EX-10.9 6 dex109.htm LOAN AND SECURITY AGREEMENT LOAN AND SECURITY AGREEMENT
Exhibit 10.9
This Loan and Security Agreement (this “Agreement”) is made on December 18, 2006, between FIFTH THIRD BANK, a Michigan banking corporation, whose address is 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx 00000 (“Bank”), and LGSI EQUIPMENT OF INDIANA, LLC, an Indiana limited liability company (“LGSI Indiana”) and LGSI EQUIPMENT, INC. OF WYOMING, a Wyoming corporation (“LGSI Wyoming”), whose addresses are 12225 Xxxxxxxx, Xxxxxx, Xxxxxxxx 00000 (collectively, “Borrower”).
Borrower desires to borrow, from time to time, certain sums of money from Bank on the terms and conditions as hereinafter set forth. Bank is willing to lend sums to Borrower, provided Borrower complies with all terms and conditions hereinafter set forth.
In this Agreement and in the Collateral Documents, the following words, phrases, and expressions shall have the respective meanings attributed to them, to be equally applicable to both the singular and plural forms, unless the plural form is the term so defined.
1.1 “Affiliate” means any individual, corporation, association, partnership or other entity which controls or is controlled by or is under common control with the Borrower. For purposes of this definition, “control” (including the correlative meanings of the terms “controlled by” and “under common control with”) means possession of the power to direct or cause the direction of the management and policies of the Borrower, or any other Person, through the direct or indirect ownership of a majority interest in voting securities.
1.2 “Agreement” means this Loan and Security Agreement, and all amendments, modifications and extensions hereto, and restatements thereof.
1.3 “Bank” means Fifth Third Bank, a Michigan banking corporation.
1.4 “Borrower” means LGSI Equipment of Indiana, LLC, a Michigan limited liability company, and LGSI Equipment, Inc. of Wyoming, a Wyoming corporation.
1.5 “Business Days” means a day on which the commercial loan department of the Bank is open for normal commercial business transactions, and, whenever the Notes bear interest determined by reference to LIBOR, relative to any determination of the date the Notes are made or continued, or of the date any required notice is to be given or LIBOR rate determination is to be made, a day on which dealings in U.S. dollar currency are carried on in the London interbank market.
1.6 “Collateral” means any and all now or hereafter existing Eligible Equipment refinanced by, or purchased with, the proceeds of the Loan and all accessions, accessories, parts, attachments, additions, substitutions and replacements of any of the foregoing, used or intended for use in connection with any of the foregoing, and further including all proceeds from any sale or other disposition thereof; provided, however, that Bank is not entitled to the proceeds of any item of Collateral for which Bank’s security interest has been released in accordance with Section 5 of this Agreement.
1.7 “Collateral Documents” means any and all documents, instruments, notes, agreements, purchase and sale agreements, and written memoranda, referred to in this Agreement or referred to in any of the foregoing, or executed in connection herewith or therewith, now or hereafter existing, and specifically, but not by way of limitation, those documents identified in Section 6 hereof and the Acceptance Certificate (as defined in Section 9.5 below).
1.8 “Consistent Basis” means, in reference to the application of GAAP, that the accounting principles observed in the current period are comparable in all material respects to those applied in the preceding periods.
1.9 “Conversion Date” means the date the Equipment Loan converts to a term loan as provided in Section 4 of this Agreement.
1.10 “Cure Period” means with respect to an Event of Default requiring a Notice of Default:
(a) fifteen (15) Business Days following the Receipt Date of the Notice of Default with respect to a Monetary Event of Default; and
(b) thirty (30) Business Days following the Receipt Date of the Notice of Default with respect to a Non-Monetary Event of Default.
1.11 “Eligible Equipment” means Equipment that meets the following criteria:
(a) Ownership: It is owned by Borrower free of all encumbrances and security interests, and are not subject to a vendor’s purchase money security interest or Equipment held by Borrower on consignment;
(b) Other Financing: No financing statement or other lien is on file, or on the Certificate of Title evidencing ownership of such Equipment, covering it or its products or proceeds, except in favor of Bank;
(c) Documents: The ownership of such Equipment is, subject to Section 2.2 of this Agreement, evidenced by a Certificate of Title, and Bank’s lien has been noted on such Certificate of Title, and such Certificate of Title (or the application therefor) has been recorded with the appropriate governmental agency issuing such Certificate of Title; provided, however, that if the ownership of the Equipment is not customarily evidenced by a Certificate of Title (such as an item of Equipment that is a forklift), then Bank’s lien on such non-titled
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Equipment shall be evidenced by a UCC-1 Financing Statement which Bank is authorized to file after review and approval by Borrower, which approval shall not be unreasonably withheld, delayed or conditioned;
(d) Condition: It is in good condition and not purchased or held for sale;
(e) Type: It is to be used and operated by Borrower in the conduct of its business; and
(f) Security: Bank has a valid, enforceable, first, prior and perfected security interest and lien priority with respect thereto, including all proceeds. Bank is not entitled to the proceeds of any item of Collateral for which Bank’s security interest has been released in accordance with Section 5 of this Agreement.
1.12 “Eligible New Equipment” means: (i) Eligible Equipment which has been acquired by Borrower after the date hereof, which has been delivered from the manufacturer thereof (or its selling agent) and has not been placed in service (as that term is used in the Internal Revenue Code of 1986, as amended) by any party; and (ii) Eligible Equipment that has been purchased by Borrower no earlier than 180 days prior to the date hereof and that has been delivered from the manufacturer thereof (or its selling agent) and has not been placed in service (as that term is used in the Internal Revenue Code of 1986, as amended) by any party other than Borrower, Borrower’s lessee or the manufacturer thereof (or its selling agent).
1.13 “Eligible Used Equipment” means Eligible Equipment acquired by Borrower, whether prior to or after the date hereof, which is not Eligible New Equipment.
1.14 “Environmental Laws” means all laws, regulations, and rules of the United States of America, the States of Michigan, Indiana, Wyoming, or state of organization of any Subsidiary (as defined in Section 9.5 below) and local authorities which pertain to the environment, including but not limited to, the Clean Air Act (42 USC 7401 et seq.), Clean Water Act (33 USC 1251 et seq.), Resource Conservation and Recovery Act of 1976 (42 USC 6901 et seq.), Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 USC 9601 et seq.), Hazardous Materials Transportation Act (49 USC 1801 et seq.), Solid Waste Disposal Act (42 USC 6901 et seq.), Toxic Substances Control Act (15 USC 2601 et seq.) and Michigan Natural Resources and Environmental Protection Act (MCL 324.101, et seq.) as each of said statutes have been or are hereafter amended, together with all rules and regulations promulgated by the Environmental Protection Agency and Michigan Departments of Natural Resources and Environmental Quality, and all additional environmental laws, rules, and regulations in effect on the date of this Agreement and as may be enacted.
1.15 “Equipment” means: (i) trucks, trailers, tractors and all equipment used for freight hauling or freight handling, the ownership of which is evidenced by a Certificate of Title; and (ii) equipment used for freight hauling or freight handling, the ownership of which is not evidenced by a Certificate of Title, such as a forklift.
1.16 “Equipment Loan Base” means the aggregate amount of Twenty-Five Million and 00/100 Dollars ($25,000,000.00).
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1.17 “Event of Default” means the occurrence of any event, act, omission, breach, failure, violation or other non-observance or non-performance by Borrower of any covenant, condition, agreement, duty, provision, or undertaking under this Agreement or any other agreement or document executed in connection herewith, including without limitation, any Note, which would constitute a Matured Event of Default after the greater of the following: (i) the lapse of time applicable thereto during which the same may be performed in accordance with the terms of this Agreement or the Collateral Documents; or (ii) the giving of a required Notice of Default and failure to cure in full within the applicable Cure Period.
1.18 “GAAP” means those principles set forth in Opinion of the Accounting Principles Board of the American Institute of Certified Public Accountants and the Financial Accounting Standards Board, or which have other substantial authoritative support and are applicable in the circumstances as of the date of the report; provided, however, that with respect to the calculation of the financial covenants under this Agreement, such calculations shall be substantially in accordance with applicable Interstate Commerce Commission regulations, but nevertheless to the extent possible, substantially consistent with GAAP (as hereinabove defined).
1.19 “Indebtedness” means:
(a) all indebtedness, obligations and liabilities of the Borrower under the Loan extended pursuant to this Agreement or in the Notes, of whatsoever kind, nature and description, due or to become due, and whether now existing or hereafter arising and howsoever evidenced or acquired;
(b) all present and future Money Advances made by Bank in connection with this Agreement or the Notes, and whether made at Bank’s option or otherwise, and the Loans and all Notes now or hereafter executed or existing in connection herewith, and interest accrued thereon, from time to time;
(c) all future advances made by Bank for the protection or preservation of Bank’s rights and interests in the Collateral, or arising under this Agreement or the Collateral Documents, including, but not by way of limitation, advances for taxes, levies, assessments, insurance or maintenance of the Collateral, and reasonable attorneys fees on a time and charges basis;
(d) all reasonable costs and expenses incurred by Bank in connection with or arising out of the protection, enforcement or collection of any of the foregoing, including, without limitation, reasonable attorney fees on a time and charges basis; and
(e) all costs and expenses incurred by Bank in connection with, or arising out of, the sale, disposition, liquidation or other realization, including, but not limited to, the taking, retaking or holding, and all proceedings (judicial or otherwise) of the Collateral, including, without limitation, reasonable attorney fees on a time and charges basis.
1.20 “Interest Period” means, with respect to any Fixed LIBOR Loan Segment (as defined in the Notes), the period beginning on the Effective Date (as defined in the Notes) of that Fixed LIBOR Loan Segment and ending on the date 30 days after that date, except
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that each Interest Period that would otherwise end on a day that is not a Business Day shall end on the next succeeding Business Day or, if that next succeeding Business Day falls in the next succeeding calendar month, on the next preceding Business Day.
1.21 “LIBOR” means the London Interbank Offered Rate, determined for any Interest Period as the arithmetic mean, truncated to the nearest one one-hundredth of a percent, of interbank interest rates offered by major banks in the London, United Kingdom market at 11:00 a.m. London Time, for U.S. dollar denominated deposits on deposit for a period of time equal to the Interest Period, as referenced and reported 2 Business Days prior to the Effective Date of that rate by one of the following sources, selected by Bank on an availability basis in descending order of priority: (i) the Telerate System “Page 3750” report of such interest rates as determined by the British Bankers Association; (ii) the Telerate Systems “LIBOR Page” report of such interest rates as determined by Xxxxxx’x News Service; (iii) The Wall Street Journal report of that interest rate; or (iv) any other generally accepted authoritative source as Bank may reference.
1.22 “Loan” or “Loans” means: (i) the Equipment Loan [as defined in Section 2.1 (a), below] and any Money Advances made thereunder; (ii) the Term Loan (as defined below); and (iii) the Notes.
1.23 “Matured Event of Default” means any Event of Default which remains uncured in full after the later of:
(a) the lapse of time applicable thereto during which the same may be performed in accordance with the terms of this Agreement or the Collateral Documents; or
(b) the giving of a required Notice of Default and failure to cure in full within the applicable Cure Period.
1.24 “Maturity Date” means the date and time when the entire remaining unpaid principal balance of the amounts due under this Agreement or any Note is or becomes due and payable for any reason, including, but not limited to, acceleration under Section 12.1 of this Agreement and the occurrence of the Termination Date.
1.25 “Monetary Event of Default” means any Event of Default which may be cured by the payment of money.
1.26 “Money Advance” means a loan or disbursement of money by Bank, or any other advance of credit by Bank, to or for the account of Borrower hereunder.
1.27 “Moroun Family Shareholders” means X. X. Xxxxxx and M. T. Moroun, or trusts for their benefit.
1.28 “Non-Monetary Event of Default” means any Event of Default which may not be cured by the payment of money.
1.29 “Note” or “Notes” means any note evidencing any Money Advance under the Loan, including any referred to in this Agreement or the Collateral Documents, now or
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hereafter executed by Borrower, including all renewals, extensions, amendments, modifications, restatements, roll-overs or substitutions thereof, from time to time, including, without limitation, the Promissory Note of even date herewith in the original principal amount of $4,979,255.83 executed by LGSI Indiana and the Promissory Note of even date herewith in the original principal amount of $17,870,097.01 executed by LGSI Wyoming.
1.30 “Notice of Default” means that written notice of an Event of Default required to be given by Bank pursuant to Section 11.
1.31 “Person” means, by way of example but not by way of limitation, an individual, partnership, limited partnership, corporation, limited liability company, trust, unincorporated organization, entity, government, governmental agency or governmental subdivision.
1.32 “Plan” means an employee pension benefit plan or other plan with respect to which Borrower or any Affiliate is an “employer” or “party in interest”, as those terms are defined in ERISA.
1.33 “Rate Management Agreement” means any agreement, device or arrangement evidencing any Rate Management Transaction (as defined herein) and any other agreement, device or arrangement providing for payments which are related to fluctuations of interest rates, exchange rates or forward rates, including, but not limited to, dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts and warrants, including without limitation any ISDA Master Agreement between the Borrower and the Bank [or any of its affiliates, including without limitation Fifth Third Bank, an Ohio banking corporation], and any schedules, confirmations and documents and other confirming evidence between the parties confirming transactions thereunder, all whether now existing or hereafter arising, and in each case as amended, modified or supplemented from time to time.
1.34 “Rate Management Transaction” means any transaction (including an agreement with respect thereto) now existing or hereafter entered into between Borrower and Bank [or any of its affiliates, including without limitation Fifth Third Bank, an Ohio banking corporation] which is a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures, or any other transaction which is governed by any ISDA Master Agreement between the Borrower and Bank [or any of its affiliates, including without limitation Fifth Third Bank, an Ohio banking corporation].
1.35 “Rate Management Obligation” means any and all obligations of Borrower to Bank [or any of its affiliates, including without limitation Fifth Third Bank, an Ohio banking corporation], whether absolute, contingent or otherwise and howsoever, and whensoever
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(whether now or hereafter) created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor) under or in connection with (i) any and all Rate Management Agreements, and (ii) any and all cancellations, buy-backs, reversals, terminations or assignments of any Rate Management Agreement.
1.36 “Receipt Date” means, with respect to a notice sent under this Agreement, a Note or any Collateral Document: (i) if notice is sent by facsimile or overnight mail, one business day after the day on which such facsimile or overnight mail delivery is sent; (ii) if a notice is sent by U.S. mail, 4 business days after which such notice is deposited in the U.S. mail; and (iii) if a notice is sent by hand delivery, the day on which the notice is delivered to the recipient.
1.37 “SWAP Rate” means the rate of interest pursuant to the Bank’s “SWAP” interest rate program as of the date of the interest rate is fixed, subject to the terms of the Bank’s standard Rate Management Agreement to be signed by the Borrower and Bank (or a Bank affiliate) at or prior to the date the interest rate is fixed.
1.38 “Term Loan First Payment Date” means the first day of the calendar month after the calendar month in which the Conversion Date occurs.
1.39 “Termination Date” means the later of: (i) January 2, 2009; or (ii) date not to exceed the 59th calendar month after the month in which the Term Loan First Payment Date occurs. For example, if the Conversion Date is November 6, 2007, and Borrower elects a 60 month term, the Term Loan First Payment Date is December 1, 2007, and the Termination Date is November 1, 2012.
1.40 “Title Holding State” means any state in which Equipment is purchased for which Bank is required under state law to hold the original Certificate of Title in order to (a) have a valid, enforceable, first and perfected security interest in such Equipment or (b) otherwise protect, enforce and/or preserve the security interest of Bank in such Equipment.
1.41 “Uniform Commercial Code” means Act 174 of the Michigan Public Acts 1962, as amended, and similar laws of the state of incorporation/organization of Borrower or any Subsidiary (as defined in Section 9.5 below), as applicable, and except as otherwise expressly provided herein all other terms shall have the meanings assigned to them in Article 9, or absent definition in Article 9, in any other Article of the Uniform Commercial Code.
Subject to the terms and conditions contained herein, and upon the condition that no Event of Default shall exist, Bank agrees that it shall fund the Loan pursuant to the following commitment:
2.1 Equipment Loan Commitment:
(a) Commitment: Bank agrees to make Money Advances to the Borrower in the aggregate amount of Twenty-Five Million and 00/100 Dollars ($25,000,000.00) in the aggregate, the proceeds of which are to be used to finance the purchase of or refinance the
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purchase of Eligible New Equipment and Eligible Used Equipment (the “Equipment Loan”), to be repaid in accordance with the Promissory Notes that Borrower, as applicable, must execute in connection with the Loan.
(i) One Hundred (100%) percent of the invoice price of or amount paid for the Eligible New Equipment; and
(ii) One Hundred (100%) percent of the invoice price of or amount paid for the Eligible Used Equipment.
Any sums outstanding at any time in excess of the Equipment Loan Base, or as otherwise herein restricted, shall be immediately repaid to Bank. Bank agrees that it shall make the Money Advances to Borrower, but not later than the Conversion Date.
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3.1 Place and Application of Payments: Bank will invoice Borrower for amounts due in connection with Money Advances. Borrower must send payment for these invoices to Bank in the form of checks or other commercially reasonable method of payment. Time and manner of payment of these invoices will be set forth thereon. These invoices reflect amounts due under the Notes. Additional terms and conditions concerning the place and application of payments are set forth in the Notes.
Provided no Event of Default has occurred, in the event no election has been made by Borrower pursuant to a Borrower’s Notice by January 2, 2008, and January 2, 2009, as applicable, then the term of the Notes shall automatically be extended for a term of 60 months based upon the principal amount outstanding as of such date and Borrower must repay the entire unpaid principal balance plus interest accrued thereon under this Agreement and the Notes in: (i) a term not to exceed 59 equal monthly payments of principal and based upon a 5 year fixed amortization of principal, beginning on the Term Loan First Payment Date and continuing on first day of each month for such term thereafter; (ii) plus monthly payments of interest accrued
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on the total outstanding principal balance of the Term Loan for such term; and (iii) on the Termination Date, a final balloon payment of the outstanding principal balance of the Term Loan plus interest accrued thereon. For example, if Borrower has borrowed the aggregate sum of $10,000,000 and such principal amount remains outstanding prior to January 2, 2008, then on or before January 2, 2008, Borrower shall convert such amount to a Term Loan for a term not to exceed 59 months from such Conversion Date. Thereafter, if Borrower borrows an additional sum in the aggregate amount of $15,000,000 and such principal amount remains outstanding prior to January 2, 2009, then on or before January 2, 2009, Borrower shall convert the $15,000,000 to a Term Loan for a term not to exceed 59 months from such Conversion Date.
After the earlier of (i) January 2, 2009, or (ii) the aggregate sum of Twenty-Five Million Dollars ($25,000,000) has been converted to one or more Term Loan(s), Borrower shall not be entitled to any advances under the Notes or this Agreement.
During the Term Loan when the Available Interest Rate is in effect and provided no Event of Default has occurred, then at any time upon fifteen (15) days’ prior written notice to Bank (the “Borrower’s Fixed Rate Notice”), Borrower may elect to fix the interest rate on the Notes at the SWAP Rate, at the election of Borrower as provided in the Borrower’s Fixed Rate Notice, provided, however, there shall be no change in the fixed amortization principal amount as provided above or the Termination Date (subject to the provisions of any Rate Management Agreement if the SWAP Rate is elected). If Borrower give Borrower’s Fixed Rate Notice and elects to so fix the interest rate, the Notes shall be appropriately amended to give effect thereto.
Notwithstanding anything in this Agreement or the Notes to the contrary, all interest accrued and unpaid, together with the principal amount unpaid, is due and payable on the earlier of: (i) the Termination Date; or (ii) the Maturity Date.
5. RELEASE/DAMAGE PROVISION:
(a) Bank is not obligated to release its security interest in any item of Collateral prior to full payment of the Indebtedness, except upon terms and conditions satisfactory to Bank.
(b) Provided, however, Bank shall release its security interest in a specified item of Collateral either: (i) upon Borrower’s sale thereof, provided the sales proceeds received are applied and paid to Bank as a prepayment of the principal amount of the note related thereto (a “Collateral Sale Prepayment”), with the remainder, if any, retained by Borrower; or (ii) upon Borrower’s prepayment of the principal amount borrowed to purchase such item of Collateral (a “Collateral Release Prepayment”). If Borrower wishes to make a Collateral Release Prepayment, it must notify Bank of the items of Collateral that it wishes to release by making a Collateral Release Prepayment. Bank will then calculate the principal amount due for the Collateral
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Release Prepayment, and Borrower must pay this amount. Bank will then release its lien on the Collateral for which a Collateral Release Prepayment is made. Under this Agreement, “Collateral Prepayment” means a Collateral Sale Prepayment or a Collateral Release Prepayment. Collateral Prepayments shall not reduce the monthly payments of principal set forth in the Notes, and shall be applied in the inverse order of the date such principal payments are due in accordance with the Notes. In addition, in the event any item of Eligible Equipment is damaged and not replaced (without a money advance from Bank) or repaired to its full value existing prior to such damage, Borrower shall pay Bank, immediately, the balance of the amount advanced by Bank with respect to such item, and such payment shall not reduce the monthly payments of principal set forth in such note, and shall be applied in the inverse order of the date such principal payments are due in accordance with such note.
Borrower hereby grants to Bank a continuing security interest in the Collateral as security for all Indebtedness, as herein provided for, or as provided for in the Collateral Documents, and Borrower has executed and delivered to Bank, or will execute or have executed and delivered to Bank, the documents referred to below securing and/or pledging to Bank any and all interests the Borrower may have, now or hereafter, in any of the Collateral referred to in any of the following documents or instruments, and/or containing such other terms, covenants, agreements, representations, warranties and other matters as Bank may require, all of which are part of the Collateral Documents. The title to any item of Collateral, ownership of which is evidenced by a Certificate of Title, shall have the Bank’s lien noted thereon (or on an application therefor) and recorded with the governmental agency issuing such Certificate of Title, in accordance with Section 2.2 of this Agreement. Each Borrower acknowledges and agrees that all of the Notes shall be secured by a security interest in all of the Collateral owned by LGSI Indiana and LGSI Wyoming such that the Notes are “cross-collateralized.”
In addition, the Loan is subject to a Purchase and Sale Agreement of even date herewith between Logistics Insight Corp., a Michigan corporation, and Bank.
7. REPRESENTATIONS AND WARRANTIES:
Borrower represents and warrants to Bank that:
7.1 Organization and Authority:
(a) LGSI Indiana is a solvent limited liability company and is organized and validly existing under the laws of the State of Indiana, has the corporate power to own its property and to conduct its business as is now being conducted, and is duly qualified, if required, to do business and is in good standing in every jurisdiction in which the nature of its business makes such qualification necessary, including, but not by way of limitation, the State of Michigan.
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(b) LGSI Wyoming is a solvent corporation and is organized and validly existing under the laws of the State of Wyoming, has the corporate power to own its property and to conduct its business as is now being conducted, and is duly qualified, if required, to do business and is in good standing in every jurisdiction in which the nature of its business makes such qualification necessary, including, but not by way of limitation, the State of Michigan.
(c) Logistics Insight Corp. is a solvent corporation and is organized and validly existing under the laws of the State of Michigan, has the corporate power to own its property and to conduct its business as is now being conducted, and is duly qualified to do business and is in good standing in every jurisdiction in which the nature of its business makes such qualification necessary, including, but not by way of limitation, the State of Michigan.
(a) Moroun Family Shareholders, directly or indirectly, own a majority of the outstanding voting and nonvoting shares of Logistics Insight Corp.
(b) Logistics Insight Corp. is the sole member of LGSI Indiana and sole shareholder of LGSI Wyoming.
(c) All shares of all classes of capital stock/membership interests issued, as applicable, are fully paid and non-assessable.
(d) Borrower does not have outstanding any other stock/membership interest or other equity security, or other instrument convertible to an equity security of Borrower, or any commitment, understanding, agreement or arrangement to issue, sell or have outstanding any of the foregoing.
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7.5 Pending Litigation: No litigation or other proceeding before any court or administrative agency, domestic or foreign, is pending, or threatened, the outcome of which could materially impair the financial condition of Borrower or its ability to conduct its business. Borrower is not in default with respect to any order, writ, injunction, decree or demand of any court or federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, which might have consequences which would materially impair the business or properties of the Borrower.
7.6 Financial Statements/Reports/Certificates:
(a) Existing Financial Information: The financial statements furnished to Bank are true and correct and have been prepared in accordance with GAAP applied on a Consistent Basis throughout the periods involved. The balance sheet fairly presents the condition of Borrower as of the date thereof, and the profit and loss statement fairly presents the results of operations. There have been no material adverse changes in the condition of Borrower, financial or otherwise, subsequent to date of the most recent financial statement furnished to Bank.
7.8 Tax Returns/Taxes: Borrower has filed all federal, state, local and foreign tax returns which are required to be filed and has paid all taxes which have become due pursuant to said returns or pursuant to any assessments of any nature whatsoever to the extent that such taxes have become due, or constitute a lien, on any of the assets of Borrower (or is protesting same in good faith). Borrower does not know of any proposed material additional tax assessment against it, or any of its properties, or any basis therefor.
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Borrower covenants and agrees, that so long as any Money Advances are outstanding or commitments therefor exist under this Agreement and until all indebtedness due Bank is paid in full, it will:
8.1 Payments of Principal and Interest on Indebtedness: Pay the principal amount of each Money Advance and accrued interest thereon when due in accordance with the terms of the Notes, whether by acceleration or otherwise, and have no Money Advances outstanding hereunder contrary to any provisions, limitations or restrictions hereof.
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(a) Pay when due all FICA taxes and all withheld federal, state and/or city income taxes, and notify Bank promptly in the event of its failure to make any such payment when due.
(b) Pay all other taxes, assessments, and other governmental charges to which Borrower or the property of same is or shall be subject before such charges become delinquent, except that no such charge need be paid so long as its validity or amount is being contested in good faith by appropriate proceedings and Borrower shall have established such reserve with respect thereto as shall be required by sound accounting principles, provided that any such tax, assessment charge or levy shall be paid forthwith (under protest) upon the commencement of proceedings to foreclose any liens securing the same or upon institution of distraint proceedings, and further provided the Borrower shall in any case involving a contested payment due from the Borrower in excess of $1,000,000.00 give notice in writing thereof to Bank.
8.7 Payment of Expenses: Pay all reasonable expenses incurred by Bank with respect to consummating this Agreement, including reasonable attorney fees and expenses incurred in perfecting Bank’s security interests on a time and charges basis.
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8.10 Environmental Laws Compliance/Notices/Indemnity. Comply with all Environmental Laws applicable to Borrower’s business. Borrower agrees to notify Bank, not later than 10 days after Borrower’s receipt, of any summons, notice, lawsuit, citation, letter, or other communication received by Borrower from any Federal, State, or local agency or unit of government, or any other Person, which asserts Borrower is in violation of any Environmental Laws. Borrower agrees to indemnify and hold Bank harmless from all violations of any Environmental Laws, which indemnity shall include all costs and expenses incurred by Bank, including reasonable attorney fees (which will be on a time and charges basis), which are related to any violation of any Environmental Laws, whether or not the Indebtedness has been paid at the time any proceeding, claim, or action is instituted against Bank. Borrower further agrees Bank may at any time, following a Matured Event of Default at Borrower’s cost and expense, hire, or require Borrower to hire, and provide Bank with an environmental audit prepared by an independent environmental engineering firm acceptable to Bank to confirm the continuing truth and accuracy of Borrower’s environmental representations and warranties.
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upon request, immediately deliver to Bank evidence of ownership and/or certificates of title relative to Collateral and shall place on or otherwise identify the Collateral with such marks or other methods of identification sufficient to give notice of Borrower’s ownership thereof.
For purposes of this Agreement, “Indebtedness” is defined as all indebtedness for borrowed money other than indebtedness which is owed to Bank.
For purposes of this Agreement, “Net Worth” shall mean the total of the capital stock (less treasury stock), paid-in capital surplus, general contingency reserves and retained earnings (deficit) of Borrower and Logistics Insight Corp. as determined on a consolidated basis in accordance with generally accepted accounting principles after eliminating all inter-company items between Borrower and Logistics Insight Corp. not incurred in ordinary course of business and all amounts properly attributable to minority interests, if any, in the stock and surplus of any subsidiary, minus the following items (without duplication of deductions), if any, appearing on the consolidated balance sheet of Borrower and Logistics Insight Corp.:
i) | All deferred charges (less amortization, unamortized debt discount and expense and corporate organization expense; |
ii) | The amount by which aggregate inventories or aggregate securities appearing on the asset side of such consolidated balance sheet exceed the lower of cost or market value (at the date of such balance sheet) thereof; and |
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iii) | Any write-up in the book amount of any asset resulting from a revaluation thereof from the book amount entered upon acquisition of such asset. |
Borrower covenants and agrees, that so long as any Money Advance is outstanding under this Agreement, and until all Indebtedness due Bank is paid in full, it will not:
9.1 Event of Default: Permit any Event of Default to occur.
9.2 Acquisitions/Merger: Except between and/or among Borrower and any Affiliates and Moroun Family Shareholders, and subject to Section 9.10 hereof, purchase or acquire obligations or stock of, or any other interest in, any Person, or purchase all or substantially all of the assets of any Person without the prior written consent of Bank, but no obligation of Bank to consent thereto shall be implied herefrom.
9.3 Negative Pledge: Create, assume or otherwise suffer to exist any mortgage, pledge or other encumbrance, or claim therefor, upon any of Borrower’s assets, now owned or hereafter acquired, except for purchase money security interests incurred in the ordinary course of business.
9.4 Loans/Liabilities: Make a loan to, or incur or assume any liability as guarantor, surety, indemnitor or otherwise with respect to any indebtedness or other obligation of, any other Person except for employees, Moroun Family Shareholders and Affiliates in the ordinary course of business provided such amount with respect to Affiliates and Moroun Family Shareholders shall not exceed $5,000,000.00 Dollars in the aggregate at anytime, provided that any such loans are subordinated to Bank. Notwithstanding the foregoing, loans or liabilities that may be deemed to have occurred as a result of Borrower’s use of bank sweep accounts shall not be in violation of this covenant.
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(i) Suffer or permit any judgment, decree or order in excess of $3,000,000.00 Dollars not fully covered by insurance to be entered by a court of competent jurisdiction against Borrower, unless such judgment, decree or order is: (i) paid pursuant to court order or settlement thereof; or (ii) appealed by Borrower, if pursuant to such appeal, the judgment, decree or order is stayed pending resolution of the appeal.
(ii) Suffer or permit any writ or warrant of attachment or any similar process to be filed against Borrower or against any property or asset of Borrower.
(iii) Borrower must send Bank written notice of an event described in this Section 9.12 within 2 business days of occurrence of such event.
9.13 Insolvency: Become insolvent or admit, in writing, its inability to meet its obligations as they mature; or Borrower shall be adjudicated bankrupt, or apply for the appointment of a trustee, receiver or custodian for or of any portion of its properties, or if any such trustee or receiver shall be appointed, and if appointed in a proceeding brought against Borrower, Borrower, by any action, shall indicate its approval of, consent to or acquiescence in such appointment, or if any such trustee or receiver shall not be discharged within 45 days; or any proceedings shall be commenced by or against Borrower under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law or statute of the United States or any state thereof, and if such proceeding shall be instituted against Borrower, Borrower shall, by any action, indicate its approval of, consent to, or acquiescence therein, or that the same shall remain undismissed for 45 days.
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10. BOOKS/RECORDS/FINANCIAL REPORTS/CERTIFICATES:
Borrower covenants and agrees, that so long as any Money Advance is outstanding under this Agreement. and until all Indebtedness due Bank is paid in full, it will keep proper books of accounts; and:
10.1 Quarterly Statements: Furnish to Bank, on a consolidated basis of Borrower and Logistics Insight Corp., quarterly management prepared financial statements, balance sheets, and profit and loss statements with respect to each fiscal quarter of each fiscal year for the quarter then ended, which shall be deemed to be certified as having been true. Such reports shall set forth the financial condition of Borrower and Logistics Insight Corp. for each such fiscal quarter of Borrower and Logistics Insight Corp. and shall be delivered to Bank no later than 90 days after the end of each such fiscal quarter of Borrower. In addition, Borrower shall deliver to Bank with each such quarterly financial statement, a schedule, as of the end of each such fiscal quarter, certified by the president or other senior officer of Borrower, of any Eligible Equipment additions or deletions not previously reported to Bank, which as to an addition has the Bank’s lien noted on the Certificate of Title applicable thereto
10.2 Annual Statements: Borrower shall provide Bank with annual consolidated audited financial statements of the Linc Logistics Company, a Michigan corporation, (which include Borrower and Logistics Insight Corp.) prepared by a certified public accountant acceptable to Bank, setting forth with detail Linc Logistics Company true condition as of the end of its fiscal years no later than 180 days after the end of each of its fiscal years.
10.3 Additional Information: All of the statements of Borrower required by Section 10.2 shall contain (unless indicated to the contrary below):
(i) a balance sheet dated as of the close of the applicable period;
(ii) income statements for the period;
(iii) capital account reconciliations (under Section 10.2 only); and
(iv) source and application of funds (under Section 10.2 only).
10.4 Certification: Borrower’s delivery to Bank of each set of financial statements (and such supplementary information as Borrower deems appropriate) pursuant to Section 10.1, shall constitute a certification to the effect that such financial statements (coupled with such supplementary information provided by Borrower) set forth the information required in order to establish whether the Borrower was in compliance with the requirements set forth in Section 8.16 of this Agreement as of the end of the period covered by the financial statement then being furnished.
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10.5 Accountant’s Statements: Each set of financial statements delivered to Bank by Borrower pursuant to Section 10.2 shall contain the opinion of the accountants preparing such financial statements stating that such financial statements fairly present the financial condition and the results of operations of the Borrower as of the end of and for such period and have been prepared in accordance with GAAP applied on a Consistent Basis (except for changes in application which are disclosed in such report and with which such accountants concur) and that the examination of such accountants in connection with such report has been made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances. Each set of financial statements delivered pursuant to Section 10.2 shall be accompanied by consolidating information in accompanying schedules presented for the purpose of additional analysis of the consolidated financial statements rather than to present the financial position and results of operations of the individual companies. The consolidating information will be subjected to the procedures applied in the audit of the consolidated financial statements and shall be, in the opinion of the accountants preparing such statements, fairly stated in all material respects in relation to the consolidated financial statements as a whole. Consolidating schedules shall include balance sheet and income statement. Schedules shall include Logistics Insight Corp., its subsidiaries presented separately, a column which will include all other companies covered by the financial statements referenced in Section 10.2, and an eliminations column along with a consolidated total column.
10.6 Inspection of Books and Records: (i) Upon the occurrence of any Event of Default or (ii) if Bank reasonably requests, Borrower authorizes Bank prior to a default upon 5 Business Day’s prior notice to Borrower, the right to inspect Borrower’s books, records and papers while in the custody of Borrower or under the custody and control of others, and Bank shall have the right to have Borrower make copies, and abstracts thereof, provided, however, that Bank shall not disclose any information concerning Borrower, its sole shareholder, Moroun Family Shareholders or any Affiliate obtained thereby to any third person or entity, except (x) as necessary or appropriate in connection with the enforcement of any of Bank’s rights hereunder, (y) as required by law, or (z) as directed by any court of competent jurisdiction provided that Bank gives to Borrower telephonic notice of the receipt of any request of any of the forgoing with written confirmation to Borrower by facsimile and overnight courier service, unless Bank is prohibited by law from providing such notice.
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12. REMEDIES IN EVENT OF DEFAULT:
If a Matured Event of Default exists, the Bank shall have the following rights and remedies, provided further that the rights and remedies contained herein or otherwise available shall be cumulative and not exclusive, and Bank shall have the right to exercise any and all other rights and remedies which may be available, whether contained in this Agreement, the Notes, or available by virtue of law, including the Uniform Commercial Code or other similar laws or statutes applicable, or contained in any other instruments or agreements between the Bank and the Borrower and/or any other Person and any such action by Bank shall not serve to release or discharge any other security, property or Collateral held by Bank in connection with this transaction.
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required by any existing or future provision of law, need Bank account to Borrower for surplus, if any. Borrower shall remain liable to Bank for the payment of any deficiency of any Indebtedness, together with interest thereon, until paid. Bank shall not be required to proceed against any other party, or against any other security for any Indebtedness or pursue any other right or remedy hereunder, or under any other instrument or agreement, but all such rights and remedies shall be cumulative and in addition to all other rights and remedies of Bank.
12.6 Certificate of Title: At such time as all prior liens have been released and new certificates of title reflecting Bank’s lien have all been issued as provided in this Agreement, Borrower shall deliver to Bank, within three (3) business days following demand, the original Certificates of Title for any Equipment purchased in Title Holding States.
Any notice or demand, which by any provision of this Agreement is required or provided to be given or served to or upon Borrower, shall be given to Borrower for all purpose by being sent by facsimile with a copy sent certified mail, return receipt requested, postage prepaid, or other expedited mail service, addressed to Borrower, attention H. E. Xxxxx, with a copy to Xxxxx Xxxxxxxxxx at the address hereinabove set forth, or at such other address as shall be designated by Borrower to Bank in writing, and any such notice shall be given to Bank, for all purposes. by being sent certified mail, return receipt requested, postage prepaid, or other expedited mail service, to Bank’s address above, or at such other address as Bank may designate to Borrower in writing.
Bank may terminate this Agreement and its obligations hereunder upon the occurrence of a Matured Event of Default. Provided this Agreement is not terminated earlier because of a Matured Event of Default, this Agreement terminates on the Termination Date. All of the Borrower’s obligations, duties, promises, covenants, representations or warranties under this Agreement and the Borrower or others’ obligations, duties, promises, covenants, representations or warranties under the Collateral Documents, continue and remain in full force and effect after the Termination Date until the Indebtedness is paid in full. Upon termination, the Indebtedness, the Notes, Money Advances, Loan(s), and all other obligations due Bank from Borrower, are then immediately due and payable.
15. CONDITIONS PRECEDENT TO ADVANCES AND ACCEPTANCE CERTIFICATE:
(a) Corporate Status: A Certificate of Good Standing of Borrower certified by the state of its incorporation/organization to the effect that the Borrower is in good standing in such state.
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(b) Resolutions: Certified resolutions of Borrower authorizing the consummation of the transactions contemplated hereby and providing for the execution of a written direction of payment if proceeds are to be paid to a Person other than Borrower.
(i) The Borrower and Logistics Insight Corp. are validly organized/incorporated and in good standing under the laws of the state of its organization/incorporation; and
(ii) All documents incident hereto including the Loan and Security Agreement, Promissory Notes, and Collateral Documents have been duly executed by the party so executing and delivered by the Borrower and/or Logistics Insight Corp., and constitute full, valid and binding obligations of such parties, enforceable in accordance with their respective terms, except that such counsel need not express any opinion as to the extent that enforcement of such documents may be limited by law, including bankruptcy, insolvency or other similar laws affecting creditor’s rights generally.
(f) Absence of Event of Default: There shall exist no Event of Default as herein defined.
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(d) Certified Documents: A true copy, as of the date of the Acceptance Certificate, of the Articles of Incorporation/Organization, By-Laws/Operating Agreement and Shareholder/Member List of the Borrower and Subsidiary, including all amendments to the foregoing, certified to by the secretary/authorized representative of each entity and a certified list of all names under which each entity has or now conducts business in each jurisdiction where it has or now conducts business under such name(s).
(f) Absence of Event of Default: There shall exist no Event of Default as herein defined.
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(a) No delay or failure of Bank in exercising any right, remedy, power or privilege hereunder shall affect such right, remedy, power or privilege, nor shall any single or partial exercise thereof preclude the exercise of any other right, remedy, power or privilege. No delay or failure of Bank at any time to demand strict adherence to the terms of this Agreement shall be deemed to constitute a course of conduct inconsistent with the Bank’s right at any time, before or after any event of default, to demand strict adherence to the terms of this Agreement or the Collateral Documents.
(b) Borrower hereby acknowledges that any original Certificates of Title held by Borrower are being held for the benefit of Bank. The failure of Bank to hold the original Certificates of Title shall not be deemed as a waiver of any right, remedy, power or privilege available to Bank. Borrower agrees that the validity and enforceability of this Agreement shall not be impaired or affected by any failure of Bank to hold the original Certificates of Title.
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IN WITNESS WHEREOF, the parties hereto have executed this Loan and Security Agreement the day and year first appearing above.
Bank: | Borrower: | |||||||
FIFTH THIRD BANK, | LGSI EQUIPMENT OF INDIANA, LLC, | |||||||
a Michigan banking corporation | an Indiana limited liability company | |||||||
/S/ XXXXXXX XXXXXXXX | /S/ H. E. XXXXX | |||||||
By: | Xxxxxxx Xxxxxxxx | By: | H. E. Xxxxx | |||||
Its: | Vice President | Its: | President | |||||
LGSI EQUIPMENT, INC. OF WYOMING, | ||||||||
a Wyoming corporation | ||||||||
/S/ H. E. XXXXX | ||||||||
By: | H. E. Xxxxx | |||||||
Its: | President |
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EXHIBIT A
ACCEPTANCE CERTIFICATE
([insert name of entity])
To: Fifth Third Bank (“Lender”)
The undersigned, being a wholly-owned subsidiary of Logistics Insight Corp., a Michigan corporation, may hereafter receive title to certain property which is Collateral (as defined in the Loan Agreement hereinafter referenced) (“Property”) from Logistics Insight Corp. pursuant to an instrument of conveyance, a copy of which shall be provided to Lender in accordance with the Loan Agreement. The Property was or will be purchased by LGSI Equipment of Indiana, LLC and LGSI Equipment, Inc. of Wyoming by the use of Money Advance(s) (as defined in the Loan Agreement), evidenced by the Notes hereinafter referenced. In connection therewith, the undersigned agrees with Lender as follows.
It has received a copy of the Loan and Security Agreement between Lender and LGSI Equipment of Indiana, LLC and LGSI Equipment, Inc. of Wyoming dated December 18, 2006, as the same may be amended (“Loan Agreement”), and the Promissory Note dated December 18, 2006, executed by LGSI Equipment of Indiana, LLC and Promissory Note dated December 18, 2006, execute by LGSI Equipment, Inc. of Wyoming, and any other Notes(s) (as defined in the Loan Agreement), evidencing the advances that were used to finance the acquisition of the Property by LGSI Equipment of Indiana, LLC and LGSI Equipment, Inc. of Wyoming (collectively, the “Loan Documents”).
It is aware of, and accepts all items of Property from time to time, subject to the lien of the Lender, which lien it acknowledges, represents and warrants is a valid, enforceable, first, prior and perfected security interest and lien priority with respect thereto. The undersigned joins in the granting of the security interest in such Property to Lender as set forth in Section 6 of the Loan Agreement.
It will not further assign, transfer or convey any items of Property, or any portion thereof, to any person or entity that is not Logistics Insight Corp. or another wholly-owned subsidiary of Logistics Insight Corp., unless the undersigned again obtains an acceptance certificate substantially consistent herewith, or pursuant to a lease (as referred to in the Loan Agreement).
It will not grant, permit or suffer any other lien, security interest or encumbrance upon any item of Property, or any portion thereof.
It acknowledges that Lender has no obligation to release its lien on any item of Property except in compliance with Section 5 of the Loan Agreement, or if all indebtedness under the Loan Agreement is paid in full.
It accepts all items of Property subject to all other terms and conditions of the Loan Documents, including, but not by way of limitation, the Lender’s rights and remedies provided for by law and/or the Loan Documents. In connection therewith, the undersigned specifically acknowledges and agrees that its rights are subject to, and subordinate to, the Lender’s rights as a secured creditor with respect to the Property, and that upon a Matured Event of Default (as defined in the Loan Agreement) Lender shall have the right to enforce its rights and remedies as provided in Section 12 of the Loan Agreement.
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At the time of the conveyance of the Property, the undersigned shall: (i) properly note the lien of the Lender on the application for the Certificate of Title (as defined in the Loan Agreement) for each such item of Property transferred; and (ii) provide proof of the notation of Lender’s lien on the Property in the form of a photocopy of the application for Certificate of Title, which must be mailed to Lender on the date on which such application for Certificate of Title is submitted to the governmental agency processing such application. Upon reasonable notice to the undersigned and during normal business hours, Lender may inspect the undersigned’s records pertaining to Certificates of Title and applications for Certificates of Title pertaining to Property. The undersigned shall mail Lender photocopies of the Certificates of Title for Property that it receives from governmental agency issuing such Certificates of Title within 2 business days of receipt of same. Provided, however, that if the ownership of the Property is not customarily evidenced by a Certificate of Title, then Lender’s lien on such non-titled Property shall be evidenced by a UCC-1 Financing Statement which Lender is authorized to file after review and approval by the undersigned, which approval shall not be unreasonably withheld, delayed or conditioned.
It shall comply with the terms and conditions of Sections 8.8 (Insurance) and 8.12 (Preservation of Collateral) of the Loan Agreement as such provisions relate to the Property.
WITNESS: | [insert name of entity] | |||||||
| By: |
| ||||||
| Its: |
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Accepted: | ||
FIFTH THIRD BANK | ||
| ||
By: |
| |
Its: |
|
STATE OF MICHIGAN | ) | |||
)ss. | ||||
COUNTY OF | ) |
The undersigned being duly sworn and known to me to be the of , a , and wholly-owned subsidiary of Logistics Insight Corp., on this day of , , executed the foregoing instrument.
| ||||
, Notary Public, | ||||
County, Michigan | ||||
Acting in County | ||||
My Commission Expires: |
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