Exhibit 10.59
CREDIT AGREEMENT
THIS CREDIT
AGREEMENT (as the same may be amended, modified or supplemented
from time to time, the “Agreement”) dated as of the
25th day of June, 2004 by and between BANK OF CHARLES TOWN, a West
Virginia banking corporation (the “Bank”), and CUISINE
SOLUTIONS, INC., a Delaware corporation (the
“Borrower”), recites and provides:
RECITALS
Subject to the
terms of this Agreement, the Bank agrees to establish a working
capital line of credit (the “ Line ”) in favor
of the Borrower. The Bank and the Borrower agree that advances
under the Line shall be made on the following terms, covenants and
conditions.
AGREEMENT
ACCORDINGLY, for
and in consideration of the mutual covenants set forth in this
Agreement and other good and valuable consideration, the receipt
and sufficiency of which are acknowledged, the Bank and the
Borrower agree as follows:
SECTION 1. The
Line
1.1
Amount and Purpose .
(a) Subject
to the terms and conditions of this Agreement, the Bank agrees to
make advances under the Line to the Borrower from time to time. The
aggregate principal amount of advances under the Line outstanding
at any time shall not exceed the lesser of $2,500,000 or the
Borrowing Base (as defined below). Within this limit, the Borrower
may borrow, repay and reborrow until September 1, 2005 (as
extended from time to time in accordance with the provisions set
forth below, the “ Termination Date
”).
(b)
Each request for an advance under the Line shall be made by written
notice from the Borrower to the Bank, given not less than two
business days prior to the date of the advance. The proceeds of
advances under the Line shall be used to carry accounts receivable
and inventory and for other short-term working capital purposes.
The Borrower also may request that the Bank issue letters of credit
for the account of the Borrower from time to time. The Bank shall
not be required to issue any letter of credit unless the form, term
and purpose for which the letter of credit is to be issued are
approved by the Bank in its sole discretion. Each letter of credit
issued by the Bank for the account of the Borrower shall be treated
as an outstanding advance under the Line for the purposes of this
Agreement. Advances under the Line shall be credited to the
operating account of the Borrower with the Bank.
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1.2
Borrowing Base .
(a) The
“Borrowing Base” shall mean, at any time, the sum of
80% of the Eligible Receivables plus 50% of Eligible Inventory,
valued at the lower of cost or market value, on a last-in, first
out basis.
(b) “Eligible
Receivables” means accounts receivable of the Borrower (1)
that represent valid obligations incurred by a customer of the
Borrower (a “Customer”) for goods shipped or delivered
or services completed under valid and binding contracts of sale,
lease or service; (2) with respect to which the Borrower has
no knowledge or notice of any inability of the Customer to make
full payment; (3) from the face amounts of which have been
deducted all payments, setoffs, amounts subject to adverse claims
made in writing to the Borrower, contractual allowances, bad debt
reserves and other applicable credits; (4) that are subject to
no liens or encumbrances; (5) that continue to be in full
conformity with the applicable representations and warranties made
by the Borrower to the Bank in the Security Agreement (as defined
below); (6) with respect to which the Bank is and continues to be
satisfied with the credit standing of the Customer; (7) on
which the Customer is not an affiliate of the Borrower; and
(8) that have been billed to the appropriate Customer and are
aged less than 90 days from the date of the initial invoice.
Notwithstanding the foregoing provisions, if the Bank reasonably
determines that the collectibility of any account receivable makes
it unacceptable for inclusion in the Borrowing Base and gives
written notice to the Borrower indicating the reasons for such
determination, then such account receivable shall be excluded from
the category of Eligible Receivables from the date of such
notice.
(c) “Eligible
Inventory” means, as applied to the Borrower, goods, as
defined under Article 9 of the West Virginia Uniform
Commercial Code, which are owned and held for sale by the Borrower
in the ordinary course of the Borrower’s business and in
which the Bank has a perfected security interest, but excludes the
following, unless otherwise specifically approved in writing as
being eligible by the Bank: (1) goods held for lease;
(2) goods that are to be furnished under a contract of
service; (3) work in process; (4) materials used or
consumed in the Borrower’s business; (5) farm products;
(6) goods which have been held for sale by the Borrower for a
period of 12 months or more; (7) damaged, broken, flawed,
imperfect, inoperable, discounted, returned, repossessed or
reclaimed goods; (8) goods held for sale to an affiliate or a
subsidiary of the Borrower; (9) goods being sold by others on
“sale or return” or under some other consignment
arrangement with the Borrower; (10) goods of another being
sold on consignment by the Borrower; (11) goods located
outside of the borders of the United States of America,
(12) goods located in the borders of the United States of
America but in the possession of someone else without the Borrower
having appropriate warehouse receipts or other negotiable
documentation evidencing a valid bailment and the ownership of the
goods by the Borrower; and (13) goods which are subject to a
lien or security interest in favor of someone other than Bank,
whether a superior lien or security interest or an inferior lien or
security interest.
1.3
Interest . Advances made under the Line shall bear interest
at a rate per annum equal to the Prime Rate plus 0.50%, adjusted
daily when and as the Prime Rate is changed. The
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“ Prime Rate ”
shall mean the Wall Street Journal Prime Rate, which is the highest
Prime Rate published in the “Money Rates” section of
the Wall Street Journal from time to time. Accrued interest
shall be payable monthly, in arrears, on the first day of each
month, beginning on August 1, 2004.
1.4
Line Note . The Borrower’s obligations to pay the
principal amount of all advances of the Line, together with accrued
interest, shall be evidenced by a promissory note, in form and
substance satisfactory to the Bank, in the principal amount of the
Line, made by the Borrower and payable to the order of the Bank (as
the same may be amended, modified or supplemented from time to
time, the “ Line Note ”). The unpaid principal
balance of the Line Note, and all accrued and unpaid interest
thereon, shall be due and payable in full on the Termination Date.
The Borrower shall prepay the Line Note to the extent that the
aggregate amount of outstanding advances under the Line exceeds the
Borrowing Base at any time.
1.5
Extensions . The Bank may elect from time to time, in its
sole discretion, to extend the Termination Date. During any period
or periods of extension, all of the remaining terms and conditions
of this Agreement shall remain in full force and effect.
SECTION 2. Payments,
Computations, Fees and Charges
2.1
Payments . All payments due with respect to this Agreement
and the Line shall be made in immediately available funds to the
Bank at its office at 111 East Washington Street, Charles Town,
West Virginia 25414. The Bank is authorized, but shall be under no
obligation, to charge any deposit account maintained by the
Borrower with the Bank for any payments due to the Bank with
respect to this Agreement or the Line. Payments shall be applied
first to accrued late charges, next to accrued fees, next to
accrued interest and then to principal.
2.2
Default Charges . If any payment due under the Line Note is
not made within ten days of its due date, the Borrower shall pay to
the Bank a late charge equal to 5% of the amount of such payment.
Upon the occurrence and during the continuation of an Event of
Default under this Agreement, the rate at which interest accrues on
the Line Note shall be increased to an amount equal to the rate of
interest then in effect under the Line Note plus 2.00% per
annum.
2.3
Fees . The Borrower agrees to pay the to the Bank a one-time
loan fee equal to $6,250 on or before June 15,
2004.
2.4
Computations . Interest and fees shall be computed on the
basis of a year of 360 days and actual days
elapsed.
2.5
Increased Costs . The Borrower agrees to reimburse the Bank
for any regulatory costs or expenses incurred by the Bank in
connection with its obligations under this Agreement, including,
without limitation, costs arising out of the Bank’s
compliance with capital adequacy guidelines, reserve requirements
and deposit insurance regulations. A statement of the costs
incurred shall be rendered to the Borrower by the Bank, setting
forth the method of calculation,
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and such increased costs shall be
paid to the Bank by the Borrower within 30 days after such
statement is received by the Borrower.
SECTION 3.
Security
3.1
Indebtedness . As used in this Agreement, the term “
Indebtedness ” means all present and future
indebtedness of the Borrower to the Bank, whether direct or
indirect, fixed or contingent, due or to become due, several, joint
or joint and several, including, without limitation, the Line, the
Line Note, the obligations of the Borrower to the Bank with respect
to any letter of credit issued by the Bank for the account of the
Borrower and overdrafts in any deposit account maintained by the
Borrower with the Bank.
3.2
Collateral . The Indebtedness is secured by the following
(the “ Collateral ”):
(a)
UCC Collateral . A first priority security interest in all
of the Borrower’s present and future accounts, chattel paper,
deposit accounts, documents, instruments, general intangibles,
inventory, investment property, letter-of-credit rights (whether or
not the letter of credit is evidenced by a writing), supporting
obligations and all proceeds and products of all of the foregoing
(the “ UCC Collateral ”), other than any
accounts of the Borrower and securities and monies held therein
from time to time maintained at Wachovia Bank, N.A. (“
Wachovia ”), securing Borrower’s reimbursement
obligations with respect to that certain letter of credit issued by
Wachovia for the account of Borrower (the “ Wachovia
Collateral ”). The security interest of the Bank in the
UCC Collateral shall be subject to a security agreement, in form
and substance acceptable to the Bank, from the Borrower in favor of
the Bank (as amended, modified or supplemented from time to time,
the “ Security Agreement ”); and
(b)
Deed of Trust . A limited recourse credit line deed of
trust, in form and substance acceptable to the Bank, from Food
Investors Corporation, a Delaware corporation (the “
Grantor ”) to C. Christopher Giragosian and Kevin F.
Hull, as trustees, in the amount of $2,500,000 (as amended,
modified or supplemented from time to time, the “ Deed of
Trust ”) creating a first lien against the approximately
345.55 acres of land, and improvements thereon owned by the Grantor
and located at 40506 Tamworth Farm Lane, Leesburg, Loudoun County,
Virginia, as more particularly described in the Deed of Trust (the
“ Real Estate ”). The Bank agrees that it shall
release the lien of the Deed of Trust provided that at the time of
such release, the Borrower or the Grantor assigns to the Bank, as
security for the Indebtedness, and on the Bank’s standard
assignment form, a deposit account maintained at the Bank in the
amount of $2,500,000.
SECTION 4.
Conditions
4.1
Conditions Precedent to Closing . In addition to any other
conditions stated in this Agreement, the following conditions must
be satisfied prior to the Bank making the first disbursement under
this Agreement:
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(a)
Loan Documents . Receipt by the Bank of appropriately
completed and duly executed originals of this Agreement, the Line
Note, the Security Agreement and, the Deed of Trust, (collectively,
together with any other documents executed and delivered in
connection with the Indebtedness, the “ Loan Documents
”);
(b)
Corporate Documents . Receipt by the Bank of
(1) certified copies of the articles or certificate of
incorporation and bylaws of the Borrower and the Grantor,
(2) appropriate resolutions of the boards of directors of the
Borrower and the Grantor authorizing the execution, delivery and
performance of the Loan Documents, (3) current certificates as
to the good standing or qualification to do business, as
applicable, of the Borrower and the Grantor in their respective
states of incorporation and each other state in which either does
business, and (4) certificates of the secretaries of the
Borrower and the Grantor as to the incumbency and signatures of the
officers of such corporations authorized to execute and deliver the
Loan Documents;
(c)
Opinion . Receipt by the Bank of the opinion of Dickstein
Shapiro Morin & Oshinsky LLP, counsel to the Borrower and the
Grantor. By executing this Agreement, the Borrower directs such
counsel to deliver such opinion;
(d)
Insurance . Receipt by the Bank of evidence that all
insurance required by the Loan Documents has been
obtained;
(e)
Financing Statements . Financing statements necessary to
perfect the Bank’s security interest in the UCC Collateral
shall be duly filed in all appropriate offices and jurisdictions,
all other financing statements covering any of the UCC Collateral
shall be terminated (other than those permitted by this Agreement),
and filing and recording receipts evidencing such filings and
terminations shall be delivered to the Bank, all in form and
substance satisfactory to the Bank;
(f)
Real Estate Documents . The Deed of Trust shall be recorded
among the land records of Loudoun County, Virginia, and the Bank
shall receive and approve the following:
(1)
Appraisal . An appraisal of the Real Estate, prepared by an
appraiser acceptable to the Bank, reflecting a value of not less
than $5,000,000;
(2)
Title Insurance . A mortgagee title insurance policy
insuring the lien of the Deed of Trust and containing only such
exceptions as may be approved by the Bank in its sole
discretion;
(3)
Survey . A current survey of the Real Estate conforming to
the minimum standards established by the American Land Title
Association and the ACSM;
(4)
Environmental Audit . An environmental audit of the Real
Estate prepared by an environmental consulting firm acceptable to
the Bank, confirming that the Real Estate is in compliance with all
applicable environmental laws;
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(5)
Compliance with Laws . Certificates of architects, engineers
or public officials confirming that the Real Estate and its use are
in compliance with all applicable zoning, land use, subdivision and
building codes, ordinances, laws and regulations; and
(g)
Flood Hazard . Evidence that no part of the improvements
forming a part of the Real Estate is located in a special flood
hazard area;
(h)
Landlord Waivers . Receipt by the Bank of such landlord and
mortgagee waivers as it deems to be necessary to protect its
security interest in the UCC Collateral;
(i)
No Default . No event shall have occurred and be continuing
that constitutes an Event of Default (as defined below), or that
would constitute an Event of Default but for the requirement that
notice be given or that a period of time elapse, or
both;
(j)
Representations . All representations and warranties
contained in this Agreement shall be true and correct as of the
date of the first disbursement under this Agreement; and
(k)
Satisfactory Documents . All documents delivered pursuant to
this Agreement must be in form and substance satisfactory to the
Bank and its counsel, and all legal matters incident to this
Agreement must be satisfactory to the Bank’s
counsel.
4.2
Subsequent Disbursements . The following conditions must be
satisfied prior to any subsequent disbursements under this
Agreement:
(a)
No Default . No event shall have occurred and be continuing
that constitutes an Event of Default (as defined below), or that
would constitute an Event of Default but for the requirement that
notice be given or that a period of time elapse, or both, either
before or after such disbursement;
(b)
Representations . All representations and warranties
contained in this Agreement shall be true and correct as of the
date of the disbursement with the same effect as though made on
such date, both before and after giving effect to such
disbursement, except that the representations and warranties set
forth in Section 5.4 shall be deemed to apply to the most
recent financial statements furnished by the Borrower to the Bank
prior to such disbursement;
(c)
Borrowing Base Certificate . If required by the Bank, a
Borrowing Base Certificate (as defined below), setting forth a
calculat
