the Borrower shall furnish the Bank proof of payment of all
Impositions.
Section 3.7 Insurance. This Section 3.7 sets forth the requirements for the
insurance relating to the Project.
(a) Types of Insurance. The Borrower shall, until all of the Obligations
are satisfied, maintain, at the Borrower's expense and for the benefit of the
Bank, such insurance policies with respect to the Project as the Bank may
reasonably require, including, without limitation, the types of insurance listed
below:
(i) Insurance against all risks of physical loss and damage to the
Improvements and the Equipment (including builder's risk during
construction, flood insurance if the Project is located in a flood plain)
in the amount of the full replacement cost thereof without reduction for
depreciation. The Borrower shall obtain all necessary endorsements to
extend the coverage under the policy or policies required by this Section
3.7(a)(i) to cover the risks excluded by the basic policy form (except for
risks excluded by standard War Risk Exclusions and Nuclear Exclusions) and
shall also obtain, at the Bank's election, boiler and machinery insurance.
Under no circumstances shall the risks of fire, lightning, windstorm,
explosion, aircraft, smoke, vandalism, malicious mischief, water damage or
flood (if the Project is in a flood plain) be excluded from coverage;
(ii) Insurance against all liability that workers' compensation laws
may impose on the Borrower with respect to the Project;
(iii) Insurance against liability for bodily injury (and death
resulting therefrom) to the extent of at least $1,000,000 per person,
$2,000,000 per occurrence. If coverage for injury to employees of the
Borrower is excluded under any such liability policy, it shall be provided
under an employer's liability portion of the workers' compensation policy
or an employer's liability stop-gap endorsement;
(iv) Insurance against liability for damage to property to the extent
of at least $500,000 per occurrence;
(v) Business interruption insurance to cover up to six months debt
service on the Project; and
(vi) Such other policies or coverage as may customarily be carried by
businesses of a size and nature similar to the business to be conducted at
the Project.
(b) Requirements as to Insurance Policies. The policies of insurance which
the Borrower is required to carry pursuant to the provisions of subsection (a)
of this Section 3.7 shall comply with the requirements listed below:
(i) Each such policy shall provide that it may not be canceled,
8
modified or allowed to lapse at the end of a policy period without at least
thirty (30) days' prior written notice to the Bank.
(ii) Each liability insurance policy shall name the Bank as an
additional insured.
(iii) Each property insurance policy shall contain a standard
mortgagee clause in favor of the Bank. The property insurance policies
shall also provide that any loss shall be payable in accordance with the
terms of such policy notwithstanding any act of the Borrower which might
otherwise result in forfeiture of such insurance and that the insurer
waives all rights of set-off, counterclaim, deduction or subrogation
against the Borrower.
(iv) Each insurance policy shall be written by an insurer with a Best
Rating Guide rating of BB+ and otherwise acceptable to the Bank. The Bank
may withdraw approval of any insurer should a situation arise in which the
financial soundness of such insurer may reasonably be questioned, in which
event the Borrower shall immediately obtain replacement insurance written
by an insurer approved by the Bank.
(v) In the event of loss, the Borrower shall use the Borrower's best
efforts to collect the maximum amount due under any policy of insurance of
which the Borrower is the beneficiary. However, the Bank or the Trustees
are authorized, in their discretion, to adjust, collect or compromise all
claims under any policies of insurance required to be maintained by the
provisions of this Section 3.7 and to execute and deliver on behalf of the
Borrower all necessary proofs of loss, receipts, vouchers and releases
required by the insurers. Each insurer is hereby authorized and directed to
make payment under such policies directly to the Bank, instead of to the
Bank and the Borrower jointly, and the Borrower hereby irrevocably appoints
the Bank as the Borrower's attorney-in-fact to endorse and transfer such
proceeds if any insurer fails to disburse directly to Bank. Any insurance
proceeds from damage to or destruction of the Project received by the Bank
shall be held in a interest-bearing account for the benefit of the Borrower
until disbursed in the manner provided in Article IV.
(vi) The following types of insurance or insurance policies will not
be acceptable to the Bank unless the Borrower has specifically requested
the Bank to approve such types and the Bank has approved the same: (A)
policies of insurance written on a claims-made basis; (B) co-insurance,
self-insured layers of insurance or deductibles or self-insured retentions
exceeding $10,000; (C) insurance written by insurers not admitted to do
business in Virginia; and (D) insurance provided by captive insurance
companies, risk-retention groups, self-insurance programs and group
self-insurance.
(c) Blanket Policies. Any insurance required by this Section 3.7 may be
supplied by means of a blanket or umbrella insurance policy, so long as the
protection provided by such blanket or umbrella insurance policy against each
risk specified in this
9
Section 3.7 cannot be reduced by claims for other risks to amounts less than
those specified in this Section 3.7, and so long as there is compliance with the
other provisions of this Article.
(d) Acceptance of Policies. The Bank owes no duty to the Borrower to
examine any policy of insurance or certificate presented to it to ascertain
compliance with this Section 3.7, and the acceptance of any policy of insurance
or certificate not conforming to such requirements does not and will not
constitute a waiver of the provisions of this Section 3.7. Any waiver that may
be granted with respect to the requirements of this Section 3.7 may be revoked
by the Bank at any time by giving notice to the Borrower.
(e) Delivery of Policies or Certificates of Insurance. The Borrower shall
deliver to the Bank originals or certified copies of all policies of insurance
it is required to maintain. The Bank may, at its option, accept certificates of
insurance issued by insurers in lieu of policies, but the Bank may, at any time,
require the delivery to it of the policies themselves and such other documents
as the Bank may require to satisfy itself that the insurance maintained by the
Borrower complies with the requirements of this Section 3.7.
Section 3.8 Insurance and Tax Escrow. If required by the Bank, the Borrower
shall pay the Bank monthly, together with and in addition to the payments, under
the Reimbursement Agreement and any sums due under any of the other Financing
Documents, an amount determined by the Bank to be necessary to enable the Bank
to pay each Imposition one month before it comes due. If the total payments made
to the Bank pursuant to the preceding sentence are less than the amount required
to pay any Imposition one month before it becomes due, the Borrower shall pay
the Bank, on demand, the amount necessary to make up such deficiency. If there
is an excess of such payments, the excess will reduce subsequent payments
required under this Section 3.8. The Bank shall not be required to pay interest
on any sums held pursuant to this Section 3.8. If an Event of Default has
occurred, the Bank may at its option apply any amounts received pursuant to this
Section 3.8 to the payment of the Obligations in such order as the Bank may
elect.
Section 3.9 Sale or Encumbrance of the Project. Except for subordinate
liens in the aggregate amount of $650,000 in favor of the Industrial Development
Authority of Mecklenburg County, Virginia and Lake Country Development Corp.,
the Borrower shall not, without the prior written consent of the Bank, (i)
lease, sell or transfer the Project or any portion thereof or any interest
therein, (ii) encumber or pledge the Project or any interest therein, in whole
or in part, (iii) xxxxx x xxxx or security interest in the Project or any
portion thereof or (iv) except as otherwise provided in the Reimbursement
Agreement, permit to exist any recorded mechanic's, materialman's, laborer's
statutory or other lien (whether or not junior to the liens created by this Deed
of Trust) upon all or any part of the Project.
Section 3.10 Maintenance of Borrower's Existence. The Borrower will keep in
full force and effect its existence, franchises, rights and privileges as a
corporation under the laws of Virginia, and will do or will cause to be done all
things necessary to preserve and keep in full force and effect its right to own
property and enforce its contracts and will not dissolve, merge or consolidate
with any other Person or entity or change its Articles of Incorporation, except
as permitted by the Reimbursement Agreement.
10
Section 3.11 Estoppel Certificates. The Borrower shall, within ten (10)
days after receipt of a written request of the Bank so to do, furnish to the
Bank or any other Person (as defined in the Reimbursement Agreement) designated
by the Bank, a certificate setting forth (i) whether or not any offsets or
defenses against the payment of principal and interest or any other sum under
the Reimbursement Agreement exist, (ii) whether or not any Default then exists
or any Event of Default has occurred and is continuing and (iii) such other
matters as the Bank may reasonably request.
Section 3.12 Payment of Filing Fees and Taxes. The Borrower will pay all
fees, taxes and expenses incident to the execution, acknowledgment, recording
and filing of any of the Financing Documents or any amendment or supplement
hereto, any financing statement, continuation statement or security agreement
with respect to the UCC Property and any instrument of further assurance
relating to the Borrower's compliance with the terms, conditions and covenants
contained in any of the Financing Documents.
Section 3.13 Right of Inspection. The Bank and the Trustees shall have the
right to enter upon and inspect the Project at such reasonable time or times as
they may desire, either in person or through their duly authorized agents or
representatives.
Section 3.14 Books and Records. The Borrower shall keep and maintain, or
shall cause to be kept and maintained, at its expense and in accordance with
generally accepted auditing principles consistently applied, proper and accurate
books, records and accounts reflecting all items of income and expense in
connection with the operation of the Project. The Bank, the Trustees and their
agents, accountants and attorneys shall have the right at any time and from time
to time, upon reasonable notice to Borrower, to examine such books, records and
accounts at the office of the Borrower, to make such copies or extracts thereof
as they shall deem appropriate and to discuss the Borrower's affairs, finances
and accounts with the Borrower and the Borrower's employees, accountants and
agents.
Section 3.15 Financial Statements. The Borrower shall provide the Bank
within the times specified, with the financial statements and other financial
information required by the Reimbursement Agreement.
Section 3.16 Taxation of Deed of Trust. In the event of the passage after
the date of this Deed of Trust of any law changing in any way the laws for the
taxation of deeds of trust or debts secured thereby, or the manner of the
collection of any such taxes, so as to adversely affect the Bank, the Borrower
shall, upon thirty (30) days' prior written request from the Bank assume and
agree, in writing, to pay any additional amount which the Bank would otherwise
be required to pay because of such change, and thereafter such amount shall be
deemed an Imposition.
Section 3.17 Environmental Compliance.
(a) Maintenance of the Project. The Borrower shall maintain the Project at
all times so that (i) there are no "hazardous substances" (as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Sections 9601 et seq., as amended) at the Project except those kept and
used in accordance with applicable law, which shall be kept current and shall
identify the type,
11
quantity and location of each such hazardous substance; (ii) there has been no
release or is no threat of release of any hazardous substance; (iii) the Project
is not subject to any action or enforcement proceeding under governmental law,
rule or regulation or subject to liability to any person because of the presence
of (A) stored, leaked or spilled petroleum products, (B) underground storage
tanks or (C) an accumulation of rubbish, debris or other solid waste, or because
of the presence, release, threat of release, discharge, storage, treatment,
generation or disposal of any "hazardous waste" (as defined by the Resource
Conservation Act, 15 U.S.C. Section 2601 et seq., as amended), including but not
limited to asbestos and items or equipment containing polychlorinated biphenyls
(PCBs) in excess of 50 parts per million; and (iv) no condition exists which is
or may be characterized by any governmental authority as an actual or potential
danger to the environment or public health.
(b) Notices of Violations, Etc. The Borrower shall provide to the Bank,
within five (5) days after the Borrower's receipt thereof, copies of all notices
from governmental authorities alleging any threat to the environment or
violation of any environmental statute, regulation or rule or requesting
information regarding the Project's compliance with the same or regarding
environmental conditions of the Project or the Borrower's practices with respect
to such conditions. The Borrower also shall promptly notify the Bank of any
Default which exists with respect to the Borrower's obligations under Section
3.17(a). If any such Default exists or if the Bank has reason to believe that
such a Default exists, the Bank shall have the right at any time thereafter to
conduct an environmental audit and site inspection of the Project, and the
Borrower shall cooperate with the Bank in conducting such audit and inspection.
In addition, the Bank may undertake any voluntary remediation in response to the
action or threat of action by any third party including a governmental authority
with respect to the matters specified in Section 3.17(a) if the Borrower shall
fail to undertake voluntary remediation after direction from any governmental
entity having jurisdiction. Any costs incurred by the Bank in conducting such
audit and inspection or in such remediation efforts and interest thereon at a
rate equal to the Advance Rate set forth in the Reimbursement Agreement, shall
be payable on demand and shall be secured by this Deed of Trust.
Section 3.18 Payment of Costs. In addition to such other amounts as the
Borrower has agreed to pay pursuant to the provisions of this Deed of Trust and
the other Financing Documents, the Borrower shall pay all expenses, including
reasonable attorney's fees, incurred by the Bank or the Trustees in (i) the
collection of any sum, the payment of which is secured hereby, (ii) preserving
the Security Property or disposing of all or any part of the same, whether by
foreclosure or otherwise, (iii) participating in any litigation or
administrative proceeding involving the Project or the Financing Documents,
whether as a plaintiff or a defendant, or (iv) conducting any additional title
examinations requested by the Trustees or the Bank. All of such expenses and
fees and interests thereon at the Advance Rate set forth in the Reimbursement
Agreement, shall be payable on demand and shall be secured by this Deed of
Trust.
Section 3.19 Further Assurances. The Borrower shall, at the Borrower's
expense, perform such further acts and execute, acknowledge and deliver all such
documents as the Bank shall, from time to time, reasonably require to assure the
Bank that the Borrower is complying with all of the Obligations and that the
liens and security interests granted by this Deed of Trust are perfected and
preserved.
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Section 3.20 Alteration of Improvements. Following the construction of the
Improvements contemplated by the Reimbursement Agreement, without the prior
written consent of the Bank, which consent shall not be unreasonably withheld,
no additional Improvements may be constructed hereafter on the Land. In
addition, without the prior written consent of the Bank, the Borrower shall not
change the architectural design of any Improvements or other structures now or
hereafter situated on the Land and shall not alter or remove the structural
portions of any Improvements now or hereafter situated thereon.
Section 3.21 Change in Zoning. The Borrower will not initiate or knowingly
acquiesce in any change in zoning or other land use classification now or
hereafter in effect and affecting the Land without in each case obtaining the
Bank's prior written consent thereto. The Borrower will promptly notify the Bank
of any such change proposed by others.
Section 3.22 Operation of Project. The Borrower will cause the Project to
be maintained and operated as a manufacturing facility in compliance with all
applicable laws, rules and regulations.
ARTICLE IV
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 4.1 Notice. In the case of (i) any damage to or destruction of all
or any part of the Project, (ii) a Condemnation of all or any part of the
Project, (iii) the loss of all or any part of the Project because of failure of
title or (iv) the commencement of any proceeding or negotiation which might
result in such a Condemnation or loss, the Borrower shall promptly give notice
thereof to the Bank describing generally the nature and extent of such damage,
destruction, Condemnation, loss, proceeding or negotiation.
Section 4.2 Restoration of the Project. If all or any part of the Project
is destroyed or damaged, the Borrower shall promptly repair or restore the same
to its condition immediately before such damage or destruction, with such
alterations and additions as the Bank may approve, regardless of the
availability of insurance proceeds to accomplish such repair or restoration.
Section 4.3 Application of Insurance Proceeds. If all or any part of the
Project is destroyed or damaged, the Bank will, after deducting the reasonable
expenses incurred in the collection and administration of the proceeds of any
insurance paid because of such damage or destruction (including reasonable
attorney's fees), make the remainder of such proceeds available to the Borrower
for the purpose of repairing or restoring the Project as required by Section 4.2
of this Deed of Trust provided that:
(1) There shall exist no Event of Default (hereinafter defined);
(2) Bank shall first be given satisfactory proof that the Improvements
have been fully restored or that, by application of such proceeds and other
funds of the Borrower available for the purpose, the Improvements will be
fully restored to its condition prior to the damage or destruction, free
and clear of all liens, except the lien of this Deed of Trust
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and any other lien in favor of the Bank; and
(3) There shall remain sufficient time to complete the restoration of
the Improvements in the reasonable judgment of the Bank prior to the
Termination Date of the 1996 Letter of Credit as to the Improvements and
Equipment financed by the 1996 Bonds and of the 1997 Letter of Credit as to
Equipment financed by the 1997 Bonds.
Unless the Bank approves of a different procedure, each disbursement of any
insurance proceeds shall be made as if it were, and shall be subject to the
conditions customarily applicable to, an advance of principal made pursuant to a
construction loan made by the Bank. Any balance of such insurance proceeds
remaining after the completion of the repair or restoration work, or all of the
insurance proceeds of the repair or restoration work, or all of the insurance
proceeds if the Bank elects not to make them available for repair or
restoration, due to the failure of any of the above conditions, shall be applied
to the payment of the Obligations in such order as the Bank may determine.
Section 4.4 Condemnation. If all or any substantial portion of the Project
shall be damaged, taken or transferred through Condemnation, then at the option
of the Bank, the Bank can request that a draft be presented under the Letter of
Credit for the prepayment of an amount equal to the compensation received for
such Condemnation. Unless the Bank shall otherwise agree, the term "substantial
portion of the Project" as used in this Section 4.4 shall mean $50,000 or more.
All compensation and other amounts payable as a result of a Condemnation in
which all or any substantial portion of the Project is taken shall be applied to
the payment of the Obligations in such order as the Bank may determine. No
settlement respecting any Condemnation shall be effected without the consent of
the Bank. The Bank and the Trustees are each hereby authorized, at their option,
to commence, appear in and prosecute, in their own names or in the name of the
Borrower, any action or proceeding relating to any Condemnation, and to settle
or compromise any claim in connection therewith. If less than a substantial
portion of the Project is damaged, taken or transferred in a Condemnation, or if
the Bank does not elect to declare the Obligations immediately due and payable
as provided above or call for the presentment of a draft under both Letters of
Credit, then the Bank, after deducting from the Condemnation proceeds all of its
sums, including attorneys' fees, may require the Borrower to repair, restore or
replace the Project or the affected portion thereof as nearly as practical to
its condition immediately prior to the Condemnation, and in such event any
proceeds of the Condemnation shall be applied to the costs of such repair,
restoration or replacement on the same terms and conditions as are specified in
Section 4.3 of this Deed of Trust regarding the application of insurance
proceeds.
ARTICLE V
DEFAULT; REMEDIES
Section 5.1 Events of Default. Each of the following shall constitute an
"Event of Default" under this Deed of Trust, whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body:
(a) Failure to pay any sum secured by this Deed of Trust or any other sum
due
14
and payable under any of the Financing Documents and the continuation of such
failure for ten (10) days after the Bank sends written notice thereof to the
Borrower;
(b) The failure to maintain at all times the insurance required by Section
3.7 of this Deed of Trust, the failure to comply with the provisions of Sections
3.9 or 3.10 of this Deed of Trust or the Assignment of Contracts or the failure
of the Borrower to notify the Bank of any Default with respect to the Borrower's
obligations under Section 3.17(a) of this Deed of Trust;
(c) Failure of any Obligor to comply with any of the other terms and
conditions contained in this Deed of Trust or in the other Financing Documents
to which such Obligor is a party and the continuation of such failure for thirty
(30) days after the Bank sends notice of such failure to the Borrower (or such
other period as may be specified in this Deed of Trust or in the Reimbursement
Agreement);
(d) The fact that any representation or warranty of any Obligor in any of
the Financing Documents proves to be untrue or misleading in any material
respect as of the time it is made or deemed to be made;
(e) Any Obligor shall: (i) make general assignment for the benefit of
creditors; (ii) fail to pay such Obligor's debts generally as they become due;
(iii) admit in writing its inability to pay such Obligor's debts generally as
they become due; (iv) file a petition, pleading or motion under any bankruptcy
or other law for the relief or aid of debtors seeking for such Obligor
reorganization, liquidation, dissolution or other relief as a debtor; (v)
default in the payment when due of any borrowed money, or (vi) consent to or
acquiesce in the appointment of a receiver, custodian, liquidator, trustee or
other similar official for such Obligor, for the whole or any substantial part
of its assets, or any part of the Project;
(f) A petition, pleading or motion shall be filed (i) against any Obligor
or under any bankruptcy or other law for the relief or aid of debtors seeking
for such Obligor reorganization, liquidation, dissolution or other relief as a
debtor or (ii) seeking to appoint a receiver, custodian, liquidator, trustee or
other similar official for any Obligor for the whole or any substantial part of
such Obligor's assets, or for any part of the Project, and such petition,
pleading or motion is not dismissed within forty-five (45) days of the filing
thereof, or any order for relief or appointment entered as a result of the
filing of such petition, pleading or motion is not stayed within seven (7)
business days after the entry thereof;
(g) The filing of a lien against the Project or any part thereof (other
than a mechanics' or materialmen's lien satisfied or secured as provided in the
Reimbursement Agreement) or the entry of a judgment for the payment of money
against any Obligor and the failure, within a 30-day period after the filing or
entry thereof, to have the same discharged or the execution thereof stayed,
provided that if the execution thereof is stayed, then within ten (10) days upon
the expiration of the stay, arrangements shall be made to discharge the same;
(h) The occurrence of any default under any of the documents evidencing any
indebtedness secured by a lien against the Security Property or any part thereof
which is either subordinate or prior to the lien of this Deed of Trust and the
failure to cure such
15
default within the applicable grace period, if any; and
(i) The occurrence of any default with respect to any loan then outstanding
between the Bank and any of the Obligors or between the Bank and an entity in
which any of the Obligors directly or indirectly have a material interest, and
the failure to cure such default within the applicable grace period, if any, or
the acceleration of the maturity of such loan as a result of such default;
The Borrower in order to secure the benefit of any of the grace periods
provided for herein for a non-monetary Event of Default must first have given
notice of the occurrence of such Event of Default to the Bank within a
reasonable time from the time the Borrower has notice of the occurrence of such
Event of Default. The Borrower may not claim the benefit of any of the grace
periods provided for herein for the same Event of Default more than once in any
one calendar year. Nothing contained herein shall be construed so as to compound
or stack any of the grace periods provided for herein.
Section 5.2 Drafts under the Letters of Credit. In addition to any and all
rights and remedies available either in law or in equity, upon the occurrence of
an Event of Default, the Bank shall be entitled to call for the presentation of
drafts on both Letters of Credit in the then full amount outstanding under the
Bonds as provided in the Indentures.
Section 5.3 Surrender of Possession. Upon the occurrence of an Event of
Default, the Borrower shall, upon demand of the Bank, promptly surrender to the
Bank or the Trustees, or their employees or agents, the actual possession of the
Project (the term "Project" as hereinafter used in this Article V shall mean the
entire Project or any part thereof), and the Bank or the Trustees, or their
employees or agents, may enter and take possession of the Project, without the
appointment of a receiver or filing an application therefor, and may exclude the
Borrower and its employees and agents wholly therefrom. If the Borrower shall
fail, upon demand, to surrender the Project, the Bank or the Trustees may obtain
a judgment or decree requiring the Borrower to surrender immediate possession of
the same.
16
Section 5.4 Right to Manage Project.
(a) Right to Manage, Etc. Upon any entering or taking possession of the
Project pursuant to Section 5.3 of this Deed of Trust, the Bank or the Trustees
may use, manage, operate and control the Project and, in so doing, shall have
access to the books, papers and accounts of the Borrower relating to the Project
and may collect all of the Income from the Project. In addition, the Bank or the
Trustees may: (i) complete the construction of the Project; (ii) maintain and
restore the Project and make such repairs, additions and improvements thereto
and thereon, and purchase or otherwise acquire such additional fixtures,
equipment and other property as they may deem necessary to facilitate the
operation of the business of the Project; (iii) contest or compromise any claim
or encumbrance against the Project (including, without limitation, any lien
prior or subordinate to the lien of this Deed of trust); (iv) employ such
counsel, accountants, contractors and other persons as any of them shall deem
necessary to assist it; (v) insure or keep the Project insured; (vi) perform all
acts required of the Borrower with respect to the Project, including acts
required of it under any Lease; (vii) use any funds of the Borrower on deposit
with the Bank for the purpose of protecting the Project; (viii) pay, settle or
compromise all existing bills and claims which are or may be liens against the
Project, or may be necessary or desirable for the completion of any repair of
the Project or for the clearing of title; and (ix) exercise all of the rights
and powers which the Borrower possessed with respect to the Project to the same
extent as the Borrower could have exercised the same. Any amounts collected from
the Project shall, after deducting therefrom sums expended pursuant to the
provisions of this Section 5.4(a), be applied to the payment of the Obligations
in such order as the Bank may determine. Nothing herein shall be deemed to
require or obligate the Bank to preserve or repair the Project or to take any
other action whatsoever.
(b) Appointment of Attorney-in-Fact. For the purpose of carrying out the
provisions of Section 5.4(a) of this Deed of Trust, the Borrower hereby
irrevocably appoints the Bank and the Trustees, any one of whom may act, the
true and lawful attorneys-in-fact for the Borrower and authorizes them, or any
one of them, to perform any act described in Section 5.4(a) and any and all
actions necessary and incidental thereto.
Section 5.5 Appointment of Receiver. Upon the occurrence of an Event of
Default, the Bank shall, upon application to a court of competent jurisdiction,
be entitled as a matter of right and without notice to the appointment of a
receiver to take possession of and to operate the Project and to collect all
amounts assigned hereunder. The receiver shall have all of the rights and powers
permitted under the laws of Virginia.
Section 5.6 Environmental Audit. Upon the occurrence of a Default, the Bank
may undertake or direct to be undertaken a full or partial environmental audit
and site inspection of the Project, taking all reasonable measures to determine
the condition of the Project and the Borrower's compliance with applicable
environmental and other statutes, regulations and rules, and the Borrower shall
cooperate fully with such audit and inspection.
Section 5.7 Right to Cure Defaults. If any Event of Default occurs, the
Bank or the Trustees, without prior notice to or demand upon the Borrower and
without waiving or releasing such Event of Default (in addition to any other
rights and remedies they may
17
have), may but shall be under no obligation to make any payment or take such
action as may be necessary to cure the Event of Default. If the Bank makes any
payment or takes any action to satisfy the requirements of any instrument
imposing a lien on the Project which is prior to the lien of this Deed of Trust,
the Bank shall be subrogated to the rights of the holder of such prior lien.
Section 5.8 Foreclosure. Upon the occurrence of an Event of Default, the
Bank, at its option, may effect the foreclosure of this Deed of Trust by
directing the Trustees to sell the Project (or such portion or portions thereof
as the Trustees may select) at public auction at such time and place and upon
such terms and conditions as may be required or permitted by applicable law,
after having first advertised the time, place and terms of sale not less than
five (5) times, which need not be successive (the last day of which may be the
day of sale) in a newspaper having general circulation in the city or county in
which the Project lies. In the event of any such sale, the Bank may bid for and
purchase the Project (or such portion thereof as may be offered for sale) and
shall be entitled to apply all or any part of the amount secured by this Deed of
Trust as a credit to the purchase price. At any foreclosure sale, such portion
of the Project as is offered for sale may, at the Bank's option, be offered for
sale for one total price, and the proceeds of such sale accounted for in one
account without distinction between the items of security or without assigning
to them any proportion of such proceeds, the Borrower hereby waiving the
application of any doctrine of marshaling.
Section 5.9 No Reinstatement. If an Event of Default shall have occurred
and the Bank or the Trustees shall have commenced to exercise any of the
remedies permitted hereunder, then a tender of payment by the Borrower or by
anyone on behalf of the Borrower of the amount necessary to satisfy all sums due
hereunder, or the acceptance by the Bank of any such payment so tendered, shall
not, without the prior consent of the Bank, constitute a reinstatement of the
Letter of Credit or this Deed of Trust.
Section 5.10 Indemnification by Borrower. The Borrower shall protect,
defend, indemnify and save harmless the Bank and the Trustees under this Deed of
Trust from and against all (as to both type and cost) liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses (including,
without limitation, attorneys' fees and expenses) imposed upon, incurred by, or
asserted against, the Bank or the Trustees on account of (i) any failure of the
Borrower to comply with any of the terms, covenants, or representations in this
Deed of Trust, or (ii) any loss or damage to the Property or any injury to, or
death of, any person that may be occasioned by any cause whatsoever pertaining
to the Property or the use, occupancy or operation thereof or any "Hazardous
Wastes", "Hazardous Substances" or "Toxic Substances" on or about the Property.
Nothing contained herein shall require the Borrower to indemnify the Bank or the
Trustees for any claim or liability resulting from its or their gross negligence
or its or their willful and wrongful acts. This covenant shall survive payment
of the Obligations, the release of this Deed of Trust or the foreclosure of the
Property by the Trustees or by a conveyance in lieu of foreclosure. The
indemnity provided for herein shall extend to the officers, directors, employees
and authorized agents of the Bank. "Hazardous Substances" shall mean all waste
materials subject to regulation under the Comprehensive Environmental Response,
Compensation and Liability Act (Superfund or CERCLA), 42 U.S.C. xx.xx. 9601 et
seq. "Hazardous Wastes" shall mean all waste materials subject to regulation
under the Resource Conservation and Recovery Act (the
18
Solid Waste Disposal Act or RCRA), 42 U.S.C. xx.xx. 6901 et seq., or applicable
state law, and any other applicable federal or state laws now in force or
hereinafter enacted relating to hazardous wastes and their disposal. "Toxic
Substances" shall mean any materials present on the Property which have been
shown to have significant adverse effects on human health or which are subject
to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. xx.xx.
2601 et seq., applicable state law, and any other applicable federal or state
laws now in force or hereafter enacted relating to toxic substances. "Toxic
Substances" includes but is not limited to asbestos, polychlorinated biphenyls
(PCBs), and lead-based paints. It does not include small quantities of such
materials present on the site in retail containers.
Section 5.11 Remedies Cumulative. No right, power or remedy conferred upon
or reserved to the Bank or the Trustee by this Deed of Trust is intended to be
exclusive of any other right, power or remedy, but each and every such right,
power and remedy shall be cumulative and concurrent and shall be in addition to
any other right, power and remedy given hereunder or under the other Financing
Documents or now or hereafter existing at law or in equity.
Section 5.12 Waiver Relating to Remedies. The Borrower (i) hereby waives,
to the fullest extent provided by law, any requirement that the Bank or the
Trustees present evidence or otherwise proceed before any court, clerk or other
judicial or quasi-judicial body before exercising the power of sale contained in
this Deed of Trust and (ii) agrees that upon the occurrence of an Event of
Default, neither the Borrower anyone claiming through or under the Borrower will
seek to take advantage of any moratorium, reinstatement, forbearance,
appraisement, valuation, stay, extension, homestead exemption or redemption law
now or hereafter in force in order to prevent or hinder the enforcement of the
provisions of this Deed of Trust and hereby waives the benefit of all such laws
to the fullest extent that it may lawfully so do.
Section 5.13 Costs Incurred by Bank and Trustees. Any and all costs and
fees (including reasonable attorneys' fees) incurred by the Bank and/or Trustees
in exercising their rights and remedies under this Article V, including, without
limitation, the costs of the environmental audit set forth in Section 5.6 above,
together with interest thereon at the Involuntary Advance Rate set forth in the
Reimbursement Agreement, shall be payable by the Borrower on demand and shall be
secured by this Deed of Trust.
ARTICLE VI
THE TRUSTEES
Section 6.1 Any Trustees May Act; Substitution Permitted. The powers of the
Trustees may be exercised by either Trustee or by any successor trustee or
trustees with the same effects as if exercised jointly by both of them. The
Borrower hereby grants to the Bank, in its sole discretion, the right and power
to appoint a substitute trustee or trustees for any reason whatsoever. Such
substitution shall be made by an instrument duly executed and acknowledged and
recorded where this Deed of Trust is recorded.
Section 6.2 Compensation and Expenses. If an Event of Default shall occur,
the Borrower shall pay the Trustees just compensation for any and all services
performed and all their expenses, charges, counsel fees and other obligations
incurred in the
19
administration and execution of the trusts hereby created and the performance of
their duties and powers hereunder, which compensation, expenses, fees and
disbursements shall constitute a part of the Obligations secured hereby.
Section 6.3 Performance of Duties; Liability. The Trustees shall perform
and fulfill faithfully their obligations hereunder, but they shall be under no
duty to act until they receive notice of the occurrence of an Event of Default
from the Bank and arrangements have been made which are satisfactory to them for
the indemnification to which they are entitled, the payment of their
compensation and the reimbursement of any expenses they may incur in the
performance of their duties. They shall have no liability for their acts unless
they are guilty of willful misconduct or gross negligence.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Successors and Assigns. This Deed of Trust shall inure to the
benefit of and be binding on the parties hereto and their respective heirs,
personal representatives, successors and assigns.
Section 7.2 Severability. If any provision of this Deed of Trust, or the
application thereof in any circumstance, is deemed to be unenforceable, the
remainder shall not be affected thereby and shall remain enforceable.
Section 7.3 Applicable Law. This Deed of Trust shall be governed by the
laws of Virginia.
Section 7.4 Notices, Demands and Requests. All notices, demands, requests
and other communications required or permitted hereunder shall be in writing and
shall be deemed to have been given when delivered in person or three (3)
business days after being sent by registered or certified mail, postage prepaid,
return receipt requested, to the person and at the addresses set forth below or
to such other persons or addresses as the party entitled to notice shall have
specified in writing to the other parties hereto from time to time, subject to
Section 55-58.2 of the Code of Virginia (1950) as amended.
(a) To the Bank:
Central Fidelity National Bank
Centerville Shopping Center
U. S. Xxxxxxx 000
Xxxxx Xxxxxx, XX 00000
(b) To the Borrower:
Sherwood Foods, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
and
20
000 X. Xxxx Xxxxxx
Xxxxx Xxxx, XX 00000
(c) To the Trustees:
c/o Central Fidelity National Bank
Centerville Shopping Center
U. S. Xxxxxxx 000
Xxxxx Xxxxxx, XX 00000
Section 7.5 Approvals and Consents. All approvals and consents required or
permitted by the Deed of trust shall be in writing, shall be signed by the party
from whom the consent or approval is sought and, unless otherwise provided
herein, may be withheld by such party in its sole discretion.
Section 7.6 Amendments. This Deed of Trust may be amended, supplemented or
terminated only in writing, signed by all of the parties hereto.
Section 7.7 No Partnership. Nothing in this Deed of Trust shall be
construed as making any party a partner or joint venturer with any other party.
Section 7.8 Renewal or Extension, Etc. The Borrower hereby agrees that
without in any way affecting their responsibility or that any of the other
Obligors, whether as surety or otherwise, (i) the Obligations, or any part
thereof, may be renewed or extended beyond maturity as often as may be desired
by agreement between the Bank and any Obligor or between the Bank and any
subsequent owner of the Land, (ii) the Bank may release any Obligor other than
the Borrower from such Obligor's Obligations and (iii) the Bank may permit the
substitution, exchange or release of any of the Security Property. The Borrower
further waives any right they may have to require the Bank to proceed against
any other party or foreclose on any collateral given to secure the payment of
the sums provided in the Reimbursement Agreement, before exercising any other
remedies herein granted to the Bank.
Section 7.9 Failure to Exercise Rights. The failure of the Bank or the
Trustees to exercise any right, power or remedy available to them upon the
occurrence of a Default or an Event of Default shall not be deemed a waiver of
the right to exercise such right, power or remedy upon the occurrence of a
subsequent Default or Event of Default.
Section 7.10 No Duty to Expend Funds. Nothing in this Deed of Trust shall
be construed to impose any obligation upon either the Bank or the Trustees to
expend any money or to take any other discretionary act herein permitted, and
neither the Bank nor the Trustees shall have any liability or obligation for any
delay or failure to take any discretionary act.
Section 7.11 Full Release. Upon full payment of all sums due under the
Obligations secured hereby and the cancellation of the Letter of Credit, the
Trustee shall, upon the request of, and at the cost of the Borrower, execute a
proper release of this Deed of Trust.
Anything in this Deed of Trust or any of the Obligations to the contrary
21
notwithstanding, and subject to any penalty or premium provided in an
Obligation, at any time the Borrower shall have the right to repay (i) the
entire principal of, interest and premium, if any, then owing, on any of the
Obligations, and (ii) all other sums and amounts then owing to the Bank
hereunder. Upon payment of all of the Obligations, and the payment and
performance by the Borrower of each and every one of the Borrower's Obligations
hereunder, at the Borrower's expense, the Bank shall execute and deliver, or
cause to be executed and delivered, such instruments of satisfaction or
termination with respect to all liens in favor of the Bank created hereby, in
proper form for recording or filing, as may be appropriate to evidence such
satisfaction and termination. The Bank's obligation to so execute and deliver,
or cause such execution and delivery of such instruments, shall be subject to
fulfillment of one of the following conditions precedent to the satisfaction of
the Bank:
(A) The Bank shall have been fully satisfied that the Borrower and any
Obligor liable on the Obligations is not insolvent as of the time of, and
after giving effect to, such payments; or
(B) As of the time of such payments, the Borrower and any Obligor
liable on the Obligations, consistent with the Borrower's or such Obligor's
Obligations to the Bank, is paying the Borrower's or such Obligor's debts
generally as such debts become due, and that the funds utilized for such
payment were legitimately obtained.
Section 7.12 Granting Easements. Provided there shall have occurred no
Default, the Borrower may grant easements, licenses, rights-of-way (including
the dedication of public highways) and other rights or privileges in the nature
of easements with respect to the Property free from the lien of the Deed of
Trust, or release existing easements, licenses, rights-of-way and other rights
or privileges, with or without consideration, provided that the Borrower
delivers to the Bank the following if requested by the Bank:
(A) A copy of the instrument of grant or release.
(B) A written application signed by the Borrower requesting such
instrument.
(C) A certificate, dated as of the date of its delivery and signed by
the Borrower stating that as of the date of such certificate no event or
condition has happened or existed, or is happening or existing, which
constitutes, or which, with notice or the lapse of time or both, would
constitute a Default or an Event of Default.
(D) An opinion, dated within 30 days of the filing of the application
required by subsection (B) hereof, of an architect, surveyor or engineer
licensed in Virginia acceptable to the Bank stating that such grant or
release is in accordance with all applicable laws, rules and regulations.
(E) A certification satisfactory to the Bank that the value of the
Property is not materially impaired. The Bank shall have the right to
require such certification to be made by an appraiser, acceptable to the
Bank, if the Bank deems such certification reasonably necessary.
22
Upon fulfillment of each of the foregoing conditions, the Bank shall
promptly cause to be executed and delivered at the Borrower's expense any
instrument necessary to release the same from the lien of the Deed of Trust.
Section 7.13. Joinder. At the request of the Borrower and the Bank one of
the Trustees joins into the execution and delivery of this Deed of Trust to
consent to its amendment and restatement. No novation is intended as to the
liens and security interests created by the 1996 Deed of Trust as supplemented.
All of the liens and security interests under the 1996 Deed of Trust as
supplemented are ratified and reaffirmed.
NOTICE: THE DEBT SECURED HEREBY IS SUBJECT TO CALL IN FULL OR THE TERMS THEREOF
BEING MODIFIED IN THE EVENT OF SALE OR CONVEYANCE OF THE PROPERTY
CONVEYED.
23
WITNESS the following duly authorized signature.
SHERWOOD FOODS, INC.
By: /s/ Xxxx Xxxxxxxx (SEAL)
---------------------------
Title: Vice President
ATTEST:
-----------------------------------
CENTRAL FIDELITY NATIONAL BANK
By:___________________________(SEAL)
Title:______________________________
Sole Acting Trustee
STATE OF ___________________ )
) to-wit:
CITY/COUNTY OF _____________ )
The foregoing instrument was acknowledged before me this ____ day of May,
1997, by ________________________, the _______________ of Sherwood Foods, Inc.,
a North Carolina corporation, on behalf of the corporation.
My commission expires: __________________________________.
---------------------------------------
Notary Public
STATE OF VIRGINIA )
) to-wit:
CITY/COUNTY OF ____________ )
The foregoing instrument was acknowledged before me this ____ day of May,
1997, by ________________________, the _______________ of Central Fidelity
National Bank.
My commission expires: __________________________________.
------------------------------------------
Notary Public
24
STATE OF VIRGINIA )
) to-wit:
CITY/COUNTY OF ____________ )
The foregoing instrument was acknowledged before me this ____ day of May,
1997, by ________________________, Sole Acting Trustee.
My commission expires: __________________________________.
-----------------------------------
Notary Public
25
SCHEDULE A
The Land
[To be provided and attached by the Title Company]
