FIRST UNION
LOAN AGREEMENT
First Union National Bank of Maryland
0000 Xxxxx Xxxxxx Xxxx
XxXxxx, Xxxxxxxx 00000
(Hereinafter referred to as the "Bank")
Sherwood Brands, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Sherwood Brands Overseas, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
(Individually and collectively "Borrower")
This Loan Agreement ("Agreement") is entered into effective November 29, 1996,
by and between Bank and Borrower, a Corporation organized under the laws of
North Carolina, and a Corporation organized under the laws of the Bahamas,
respectively.
Borrower has applied to Bank for extensions of credit as follows:
Line of Credit - in the principal amount of $2,000,000.00 which is evidenced by
the Promissory Note dated November 29, 1996 ("Line of Credit Note"), under which
Borrower may borrow, repay, and reborrow, from time to time, so long as the
total indebtedness outstanding at any one time does not exceed the principal
amount. The Loan proceeds are to be used by Borrower solely for collection of
accounts receivable and the purchase of inventory, to include raw materials.
Bank's obligation to advance or readvance under the Line of Credit Note shall
terminate if Borrower is in Default under the Line of Credit Note.
Letters of Credit - letters of credit issued and to be issued for the benefit of
Borrower in the amount of $2,000,000.00 and the reimbursement obligations
thereunder.
Foreign Exchange Obligations - forward foreign exchange and foreign exchange
option transactions and any other swap agreements (as defined in 11 U.S.C. ss.
101).
The foregoing are referred to herein individually and collectively as the "Note"
or the "Loan".
This Agreement also amends and restates in its entirety that certain Loan
Agreement dated November 30, 1995 and applies to govern all of the loans
thereby.
This Agreement applies to the Loan and all Loan Documents. The terms "Loan
Documents" and "Obligations," as used in this Agreement, are defined in the
Note. The term "Borrower" shall include its Subsidiaries and Affiliates. As used
in this Agreement as to Borrower, "Subsidiary" shall mean any corporation of
which more than 50% of the issued and outstanding voting stock is owned directly
or indirectly by Borrower. As to Borrower, "Affiliate" shall have the meaning as
defined in 11 U.S.C. ss. 101, except that the term "debtor" therein shall be
substituted by the term "Borrower" herein.
Relying upon the covenants, agreements, representations and warranties contained
in this Agreement, Bank is willing to extend credit to Borrower upon the terms
and subject to the conditions set forth herein, and Bank and Borrower agree as
follows:
REPRESENTATIONS. Borrower represents that from the date of this Agreement and
until final payment in full of the Obligations: Accurate Information. All
information now and hereafter furnished to Bank is and will be true, correct and
complete. Any such information relating to Borrower's financial condition will
accurately reflect Borrower's financial condition as of the date(s) thereof,
(including all contingent liabilities of every type), and Borrower further
represents that its financial condition has not changed materially or adversely
since the date(s) of such documents. Authorization; Non-Contravention. The
execution, delivery and performance by Borrower and any guarantor, as
applicable, of this Agreement and other Loan Documents to which it is a party
are within its power, have been duly authorized by all necessary action taken by
the duly authorized officers of Borrower and any guarantors and, if necessary,
by making appropriate filings with any governmental agency or unit and are the
legal, binding, valid and enforceable obligations of Borrower and any
guarantors; and do not (i) contravene, or constitute (with or without the giving
of notice or lapse of time or both) a violation of any provision of applicable
law, a violation of the organizational documents of Borrower or any guarantor,
or a default under any agreement, judgment, injunction, order, decree or other
instrument binding upon or affecting Borrower or any guarantor, (ii) result in
the creation or imposition of any lien (other than the lien(s) created by the
Loan Documents) on any of Borrower's or guarantor's assets, or (iii) give cause
for the acceleration of any obligations of Borrower or any guarantor to any
other creditor. Asset Ownership. Borrower has good and marketable title to all
of the properties and assets reflected on the balance sheets and financial
statements supplied Bank by Borrower, and all such properties and assets are
free and clear of mortgages, security deeds, pledges, liens, charges, and all
other encumbrances, except as otherwise disclosed to Bank by Borrower in writing
("Permitted Liens"). To Borrower's knowledge, no default has occurred under any
Permitted Liens and no claims or interests adverse to Borrower's present rights
in its properties and assets have arisen. Discharge of Liens and Taxes. Borrower
has duly filed, paid and/or discharged all taxes or other claims which may
become a lien on any of its property or assets, except to the extent that such
items are being appropriately contested in good faith and an adequate reserve
for the payment thereof is being maintained. Sufficiency of Capital. Borrower is
not, and after consummation of this Agreement and after giving effect to all
indebtedness incurred and liens created by Borrower in connection with the Loan,
will not be, insolvent within the meaning of 11 U.S.C. ss. 101(32). Compliance
with Laws. Borrower is in compliance in all respects with all federal, state and
local laws, rules and regulations applicable to its properties, operations,
business, and finances, including, without limitation, any federal or state laws
relating to liquor (including 18 U.S.C. ss. 3617, et seq.) or narcotics
(including 21 U.S.C. ss. 801, et seq.) and/or any commercial crimes; all
applicable federal, state and local laws and regulations intended to protect the
environment; and the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), if applicable. Organization and Authority. Each corporate or
limited liability company Borrower and any guarantor, as applicable, is duly
created, validly existing and in good standing under the laws of the state of
its organization, and has all powers, governmental licenses, authorizations,
consents and approvals required to operate its business as now conducted. Each
corporate or limited liability company Borrower and any guarantor, if any, is
duly qualified, licensed and in good standing in each jurisdiction where
qualification or licensing is required by the nature of its business or the
character and location of its property, business or customers, and in which the
failure to so qualify or be licensed, as the case may be, in the aggregate,
could have a material adverse effect on the business, financial position,
results of operations, properties or prospects of Borrower or any such
guarantor. No Litigation. There are no pending or threatened suits, claims or
demands against Borrower or any guarantor that have not been disclosed to Bank
by Borrower in writing.
AFFIRMATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will: Business Continuity. Conduct its business in
substantially the same manner and locations as such business is now and has
previously been conducted. Maintain Properties. Maintain, preserve and keep its
property in good repair, working order and condition, making all needed
replacements,
Page 2
additions and improvements thereto, to the extent allowed by this Agreement.
Access to Books & Records. Allow Bank, or its agents, during normal business
hours, access to the books, records and such other documents of Borrower as Bank
shall reasonably require, and allow Bank to make copies thereof at Bank's
expense. Insurance. Maintain adequate insurance coverage with respect to its
properties and business against loss or damage of the kinds and in the amounts
customarily insured against by companies of established reputation engaged in
the same or similar businesses including, without limitation, commercial general
liability insurance, workers compensation insurance, and business interruption
insurance; all acquired in such amounts and from such companies as Bank may
reasonably require. Notice of Default and Other Notices. (a) Notice of Default.
Furnish to Bank immediately upon becoming aware of the existence of any
condition or event which constitutes a Default (as defined in the Loan
Documents) or any event which, upon the giving of notice or lapse of time or
both, may become a Default, written notice specifying the nature and period of
existence thereof and the action which Borrower is taking or proposes to take
with respect thereto. (b) Other Notices. Promptly notify Bank in writing of (i)
any material adverse change in its financial condition or its business; (ii) any
default under any material agreement, contract or other instrument to which it
is a party or by which any of its properties are bound, or any acceleration of
the maturity of any indebtedness owing by Borrower; (iii) any material adverse
claim against or affecting Borrower or any part of its properties; (iv) the
commencement of, and any material determination in, any litigation with any
third party or any proceeding before any governmental agency or unit affecting
Borrower; and (v) at least 30 days prior thereto, any change in Borrower's name
or address as shown above, and/or any change in Borrower's structure. Compliance
with Other Agreements. Comply with all terms and conditions contained in this
Agreement, and any other Loan Documents, and swap agreements, if applicable, as
defined in the Note. Payment of Debts. Pay and discharge when due, and before
subject to penalty or further charge, and otherwise satisfy before maturity or
delinquency, all obligations, debts, taxes, and liabilities of whatever nature
or amount, except those which Borrower in good faith disputes. Reports and
Proxies. Deliver to Bank, promptly, a copy of all financial statements, reports,
notices, and proxy statements, sent by Borrower to stockholders, and all regular
or periodic reports required to be filed by Borrower with any governmental
agency or authority. Other Financial Information. Deliver promptly such other
information regarding the operation, business affairs, and financial condition
of Borrower which Bank may reasonably request. Non-Default Certificate From
Borrower. Deliver to Bank, with the Financial Statements required herein, a
certificate signed by Borrower, if Borrower is an individual, or by a principal
financial officer of Borrower warranting that no "Default" as specified in the
Loan Documents nor any event which, upon the giving of notice or lapse of time
or both; would constitute such a Default, has occurred. Estoppel Certificate.
Furnish, within 15 days after request by Bank, a written statement duly
acknowledged of the amount due under the Loan and whether offsets or defenses
exist against the Obligations. Deposit Relationship. Maintain its primary
depository account and cash management account with Bank. Examinations. Borrower
will allow Bank to perform Collateral examinations on an annual basis at the
Borrower's expense. The expense of the examination will be preapproved by the
Borrower in writing before any examination will commence.
NEGATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will not: Default on Other Contracts or
Obligations. Default on any material contract with or obligation when due to a
third party or default in the performance of any obligation to a third party
incurred for money borrowed. Judgment Entered. Permit the entry of any monetary
judgment or the assessment against, the filing of any tax lien against, or the
issuance of any writ of garnishment or attachment against any property of or
debts due Borrower. Government Intervention. Permit the assertion or making of
any seizure, vesting or intervention by or under authority of any government by
which the management of Borrower or any guarantor is displaced of its authority
in the conduct of its respective business or such business is curtailed or
materially impaired. Prepayment of Other Debt. Retire any long-term debt entered
into prior to the date of this Agreement at a date in advance of its legal
obligation to do so. Retire or Repurchase Capital Stock. Retire or otherwise
Page 3
acquire any of its capital stock. Guarantees. Guarantee or otherwise become
responsible for obligations of any other person, corporation or entity except
for the endorsement of negotiable instruments by Borrower or its subsidiary, if
any, in the ordinary course of business for collection, as unconditional
guarantor of debt incurred by Sherwood Foods, Inc. in the aggregate amount of
$2,165,000.00 and as conditional guarantor of debt incurred by Sherwood Foods,
Inc. for an aggregate of $1,360,000.00. The latter conditional guarantee is
subject to wording acceptable to the Bank that the Borrower is obligated only to
not impede creditor access to certain items of machinery and equipment to be
acquired by Sherwood Foods, Inc. in the event of default on said loans or leases
with no other responsibility to perform. Encumbrances. Create, assume, or permit
to exist any mortgage, security deed, deed of trust, pledge, lien, charge or
other encumbrance on any of its assets, whether now owned or hereafter acquired,
other than: (i) security interests required by the Loan Documents; (ii) liens
for taxes contested in good faith; (iii) liens accruing by law for employee
benefits; or (iv) Permitted Liens as defined in this Agreement.
FINANCIAL COVENANTS. Borrower, on a consolidated basis, agrees to the following
provisions from the date of this Agreement and until final payment in full of
the Obligations, unless Bank shall otherwise consent in writing: Current Ratio.
Borrower shall, at all times, maintain a Current Ratio of not less than 1.50 to
1.00. "Current Ratio" shall mean the ratio of consolidated current assets to
consolidated current liabilities. Tangible Net Worth. Borrower shall, at all
times, maintain a Consolidated Tangible Net Worth of at least $2,300,000.00.
"Consolidated Tangible Net Worth" shall mean, at any time, the Net Worth less
the total of (1) all assets which would be classified as intangible assets under
GAAP, including goodwill, trademarks, trademark applications and licenses, and
deferred charges, (2) leasehold improvements, (3) applicable reserves,
allowances and other similar properly deductible items to the extent such
reserves, allowances, and other similar properly deductible items have not been
previously deducted by the Bank in the calculation of Net Worth, (4) any
revaluation or other write-up in book value of assets subsequent to the date of
the most recent financial statements deliver to the Bank, and (5) the amount to
fall loans, advances to, or investments in, any individual or entity, excluding
cash equivalents and deposit accounts maintained by the Borrower and its
consolidated subsidiaries with any financial institution and (6) accounts
receivable from an affiliate of the Borrower, excluding debt fully subordinated
to Bank, after subtracting therefrom the aggregate amount of any intangible
assets of Borrower, and its subsidiaries, (including without limitation,
goodwill, franchise, licenses, patents, trademarks, trade names, copyrights,
service marks, and brand names). Debt/Worth Ratio. Borrower shall at all times
maintain a Consolidated Total Liabilities, including debt fully subordinated to
Bank, to Consolidated Tangible Net Worth ratio of not more than 2.50 to 1.00.
For purposes of this computation, "Consolidated Total Liabilities" shall mean
all liabilities of the Borrower and its subsidiaries, including capitalized
leases and all reserves for deferred taxes and other deferred sums appearing on
the liabilities of the balance sheet of the Borrower and its subsidiaries, in
accordance with generally accepted accounting principles applied on a consistent
basis. Fixed Assets. Borrower shall not during any fiscal year, expend on gross
fixed assets (including fixed gross leases to be capitalized under generally
acceptable accounting principals and leasehold improvements) an amount exceeding
$75,000.00 in the aggregate. Leases. Borrower shall not incur, create, or assume
any direct or indirect liability for the payment of rent or otherwise, under any
lease or rental arrangement (excluding capitalized leases) if immediately
thereafter the sum of such lease or rental payments to be made by Borrower
during any 12-month period is increased by $50,000.00 in the aggregate.
Limitation on Debt. Borrower shall not, directly or indirectly, create, incur,
assume or become liable for, contingent or otherwise, for any funded debt if,
upon giving effect to such incurrence on a pro forma basis, the aggregate amount
of debt incurred shall exceed $100,000.00. Loans and Advances. Borrower shall
not make loans or advances, excepting ordinary course of business travel and
expense advances, to any person or entity, which total more than $25,000.00 in
the aggregate, with the exception of loans or advances to Borrower's affiliate,
Sherwood Foods, Inc. in which the aggregate limit shall be $500,000.00.
Page 4
ANNUAL FINANCIAL STATEMENTS. Borrower shall deliver to Bank, within 90 days
after the close of each fiscal year, audited financial statements reflecting its
operations and that of its affiliate, Sherwood Foods, Inc. during such fiscal
year, including, without limitation, a balance sheet, profit and loss statement
and statement of cash flows, with supporting schedules; all on a consolidated
and consolidating basis and in reasonable detail, prepared in conformity with
generally accepted accounting principles, applied on a basis consistent with
that of the preceding year. All such statements shall be examined by an
independent certified public accountant acceptable to Bank. The opinion of such
independent certified public accountant shall not be acceptable to Bank if
qualified due to any limitations in scope imposed by Borrower or its
Subsidiaries, if any. Any other qualification of the opinion by the accountant
shall render the acceptability of the financial statements subject to Bank's
approval.
PERIODIC FINANCIAL STATEMENTS. Borrower shall deliver to Bank unaudited
management-prepared quarterly financial statements on its operations and that of
its affiliate, Sherwood Foods, Inc., including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting
schedules, as soon as available and in any event within 45 days after the close
of each such period; all in reasonable detail and prepared in conformity with
generally accepted accounting principles, applied on a basis consistent with
that of the preceding year. Such statements shall be certified as to their
correctness by a principal financial officer of Borrower.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial statements and information pertaining to Borrower's financial
condition. Such information shall be true, complete, and accurate.
BORROWING BASE. As to the Line of Credit Note in the principal amount of
$2,000,000.00, and any Letters of Credit issued, the following provisions shall
apply:
Borrowing Limitation. The maximum principal amount that Borrower may borrow
shall be the lesser of the principal amount stated in the Line of Credit Note
or the maximum principal amount allowed under this addendum (the "Maximum
Principal Amount").
The Maximum Principal Amount shall be an amount equal to 80% of domestic
accounts receivable, cross-aged, less than 61 days past due; plus 70% of
domestically-owned and held finished goods inventory; less the aggregate amount
of all outstanding letters of credit. Inventory advances are capped at
$1,500,000.00 with the exception of the months of June, July, and August during
which there will be no advance rate cap on inventory. Cross-aged shall be
defined as accounts where no more than 30% of their original invoices are more
than 61 days past due from the original date of invoice.
"Eligible Account" refers to an account receivable not more than 61 days from
the date of the original invoice that arises in the ordinary course of
Borrower's business and meets the following eligibility requirements: (a) the
sale of goods or services reflected in such account is final and such goods and
services have been delivered or provided and accepted by the account debtor and
payment for such is owing; (b) the invoices comprising an account are not
subject to any claims, returns or disputes of any kind; (c) the account debtor
is not insolvent; (d) the account debtor has its principal place of business in
the United States; (e) the account debtor is not an affiliate of Borrower and is
not a supplier to Borrower and the account is not otherwise exposed to risk of
set-off; (f) not more than thirty percent of the original invoices owing
Borrower by the account debtor are more than sixty days from the date of the
original invoice.
"Eligible Inventory" means inventory of raw material and finished goods in
Borrower's possession that is held for use or sale in the ordinary course of
Borrower's business and is not unmerchantable or obsolete and is subject to a
first priority perfected security interest in favor of Bank. The value of the
inventory will be determined by Bank and will be valued at the lower of cost or
market on a first-in, first-out basis.
Page 5
Required Reports. Borrower shall certify to Bank by the tenth day of each month,
the amount of Eligible Accounts and the value of Eligible Inventory as of the
first day of each month, in a Inventory Report and an Accounts Receivable Aging
Listing Report together with all detail and supporting documents requested by
Bank. Bank may at any time and from time to time, during Bank's normal business
hours, enter upon any business premises of Borrower and audit Borrower's
accounts and inventory. Bank's determination of the amount of Eligible Accounts
and the value of Eligible Inventory shall at all times be indisputable and
deemed correct. The Borrower, at all times, shall cooperate with Bank without
limitation by providing Bank information and access to Borrower's premises and
business records and shall be courteous to Bank's agents.
Continuing Representations. Borrower warrants and represents as a continuing
warranty, that so long as principal is outstanding under the Line of Credit
Note, the outstanding principal balance shall not exceed the lesser of the
Maximum Principal Amount or the principal amount stated in the Line of Credit
Note (the "Borrowing Limit"). Borrower agrees to pay any advances in excess of
the Borrowing Limit immediately upon receipt by Borrower of written notice that
the Borrowing Limit has been exceeded.
CONDITIONS PRECEDENT. The obligations of Bank to make the Loan and any advances
pursuant to this Agreement are subject to the following conditions precedent:
Additional Documents. Receipt by Bank of such additional supporting documents as
Bank or its counsel may reasonably request.
IN WITNESS WHEREOF, Borrower and Bank, effective as of the day and year first
written above, have caused this Agreement to be executed under seal.
Sherwood Brands, Inc.
Taxpayer Identification Number: 00-0000000
CORPORATE By: /s/ Xxxx Xxxxxxxx
SEAL ------------------------------------
Title: Vice President
---------------------------------
Sherwood Brands Overseas, Inc.
Taxpayer Identification Number: ____
CORPORATE By: /s/ Xxxx Xxxxxxxx
SEAL ------------------------------------
Title: Director
---------------------------------
First Union National Bank of Maryland
By:
---------------------------------
Title:
-------------------------------
Page 6
FIRST UNION
PROMISSORY NOTE
$2,000,000.00
November 29, 1996
Sherwood Brands, Inc.
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Sherwood Brands Overseas, Inc.
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
(Individually and collectively "Borrower")
First Union National Bank of Maryland
0000 Xxxxx Xxxxxx Xxxx
XxXxxx, Xxxxxxxx 00000
(Hereinafter referred to as the "Bank")
RENEWAL/MODIFICATION. This Promissory Note renews, extends and/or modifies that
certain Promissory Note dated November 30, 1995, evidencing an original
principal indebtedness of $2,000,000.00. This Promissory Note is not a novation.
Borrower promises to pay to the order of Bank, in lawful money of the United
States of America, at its office indicated above or wherever else Bank may
specify, the sum of Two Million and No/100 Dollars ($2,000,000.00) or such sum
as may be advanced from time to time with interest on the unpaid principal
balance at the rate and on the terms provided in this Promissory Note (including
all renewals, extensions or modifications hereof, this "Note").
SECURITY. Sherwood Brands, Inc. has granted Bank a security interest in the
collateral described in the Loan Documents, including, but not limited to,
personal property collateral described in that certain Security Agreement dated
November 30, 1995; Sherwood Brands Overseas, Inc. has granted Bank a security
interest in the collateral described in the Loan Documents, including, but not
limited to, personal property collateral described in that certain Security
Agreement dated November 29, 1996; and Uziel and Xxxxx Xxxxxxx have granted Bank
a security interest in real property described in that certain Indemnity Deed of
Trust dated November 30, 1995.
INTEREST RATE. Interest shall accrue on the unpaid principal balance of this
Note from the date hereof at the rate of Bank's Prime Rate as that rate may
change from time to time with changes to occur on the date Bank's Prime Rate
changes ("Interest Rate"). Bank's Prime Rate shall be that rate announced by
Bank from time to time as its Prime Rate and is one of several interest rate
bases used by Bank. Bank lends at rates both above and below Bank's Prime Rate,
and Borrower acknowledges that Bank's Prime Rate is not represented or intended
to be the lowest or most favorable rate of interest offered by Bank.
DEFAULT RATE. In addition to all other rights contained in this Note, if a
Default (defined herein) occurs and as long as a Default continues, all
outstanding Obligations shall bear interest at the Interest Rate plus 3%
("Default Rate"). The Default Rate shall also apply from acceleration until the
Obligations or any judgment thereon is paid in full.
INTEREST COMPUTATION. (Actual/360). Interest shall be computed on the basis of a
360-day year for the actual number of days in the interest period ("Actual/360
Computation"). The Actual/360 Computation determines the annual effective
interest yield by taking the stated (nominal) interest rate for a year's period
and then dividing said rate by 360 to determine the daily periodic rate to be
applied for each day in the interest period. Application of the Actual/360
Computation produces an annualized effective interest rate exceeding that of the
nominal rate.
REPAYMENT TERMS. This Note shall be due and payable in consecutive monthly
payments of accrued interest only commencing on December 31, 1996, and on the
last day of each month thereafter until fully paid. In any event, all principal
and accrued interest shall be due and payable on November 30, 1997.
APPLICATION OF PAYMENTS. Monies received by Bank from any source for application
toward payment of the Obligations shall be applied to accrued interest and then
to principal. If a Default occurs, monies may be applied to the Obligations in
any manner or order deemed appropriate by Bank.
If any payment received by Bank under this Note or other Loan Documents is
rescinded, avoided or for any reason returned by Bank because of any adverse
claim or threatened action, the returned payment shall remain payable as an
obligation of all persons liable under this Note or other Loan Documents as
though such payment had not been made.
LOAN DOCUMENTS AND OBLIGATIONS. The term "Loan Documents" used in this Note and
other Loan Documents refers to all documents executed in connection with the
loan evidenced by this Note and may include, without limitation, a commitment
letter that survives closing, a loan agreement, this Note, guaranty agreements,
security agreements, security instruments, financing statements, mortgage
instruments, letters of credit and any renewals or modifications, but however,
does not include swap agreements as defined in 11 U.S.C. ss. 101 whenever
executed.
The term "Obligations" used in this Note refers to any and all indebtedness and
other obligations under this Note, all other obligations as defined in the
respective Loan Documents, and all obligations under any swap agreements as
defined in 11 U.S.C. ss. 101 between Borrower and Bank whenever executed.
LATE CHARGE. If any payments are not timely made, Borrower shall also pay to
Bank a late charge equal to 5% of each payment past due for 15 or more days.
Acceptance by Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Bank's right to collect such late charge or to collect
a late charge for any subsequent late payment received.
If this Note is secured by owner-occupied residential real property located
outside the state in which the office of Bank first shown above is located, the
late charge laws of the state where the real property is located shall apply to
this Note, or if permitted under the law of that state, 5% of each payment past
due for 10 or more days.
ATTORNEYS' FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank's
reasonable expenses incurred to enforce or collect any of the Obligations,
including, without limitation, reasonable arbitration, paralegals', attorneys'
and experts' fees and expenses, whether incurred without the commencement of a
suit, in any trial, arbitration, or administrative proceeding, or in any
appellate or bankruptcy proceeding.
USURY. Regardless of any other provision of this Note or other Loan Documents,
if for any reason the effective interest should exceed the maximum lawful
interest, the effective interest shall be deemed reduced to, and shall be, such
maximum lawful interest, and (i) the amount which would be excessive interest
shall be deemed applied to the reduction of the principal balance of this Note
and not to the payment of interest, and (ii) if the loan evidenced by this Note
has been or is thereby paid in full, the excess shall be returned to the party
paying same, such application to the principal balance of this Note or the
refunding of excess to be a complete settlement and acquittance thereof.
BORROWER'S ACCOUNTS. Except as prohibited by law, Borrower grants Bank a
security interest in all of Borrower's accounts with Bank and any of its
affiliates.
Page 2
CURE PERIOD. "Cure Period" shall be ten (10) days from the mailing of notice or
courier by next day delivery of the applicable event with respect to payment
defaults and thirty (30) days from the mailing of notice of the applicable event
with respect to any violation of Affirmative, Negative and Financial Covenants
in the Loan Agreement dated November 29, 1996.
DEFAULT. If any of the following occurs and is not cured within the applicable
Cure Period, a default ("Default") under this Note shall exist: Nonpayment;
Nonperformance. The failure of timely payment or performance of the Obligations
under this Note or any other Loan Documents. False Warranty. A warranty or
representation made in the Loan Documents or furnished Bank in connection with
the loan evidenced by this Note proves materially false, or if of a continuing
nature, becomes materially false. Cross Default. At Bank's option, any default
in payment or performance of any obligation under any other loans, contracts or
agreements of Borrower, any Subsidiary or Affiliate of Borrower, any general
partner of or the holder(s) of the majority ownership interests of Borrower with
Bank or its affiliates ("Affiliate" shall have the meaning as defined in 11
U.S.C. ss. 101, except that the term "debtor" therein shall be substituted by
the term "Borrower" herein; "Subsidiary" shall mean any corporation of which
more than 50% of the issued and outstanding voting stock is owned directly or
indirectly by Borrower). Cessation; Bankruptcy. The death of, appointment of
guardian for, dissolution of, termination of existence of, loss of good standing
status by, appointment of a receiver for, assignment for the benefit of
creditors of, or commencement of any bankruptcy or insolvency proceeding by or
against the Borrower, its Subsidiaries or Affiliates, if any, or any general
partner of or the holder(s) of the majority ownership interests of Borrower, or
any party to the Loan Documents. Material Capital Structure or Business
Alteration. Without prior written consent of Bank, (i) a material alteration in
the kind or type of Borrower's business or that of its Subsidiaries or
Affiliates, if any; (ii) the acquisition of substantially all of Borrower's, any
Subsidiary's, any Affiliate's, or guarantor's business or assets, or a material
portion (10% or more) of such business or assets if such a sale is outside
Borrower's, any Subsidiary's, any Affiliate's or any guarantor's, ordinary
course of business, or more than 50% of its outstanding stock or voting power in
a single transaction or a series of transactions; (iii) the acquisition of
substantially all of the business or assets or more than 50% of the outstanding
stock or voting power of any other entity; or (iv) should any Borrower,
Subsidiary, Affiliate, or guarantor enter into any merger or consolidation.
REMEDIES UPON DEFAULT. If a Default occurs under this Note or any Loan
Documents, Bank may at any time thereafter, take the following actions: Bank
Lien and Set-off. Exercise its right of set-off or to foreclose its security
interest or lien against any account of any nature or maturity of Borrower with
Bank without notice. Acceleration Upon Default. Accelerate the maturity of this
Note and all other Obligations, and all of the Obligations shall be immediately
due and payable. Cumulative. Exercise any rights and remedies as provided under
the Note and other Loan Documents, or as provided by law or equity.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial statements and information pertaining to Borrower's financial
condition. Such information shall be true, complete, and accurate.
CONFESSION OF JUDGMENT. If a Default occurs under this Note, each Borrower
hereby authorizes any attorney designated by Bank or any clerk of any court of
record to appear for it in any court of record and confess judgment against it
without prior hearing, in favor of Bank for and in the amount of the Obligations
then outstanding plus interest accrued and unpaid thereon, all other amounts
then due and payable under this Note or other Loan Documents, costs of suit and
attorneys' fees in an amount equal to 15% of the Obligations then outstanding
(which shall be deemed reasonable attorneys' fees for the purposes of this
paragraph). The authority and power to appear for and enter judgment against the
Borrower shall not be exhausted by one or more exercises thereof, or by any
imperfect exercise thereof, and shall not be extinguished by any judgment
entered pursuant thereto. Such authority and power may be exercised on one or
more occasions, from time to time, in the same or different jurisdictions, as
often as Bank shall deem necessary or desirable, for all of which this Note
shall be a sufficient warrant. Notwithstanding any provision or waiver contained
herein to the contrary, Borrower shall have all rights and remedies
Page 3
available to a defendant under Rule 2-611 Maryland Rules of Procedure of the
Annotated Code of Maryland, as amended.
LINE OF CREDIT ADVANCES. Borrower may borrow, repay and reborrow, and Bank may
advance and readvance under this Note respectively from time to time, so long as
the total indebtedness outstanding at any one time does not exceed the principal
amount stated on the face of this Note. Bank's obligation to advance or
readvance under this Note shall terminate if Borrower is in Default under this
Note.
LOAN AGREEMENT. This Note is subject to the provisions of that certain Loan
Agreement between Bank and Borrower dated November 29, 1996.
WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and
other Loan Documents shall be valid unless in writing and signed by an officer
of Bank. No waiver by Bank of any Default shall operate as a waiver of any other
Default or the same Default on a future occasion. Neither the failure nor any
delay on the part of Bank in exercising any right, power, or remedy under this
Note and other Loan Documents shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
Except as expressly provided in the Loan Documents, each Borrower or any person
liable under this Note waives presentment, protest, notice of dishonor, demand
for payment, notice of intention to accelerate maturity, notice of acceleration
of maturity, notice of sale and all other notices of any kind. Further, each
agrees that Bank may extend, modify or renew this Note or make a novation of the
loan evidenced by this Note for any period and grant any releases, compromises
or indulgences with respect to any collateral securing this Note, or with
respect to any Borrower or any person liable under this Note or other Loan
Documents, all without notice to or consent of any Borrower or any person who
may be liable under this Note or other Loan Documents and without affecting the
liability of Borrower or any person who may be liable under this Note or other
Loan Documents.
MISCELLANEOUS PROVISIONS. Assignment. This Note and other Loan Documents shall
inure to the benefit of and be binding upon the parties and their respective
heirs, legal representatives, successors and assigns. Bank's interests in and
rights under this Note and other Loan Documents are freely assignable, in whole
or in part, by Bank. Borrower shall not assign its rights and interest hereunder
without the prior written consent of Bank, and any attempt by Borrower to assign
without Bank's prior written consent is null and void. Any assignment shall not
release Borrower from the Obligations. Applicable Law; Conflict Between
Documents. This Note and other Loan Documents shall be governed by and construed
under the laws of the state where Bank first shown above is located without
regard to that state's conflict of laws principles. If the terms of this Note
should conflict with the terms of the loan agreement or any commitment letter
that survives closing, the terms of this Note shall control. Jurisdiction.
Borrower irrevocably agrees to non-exclusive personal jurisdiction in the state
in which the office of Bank first shown above is located. Severability. If any
provision of this Note or of the other Loan Documents shall be prohibited or
invalid under applicable law, such provision shall be ineffective but only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Note or other such
document. Notices. Any notices to Borrower shall be sufficiently given, if in
writing and mailed or delivered to the Borrower's address shown above or such
other address as provided hereunder, and to Bank, if in writing and mailed or
delivered to Bank's office address shown above or such other address as Bank may
specify in writing from time to time. In the event that Borrower changes
Borrower's address at any time prior to the date the Obligations are paid in
full, Borrower agrees to promptly give written notice of said change of address
by registered or certified mail, return receipt requested, all charges prepaid.
Plural; Captions. All references in the Loan Documents to Borrower, guarantor,
person, document or other nouns of reference mean both the singular and plural
form, as the case may be, and the term "person" shall mean any individual,
person or entity. The captions contained in the Loan Documents are inserted for
convenience only and shall not affect the meaning or interpretation of the Loan
Documents. Binding Contract. Borrower by execution of and Bank by acceptance of
this Note agree that each party is bound to all terms and provisions of this
Note. Advances. Bank in its
Page 4
sole discretion may make other advances and readvances under this Note pursuant
hereto. Posting of Payments. All payments received during normal banking hours
after 2:00 p.m. local time at the office of Bank first shown above shall be
deemed received at the opening of the next banking day. Joint and Several
Obligations. Each Borrower is jointly and severally obligated under this Note.
Fees and Taxes. Borrower shall promptly pay all documentary, intangible
recordation and/or similar taxes on this transaction whether assessed at closing
or arising from time to time.
ARBITRATION. Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Note and other Loan Documents
("Disputes") between or among parties to this Note shall be resolved by binding
arbitration as provided herein. Institution of a judicial proceeding by a party
does not waive the right of that party to demand arbitration hereunder. Disputes
may include, without limitation, tort claims, counterclaims, disputes as to
whether a matter is subject to arbitration, claims brought as class actions,
claims arising from Loan Documents executed in the future, or claims arising out
of or connected with the transaction reflected by this Note.
Arbitration shall be conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in the city in which the office of Bank first stated above is
located. The expedited procedures set forth in Rule 51 et seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000.00. All
applicable statutes of limitation shall apply to any Dispute. A judgment upon
the award may be entered in any court having jurisdiction. The panel from which
all arbitrators are selected shall be comprised of licensed attorneys. The
single arbitrator selected for expedited procedure shall be a retired judge from
the highest court of general jurisdiction, state or federal, of the state where
the hearing will be conducted or if such person is not available to serve, the
single arbitrator may be a licensed attorney. Notwithstanding the foregoing,
this arbitration provision does not apply to disputes under or related to swap
agreements.
PRESERVATION AND LIMITATION OF REMEDIES. Notwithstanding the preceding binding
arbitration provisions, Bank and Borrower agree to preserve, without diminution,
certain remedies that any party hereto may employ or exercise freely,
independently or in connection with an arbitration proceeding or after an
arbitration action is brought. Bank and Borrower shall have the right to proceed
in any court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (i) all rights to foreclose against any real
or personal property or other security by exercising a power of sale granted
under Loan Documents or under applicable law or by judicial foreclosure and
sale, including a proceeding to confirm the sale; (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of judgment.
Preservation of these remedies does not limit the power of an arbitrator to
grant similar remedies that may be requested by a party in a Dispute.
Borrower and Bank agree that they shall not have a remedy of punitive or
exemplary damages against the other in any Dispute and hereby waive any right or
claim to punitive or exemplary damages they have now or which may arise in the
future in connection with any Dispute whether the Dispute is resolved by
arbitration or judicially.
Page 5
IN WITNESS WHEREOF, Borrower, as of the day and year first above written, has
caused this Note to be executed under seal.
Sherwood Brands, Inc.
Taxpayer Identification Number: 00-0000000
CORPORATE By: /s/ Xxxx Xxxxxxxx
SEAL ------------------------------------
Title: Vice President
---------------------------------
Sherwood Brands Overseas, Inc.
Taxpayer Identification Number: N/A
CORPORATE By: /s/ Xxxx Xxxxxxxx
SEAL ------------------------------------
Title: Director
---------------------------------
Page 6
MODIFICATION NUMBER 1
TO THE PROMISSORY NOTE AND THE LOAN AGREEMENT
SHERWOOD BRANDS, LLC, successor-in-interest to Sherwood Brands, Inc.
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
SHERWOOD BRANDS OVERSEAS, INC.
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
(Individually and collectively, "Borrower")
FIRST UNION NATIONAL BANK
0000 Xxxxx Xxxxxx Xxxx
XxXxxx, Xxxxxxxx 00000
(Hereinafter referred to as the "Bank")
THIS AGREEMENT is entered into as of December 12, 1997 by and between Bank and
Borrower.
WHEREAS, Bank is the holder of a Promissory Note executed and delivered by
Sherwood Brands, Inc. ("SBI") and Sherwood Brands Overseas, Inc. ("SBO") dated
November 29, 1996, in the original principal amount of $2,000,000.00 (the
"Note"); and
WHEREAS, in connection with execution of the Note, SBI and SBO also executed and
delivered to Bank certain other Loan Documents, including a Loan Agreement,
dated November 29, 1996 (the "Loan Agreement");
WHEREAS, by the Assumption and Amendment Agreement dated as of the 31st day of
July, 1997 Sherwood Brands, LLC assumed and agreed to perform all of the
obligations under the Note, the Loan Agreement and the other Loan Documents of
SBI's successor-by-merger, Sherwood Foods, Inc.; and
WHEREAS, Borrower and Bank have agreed to modify the terms of the Promissory
Note and the Loan Agreement.
NOW, THEREFORE, in consideration of the premises contained herein and other good
and valuable consideration, receipt and sufficiency of which is acknowledged,
the parties agree as follows:
OUTSTANDING BALANCE. The total outstanding unpaid principal balance under the
Note as of December 9, 1997 is $1,369,588.74. The parties acknowledge that
interest on the obligations under the Note is paid through November 30, 1997.
MODIFICATIONS.
1. The Note is hereby modified by deleting the provisions in the Note
establishing the repayment terms end substituting the following in their
place and stead:
REPAYMENT TERMS. The Note shall be due and payable in consecutive monthly
payments of accrued interest only commencing on December 31, 1997, and on
the last day of each month thereafter until fully paid. In any event, all
principal and accrued interest shall be due and payable on November 30,
1998.
CURE PERIOD. Except as provided below, a Default may be cured within ten
(10) days from the mailing of notice or courier by next day delivery of the
applicable event with respect to payment defaults and thirty (30) days from
the mailing of notice ("Right to Notice and Cure") of the applicable event
with respect to any violation of Affirmative, Negative and Financial
Covenants in the Loan Agreement ("Cure Period"). During the Cure Period
Bank shall not exercise its remedies to collect the Obligations except as
the Bank reasonably deems necessary to protect its interest in collateral
securing the Obligations. The Right to Notice and Cure is applicable only
to curable Defaults and only to one occurrence of Default during any one
year period. This Right to Notice and Cure shall have no effect with
respect to subsequent Defaults within such one year period and shall not be
applicable to False Warranty, Cessation or Bankruptcy Defaults.
AUTOMATIC DEBIT OF CHECKING ACCOUNT FOR LOAN PAYMENT. Borrower authorizes
Bank to debit its demand deposit account number 2040000037536 or any other
account with Bank (routing number 000000000) designated in writing by
Borrower, beginning December 31, 1997 for any payments due under this Note.
Borrower further certifies that Borrower holds legitimate ownership of this
account and preauthorizes this periodic debit as part of its right under
said ownership.
LINE OF CREDIT ADVANCES. Borrower may borrow, repay and reborrow, and Bank
may advance and readvance under the Note respectively from time to time
until the maturity hereof (each an "Advance" and together the "Advances"),
so long as the total indebtedness outstanding under the Note at any one
time does not exceed the principal amount stated on the face of the Note.
Bank's obligation to make Advances under the Note shall terminate if
Borrower is in Default or a representation in any of the Loan Documents is
false or has become false. As of the date of each proposed Advance,
Borrower shall be deemed to represent that each representation made in the
Loan Documents is true as of such date.
2. The section entitled FINANCIAL COVENANTS of the Loan Agreement is hereby
amended by deleting the subparagraph(s) entitled Tangible Net Worth and
adding the following in its place and stead:
FINANCIAL COVENANTS. Borrower agrees to the following provisions from the
date hereof until final payment in full of the Obligations, unless Bank
shall otherwise consent in writing: Tangible Net Worth. Borrower shall, at
all times, maintain Consolidated Tangible Net Worth of at least
$2,000,000.00. "Consolidated Tangible Net Worth" shall mean, at any time,
the Net Worth less the total of (1) all assets which would be classified as
intangible assets under GAAP, including goodwill, trademarks, trademark
applications and licenses, and deferred charges, (2) leasehold
improvements, (3) applicable reserves, allowances and other similar
properly deductible items to the extent such reserves, allowances, and
other similar properly deductible items have not been previously deducted
by the Bank in the calculation of Net Worth, (4) any revaluation or other
write-up in book value of assets subsequent to the date of the most recent
financial statements delivered to the Bank, and (5) the amount to fall
loans, advances to, or investments in, any individual or entity, excluding
cash equivalents and deposit accounts maintained by the Borrower and its
consolidated subsidiaries with any financial institution, and (6) accounts
receivable from an affiliate of the Borrower, excluding debt fully
subordinated to Bank, after subtracting therefrom the aggregate amount of
any intangible assets of Borrower, and its subsidiaries, (including without
limitation, goodwill, franchise, licenses, patents, trademarks, trade
names, copyrights, service marks and brand names). Debt/Worth Ratio.
Borrower shall at all times maintain a Consolidated Total Liabilities,
including debt fully subordinated to Bank, to Consolidated Tangible Net
Worth ratio of not more than 1.50 to 1.00. For purposes of this
computation, "Consolidated Total Liabilities" shall mean all liabilities of
Borrower and its
Page 2
subsidiaries, including capitalized leases and all reserves for deferred
taxes and other deferred sums appearing on the liabilities side of a
balance sheet of Borrower and its subsidiaries, in accordance with
generally accepted accounting principles applied on a consistent basis.
Loans and Advances. Borrower shall not make loans or advances, excepting
ordinary course of business travel and expense advances, to any person or
entity, which total more than $25,000.00 in the aggregate, with the
exception of loans or advances to Borrower's affiliate, Sherwood Foods,
Inc., in which case the aggregate limit shall be $700,000.00.
ACKNOWLEDGMENTS. Borrower acknowledges and represents that the Note and other
Loan Documents, as amended hereby, are in full force and effect and are binding
upon it, its successors, assigns, administrators and heirs without any defense,
counterclaim, right or claim of set-off or of other sum due; that, after giving
effect to this Agreement, no default or event that with the passage of time or
giving of notice would constitute a default under the Loan Documents has
occurred; that all representations and warranties contained in the Loan
Documents are true and correct as of this date; that there have been no changes
in the ownership of any collateral pledged to secure the Obligations since the
dates of the instruments originally pledging such collateral; and that Borrower
has taken all necessary action (corporate or otherwise) to authorize the
execution and delivery of this Agreement. This Agreement constitutes only a
modification of an existing obligation owing by Borrower to Bank, and is not a
novation.
LIENS. Borrower acknowledges and confirms the extent, validity and priority of
the Bank's security interests and liens in the collateral pledged, if any,
pursuant to the Loan Documents, and agrees that such security interests and
liens shall secure the Borrower's Obligations to Bank, including any
modification of the Note or Loan Agreement, and all future modifications,
extensions, renewals and/or replacements of the Loan Documents.
MISCELLANEOUS. This Agreement shall be construed in accordance with and governed
by the laws of the applicable state as originally provided in the Loan
Documents, without reference to that state's conflicts of laws principles. This
Agreement and the other Loan Documents constitute the sole agreement of the
parties with respect to the subject matter thereof and supersede all oral
negotiations and prior writings with respect to the subject matter thereof. No
amendment of this Agreement, and no waiver of any one or more of the provisions
hereof shall be effective unless set forth in writing and signed by the parties
hereto. The illegality, unenforceability or inconsistency of any provision of
this Agreement shall not in any way affect or impair the legality,
enforceability or consistency of the remaining provisions of this Agreement or
the other Loan Documents. This Agreement and the other Loan Documents are
intended to be consistent. However, in the event of any inconsistencies among
this Agreement and any of the Loan Documents, the terms of this Agreement, and
then the Note, shall control. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts. Each such
counterpart shall be deemed an original, but all such counterparts shall
together constitute one and the same agreement.
DEFINITIONS. The term "Loan Documents" used in this Agreement and other Loan
Documents refers to all documents, agreements, and instruments executed in
connection with any of the Obligations (as defined herein), and may include,
without limitation, modification agreements, a commitment letter that survives
closing, a loan agreement, any note, guaranty agreements, security agreements,
security instruments, financing statements, mortgage instruments, letters of
credit and any renewals or modifications, whenever any of the foregoing are
executed, but does not include swap agreements (as defined in 11 U.S.C. ss.
101). The term "Obligations" used in this Agreement refers to any and all
indebtedness and other obligations of every kind and description of the Borrower
to the Bank or to any Bank affiliate, whether or not under the Loan Documents,
and whether such debts or obligations are primary or secondary, direct or
indirect, absolute or
Page 3
contingent, sole, joint or several, secured or unsecured, due or to become due,
contractual, including, without limitation, swap agreements (as defined in 11
U.S.C. ss. 101), arising by tort, arising by operation of law, by overdraft or
otherwise, or now or hereafter existing, including, without limitation,
principal, interest, fees, late fees, expenses, attorneys' fees and costs that
have been or may hereafter be contracted or incurred. Terms used in this
Agreement which are capitalized and not otherwise defined herein shall have the
meanings ascribed to such terms in the Note and/or other Loan Documents.
ARBITRATION. Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement and other Loan
Documents ("Disputes") between or among parties to this Agreement shall be
resolved by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions, claims arising from Loan Documents executed in the
future, or claims arising out of or connected with the transaction reflected by
this Agreement.
Arbitration shall be conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in the city in which the office of Bank first stated above is
located. The expedited procedures set forth in Rule 51 et seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000.00. All
applicable statutes of limitation shall apply to any Dispute. A judgment upon
the award may be entered in any court having jurisdiction. The panel from which
all arbitrators are selected shall be comprised of licensed attorneys. The
single arbitrator selected for expedited procedure shall be a retired judge from
the highest court of general jurisdiction, state or federal, of the state where
the hearing will be conducted or if such person is not available to serve, the
single arbitrator may be a licensed attorney. Notwithstanding the foregoing,
this arbitration provision does not apply to disputes under or related to swap
agreements.
PRESERVATION AND LIMITATION OF REMEDIES. Notwithstanding the preceding binding
arbitration provisions, Bank and Borrower agree to preserve, without diminution,
certain remedies that any party hereto may employ or exercise freely,
independently or in connection with an arbitration proceeding or after an
arbitration action is brought. Bank and Borrower shall have the right to proceed
in any court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (i) all rights to foreclose against any real
or personal property or other security by exercising a power of sale granted
under Loan Documents or under applicable law or by judicial foreclosure and
sale, including a proceeding to confirm the sale; (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of judgment.
Preservation of these remedies does not limit the power of an arbitrator to
grant similar remedies that may be requested by a party in a Dispute.
Borrower and Bank agree that they shall not have a remedy of punitive or
exemplary damages against the other in any Dispute and hereby waive any right or
claim to punitive or exemplary damages they have now or which may arise in the
future in connection with any Dispute whether the Dispute is resolved by
arbitration or judicially.
Page 4
IN WITNESS WHEREOF, the undersigned have signed and sealed this Agreement the
day and year first above written, and this Agreement is deemed effective as of
November 30, 1997.
SHERWOOD BRANDS, LLC
Taxpayer Identification Number: 00-0000000
By: /s/ Xxxx Xxxxxxxx
---------------------------------(SEAL)
Printed Name: Xxxx Xxxxxxxx
-----------------------
Title: Vice President
------------------------------
SHERWOOD BRANDS OVERSEAS, INC.
CORPORATE By: /s/ Xxxx Xxxxxxxx
SEAL ----------------------------------
Printed Name: Xxxx Xxxxxxxx
-----------------------
Title: Director
------------------------------
FIRST UNION NATIONAL BANK
By:
CORPORATE -----------------------------------
SEAL Xxxxxx X. Xxxxx, Vice President
Page 5
MODIFICATION NUMBER 2
TO THE LOAN AGREEMENT
SHERW0OD BRANDS, LLC, successor-in-interest to Sherwood Brands, Inc.
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
SHERW0OD BRANDS OVERSEAS, INC.
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
(Individually and collectively, "Borrower")
FIRST UNION NATIONAL. BANK
0000 Xxxxx Xxxxxx Xxxx
XxXxxx, Xxxxxxxx 00000
(Hereinafter referred to as the "Bank")
THIS AGREEMENT is entered into as of December 23, 1997 by and between Bank and
Borrower.
WHEREAS, Bank is the holder of a Promissory Note executed and delivered by
Sherwood Brands, Inc. ("SBI") and Sherwood Brands Overseas, Inc. ("SBO") dated
November 29, 1996, in the original principal amount of $2,000,000.00 (the
"Note"); and
WHEREAS, in connection with execution of the Note, SBI and SBO also executed and
delivered to Bank certain other Loan Documents, including a Loan Agreement,
dated November 29, 1996 (the "Loan Agreement").
WHEREAS, by the Assumption and Amendment Agreement dated as of the 31st day of
July, 1997 Sherwood Brands, LLC assumed and agreed to perform all of the
obligations under the Note, the Loan Agreement and the other Loan Documents of
SBI's successor-by-merger. Sherwood Foods, Inc.; and
WHEREAS, Borrower and Bank have agreed to modify the terms of the Promissory
Note and the Loan Agreement.
NOW, THEREFORE, in consideration of the premises contained herein and other good
and valuable consideration, receipt and sufficiency of which is acknowledged,
the parties agree as follows:
OUTSTANDING BALANCE. The total outstanding unpaid principal balance under the
Note as of December 9, 1997 is $1,369,588.74. The parties acknowledge that
interest on the obligations under the Note is paid through November 30, 1997.
MODIFICATIONS.
1. The section entitled FINANCIAL COVENANTS of the Loan Agreement is hereby
amended by deleting the subparagraph(s) entitled Debt/Worth Ratio and
adding the following in their place and stead:
Debt/Worth Ratio. Borrower shall at all times maintain a Consolidated Total
Liabilities, including debt fully subordinated to Bank, to Consolidated
Tangible Net Worth ratio of not more than 3.00 to 1.00. For purposes of
this computation, "Consolidated Total Liabilities" shall mean all
liabilities of Borrower and its subsidiaries, including capitalized leases
and all reserves for deferred taxes and other deferred sums appearing on
the liabilities side of a balance sheet of Borrower and its subsidiaries,
in accordance with generally accepted accounting principles applied on a
consistent basis.
ACKNOWLEDGMENTS. Borrower acknowledges and represents that the Note and other
Loan Documents, as amended hereby, are in full force and effect and are binding
upon it, its successors, assigns, administrators and heirs without any defense,
counterclaim, right or claim of set-off or of other sum due; that, after giving
effect to this Agreement, no default or event that with the passage of time or
giving of notice would constitute a default under the Loan Documents has
occurred; that all representations and warranties contained in the Loan
Documents are true and correct as of this date; that there have been no changes
in the ownership of any collateral pledged to secure the Obligations since the
dates of the instruments originally pledging such collateral; and that Borrower
has taken all necessary action (corporate or otherwise) to authorize the
execution and delivery of this Agreement. This Agreement constitutes only a
modification of an existing obligation owing by Borrower to Bank, and is not a
novation.
LIENS. Borrower acknowledges and confirms the extent, validity and priority of
the Bank's security interests and liens in the collateral pledged, if any,
pursuant to the Loan Documents, and agrees that such security interests and
liens shall secure the Borrower's Obligations to Bank, including any
modification of the Note or Loan Agreement, and all future modifications,
extensions, renewals and/or replacements of the Loan Documents.
MISCELLANEOUS. This Agreement shall be construed in accordance with and governed
by the laws of the applicable state as originally provided in the Loan
Documents, without reference to that state's conflicts of laws principles. This
Agreement and the other Loan Documents constitute the sole agreement of the
parties with respect to the subject matter thereof and supersede all oral
negotiations and prior writings with respect to the subject matter thereof. No
amendment of this Agreement, and no waiver of any one or more of the provisions
hereof shall be effective unless set forth in writing and signed by the parties
hereto. The illegality, unenforceability or inconsistency of any provision of
this Agreement shall not in any way affect or impair the legality,
enforceability or consistency of the remaining provisions of this Agreement or
the other Loan Documents. This Agreement and the other Loan Documents are
intended to be consistent. However, in the event of any inconsistencies among
this Agreement and any of the Loan Documents, the terms of this Agreement, and
then the Note, shall control. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts. Each such
counterpart shall be deemed an original, but all such counterparts shall
together constitute one and the same agreement.
DEFINITIONS. The term "Loan Documents" used in this Agreement and other Loan
Documents refers to all documents, agreements, and instruments executed in
connection with any of the Obligations (as defined herein), and may include,
without limitation, modification agreements, a commitment letter that survives
closing, a loan agreement, any note, guaranty agreements, security agreements,
security instruments, financing statements, mortgage instruments, letters of
credit and any renewals or modifications, whenever any of the foregoing are
executed, but does not include swap agreements (as defined in 11 U.S.C. ss.
101). The term "Obligations" used in this Agreement refers to any and all
indebtedness and other obligations of every kind and description of the Borrower
to the Bank or to any Bank affiliate, whether or not under the Loan Documents,
and whether such debts or obligations are primary or secondary, direct or
indirect, absolute or contingent, sole, joint or several, secured or unsecured,
due or to become due, contractual, including, without limitation, swap
agreements (as defined in 11 U.S.C. ss. 101), arising by tort, arising by
operation of law, by overdraft or otherwise, or now or hereafter existing,
including, without limitation, principal, interest, fees, late fees, expenses,
attorneys' fees and costs that have been or may hereafter be contracted or
incurred. Terms used In this Agreement which are capitalized and not otherwise
defined herein shall have the meanings ascribed to such terms in the Note and/or
other Loan Documents.
Page 2
ARBITRATION, Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement and other Loan
Documents ("Disputes") between or among parties to this Agreement shall be
resolved by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions, claims arising from Loan Documents executed in the
future, or claims arising out of or connected with the transaction reflected by
this Agreement.
Arbitration shall be conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in the city in which the office of Bank first stated above is
located. The expedited procedures set forth In Rule 51 et seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000.00. All
applicable statutes of limitation shall apply to any Dispute. A judgment upon
the award may be entered in any court having jurisdiction. The panel from which
all arbitrators are selected shall be comprised of licensed attorneys. The
single arbitrator selected for expedited procedure shall be a retired judge from
the highest court of general jurisdiction, state or federal, of the state where
the hearing will be conducted or if such person is not available to serve, the
single arbitrator may be a licensed attorney. Notwithstanding the foregoing,
this arbitration provision does not apply to disputes under or related to swap
agreements.
PRESERVATION AND LIMITATION OF REMEDIES. Notwithstanding the preceding binding
arbitration provisions, Bank and Borrower agree to preserve, without diminution,
certain remedies that any party hereto may employ or exercise freely,
independently or in connection with an arbitration proceeding or after an
arbitration action is brought. Bank and Borrower shall have the right to proceed
in any court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (i) all rights to foreclose against any real
or personal property or other security by exercising a power of sale granted
under Loan Documents or under applicable law or by judicial foreclosure and
sale, including a proceeding to confirm the sale; (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of judgment.
Preservation of these remedies does not limit the power of an arbitrator to
grant similar remedies that may be requested by a party in a Dispute.
Borrower and Bank agree that they shall not have a remedy of punitive or
exemplary damages against the other in any Dispute and hereby waive any right or
claim to punitive or exemplary damages they have now or which may arise in the
future in connection with any Dispute whether the Dispute is resolved by
arbitration or judicially.
IN WITNESS WHEREOF, the undersigned have signed and sealed this Agreement the
day and year first above written, and this Agreement is deemed effective as of
November 30, 1997.
SHERWOOD BRANDS, LLC
Taxpayer Identification Number: 00-0000000
By: /s/ Xxxx Xxxxxxxx (SEAL)
-------------------------------------
Xxxx Xxxxxxxx , Vice President-Finance
Page 3
SHERWOOD BRANDS OVERSEAS, INC.
CORPORATE By: /s/ Xxxx Xxxxxxxx
SEAL ----------------------------------
Xxxx Xxxxxxxx, Director
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxx X. Xxxxx
CORPORATE -----------------------------------
SEAL Xxxxxx X. Xxxxx, Vice President
Page 4
FIRST UNION
SECURITY AGREEMENT
November 29, 1996
Sherwood Brands Overseas, Inc.
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
(Individually and collectively "Debtor")
First Union National Bank of Maryland
0000 Xxxxx Xxxxxx Xxxx
XxXxxx, Xxxxxxxx 00000
(Hereinafter referred to as the "Bank")
For value received and to secure payment and performance of the Promissory Note
executed by the Sherwood Brands, Inc. and Debtor dated November 29, 1996, in the
original principal amount of $2,000,000.00, and a $2,000,000.00 facility used
for the issuance of letters of credit, both payable to Bank, and any extensions,
renewals, modifications or novations thereof (the "Note"), this Security
Agreement and the other Loan Documents, and any other obligations of Debtor to
Bank however created, arising or evidenced, whether direct or indirect, absolute
or contingent, now existing or hereafter arising or acquired, including but not
limited to letter of credit reimbursement obligations, forward foreign exchange
and foreign exchange option transactions and any other swap agreements (as
defined in 11 U.S.C. ss. 101), future advances, and all costs and expenses
incurred by Bank to obtain, preserve, perfect and enforce the security interest
granted herein and to maintain, preserve and collect the property subject to the
security interest (collectively, "Obligations"), Debtor hereby grants to Bank a
continuing security interest in and lien upon the following described property,
now owned or hereafter acquired, any additions, accessions, or substitutions
thereof and thereto, and all proceeds and products thereof, including cash or
non-cash dividends (collectively, "Collateral"):
All accounts, together with all chattel paper and instruments, and all credit
insurance, guaranties, letters of credit, and other security for any of the
foregoing.
All inventory, including all goods in the possession of the Debtor, in transit,
and held by third parties, including all raw materials and work in process to be
processed into such inventory, and all accessions, attachments and other
additions to, substitutes for, replacements for, improvements to and returns of
such inventory, all accounts arising from the disposition of inventory.
Debtor hereby represents and agrees that:
OWNERSHIP. Debtor owns the Collateral or Debtor will purchase and acquire rights
in the Collateral within ten days of the date advances are made under the Note.
If Collateral is being acquired with the proceeds of an advance under the Note,
Debtor authorizes Bank to disburse proceeds directly to the seller of the
Collateral. The Collateral is free and clear of all liens, security interests,
and claims except those previously reported in writing to Bank, and Debtor will
keep the Collateral free and clear from all liens, security interests and
claims, other than those granted to Bank.
NAME AND OFFICES. There has been no change in the name of Debtor, or the name
under which Debtor conducts business, within the 5 years preceding the date of
execution of this Security Agreement and Debtor has not moved its executive
offices or residence within the 5 years preceding the date of execution of this
Security Agreement except as previously reported in writing to Bank. The
taxpayer identification number of Debtor as provided herein is correct.
TITLE/TAXES. Debtor has good and marketable title to Collateral and will warrant
and defend same against all claims. Debtor will not transfer, sell, or lease
Collateral (except in the ordinary course of business). Debtor agrees to pay
promptly all taxes and assessments upon or for the use of Collateral and on this
Security Agreement. At its option, Bank may discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on Collateral.
Debtor agrees to reimburse Bank, on demand, for any such payment made by Bank.
Any amounts so paid shall be added to the Obligations.
WAIVERS. Except as expressly provided in the Loan Documents, Debtor waives
presentment, demand, protest, notice of dishonor, notice of default, demand for
payment, notice of intention to accelerate, and notice of acceleration of
maturity. Debtor further agrees not to assert against Bank as a defense (legal
or equitable), as a set-off, as a counterclaim, or otherwise, any claims Debtor
may have against any seller or lessor that provided personal property or
services relating to any part of the Collateral. Debtor waives all exemptions
and homestead rights with regard to the Collateral. Debtor waives any and all
rights to notice or to hearing prior to Bank's taking immediate possession or
control of any Collateral, and to any bond or security which might be required
by applicable law prior to the exercise of any of Bank's remedies against any
Collateral.
EXTENSIONS, RELEASES. Debtor agrees that Bank may extend, renew or modify any of
the Obligations and grant any releases, compromises or indulgences with respect
to any security for the Obligations, or with respect to any party liable for the
Obligations, all without notice to or consent of Debtor and without affecting
the liability of Debtor or the enforceability of this Security Agreement.
NOTIFICATIONS OF CHANGE. Debtor will notify Bank in writing at least 30 days
prior to any change in: (i) Debtor's chief place of business and/or residence;
(ii) Debtor's name or identity; or (iii) Debtor's corporate structure. Debtor
will keep Collateral at the location(s) previously provided to Bank until such
time as Bank provides written advance consent to a change of location. Debtor
will bear the cost of preparing and filing any documents necessary to protect
Bank's liens.
COLLATERAL CONDITION AND LAWFUL USE. Debtor represents that Collateral is in
good repair and condition and that Debtor shall use reasonable care to prevent
Collateral from being damaged or depreciating. Debtor shall immediately notify
Bank of any material loss or damage to Collateral. Debtor shall not permit any
item of equipment to become a fixture to real estate or an accession to other
personal property. Debtor represents it is in compliance in all respects with
all federal, state and local laws, rules and regulations applicable to its
properties, Collateral, operations, business, and finances, including, without
limitation, any federal or state laws relating to liquor (including 18 U.S.C.
ss. 3617, et seq.) or narcotics (including 21 U.S.C. ss. 801, et seq.) and all
applicable federal, state and local laws, and regulations intended to protect
the environment.
RISK OF LOSS AND INSURANCE. Debtor shall bear all risk of loss with respect to
the Collateral. The injury to or loss of Collateral, either partial or total,
shall not release Debtor from payment or other performance hereof. Debtor agrees
to obtain and keep in force casualty and hazard insurance on Collateral naming
Bank as loss payee. Such insurance is to be in form and amounts satisfactory to
Bank. All such policies shall provide to Bank a minimum of 30 days written
notice of cancellation. Debtor shall furnish to Bank such policies, or other
evidence of such policies satisfactory to Bank. Bank is authorized, but not
obligated, to purchase any or all insurance or "Single Interest Insurance"
protecting such interest as Bank deems appropriate against such risks and for
such coverage and for such amounts, including either the loan amount or value of
the Collateral at its discretion, all at Debtor's expense. In such event, Debtor
agrees to reimburse Bank for the cost of such insurance and Bank may add such
cost to the Obligations. Debtor shall bear the risk of loss to the extent of any
deficiency in the effective insurance coverage with respect to
Page 2
loss or damage to any of the Collateral. Debtor hereby assigns to Bank the
proceeds of all such insurance and directs any insurer to make payments directly
to Bank. Debtor hereby appoints Bank its attorney-in-fact, which appointment
shall be irrevocable and coupled with an interest for so long as the Obligations
are unpaid, to file proof of loss and/or any other forms required to collect
from any insurer any amount due from any damage or destruction of Collateral, to
agree to and bind Debtor as to the amount of said recovery, to designate
payee(s) of such recovery, to grant releases to insurer, to grant subrogation
rights to any insurer, and to endorse any settlement check or draft. Debtor
agrees not to exercise any of the foregoing powers granted to Bank without the
Bank's prior written consent.
ADDITIONAL COLLATERAL. If at any time Collateral is reasonably determined in
Bank's sole discretion to be unsatisfactory to Bank, then on demand of Bank,
Debtor shall immediately furnish such additional Collateral satisfactory to Bank
to be held by Bank as if originally pledged hereunder and shall execute such
additional security agreements and financing statements as requested by Bank.
FINANCING STATEMENTS. No Financing Statement (other than any filed by Bank or
disclosed above) covering any of Collateral or proceeds thereof is on file in
any public filing office. This Security Agreement, or a copy thereof, or any
Financing Statement executed hereunder may be recorded. On request of Bank,
Debtor will execute one or more Financing Statements in form satisfactory to
Bank and will pay all costs and expenses of filing the same or of filing this
Security Agreement in all public filing offices, where filing is deemed by Bank
to be desirable. Bank is authorized to file Financing Statements relating to
Collateral without Debtor's signature where authorized by law. Debtor appoints
Bank as its attorney-in-fact to execute such documents necessary to accomplish
perfection of Bank's security interest. The appointment is coupled with an
interest and shall be irrevocable as long as any Obligations remain outstanding.
Debtor further agrees to take such other actions as might be requested for the
perfection, continuation and assignment, in whole or in part, of the security
interests granted herein. If certificates are issued or outstanding as to any of
the Collateral, Debtor will cause the security interests of Bank to be properly
protected, including perfection of notation thereon.
LANDLORD/MORTGAGEE WAIVERS. Debtor shall cause each mortgagee of real property
owned by Debtor and each landlord of real property leased by Debtor to execute
and deliver instruments satisfactory in form and substance to Bank by which such
mortgagee or landlord waives its rights, if any, in the Collateral.
CONTRACTS, CHATTEL PAPER, ACCOUNTS, GENERAL INTANGIBLES. Debtor warrants that
the Collateral consisting of contract rights, chattel paper, accounts, or
general intangibles is (i) genuine and enforceable in accordance with its terms
except as limited by law; (ii) not subject to any defense, set-off, claim or
counterclaim of a material nature against Debtor except as to which Debtor has
notified Bank in writing; and (iii) not subject to any other circumstances that
would impair the validity, enforceability or amount of such Collateral except as
to which Debtor has notified Bank in writing. Debtor shall not amend, modify or
supplement any lease, contract or agreement contained in the Collateral or waive
any provision therein, without prior written consent of Bank.
ACCOUNT INFORMATION. From time to time, at the Bank's request, Debtor shall
provide Bank with schedules describing all accounts and contracts, including
customers' addresses, credited or acquired by Debtor and at the Bank's request
shall execute and deliver written assignments of contracts and other documents
evidencing such accounts and contracts to Bank. Together with each schedule,
Debtor shall, if requested by Bank, furnish Bank with copies of Debtor's sales
Page 3
journals, invoices, customer purchase orders or the equivalent, and original
shipping or delivery receipts for all goods sold, and Debtor warrants the
genuineness thereof.
ACCOUNT AND CONTRACT DEBTORS. Bank shall have the right to notify the account
and contract debtors obligated on any or all of the Collateral to make payment
thereof directly to Bank and Bank may take control of all proceeds of any such
Collateral, which rights Bank may exercise at any time. The cost of such
collection and enforcement, including attorneys' fees and expenses, shall be
borne solely by Debtor whether the same is incurred by Bank or Debtor. Upon
demand of Bank, Debtor will, upon receipt of all checks, drafts, cash and other
remittances in payment on Collateral, deposit the same in a special bank account
maintained with Bank, over which Bank also has the power of withdrawal.
If a Default occurs, no discount, credit, or allowance shall be granted by
Debtor to any account or contract debtor and no return of merchandise shall be
accepted by Debtor without Bank's consent. Bank may, after Default, settle or
adjust disputes and claims directly with account contract debtors for amounts
and upon terms that Bank considers advisable, and in such cases, Bank will
credit the Obligations with the net amounts received by Bank, after deducting
all of the expenses incurred by Bank. Debtor agrees to indemnify and defend Bank
and hold it harmless with respect to any claim or proceeding arising out of any
matter related to collection of the Collateral.
INVENTORY. So long as no Default has occurred, Debtor shall have the right in
the regular course of business, to process and sell Debtor's inventory, unless
Bank shall hereafter otherwise direct in writing. Upon demand of Bank, Debtor
will, upon receipt of all checks, drafts, cash and other remittances, in payment
of Collateral sold, deposit the same in a special bank account maintained with
Bank, over which Bank also has the power of withdrawal. Debtor shall comply with
all federal, state, and local laws, regulations, rulings, and orders applicable
to Debtor or its assets or business, in all respects. Without limiting the
generality of the previous sentence, Debtor shall comply with all requirements
of the federal Fair Labor Standards Act in the conduct of its business and the
production of inventory. Debtor shall notify Bank immediately of any violation
by Debtor of the Fair Labor Standards Act, and a failure of Debtor to so notify
Bank shall constitute a continuing representation that all inventory then
existing has been produced in compliance with the Fair Labor Standards Act.
INSTRUMENTS, CHATTEL PAPER. Any Collateral that is instruments, chattel paper
and negotiable documents will be properly assigned to, deposited with and held
by Bank, unless Bank shall hereafter otherwise direct or consent in writing.
Bank may, without notice, before or after maturity of the Obligations, exercise
any or all rights of collection, conversion, or exchange and other similar
rights, privileges and options pertaining to the Collateral, but shall have no
duty to do so.
COLLATERAL DUTIES. Bank shall have no custodial or ministerial duties to perform
with respect to Collateral pledged except as set forth herein; and by way or
explanation and not by way of limitation, Bank shall incur no liability for any
of the following: (i) loss or depreciation of the Collateral (unless caused by
its willful misconduct), (ii) its failure to present any paper for payment or
protest, to protest or give notice of nonpayment, or any other notice with
respect to any paper or Collateral, or (iii) its failure to present or surrender
for redemption, conversion or exchange any bond, stock, paper or other security
whether in connection with any merger, consolidation, recapitalization, or
reorganization, arising out of the refunding of the original security, or for
any other reason, or its failure to notify any party hereto that the Collateral
should be so presented or surrendered.
TRANSFER OF COLLATERAL. The Bank may assign its rights in the Collateral or any
part thereof, to the assignee, as well as any subsequent holder hereof, who
shall thereupon become vested with
Page 4
all the powers and rights herein given to the Bank with respect to the property
so transferred and delivered, and the Bank shall thereafter be forever relieved
and fully discharged from any liability with respect to such property so
transferred, but with respect to any property not so transferred the Bank shall
retain all rights and powers hereby given.
SUBSTITUTE COLLATERAL. With prior written consent of Bank, other Collateral may
be substituted for the original Collateral herein in which event all rights,
duties, obligations, remedies and security interests provided for, created or
granted shall apply fully to such substitute Collateral.
INSPECTION, BOOKS AND RECORDS. Debtor will at all times keep accurate and
complete records covering each item of Collateral, including the proceeds
therefrom. Bank, or any of its agents, shall have the right, at intervals to be
determined by Bank and without hindrance or delay, to inspect, audit, and
examine the Collateral and to make extracts from the books, records, journals,
orders, receipts, correspondence and other data relating to the Collateral,
Debtor's business or any other transaction between the parties hereto. Debtor
will at its expense furnish Bank copies thereof upon request.
CROSS COLLATERALIZATION LIMITATION. As to any other existing or future consumer
purpose loan by Bank to Debtor, within the meaning of the Federal Consumer
Credit Protection Act, Bank expressly waives any security interest granted
herein in Collateral that Debtor uses as a principal dwelling and household
goods.
ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION. Debtor shall pay all of Bank's
reasonable expenses incurred in enforcing this Agreement and in preserving and
liquidating the Collateral, including but not limited to, reasonable
arbitration, paralegals', attorneys' and experts' fees and expenses, whether
incurred without the commencement of a suit, in any trial, arbitration, or
administrative proceeding, or in any appellate or bankruptcy proceeding.
DEFAULT. Unless cured within the applicable Cure Period as defined in the
Promissory Note of even date herewith, if any of the following occurs, a default
("Default") under this Security Agreement shall exist: (i) The failure of timely
payment or performance of any of the Obligations or a default under any Loan
Document; (ii) Any breach of any representation or agreement contained or
referred to in this Security Agreement or other Loan Document; (iii) Any loss,
theft, substantial damage, or destruction of the Collateral not fully covered by
insurance, or as to which insurance proceeds are not remitted to Bank within 30
days of the loss; any sale (except the sale of inventory in the ordinary course
of business), lease, or encumbrance of any of the Collateral without prior
written consent of Bank; or the making of any levy, seizure, or attachment on or
of the Collateral which is not removed with 10 days; or (iv) the death of,
appointment of guardian for, dissolution of, termination of existence of, loss
of good standing status by, appointment of a receiver for, assignment for the
benefit of creditors of, or commencement of any bankruptcy or insolvency
proceeding by or against Debtor, its Subsidiaries or Affiliates, if any, or any
general partner of or the holder(s) of the majority ownership interests of
Debtor or any party to the Loan Documents.
REMEDIES ON DEFAULT (INCLUDING POWER OF SALE). If a Default occurs, all of the
Obligations shall be immediately due and payable, without notice and Bank shall
have all the rights and remedies of a secured party under the Uniform Commercial
Code. Without limitation thereto, Bank shall have the following rights and
remedies: (i) To take immediate possession of the Collateral, without notice or
resort to legal process, and for such purpose, to enter upon any premises on
which the Collateral or any part thereof may be situated and to remove the same
therefrom, or, at its option, to render the Collateral unusable or dispose of
said Collateral on Debtor's premises. (ii) To require Debtor to assemble the
Collateral and make it available to Bank at a place to be designated by Bank.
(iii) To exercise its right of set-off or bank lien as to any monies of Debtor
deposited in demand, checking,
Page 5
time, savings, certificate of deposit or other accounts of any nature maintained
by Debtor with Bank or Affiliates of Bank, without advance notice, regardless of
whether such accounts are general or special. (iv) To dispose of Collateral, as
a unit or in parcels, separately or with any real property interests also
securing the Obligations, in any county or place to be selected by Bank, at
either private or public sale (at which public sale bank may be the purchaser)
with or without having the Collateral physically present at said sale. (v) Any
notice of sale, disposition or other action by Bank required by law and sent to
Debtor at Debtor's address shown above, or at such other address of Debtor as
may from time to time be shown on the records of Bank, at least 5 days prior to
such action, shall constitute reasonable notice to Debtor. Notice shall be
deemed given or sent when mailed postage prepaid to Debtor's address as provided
herein. (vi) Bank shall be entitled to apply the proceeds of any sale or other
disposition of the Collateral, and the payments received by Bank with respect to
any of the Collateral, to the Obligations in such order and manner as Bank may
determine. (vii) Collateral that is subject to rapid declines in value and is
customarily sold in recognized markets may be disposed of by Bank in a
recognized market for such collateral without providing notice of sale.
REMEDIES ARE CUMULATIVE. No failure on the part of Bank to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by Bank or any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any right, power or remedy. The remedies herein provided are
cumulative and are not exclusive of any remedies provided by law, in equity, or
in other Loan Documents.
MISCELLANEOUS. (i) Amendments and Waivers. No waivers, amendments or
modifications of any provision of this Security Agreement shall be valid unless
in writing and signed by an officer of Bank. No waiver by Bank of any Default
shall operate as a waiver of any other Default or of the same Default on a
future occasion. Neither the failure of, nor any delay by, Bank in exercising
any right, power or privilege granted pursuant to this Security Agreement shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise of any other right, power or privilege.
(ii) Assignment. All rights of Bank hereunder are freely assignable, in whole or
in part, and shall inure to the benefit of and be enforceable by Bank, its
successors, assigns and affiliates. Debtor shall not assign its rights and
interest hereunder without the prior written consent of Bank, and any attempt by
Debtor to assign without Bank's prior written consent is null and void. Any
assignment shall not release Debtor from the Obligations. This Security
Agreement shall be binding upon Debtor, and the heirs, personal representatives,
successors, and assigns of Debtor. (iii) Applicable Law; Conflict Between
Documents. This Security Agreement shall be governed by and construed under the
law of the state in which the office of Bank as stated above is located without
regard to that state's conflict of laws principles. If any terms of this
Security Agreement conflict with the terms of any commitment letter or loan
proposal, the terms of this Security Agreement shall control. (iv) Jurisdiction.
Debtor irrevocably agrees to non-exclusive personal jurisdiction in the state in
which the office of Bank as stated above is located. (v) Severability. If any
provision of this Security Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective but only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Security Agreement. (vi) Notices.
Any notices to Debtor shall be sufficiently given, if in writing and mailed or
delivered to the address of Debtor shown above or such other address as provided
hereunder; and to Bank, if in writing and mailed or delivered to Bank's office
address shown above or such other address as Bank may specify in writing from
time to time. In the event that the Debtor changes Debtor's address at any time
prior to the date this Note is paid in full, Debtor agrees to promptly give
written notice of said change of address by registered or certified mail, return
receipt requested, all charges prepaid. (vii) Captions. The captions contained
herein are inserted for convenience only and shall not affect the meaning or
interpretation of this Security Agreement or
Page 6
any provision hereof. The use of the plural shall also mean the singular, and
vice versa. (viii) Loan Documents. The term "Loan Documents" refers to all
documents executed in connection with the Obligations and may include, without
limitation, commitment letters, loan agreements, guaranty agreements, other
security agreements, letters of credit, instruments, financing statements,
mortgages, deeds of trust, deeds to secure debt, and any amendments or
supplements (excluding swap agreements as defined in 11 U.S.C. ss. 101). (ix)
Joint and Several Liability. If more than one person has signed this Security
Agreement, such parties are jointly and severally obligated hereunder. (x)
Binding Contract. Debtor by execution and Bank by acceptance of this Security
Agreement, agree that each party is bound by all terms and provisions of this
Security Agreement.
IN WITNESS WHEREOF, Debtor, effective as of the day and year first written
above, has caused this Agreement to be executed under seal.
Sherwood Brands Overseas, Inc.
Taxpayer Identification Number: N/A
CORPORATE By: /s/ Xxxx Xxxxxxxx
SEAL --------------------------------
Title: Director
----------------------------
Page 7
FIRST UNION
UNCONDITIONAL GUARANTY
November 29, 1996
Sherwood Brands, Inc.
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Sherwood Brands Overseas, Inc.
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
(Individually and collectively "Borrower")
Xxxxx Xxxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
(Individually and collectively "Guarantor")
First Union National Bank of Maryland
0000 Xxxxx Xxxxxx Xxxx
XxXxxx, Xxxxxxxx 00000
(Hereinafter referred to as "Bank")
To induce Bank to make, extend or renew loans, advances, credit, or other
financial accommodations to or for the benefit of Borrower, and in consideration
of loans, advances, credit, or other financial accommodations made, extended or
renewed to or for the benefit of Borrower, Guarantor hereby absolutely,
irrevocably and unconditionally guarantees to Bank and its successors, assigns
and affiliates the timely payment and performance of all liabilities and
obligations of Borrower to Bank and its affiliates, including, but not limited
to, all obligations under any notes, loan agreements, security agreements,
letters of credit, swap agreements (as defined in 11 U.S. Code ss.101),
instruments, accounts receivable, contracts, drafts, leases, chattel paper,
indemnities, acceptances, repurchase agreements, overdrafts, and the Loan
Documents defined below, however and whenever incurred or evidenced, whether
primary, secondary, direct, indirect, absolute, contingent, due or to become
due, now existing or hereafter contracted or acquired, and all modifications,
extensions or renewals thereof, including without limitation all principal,
interest, charges, and costs and expenses incurred thereunder (including
attorneys' fees and other costs of collection incurred, regardless of whether
suit is commenced) (collectively, the "Guaranteed Obligations").
Guarantor further covenants and agrees:
GUARANTOR'S LIABILITY. This Guaranty is a continuing and unconditional guaranty
of payment and performance and not of collection. The parties to this Guaranty
are jointly and severally obligated hereunder. This Guaranty does not impose any
obligation on Bank to extend or continue to extend credit or otherwise deal with
Borrower at any subsequent time. This Guaranty shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of the Guaranteed
Obligations is rescinded, avoided or for any other reason must be returned by
Bank, and the returned payment shall remain payable as part of the Guaranteed
Obligations, all as though such payment had not been made. Except to the extent
the provisions of this Guaranty give the Bank additional rights, this Guaranty
shall not be deemed to supersede or replace any other guaranties given to Bank
by Guarantor; and the obligations guaranteed hereby shall be in addition to any
other obligations guaranteed by Guarantor pursuant to any other agreement of
guaranty given to Bank and other guaranties of the Guaranteed Obligations.
TERMINATION OF GUARANTY. Guarantor may terminate this Guaranty by written
notice, delivered personally to or received by certified or registered United
States Mail by an authorized officer of the Bank at the address for notices
provided herein. Such termination shall be effective with respect to Guaranteed
Obligations arising more than 15 days after the date such written notice is
received by said Bank officer. Guarantor may not terminate this Guaranty as to
Guaranteed Obligations (including any subsequent extensions, modifications or
compromises of the Guaranteed Obligations) then existing, or to Guaranteed
Obligations arising subsequent to receipt by Bank of said notice if such
Guaranteed Obligations are a result of Bank's obligation to make advances
pursuant to a commitment entered into prior to expiration of the 15 day notice
period, or are a result of advances which are necessary for Bank to protect its
collateral or otherwise preserve its interests. Termination of this Guaranty by
any single Guarantor will not affect the existing and continuing obligations of
any other guarantor hereunder.
APPLICATION OF PAYMENTS, BANK LIEN AND SET-OFF. Monies received from any source
by Bank for application toward payment of the Guaranteed Obligations may be
applied to such Guaranteed Obligations in any manner or order deemed appropriate
by Bank. Except as prohibited by law, Guarantor grants Bank a security interest
in all of Guarantor's accounts maintained with Bank and any of its affiliates
(collectively, the "Accounts"). If a Default occurs, Bank is authorized to
exercise its right of set-off or to foreclose its lien against any obligation of
Bank to Guarantor including, without limitation, all Accounts or any other debt
of any maturity, without notice.
CONSENT TO MODIFICATIONS. Guarantor consents and agrees that Bank may from time
to time, in its sole discretion, without affecting, impairing, lessening or
releasing the obligations of the Guarantor hereunder: (a) extend or modify the
time, manner, place or terms of payment or performance and/or otherwise change
or modify the credit terms of the Guaranteed Obligations; (b) increase, renew,
or enter into a novation of the Guaranteed Obligations; (c) waive or consent to
the departure from terms of the Guaranteed Obligations; (d) permit any change in
the business or other dealings and relations of Borrower or any other guarantor
with Bank; (e) proceed against, exchange, release, realize upon, or otherwise
deal with in any manner any collateral that is or may be held by Bank in
connection with the Guaranteed Obligations or any liabilities or obligations of
Guarantor; and (f) proceed against, settle, release, or compromise with
Borrower, any insurance carrier, or any other person or entity liable as to any
part of the Guaranteed Obligations, and/or subordinate the payment of any part
of the Guaranteed Obligations to the payment of any other obligations, which may
at any time be due or owing to Bank; all in such manner and upon such terms as
Bank may deem appropriate, and without notice to or further consent from
Guarantor. No invalidity, irregularity, discharge or unenforceability of, or
action or omission by Bank relating to any part of, the Guaranteed Obligations
or any security therefor shall affect or impair this Guaranty.
WAIVERS AND ACKNOWLEDGMENTS. Except as expressly provided in the Loan Documents,
Guarantor waives and releases the following rights, demands, and defenses
Guarantor may have with respect to Bank and collection of the Guaranteed
Obligations: (a) promptness and diligence in collection of any of the Guaranteed
Obligations from Borrower or any other person liable thereon, and in foreclosure
of any security interest and sale of any property serving as collateral for the
Guaranteed Obligations; (b) any law or statute that requires that Bank make
demand upon, assert claims against, or collect from Borrower or other persons or
entities, foreclose any security interest, sell collateral, exhaust any
remedies, or take any other action against Borrower or other persons or entities
prior to making demand upon, collecting from or taking action against Guarantor
with respect to the Guaranteed Obligations, including any such rights Guarantor
might otherwise have had under Va. Code xx.xx. 49-25 and 49-26, et seq.,
N.C.G.S. xx.xx. 26-7, et seq., Tenn. Code Xxx. ss. 00-00-000, O.C.G.A. ss.
10-7-24 (and any successor statute) and any other applicable law; (c) any law or
statute that requires that Borrower or any other person be joined in, notified
of or made part of any action against Guarantor; (d) that Bank preserve, insure
or perfect any security interest in collateral or sell or dispose of collateral
in a particular manner or at a particular time; (e) notice of extensions,
modifications, renewals, or novations of the Guaranteed Obligations, of any new
transactions or other relationships between Bank, Borrower and/or any guarantor,
and of changes in the financial condition of, ownership of, or business
structure of Borrower or any other guarantor;
Page 2
(f) presentment, protest, notice of dishonor, notice of default, demand for
payment, notice of intention to accelerate maturity, notice of acceleration of
maturity, notice of sale, and all other notices of any kind whatsoever; (g) the
right to assert against Bank any defense (legal or equitable), set-off,
counterclaim, or claim that Guarantor may have at any time against Borrower or
any other party liable to Bank; (h) all defenses relating to invalidity,
insufficiency, unenforceability, enforcement, release or impairment of Bank's
lien on any collateral, of the Loan Documents, or of any other guaranties held
by Bank; (i) any claim or defense that acceleration of maturity of the
Guaranteed Obligations is stayed against Guarantor because of the stay of
assertion or of acceleration of claims against any other person or entity for
any reason including the bankruptcy or insolvency of that person or entity; and
(j) the benefit of any exemption claimed by Guarantor. Guarantor acknowledges
and represents that it has relied upon its own due diligence in making its own
independent appraisal of Borrower, Borrower's business affairs and financial
condition, and any collateral; Guarantor will continue to be responsible for
making its own independent appraisal of such matters; and Guarantor has not
relied upon and will not hereafter rely upon Bank for information regarding
Borrower or any collateral.
FINANCIAL CONDITION. Guarantor warrants, represents and covenants to Bank that
on and after the date hereof: (a) the fair saleable value of Guarantor's assets
exceeds its liabilities, Guarantor is meeting its current liabilities as they
mature, and Guarantor is and shall remain solvent; (b) all financial statements
of Guarantor furnished to Bank are correct and accurately reflect the financial
condition of Guarantor as of the respective dates thereof; (c) since the date of
such financial statements, there has not occurred a material adverse change in
the financial condition of Guarantor; (d) there are not now pending any court or
administrative proceedings or undischarged judgments against Guarantor, no
federal or state tax liens have been filed or threatened against Guarantor, and
Guarantor is not in default or claimed default under any agreement; and (e) at
such reasonable times as Bank requests, Guarantor will furnish Bank with such
other financial information as Bank may reasonably request.
INTEREST. Regardless of any other provision of this Guaranty or other Loan
Documents, if for any reason the effective interest on any of the Guaranteed
Obligations should exceed the maximum lawful interest, the effective interest
shall be deemed reduced to and shall be such maximum lawful interest, and any
sums of interest which have been collected in excess of such maximum lawful
interest shall be applied as a credit against the unpaid principal balance of
the Guaranteed Obligations.
DEFAULT. If any of the following events occur, a default ("Default") under this
Guaranty shall exist: (a) Failure of timely payment or performance of the
Guaranteed Obligations or a default under any Loan Document; (b) A breach of any
agreement or representation contained or referred to in the Guaranty, or any of
the Loan Documents, or contained in any other contract or agreement of Guarantor
with Bank or its affiliates, whether now existing or hereafter arising; (c) The
death of, appointment of a guardian for, dissolution of, termination of
existence of, loss of good standing status by, appointment of a receiver for,
assignment for the benefit of creditors of, or the commencement of any
insolvency or bankruptcy proceeding by or against, Guarantor or any general
partner of or the holder(s) of the majority ownership interests of Guarantor;
and/or (d) The entry of any monetary judgment or the assessment against, the
filing of any tax lien against, or the issuance of any writ of garnishment or
attachment against any property of or debts due Guarantor.
If a Default occurs, the Guaranteed Obligations shall be due immediately and
payable without notice. Guarantor shall pay interest on the Guaranteed
Obligations from such Default at the highest rate of interest charged on any of
the Guaranteed Obligations.
ATTORNEY'S FEES AND OTHER COSTS OF COLLECTION. Guarantor shall pay all of Bank's
reasonable expenses incurred to enforce or collect any of the Guaranteed
Obligations, including, without limitation, reasonable arbitration, paralegals',
attorneys' and experts' fees and expenses, whether incurred without the
commencement of a suit, in any suit, arbitration, or administrative proceeding,
or in any appellate or bankruptcy proceeding.
Page 3
SUBORDINATION OF OTHER DEBTS. Guarantor agrees: (a) to subordinate the
obligations now or hereafter owed by Borrower to Guarantor ("Subordinated Debt")
to any and all obligations of Borrower to Bank now or hereafter existing while
this Guaranty is in effect, provided however that Guarantor may receive
regularly scheduled principal and interest payments on the Subordinated Debt so
long as (i) all sums due and payable by Borrower to Bank have been paid in full
on or prior to such date, and (ii) no event or condition which constitutes or
which with notice or the lapse or time would constitute an event of default with
respect to the Guaranteed Obligations, shall be continuing on or as of the
payment date; (b) Guarantor will place a legend indicating such subordination on
every note, ledger page or other document evidencing any part of the
Subordinated Debt; and (c) except as permitted by this paragraph, Guarantor will
not request or accept payment of or any security for any part of the
Subordinated Debt, and any proceeds of the Subordinated Debt paid to Guarantor,
through error or otherwise, shall immediately be forwarded to Bank by Guarantor,
properly endorsed to the order of Bank, to apply to the Guaranteed Obligations.
MISCELLANEOUS. (a) Assignment. This Guaranty and other Loan Documents shall
inure to the benefit of and be binding upon the parties and their respective
heirs, legal representatives, successors and assigns. Bank's interests in and
rights under this Guaranty and other Loan Documents are freely assignable, in
whole or in part, by Bank. Any assignment shall not release Guarantor from the
Guaranteed Obligations. (b) Applicable Law; Conflict Between Documents. This
Guaranty and other Loan Documents shall be governed by and construed under the
laws of the state in which office of Bank first shown above is located without
regard to that state's conflict of laws principles. If the terms of this
Guaranty should conflict with the terms of any commitment letter that survives
closing, the terms of this Guaranty shall control. (c) Jurisdiction. Guarantor
irrevocably agrees to non-exclusive personal jurisdiction in the state in which
the office of Bank first shown above is located. (d) Severability. If any
provision of this Guaranty or of the other Loan Documents shall be prohibited or
invalid under applicable law, such provision shall be ineffective but only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Guaranty or other
document. (e) Notices. Any notices to Guarantor shall be sufficiently given, if
in writing and mailed or delivered to the Guarantor's address shown above or
such other address as provided hereunder, and to Bank, if in writing and mailed
or delivered to Bank's office address shown above or such other address as Bank
may specify in writing from time to time. In the event that Guarantor changes
Guarantor's address at any time prior to the date the Guaranteed Obligations are
paid in full, Guarantor agrees to promptly give written notice of said change of
address by registered or certified mail, return receipt requested, all charges
prepaid. (f) Plural; Captions. All references in the Loan Documents to borrower,
guarantor, person, document or other nouns of reference mean both the singular
and plural form, as the case may be, and the term "person" shall mean any
individual, person or entity. The captions contained in the Loan Documents are
inserted for convenience only and shall not affect the meaning or interpretation
of the Loan Documents. (g) Binding Contract. Guarantor by execution of and Bank
by acceptance of this Guaranty agree that each party is bound to all terms and
provisions of this Guaranty. (h) Amendments, Waivers and Remedies. No waivers,
amendments or modifications of this Guaranty and other Loan Documents shall be
valid unless in writing and signed by an officer of Bank. No waiver by Bank of
any Default shall operate as a waiver of any other Default or the same Default
on a future occasion. Neither the failure nor any delay on the part of Bank in
exercising any right, power, or privilege granted pursuant to this Guaranty and
other Loan Documents shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise or the exercise
of any other right, power or privilege. All remedies available to Bank with
respect to this Guaranty and other Loan Documents and remedies available at law
or in equity shall be cumulative and may be pursued concurrently or
successively. (i) Partnerships. If Guarantor is a partnership, the obligations,
liabilities and agreements on the part of Guarantor shall remain in full force
and effect and fully applicable notwithstanding any changes in the individuals
comprising the partnership. The term "Guarantor" includes any altered or
successive partnerships, and predecessor partnership(s) and the partners shall
not be released from any obligations or liabilities hereunder. (j) Loan
Documents. The term "Loan Documents" refers to all documents executed in
connection with the Guaranteed Obligations and may include, without limitation,
commitment letters that survive closing, loan agreements, other guaranty
agreements, security agreements, instruments, financing statements, mortgages,
deeds of trust, deeds to secure debt, letters of credit and any amendments or
supplements (excluding swap agreements as defined in 11 U.S. Code ss. 101).
ANNUAL FINANCIAL STATEMENTS. Guarantor shall deliver to Bank annually, within
thirteen months of the previous statement date on file with Bank, Guarantor's
financial statement. Said financial statement shall disclose all of Guarantor's
assets, liabilities, net worth income and contingent liabilities, all in
reasonable detail and acceptable to Bank and submitted on a form to be provided
by Bank or on such other form acceptable to Bank, signed by Guarantor and
certified by Guarantor to Bank to be true, correct and complete.
FINANCIAL AND OTHER INFORMATION. Guarantor shall deliver to Bank such
information as Bank may reasonably request from time to time, including without
limitation, financial statements and information pertaining to Guarantor's
financial condition. Such information shall be true, complete, and accurate.
TAX RETURNS. Guarantor shall deliver to Bank, within 30 days of filing, complete
copies of federal and state tax returns, as applicable, each of which shall be
signed and certified by Guarantor to be true and complete copies of such
returns. In the event an extension is filed, Guarantor shall deliver a copy of
the extension within 30 days of filing.
SECURITY. Guarantor has granted Bank a security interest in the collateral
described in the Loan Documents, including, but not limited to, real property
collateral described in that certain Deed of Trust dated November 30, 1995.
ARBITRATION. [ILLEGIBLE]
[ILLEGIBLE] The single arbitrator selected for expedited procedure shall be a
retired judge from the highest court of general jurisdiction, state or federal,
of the state where the hearing will be conducted or if such person is not
available to serve, the single arbitrator may be a licensed attorney.
Notwithstanding the foregoing, this arbitration provision does not apply to
disputes under or related to swap agreements.
PRESERVATION AND LIMITATION OF REMEDIES. Notwithstanding the preceding binding
arbitration provisions, Bank and Guarantor agree to preserve, without
diminution, certain remedies that any party hereto may employ or exercise
freely, independently or in connection with an arbitration proceeding or after
an arbitration action is brought. Bank and Guarantor shall have the right to
proceed in any court of proper jurisdiction or by self-help to exercise or
prosecute the following remedies, as applicable: (i) all rights to foreclose
against any real or personal property or other security by exercising a power of
sale granted under Loan Documents or under applicable law or by judicial
foreclosure and sale, including a proceeding to confirm the sale; (ii) all
rights of self-help including peaceful occupation of real property and
collection of rents, set-off, and peaceful possession of personal property;
(iii) obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and filing an
involuntary bankruptcy proceeding; and (iv) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in a
Dispute.
Guarantor and Bank agree that they shall not have a remedy of punitive or
exemplary damages against the other in any Dispute and hereby waive any right or
claim to punitive or exemplary damages they have now or which may arise in the
future in connection with any Dispute whether the Dispute is resolved by
arbitration or judicially.
CONFESSION OF JUDGMENT. If a Default occurs under this Guaranty, each Guarantor
hereby authorizes any attorney designated by Bank or any clerk of any court of
record to appear for it in any court of record and confess judgment against it
without prior hearing, in favor of Bank for and in the amount of the Guaranteed
Obligations then outstanding plus interest accrued and unpaid thereon, all other
amounts then due and payable under this Guaranty or other Loan Documents, costs
of suit and attorneys' fees in an amount equal to 15% of the Guaranteed
Obligations then outstanding (which shall be deemed reasonable attorneys' fees
for the purposes of this paragraph). The authority and power to appear for and
enter judgment against the Guarantor shall not be exhausted by one or more
exercises thereof, or by any imperfect exercise thereof, and shall not be
extinguished by any judgment entered pursuant thereto. Such authority and power
may be exercised on one or more occasions, from time to time, in the same or
different jurisdictions, as often as Bank shall deem necessary or desirable, for
all of which this Guaranty shall be a sufficient warrant. Notwithstanding any
provision or waiver contained herein to the contrary, Guarantor shall have all
rights and remedies available to a defendant under Rule 2-611 Maryland Rules of
Procedure of the Annotated Code of Maryland, as amended.
IN WITNESS WHEREOF, Guarantor, effective as of the day and year first written
above, has caused this Unconditional Guaranty to be executed under seal.
/s/ Xxxxx Xxxxxxx
------------------------------------(SEAL)
Xxxxx Xxxxxxx
Taxpayer Identification Number: ###-##-####
FIRST UNION
SUBORDINATION AGREEMENT
To: First Union National Bank of Maryland ("Bank")
Date: November 29, 1996
__________________, Maryland
I, Sherwood Foods, Inc., creditor of Sherwood Brands, Inc., (hereinafter
referred to as "Borrower"), in the amount shown in the attached Schedule "A",
know that Borrower desires to obtain credit accommodation from you and that you
are willing to extend credit accommodation to Borrower from time to time in such
amounts as you deem advisable, provided the Subordination Agreement
("Agreement") herein set forth shall be and remain in effect. To induce you to
give such credit accommodation to Borrower, I agree that:
(1) Any indebtedness now existing or hereafter contracted and owing by
Borrower to you, notice of the creation, existence, extension and renewal of
such indebtedness being hereby waived by me, shall be paid prior to payment of
any part of any and all indebtedness, now existing or hereafter contracted and
owing by Borrower to me, and that I shall receive no security (without the
security being fully subordinated to the Bank debt) from Borrower for such
indebtedness to me, nor any loans, advances or gifts from Borrower so long as
Borrower shall be indebted to you (except as shown in the attached Schedule
"B").
(2) All such indebtedness of Borrower to me, now existing or hereafter
contracted, is hereby assigned to you as security for the payment of all such
indebtedness of Borrower to you and nothing in this agreement provided shall by
implication diminish the effect of the assignment contained in this paragraph.
(3) In any proceeding to wind up the affairs of Borrower, whether in
bankruptcy or otherwise, or for an arrangement with creditors, or for
reorganization of Borrower, you shall have the right to prove and vote my claim
and to receive all distributions thereon.
(4) Any notes or other evidence of indebtedness which have been or shall be
issued to me by Borrower shall be deposited with you or shall be endorsed with a
memo reading: "Payment of this instrument is subordinated to all debts now or
hereafter owed by maker to First Union National Bank of Maryland."
(5) Upon any breach of this Agreement by me or Borrower, all indebtedness
then owing by Borrower to you shall, at your option, become due and payable at
once. Any funds or property of any kind received by me in violation of this
Agreement shall be held by me in trust for you and shall be paid or delivered
over to you upon demand. Waiver of earlier breaches by you shall not be
construed as waiver of any later breach. This Agreement shall remain in full
force and effect until written notice of its termination shall have been given
by me to a First Union officer duly authorized by you and familiar with the
transaction giving rise to this Agreement, and any such termination
shall in no manner impair or affect my liability then existing to you hereunder,
or the priority of any claim held by you against the Borrower at the time of
such termination.
Borrower joins in this Agreement which shall be binding upon all parties hereto
and their respective heirs, assigns, successors, executors and administrators.
Executed at Rockville, Maryland, on the day and year first above written.
Sherwood Foods, Inc.
By: /s/ Xxxx Xxxxxxxx
------------------------------------ CORPORATE SEAL
Title: Vice President
---------------------------------
By:
------------------------------------
Title:
---------------------------------
Sherwood Brands, Inc., Borrower
By: /s/ Xxxx Xxxxxxxx
------------------------------------ CORPORATE SEAL
Title: Director
---------------------------------
By:
------------------------------------
Title:
---------------------------------
Page 2
SCHEDULE "A"
Promissory Note
Payee: Sherwood Foods, Inc. Date ________________________
Amount $218,331.00.
PAYMENT OF THIS INSTRUMENT IS SUBORDINATED TO ALL DEBTS NOW OR HEREAFTER OWED BY
MAKER TO FIRST UNION NATIONAL BANK OF MARYLAND.
--------------------------------------------------------------------------------
SCHEDULE "B"
Exceptions:
As long as Borrower is not in default under its obligations to Bank, Borrower
may make payments hereunder so long as the aggregate repayment on all
indebtedness subordinated to Borrower's indebtedness to Bank does not exceed
$125,000.00 annually, as long as the minimum net worth does not fall below
$2,300,000.00 in the aggregate.
Prepared by: L. Xxxxx Xxxxx
RETURN TO: QUALITY CONTROL AND COMPLIANCE
FIRST UNION NATIONAL BANK OF XXXXXXXX
X. 0. Xxx 00000
Xxxxxxx, Xxxxxxxx 00000-0000
PARCEL IDENTIFICATION NUMBER ______________
This is to certify that this instrument has been prepared by First Union
National Bank of Maryland, one of the parties named in the instrument.
--------------------------------------
L. Xxxxx Xxxxx, Doc Prep Specialist
MODIFICATION AND EXTENSION OF DEED OF TRUST
THIS MODIFICATION AND EXTENSION, is made effective as of November 29, 1996,
by Xxxxx Xxxxxxx and Xxxxx Xxxxxxx, the Grantor under the Deed of Trust
described below ("Grantor") whose address is 0000 Xxxxxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxx 00000, and delivered to First Union National Bank of Maryland, a
national banking association ("Bank"), whose address is Congressional Park Plaza
Branch, 000 Xxxxxxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000.
RECITALS
Bank is owner and holder of a certain Indemnity Deed Of Trust (the "Deed of
Trust") wherein TRSTE Inc. is the trustee, dated November 30, 1995, recorded in
Libor 13918, folio 550, of the public land records of the County of Xxxxxxxxxx,
State of Maryland.
Bank is owner and holder of a certain Guaranty (the "Guaranty") dated
November 30, 1995, made by Grantor, which is secured by the Deed of Trust.
Sherwood Brands, Inc. and Sherwood Brands Overseas, Inc. are indebted to
First Union National Bank of Maryland in an aggregate amount, including future
advances, of Four Million and No/100ths Dollars ($4,000,000.00), (the "Note")
which indebtedness is also secured by the Deed of Trust and guaranteed by the
Guaranty.
Bank and Grantor have modified the Guaranty and accordingly have agreed to
modify and extend the Deed of Trust.
WITNESSETH
In consideration of the foregoing premises Grantor and Bank hereby modify
the Deed of Trust as follows:
Guaranty Modified. Bank and Guarantor have executed a Unconditional
Guaranty (the "Modified Guaranty") dated November 29, 1996, that modifies the
Guaranty. It is hereby certified that a Borrower in the name of Sherwood Brands
Overseas, Inc. is being added to the Modified Guaranty.
Modified Guaranty Secured. Grantor acknowledges and agrees (i) that the
Modified Guaranty is a modification of the Guaranty, (ii) that the payment and
performance of the Obligations (as the term "Obligations" is defined in the
Modified Guaranty) is secured by the Deed of Trust, (iii) that there are no
defenses or impediments to enforcement of the lien of the Deed of Trust, and
(iv) that the Modified Guaranty evidences the same indebtedness as the Guaranty
and is not a novation.
Deed of Trust Confirmed. Grantor acknowledges and agrees that the Deed of
Trust, except as expressly modified by this Modification And Extension shall
remain in full force and effect as originally executed and the terms of this
Modification And Extension shall be part of the Deed of Trust. The new
expiration date of the Deed of Trust will be November 30, 1997.
Document Taxes. Grantor shall pay the full amount of any documentary stamp
tax, intangible tax, interest, filing fees and penalties, if any, charged
incident to the loan transaction and modification(s) described in or created by
this Modification And Extension and the filing of this Agreement. If Grantor
fails to pay the obligations under this paragraph, Bank may pay such
obligations. Any amounts so paid by Bank shall bear interest at the default rate
stated in the Modified Note and shall be secured by the Deed of Trust.
IN WITNESS WHEREOF, Grantor, Trustee and Bank have signed and sealed this
instrument as of the day and year first above written.
Bank
CORPORATE SEAL First Union National Bank of Maryland
By:
-------------------------------------
Title:
----------------------------------
Trustee
CORPORATE SEAL TRSTE Inc.
By:
-------------------------------------
Title:
----------------------------------
Grantor
/s/ Xxxxx Xxxxxxx
-------------------------------------(SEAL)
Xxxxx Xxxxxxx
/s/ Xxxxx Xxxxxxx
-------------------------------------(SEAL)
Xxxxx Xxxxxxx
Page 2
State of Maryland
City/County of _______________
BANK ACKNOWLEDGMENT
I certify that before me appeared this day, _____________________, a person
known to me, who after being sworn said he/she is __________________ of First
Union National Bank of Maryland, a national banking association, and is duly
authorized to act on behalf of said bank, that the seal affixed to the foregoing
instrument is the seal of said bank and that said instrument was signed and
sealed by him/her on behalf of said bank, and being informed of the contents
thereof, acknowledged execution of the foregoing instrument on behalf of said
bank.
Witness my hand and official seal, this ______ day of ____________, 19___.
____________________________, Notary Public
Notary Seal
_______________________________________
(Printed Name of Notary)
My Commission expires: ____________________
State of Maryland
City/County of ____________________
TRUSTEE ACKNOWLEDGMENT
I certify that before me appeared this day, _______________________ , a
person known to me, who after being sworn said he/she is __________________ of
TRSTE, Inc., a Virginia Corporation, and is duly authorized to act on behalf of
said corporation, that the seal affixed to the foregoing instrument is the seal
of said corporation and that said instrument was signed and sealed by him/her on
behalf of said corporation, and acknowledged execution of the foregoing
instrument on behalf of said corporation.
Witness my hand and official seal, this _____ day of ______________,19___.
____________________________, Notary Public
Notary Seal
_______________________________________
(Printed Name of Notary)
My Commission expires: ____________________
Page 3
State of Maryland
City/County of Xxxxxxxxxx
INDIVIDUAL ACKNOWLEDGMENT
I certify that Xxxxx Xxxxxxx, a person(s) known to me, appeared before me
this day, and being informed of the contents thereof, acknowledged execution of
the foregoing instrument.
Witness my hand and official seal, this 11th day of December 1996.
/s/ Xxxxxxxx X. Xxxxxxx, Notary Public
------------------------------
Notary Seal Xxxxxxxx X. Xxxxxxx
------------------------------
(Printed Name of Notary)
My Commission expires: ____________________
Xxxxxxxx X. Xxxxxxx, Notary Public
Xxxxxxxxxx County
State of Maryland
My Commission Expires May 1, 0000
Xxxxx xx Xxxxxxxx
Xxxx/Xxxxxx of Xxxxxxxxxx
INDIVIDUAL ACKNOWLEDGMENT
I certify that Xxxxx Xxxxxxx, a person(s) known to me, appeared before me
this day, and being informed of the contents thereof, acknowledged execution of
the foregoing instrument.
Witness my hand and official seal, this 11th day of December 1996.
/s/ Xxxxxxxx X. Xxxxxxx, Notary Public
-----------------------------
Notary Seal Xxxxxxxx X. Xxxxxxx
-----------------------------
(Printed Name of Notary)
My Commission expires: ____________________
Xxxxxxxx X. Xxxxxxx, Notary Public
Xxxxxxxxxx County
State of Maryland
My Commission Expires May 1, 2000
Page 4
