LOAN AND SECURITY AGREEMENT
by and between
CONGRESS FINANCIAL CORPORATION (FLORIDA)
as Lender
and
XXXXXXXXX MOBILE FUELING, INC.
as Borrower
Dated: September 26, 2002.
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS....................................................1
SECTION 2. CREDIT FACILITIES.............................................14
2.1 REVOLVING LOANS..................................................14
2.2 LETTER OF CREDIT ACCOMMODATIONS..................................15
SECTION 3. INTEREST AND FEES.............................................18
3.1 INTEREST.........................................................18
3.2 CLOSING FEE......................................................18
3.3 SERVICING FEE....................................................18
3.4 UNUSED LINE FEE..................................................18
SECTION 4. CONDITIONS PRECEDENT..........................................18
4.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTER OF CREDIT
ACCOMMODATIONS...................................................18
4.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTER OF CREDIT
ACCOMMODATIONS...................................................20
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST.....................21
5.1 GRANT OF SECURITY INTEREST.......................................21
5.2 PERFECTION OF SECURITY INTERESTS.................................22
SECTION 6. COLLECTION AND ADMINISTRATION.................................25
6.1 BORROWER'S LOAN ACCOUNT..........................................25
6.2 STATEMENTS.......................................................26
6.3 COLLECTION OF ACCOUNTS...........................................26
6.4 PAYMENTS.........................................................27
6.5 AUTHORIZATION TO MAKE LOANS......................................28
6.6 USE OF PROCEEDS..................................................28
SECTION 7. COLLATERAL REPORTING AND COLLATERAL COVENANTS.................28
7.1 COLLATERAL REPORTING.............................................28
7.2 ACCOUNTS COVENANTS...............................................29
7.3 INVENTORY COVENANTS..............................................30
7.4 EQUIPMENT COVENANTS..............................................30
7.5 POWER OF ATTORNEY................................................30
7.6 RIGHT TO CURE....................................................31
7.7 ACCESS TO PREMISES...............................................32
SECTION 8. REPRESENTATIONS AND WARRANTIES................................32
8.1 CORPORATE EXISTENCE; POWER AND AUTHORITY.........................32
8.2 NAME; STATE OF ORGANIZATION; CHIEF EXECUTIVE OFFICE;
COLLATERAL LOCATIONS.............................................32
8.3 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE.................33
8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES...........................33
8.5 TAX RETURNS......................................................33
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8.6 LITIGATION.......................................................33
8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS.............34
8.8 ENVIRONMENTAL COMPLIANCE.........................................34
8.9 EMPLOYEE BENEFITS................................................34
8.10 BANK ACCOUNTS....................................................35
8.11 INTELLECTUAL PROPERTY............................................35
8.12 SUBSIDIARIES; AFFILIATES; CAPITALIZATION; SOLVENCY...............36
8.13 LABOR DISPUTES...................................................36
8.14 RESTRICTIONS ON SUBSIDIARIES.....................................37
8.15 MATERIAL CONTRACTS...............................................37
8.16 PAYABLE PRACTICES................................................37
8.17 ACCURACY AND COMPLETENESS OF INFORMATION.........................37
8.18 SURVIVAL OF WARRANTIES; CUMULATIVE...............................37
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS............................37
9.1 MAINTENANCE OF EXISTENCE.........................................37
9.2 NEW COLLATERAL LOCATIONS.........................................38
9.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC...........................38
9.4 PAYMENT OF TAXES AND CLAIMS......................................39
9.5 INSURANCE........................................................39
9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION.......................40
9.7 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC..........41
9.8 ENCUMBRANCES.....................................................42
9.9 INDEBTEDNESS.....................................................42
9.10 LOANS, INVESTMENTS, ETC..........................................44
9.11 DIVIDENDS AND REDEMPTIONS........................................45
9.12 TRANSACTIONS WITH AFFILIATES.....................................45
9.13 COMPLIANCE WITH ERISA............................................46
9.14 END OF FISCAL YEARS: FISCAL QUARTERS.............................46
9.15 CHANGE IN BUSINESS...............................................46
9.16 LIMITATION OF RESTRICTIONS AFFECTING SUBSIDIARIES................46
9.17 BOOK NET WORTH...................................................47
9.18 LICENSE AGREEMENTS...............................................47
9.19 COSTS AND EXPENSES...............................................48
9.20 FURTHER ASSURANCES...............................................48
SECTION 10. EVENTS OF DEFAULT AND REMEDIES................................48
10.1 EVENTS OF DEFAULT................................................48
10.2 REMEDIES.........................................................51
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
GOVERNING LAW...............................................................54
11.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS;
JURY TRIAL WAIVER................................................54
11.2 WAIVER OF NOTICES................................................55
11.3 AMENDMENTS AND WAIVERS...........................................55
11.4 WAIVER OF COUNTERCLAIMS..........................................55
11.5 INDEMNIFICATION..................................................55
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SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS..............................56
12.1 TERM.............................................................56
12.2 INTERPRETATIVE PROVISIONS........................................57
12.3 NOTICES..........................................................59
12.4 PARTIAL INVALIDITY...............................................59
12.5 SUCCESSORS; DISCLOSURE OF INFORMATION; CONFIDENTIALITY...........59
12.6 ENTIRE AGREEMENT.................................................60
12.7 COUNTERPARTS, ETC................................................60
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated September 26, 2002 is entered into
by and between Congress Financial Corporation (Florida), a Florida corporation
("Lender") and Xxxxxxxxx Mobile Fueling, Inc., a Florida corporation
("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender enter into financing
arrangements with Borrower pursuant to which Lender may make loans and provide
other financial accommodations to Borrower; and
WHEREAS, Lender is willing to make such loans and provide such financial
accommodations on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of Borrower to payment
of a monetary obligation, whether or not earned by performance, which is not
evidenced by chattel paper or an instrument, (a) for property that has been or
is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for
services rendered or to be rendered, (c) for a secondary obligation incurred or
to be incurred, or (d) arising out of the use of a credit or charge card or
information contained on or for use with the card.
1.2 "Affiliate" shall mean, with respect to a specified Person, any other Person
which directly or indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with such Person, and without limiting
the generality of the foregoing, includes (a) any Person which beneficially owns
or holds five (5%) percent or more of any class of Voting Stock of such Person
or other equity interests in such Person, (b) any Person of which such Person
beneficially owns or holds five (5%) percent or more of any class of Voting
Stock or in which such Person beneficially owns or holds five (5%) percent or
more of the equity interests and (c) any director or executive officer of such
Person. For the purposes of this definition, the term "control" (including with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of Voting Stock, by
agreement or otherwise.
1.3 "Applicable Margin" shall mean (a) one and three-quarters (1.75%) percent on
and after the date of this Agreement, unless and until adjusted pursuant to the
terms of this Agreement, and (b) commencing on the date of Lender's written
notification to Borrower of
Lender's confirmation of Borrower's EBITDA for its immediately preceding fiscal
year, and continuing until the date of such next confirmation (subject to the
terms of this Agreement), the applicable percentage based on Borrower's EBITDA,
as follows:
--------------------------------------------------------------------------------
FISCAL YEAR ENDING EBITDA APPLICABLE MARGIN
--------------------------------------------------------------------------------
> $5,000,000.00 1.50%
-----------------------------------------------------------
6/30/03 < $5,000,000.00 > $3,000,000.00 1.75%
-----------------------------------------------------------
< $3,000,000.00 2.00%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
> $5,500,000.00 1.50%
-----------------------------------------------------------
6/30/04 < $5,500,000.00 > $3,000,000.00 1.75%
-----------------------------------------------------------
< $3,000,000.00 2.25%
--------------------------------------------------------------------------------
1.4 "Blocked Accounts" shall have the meaning set forth in Section 6.3 hereof.
1.5 "Book Net Worth" shall mean as to any Person, at any time, in accordance
with GAAP (except as otherwise specifically set forth below), on a consolidated
basis for such Person and its subsidiaries (if any), the amount equal to the
stockholder's equity section of Borrower's balance sheet, including all Capital
Stock, additional paid-in capital, and retained earnings or deficits, but
excluding treasury stock having a value not exceeding $200,000.00.
1.6 "Borrowing Base" shall mean, at any time, the amount equal to: (a)
eighty-five (85%) percent of the (i) Net Amount of Eligible Accounts and (ii)
Unbilled Gallons Delivered, LESS (b) any Reserves.
1.7 "Business Day" shall mean any day other than a Saturday, Sunday, or other
day on which commercial banks are authorized or required to close under the laws
of the State of Florida or the State of North Carolina, and a day on which the
Reference Bank and Lender are open for the transaction of business.
1.8 "Capital Leases" shall mean, as applied to any Person, any lease of (or any
agreement conveying the right to use) any property (whether real, personal or
mixed) by such Person as lessee which in accordance with GAAP, is required to be
reflected as a liability on the balance sheet of such Person.
1.9 "Capital Stock" shall mean, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock or partnership, limited liability company or other equity
interests at any time outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock or other interests (but
excluding any debt security that is exchangeable for or convertible into such
capital stock).
1.10 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of ninety (90) days or less issued or directly
and fully guaranteed or insured by the United States of America of any agency or
instrumentality thereof; PROVIDED, THAT, the full faith and credit of the United
States of America is pledged in support thereof; (b) certificates of deposit or
bankers' acceptances with a maturity of ninety (90) days or less of any
financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$250,000,000; (c) commercial paper (including variable rate demand notes) with a
maturity of ninety (90) days or less issued by a corporation (except an
Affiliate of Borrower) organized under the laws of any State of the United
States of America or the District of Columbia and rated at least A-1 by Standard
& Poor's Ratings Service, a division of The XxXxxx-Xxxx Companies, Inc. or at
least P-1 by Xxxxx'x Investors Service, Inc.; (d) repurchase obligations with a
term of not more than thirty (30) days for underlying securities of the types
described in clause (a) above entered into with any financial
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institution having combined capital and surplus and undivided profits of not
less than $250,000,000; (e) repurchase agreements and reverse repurchase
agreements relating to marketable direct obligations issued or unconditionally
guaranteed by the United States of America or issued by any governmental agency
thereof and backed by the full faith and credit of the United States of America,
in each case maturing within ninety (90) days or less from the date of
acquisition; PROVIDED, THAT, the terms of such agreements comply with the
guidelines set forth in the Federal Financial Agreements of Depository
Institutions with Securities Dealers and Others, as adopted by the Comptroller
of the Currency on October 31, 1985; and (f) investments in money market funds
and mutual funds which invest substantially all of their assets in securities of
the types described in clauses (a) through (e) above.
1.11 "Change of Control" shall mean (a) the transfer (in one transaction or a
series of transactions) of all or substantially all of the assets of Borrower to
any Person or group (as such term is used in Section 13(d)(3) of the Exchange
Act); (b) the liquidation or dissolution of Borrower or the adoption of a plan
by the stockholders of Borrower relating to the dissolution or liquidation of
Borrower; (c) the acquisition by any Person or group (as such term is used in
Section 13(d)(3) of the Exchange Act), except for one or more of the
shareholders specified in the Information Certificate, of beneficial ownership,
directly or indirectly, of a majority of the voting power of the total
outstanding Voting Stock of Borrower or the Board of Directors of Borrower; or
(d) during any period of two (2) consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of Borrower
(together with any new directors who have been appointed by any of the
shareholders specified in the Information Certificate, or whose nomination for
election by the stockholders of Borrower, as the case may be, was approved by a
vote of at least sixty (60%) percent of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of Borrower then still in
office.
1.12 "Code" shall mean the Internal Revenue Code of 1986, as the same now exists
or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.13 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.14 "Collateral Access Agreement" shall mean an agreement in writing, in form
and substance satisfactory to Lender, from any lessor of premises to Borrower,
or any other person to whom any Collateral (including Inventory, Equipment,
bills of lading or other documents of title) is consigned or who has custody,
control or possession of any such Collateral or is otherwise the owner or
operator of any premises on which any of such Collateral is located,
3
pursuant to which such lessor, consignee or other person, INTER ALIA,
acknowledges the first priority security interest of Lender in such Collateral,
agrees to waive any and all claims such lessor, consignee or other person may,
at any time, have against such Collateral, whether for processing, storage or
otherwise, and agrees to permit Lender access to, and the right to remain on,
the premises of such lessor, consignee or other person so as to exercise
Lender's rights and remedies and otherwise deal with such Collateral and, in the
case of any consignee or other person who at any time has custody, control or
possession of any Collateral, acknowledges that it holds and will hold
possession of the Collateral for the benefit of Lender and agrees to follow all
instructions of Lender with respect thereto.
1.15 "Default" shall mean an act, condition or event which with notice or
passage of time or both would constitute an Event of Default.
1.16 "Deposit Account Control Agreement" shall mean an agreement in writing, in
form and substance satisfactory to Lender, by and among Lender, Borrower and any
bank at which any deposit account of Borrower is at any time maintained which
provides that such bank will comply with instructions originated by Lender
directing disposition of the funds in the deposit account without further
consent by Borrower and such other terms and conditions as Lender may require,
including as to any such agreement with respect to any Blocked Account,
providing that all items received or deposited in the Blocked Accounts are the
property of Lender, that the bank has no lien upon, or right to setoff against,
the Blocked Accounts, the items received for deposit therein, or the funds from
time to time on deposit therein and that the bank will wire, or otherwise
transfer, in immediately available funds, on a daily basis to the Lender Payment
Account all funds received or deposited into the Blocked Accounts.
1.17 "Dilution" shall mean for any period, the fraction, expressed as a
percentage, the numerator of which is the aggregate amount of non-cash
reductions in Accounts of Borrower for such period and the denominator of which
is the aggregate dollar amount of the sales of Borrower for such period.
1.18 "Dilution Reserve" shall mean a Reserve in amounts established by Lender to
reflect that Dilution with respect to the Accounts of Borrower as calculated by
Lender for any period is or is reasonably anticipated to be greater than five
(5%) percent.
1.19 "EBITDA" shall mean, for any period, for Borrower and its Subsidiaries on a
consolidated basis, an amount equal to the sum of (a) Net Income, (b) Interest
Charges, (c) the amount of taxes, based on or measured by income, used or
included in the determination of such Net Income, and (d) the amount of
depreciation and amortization expense deducted in determining such Net Income.
1.20 "Eligible Accounts" shall mean Accounts created by Borrower which are and
continue to be acceptable to Lender based on the criteria set forth below. In
general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and BONA FIDE sale and delivery of goods
by Borrower or rendition of services by Borrower in the ordinary course of its
business
4
which transactions are completed in accordance with the terms and provisions
contained in any documents related thereto;
(b) such Accounts are not unpaid more than ninety (90) days after the date
of the original invoice for them;
(c) such Accounts comply with the terms and conditions contained in
Section 7.2(b) of this Agreement;
(d) such Accounts do not arise from sales on consignment, guaranteed sale, sale
and return, sale on approval, or other terms under which payment by the account
debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with respect to such
Accounts is located in the United States of America or Canada (PROVIDED, that,
at any time promptly upon Lender's request, Borrower shall execute and deliver,
or cause to be executed and delivered, such other agreements, documents and
instruments as may be required by Lender to perfect the security interests of
Lender in those Accounts of an account debtor with its chief executive office or
principal place of business in Canada in accordance with the applicable laws of
the Province of Canada in which such chief executive office or principal place
of business is located and take or cause to be taken such other and further
actions as Lender may request to enable Lender as secured party with respect
thereto to collect such Accounts under the applicable Federal or Provincial laws
of Canada) or, at Lender's option, if the chief executive office and principal
place of business of the account debtor with respect to such Accounts is located
other than in the United States of America or Canada, then if either: (i) the
account debtor has delivered to Borrower an irrevocable letter of credit issued
or confirmed by a bank satisfactory to Lender and payable only in the United
States of America and in U.S. dollars, sufficient to cover such Account, in form
and substance satisfactory to Lender and if required by Lender, the original of
such letter of credit has been delivered to Lender or Lender's agent and
Borrower has complied with the terms of Section 5.2(f) hereof with respect to
the assignment of the proceeds of such letter of credit to Lender or naming
Lender as transferee beneficiary thereunder, as Lender may specify, or (ii) such
Account is subject to credit insurance payable to Lender issued by an insurer
and on terms and in an amount acceptable to Lender, or (iii) such Account is
otherwise acceptable in all respects to Lender (subject to such lending formula
with respect thereto as Lender may determine);
(f) such Accounts do not consist of progress xxxxxxxx (such that the obligation
of the account debtors with respect to such Accounts is conditioned upon
Borrower's satisfactory completion of any further performance under the
agreement giving rise thereto), xxxx and hold invoices or retainage invoices,
except as to xxxx and hold invoices, if Lender shall have received an agreement
in writing from the account debtor, in form and substance satisfactory to
Lender, confirming the unconditional obligation of the account debtor to take
the goods related thereto and pay such invoice;
(g) the account debtor with respect to such Accounts has not asserted a
counterclaim, defense or dispute and does not have, and does not engage in
transactions which may give rise to any right of setoff or recoupment against
such Accounts (but the portion of the
5
Accounts of such account debtor in excess of the amount at any time and from
time to time owed by Borrower to such account debtor or claimed owed by such
account debtor may be deemed Eligible Accounts);
(h) there are no facts, events or occurrences which would impair the validity,
enforceability or collectability of such Accounts or reduce the amount payable
or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and perfected
security interest of Lender and any goods giving rise thereto are not, and were
not at the time of the sale thereof, subject to any liens except those permitted
in this Agreement;
(j) neither the account debtor nor any officer or employee of the account debtor
with respect to such Accounts is an officer, employee, agent or other Affiliate
of Borrower;
(k) the account debtors with respect to such Accounts are not any foreign
government, the United States of America, any State, political subdivision,
department, agency or instrumentality thereof, unless, if the account debtor is
the United States of America, any State, political subdivision, department,
agency or instrumentality thereof, upon Lender's request, the Federal Assignment
of Claims Act of 1940, as amended or any similar State or local law, if
applicable, has been complied with in a manner satisfactory to Lender;
(l) there are no proceedings or actions which are threatened or pending against
the account debtors with respect to such Accounts which might result in any
material adverse change in any such account debtor's financial condition
(including, without limitation, any bankruptcy, dissolution, liquidation,
reorganization or similar proceeding);
(m) such Accounts are not evidenced by or arising under any instrument or
chattel paper;
(n) such Accounts of a single account debtor or its affiliates do not constitute
more than twenty-five (25%) percent of all otherwise Eligible Accounts (but the
portion of the Accounts not in excess of such percentage may be deemed Eligible
Accounts);
(o) such Accounts are not owed by an account debtor who has Accounts unpaid more
than ninety (90) days after the original invoice date for them which constitute
more than fifty (50%) percent of the total Accounts of such account debtor;
(p) the account debtor is not located in a state requiring the filing of a
Notice of Business Activities Report or similar report in order to permit
Borrower to seek judicial enforcement in such State of payment of such Account,
unless Borrower has qualified to do business in such state or has filed a Notice
of Business Activities Report or equivalent report for the then current year or
such failure to file and inability to seek judicial enforcement is capable of
being remedied without any material delay or material cost;
(q) such Accounts are owed by account debtors whose total indebtedness to
Borrower does not exceed the credit limit with respect to such account debtors
as determined by
6
Borrower from time to time in the ordinary course of business consistent with
its current practices as of the date hereof and as is reasonably acceptable to
Lender (but the portion of the Accounts not in excess of such credit limit may
be deemed Eligible Accounts); and
(r) such Accounts are owed by account debtors deemed creditworthy at all times
by Lender in good faith.
The criteria for Eligible Accounts set forth above may only be changed and any
new criteria for Eligible Accounts may only be established by Lender in good
faith based on either: (i) an event, condition or other circumstance arising
after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Lender has no written notice thereof
from Borrower prior to the date hereof, in either case under clause (i) or (ii)
which adversely affects or could reasonably be expected to adversely affect the
Accounts in the good faith determination of Lender. Any Accounts which are not
Eligible Accounts shall nevertheless be part of the Collateral.
1.21 "Environmental Laws" shall mean all foreign, Federal, State and local laws
(including common law), legislation, rules, codes, licenses, permits (including
any conditions imposed therein), authorizations, judicial or administrative
decisions, injunctions or agreements between Borrower and any Governmental
Authority, (a) relating to pollution and the protection, preservation or
restoration of the environment (including air, water vapor, surface water,
ground water, drinking water, drinking water supply, surface land, subsurface
land, plant and animal life or any other natural resource), or to human health
or safety, (b) relating to the exposure to, or the use, storage, recycling,
treatment, generation, manufacture, processing, distribution, transportation,
handling, labeling, production, release or disposal, or threatened release, of
Hazardous Materials, or (c) relating to all laws with regard to recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous
Materials. The term "Environmental Laws" includes (i) the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Federal
Superfund Amendments and Reauthorization Act, the Federal Water Pollution
Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the
Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous
and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii)
applicable state counterparts to such laws, and (iii) any common law or
equitable doctrine that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of or exposure to any
Hazardous Materials.
1.22 "Equipment" shall mean all of Borrower's now owned and hereafter acquired
equipment, wherever located, including machinery, data processing and computer
equipment and computer hardware and software, whether owned or licensed, and
including embedded software, tools, furniture, fixtures, all attachments,
accessions and property now or hereafter affixed thereto or used in connection
therewith, and substitutions and replacements thereof, wherever located, but
excluding Vehicles.
1.23 "ERISA" shall mean the United States Employee Retirement Income Security
Act of 1974, together with all rules, regulations and interpretations thereunder
or related thereto.
7
1.24 "ERISA Affiliate" shall mean any person required to be aggregated with
Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m) or
414(o) of the Code.
1.25 "ERISA Event" shall mean (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder, with respect to a Plan; (b)
the adoption of any amendment to a Plan that would require the provision of
security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c)
the existence with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (d) the filing pursuant to Section 412 of the Code or Section 303(d) of
ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (e) the occurrence of a "prohibited transaction" with
respect to which Borrower or any of its Subsidiaries is a "disqualified person"
(within the meaning of Section 4975 of the Code) or with respect to which
Borrower or any of its Subsidiaries could otherwise be liable; (f) a complete or
partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer
Plan or a cessation of operations which is treated as such a withdrawal or
notification that a Multiemployer Plan is in reorganization; (g) the filing of a
notice of intent to terminate, the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the Pension Benefit Guaranty Corporation to terminate a Plan; (h)
an event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan; (i) the imposition of any liability under Title
IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due
but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA
Affiliate in excess of $250,000.00; and (j) any other event or condition with
respect to a Plan including any Plan subject to Title IV of ERISA maintained, or
contributed to, by any ERISA Affiliate that could reasonably be expected to
result in liability of Borrower in excess of $250,000.00.
1.26 "Event of Default" shall mean the occurrence or existence of any event or
condition described in Section 10.1 hereof.
1.27 "Excess Availability" shall mean the amount, as determined by Lender,
calculated at any time, equal to: (a) the lesser of: (i) the Borrowing Base plus
the amount of all money market account balances securing the Obligations, and
(ii) the Revolving Loan Limit, MINUS (b) the sum of: (i) the amount of all then
outstanding and unpaid Obligations, plus (ii) the aggregate amount of all then
outstanding and unpaid trade payables and other obligations of Borrower which
are more than ninety (90) days past due as of such time, plus (iii) the amount
of checks issued by Borrower to pay trade payables and other obligations which
are more than thirty (30) days past due as of such time, but not yet sent (but
without duplication of clause (b)(ii)) and the book overdraft of Borrower.
1.28 "Exchange Act" shall mean the Securities Exchange Act of 1934, together
with all rules, regulations and interpretations thereunder or related thereto.
1.29 "Financing Agreements" shall mean, collectively, this Agreement and all
notes, guarantees, security agreements and other agreements, documents and
instruments now or at any time hereafter executed and/or delivered by Borrower
or any Obligor in connection with this Agreement.
8
1.30 "GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time as set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board which are applicable to the circumstances
as of the date of determination consistently applied, except that, for purposes
of Section 9.17 hereof, GAAP shall be determined on the basis of such principles
in effect on the date hereof and consistent with those used in the preparation
of the most recent audited financial statements delivered to Lender prior to the
date hereof.
1.31 "Governmental Authority" shall mean any nation or government, any state,
province, or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
1.32 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.33 "Indebtedness" shall mean, with respect to any Person, any liability,
whether or not contingent, (a) in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof) or evidenced by bonds, notes, debentures or similar
instruments; (b) representing the balance deferred and unpaid of the purchase
price of any property or services (except any such balance that constitutes an
account payable to a trade creditor (whether or not an Affiliate) created,
incurred, assumed or guaranteed by such Person in the ordinary course of
business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
payable is being contested in good faith); (c) all obligations as lessee under
leases which have been, or should be, in accordance with GAAP recorded as
Capital Leases; (d) any contractual obligation, contingent or otherwise, of such
Person to pay or be liable for the payment of any indebtedness described in this
definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge thereof,
or to maintain solvency, assets, level of income, or other financial condition;
(e) all obligations with respect to redeemable stock and redemption or
repurchase obligations under any Capital Stock or other equity securities issued
by such Person; (f) all reimbursement obligations and other liabilities of such
Person with respect to surety bonds (whether bid, performance or otherwise),
letters of credit, banker's acceptances, drafts or similar documents or
instruments issued for such Person's account; (g) all indebtedness of such
Person in respect of indebtedness of another Person for borrowed money or
indebtedness of another Person otherwise described in this definition which is
secured by any consensual lien,
9
security interest, collateral assignment, conditional sale, mortgage, deed of
trust, or other encumbrance on any asset of such Person, whether or not such
obligations, liabilities or indebtedness are assumed by or are a personal
liability of such Person, all as of such time; (h) all obligations, liabilities
and indebtedness of such Person (marked to market) arising under swap
agreements, cap agreements and collar agreements and other agreements or
arrangements designed to protect such person against fluctuations in interest
rates or currency or commodity values and (i) all obligations owed by such
Person under License Agreements with respect to non-refundable, advance or
minimum guarantee royalty payments.
1.34 "Information Certificate" shall mean the Information Certificate of
Borrower dated August 30, 2002 (revised September 26, 2002) and delivered to
Lender, containing material information with respect to Borrower, its business
and assets provided by or on behalf of Borrower to Lender in connection with the
preparation of this Agreement and the other Financing Agreements and the
financing arrangements provided for herein.
1.35 "Intellectual Property" shall mean Borrower's now owned and hereafter
arising or acquired: patents, patent rights, patent applications, copyrights,
works which are the subject matter of copyrights, copyright registrations,
trademarks, trade names, trade styles, trademark and service xxxx applications,
and licenses and rights to use any of the foregoing; all extensions, renewals,
reissues, divisions, continuations, and continuations-in-part of any of the
foregoing; all rights to xxx for past, present and future infringement of any of
the foregoing; inventions, trade secrets, formulae, processes, compounds,
drawings, designs, blueprints, surveys, reports, manuals, and operating
standards; goodwill (including any goodwill associated with any trademark or the
license of any trademark); customer and other lists in whatever form maintained;
and trade secret rights, copyright rights, rights in works of authorship, domain
names and domain name registrations; software and contract rights relating to
software, in whatever form created or maintained.
1.36 "Interest Charges" shall mean, for any period, for Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, fees, charges and related expenses of Borrower and its Subsidiaries in
connection with borrowed money (including capitalized interest) or in connection
with the deferred purchase price of assets, in each case to the extent treated
as interest in accordance with GAAP, and (b) the portion of rent expense of
Borrower and its Subsidiaries with respect to such period under Capital Leases
that is treated as interest in accordance with GAAP.
1.37 "Interest Rate" shall mean a rate equal to the Prime Rate plus the
Applicable Margin; PROVIDED, THAT, notwithstanding anything to the contrary
contained herein, the Interest Rate shall mean the rate of four (4%) percent per
annum in excess of the Prime Rate, at Lender's option, without notice, (a)
either (i) for the period on and after the date of termination or non-renewal
hereof until such time as all Obligations are indefeasibly paid and satisfied in
full in immediately available funds, or (ii) for the period from and after the
date of the occurrence of any Event of Default, and for so long as such Event of
Default is continuing as determined by Lender and (b) on the Revolving Loans at
any time outstanding in excess of the amounts available to Borrower under
Section 2 (whether or not such excess(es) arise or are made with or without
Lender's knowledge or consent and whether made before or after an Event of
Default).
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1.38 "Inventory" shall mean all of Borrower's now owned and hereafter existing
or acquired goods, wherever located, which (a) are leased by Borrower as lessor;
(b) are held by Borrower for sale or lease or to be furnished under a contract
of service; (c) are furnished by Borrower under a contract of service; or (d)
consist of raw materials, work in process, finished goods or materials used or
consumed in its business.
1.39 "Investment Property Control Agreement" shall mean an agreement in writing,
in form and substance satisfactory to Lender, by and among Lender, Borrower and
any securities intermediary, commodity intermediary or other person who has
custody, control or possession of any investment property of Borrower
acknowledging that such securities intermediary, commodity intermediary or other
person has custody, control or possession of such investment property on behalf
of Lender, that it will comply with entitlement orders originated by Lender with
respect to such investment property, or other instructions of Lender, or (as the
case may be) apply any value distributed on account of any commodity contract as
directed by Lender, in each case, without the further consent of Borrower and
including such other terms and conditions as Lender may require.
1.40 "Lender Payment Account" shall mean account no. 5000000030334 of Lender at
Wachovia Bank, National Association or such other account of Lender as Lender
may from time to time designate to Borrower as the Lender Payment Account for
purposes of this Agreement.
1.41 "Letter of Credit Accommodations" shall mean, collectively, the letters of
credit, merchandise purchase or other guaranties which are from time to time
either (a) issued or opened by Lender for the account of Borrower or any Obligor
or (b) with respect to which Lender has agreed to indemnify the issuer or
guaranteed to the issuer the performance by Borrower of its obligations to such
issuer: sometimes being referred to herein individually as a "Letter of Credit
Accommodation".
1.42 "License Agreements" shall have the meaning set forth in Section 8.11
hereof.
1.43 "Loans" shall mean the Revolving Loans.
1.44 "Material Contract" shall mean (a) any contract or other agreement (other
than the Financing Agreements), written or oral, of Borrower involving monetary
liability of or to any Person in an amount in excess of $500,000.00 in any
fiscal year and (b) any other contract or other agreement (other than the
Financing Agreements), whether written or oral, to which Borrower is a party as
to which the breach, nonperformance, cancellation or failure to renew by any
party thereto would have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations or prospects of
Borrower or the validity or enforceability of this Agreement, any of the other
Financing Agreements, or any of the rights and remedies of Lender hereunder or
thereunder.
1.45 "Maximum Credit" shall mean the amount of $10,000,000.00.
1.46 "Multiemployer Plan" shall mean a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by Borrower or any
ERISA Affiliate.
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1.47 "Net Amount of Eligible Accounts" shall mean the gross amount of Eligible
Accounts less returns, discounts, claims, credits and allowances of any nature
at any time issued, owing, granted, outstanding, available or claimed with
respect thereto.
1.48 "Net Income" shall mean, for any period, for Borrower and its Subsidiaries
on a consolidated basis, the net income of the Borrower and its Subsidiaries
from continuing operations after extraordinary items (excluding gains or losses
from dispositions of assets) for that period.
1.49 "Obligations" shall mean any and all Revolving Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by Borrower to Lender and/or its affiliates,
including principal, interest, charges, fees, costs and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or otherwise,
whether arising under this Agreement or otherwise, whether now existing or
hereafter arising, whether arising before, during or after the initial or any
renewal term of this Agreement or after the commencement of any case with
respect to Borrower under the United States Bankruptcy Code or any similar
statute (including the payment of interest and other amounts which would accrue
and become due but for the commencement of such case, whether or not such
amounts are allowed or allowable in whole or in part in such case), whether
direct or indirect, absolute or contingent, joint or several, due or not due,
primary or secondary, liquidated or unliquidated, secured or unsecured, and
however acquired by Lender.
1.50 "Obligor" shall mean any guarantor, endorser, acceptor, surety or other
person liable on or with respect to the Obligations or who is the owner of any
property which is security for the Obligations, other than Borrower.
1.51 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S
status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.52 "Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA)
which Borrower sponsors, maintains, or to which it makes, is making, or is
obligated to make contributions, or in the case of a Multiemployer Plan has made
contributions at any time during the immediately preceding six (6) plan years.
1.53 "Prime Rate" shall mean the rate from time to time publicly announced by
Wachovia Bank, National Association, or its successors, as its prime rate,
whether or not such announced rate is the best rate available at such bank.
1.54 "Receivables" shall mean all of the following now owned or hereafter
arising or acquired property of Borrower: (a) all Accounts; (b) all interest,
fees, late charges, penalties, collection fees and other amounts due or to
become due or otherwise payable in connection with any Account; (c) all payment
intangibles of Borrower and other contract rights, chattel paper, instruments,
notes, and other forms of obligations owing to Borrower, whether from the sale
and lease of goods or other property, licensing of any property (including
Intellectual Property or
12
other general intangibles), rendition of services or from loans or advances by
Borrower or to or for the benefit of any third person (including loans or
advances to any Affiliates or Subsidiaries of Borrower) or otherwise associated
with any Accounts, Inventory or general intangibles of Borrower (including,
without limitation, choses in action, causes of action, tax refunds, tax refund
claims, any funds which may become payable to Borrower in connection with the
termination of any Plan or other employee benefit plan and any other amounts
payable to Borrower from any Plan or other employee benefit plan, rights and
claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, casualty or any similar types of
insurance and any proceeds thereof and proceeds of insurance covering the lives
of employees on which Borrower is a beneficiary).
1.55 "Records" shall mean all of Borrower's present and future books of account
of every kind or nature, purchase and sale agreements, invoices, ledger cards,
bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of Borrower with respect to the
foregoing maintained with or by any other person).
1.56 "Reference Bank" shall mean Wachovia Bank, National Association, or such
other bank as Lender may from time to time designate.
1.57 "Renewal Date" shall have the meaning set forth in Section 12.1 hereof.
1.58 "Reserves" shall mean as of any date of determination, such amounts as
Lender may from time to time establish and revise in good faith reducing the
amount of Revolving Loans and Letter of Credit Accommodations which would
otherwise be available to Borrower under the lending formula(s) provided for
herein: (a) to reflect events, conditions, contingencies or risks which, as
determined by Lender in good faith, adversely affect, or would have a reasonable
likelihood of adversely affecting, either (i) the Collateral or any other
property which is security for the Obligations or its value, (ii) the assets,
business or prospects of Borrower or any Obligor or (iii) the security interests
and other rights of Lender in the Collateral (including the enforceability,
perfection and priority thereof) or (b) to reflect Lender's good faith belief
that any collateral report or financial information furnished by or on behalf of
Borrower or any Obligor to Lender is or may have been incomplete, inaccurate or
misleading in any material respect or (c) to reflect outstanding Letter of
Credit Accommodations as provided in Section 2.2 hereof or (d) in respect of any
state of facts which Lender determines in good faith constitutes a Default or an
Event of Default. The term "Reserves" as used herein, shall include, in addition
and not in limitation, Dilution Reserves. To the extent Lender may revise the
lending formulas used to determine the Borrowing Base or establish new criteria
or revise existing criteria for Eligible Accounts so as to address any
circumstances, condition, event or contingency in a manner satisfactory to
Lender, Lender shall not establish a Reserve for the same purpose. The amount of
any Reserve established by Lender shall have a reasonable relationship to the
event, condition or other matter which is the basis for such reserve as
determined by Lender in good faith.
1.59 "Revolving Loan Limit" shall mean the Maximum Credit.
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1.60 "Revolving Loans" shall mean the loans now or hereafter made by Lender to
or for the benefit of Borrower on a revolving basis (involving advances,
repayments and readvances) as set forth in Section 2.1 hereof.
1.61 "Subsidiary" or "subsidiary" shall mean, with respect to any Person, any
corporation, limited liability company, limited liability partnership or other
limited or general partnership, trust, association or other business entity of
which an aggregate of at least a majority of the outstanding Capital Stock or
other interests entitled to vote in the election of the board of directors of
such corporation (irrespective of whether, at the time, Capital Stock of any
other class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency), managers, trustees or other
controlling persons, or an equivalent controlling interest therein, of such
Person is, at the time, directly or indirectly, owned by such Person and/or one
or more subsidiaries of such Person.
1.62 "UCC" shall mean the Uniform Commercial Code as in effect in the State of
Florida, and any successor statute, as in effect from time to time (except that
terms used herein which are defined in the Uniform Commercial Code as in effect
in the State of Florida on the date hereof shall continue to have the same
meaning notwithstanding any replacement or amendment of such statute except as
Lender may otherwise determine).
1.63 "Unbilled Gallons Delivered" shall mean, until the earlier of either
October 31, 2002 or the date on which Borrower has implemented its daily billing
system (the "UGD Termination Date"), the lowest average weekly price, for the
then immediately preceding ninety (90) day period, of actual gallons of fuel
delivered by Borrower but not yet billed; PROVIDED, HOWEVER, that the UGD
Termination Date shall not apply to unbilled gallons delivered to the United
States Postal Service and other customers approved by Lender from time to time,
in its reasonable discretion.
1.64 "Vehicles" shall mean vehicles, rolling stock and equipment attached
thereto.
1.65 "Voting Stock" shall mean with respect to any Person, (a) one (1) or more
classes of Capital Stock of such Person having general voting powers to elect at
least a majority of the board of directors, managers or trustees of such Person,
irrespective of whether at the time Capital Stock of any other class or classes
have or might have voting power by reason of the happening of any contingency,
and (b) any Capital Stock of such Person convertible or exchangeable without
restriction at the option of the holder thereof into Capital Stock of such
Person described in clause (a) of this definition.
SECTION 2. CREDIT FACILITIES
2.1 REVOLVING LOANS.
(a) Subject to and upon the terms and conditions contained herein, Lender agrees
to make Revolving Loans to Borrower from time to time in amounts requested by
Borrower up to the amount equal to the lesser of: (i) the Borrowing Base;
PROVIDED, HOWEVER, that the amount of Revolving Loans which are based upon
Unbilled Gallons Delivered shall not exceed $1,000,000 for any fuel which
remains unbilled after five (5) days, or (ii) the Revolving Loan Limit.
14
(b) Except in Lender's discretion, (i) the aggregate amount of the Revolving
Loans outstanding at any time shall not exceed the Revolving Loan Limit and (ii)
the aggregate amount of the Loans and the Letter of Credit Accommodations
outstanding at any time shall not exceed the Maximum Credit. In the event that
the outstanding amount of any component of the Loans, or the aggregate amount of
the outstanding Loans and Letter of Credit Accommodations, exceed the amounts
available pursuant to the Borrowing Base, the Revolving Loan Limit, the
sublimits for Letter of Credit Accommodations set forth in Section 2.2(e) or the
Maximum Credit, as applicable, such event shall not limit, waive or otherwise
affect any rights of Lender in that circumstance or on any future occasions and
Borrower shall, upon demand by Lender, which may be made at any time or from
time to time, immediately repay to Lender the entire amount of any such
excess(es) for which payment is demanded.
2.2 LETTER OF CREDIT ACCOMMODATIONS.
(a) Subject to and upon the terms and conditions contained herein, at the
request of Borrower, Lender agrees to provide or arrange for Letter of Credit
Accommodations for the account of Borrower containing terms and conditions
acceptable to Lender and the issuer thereof. Any payments made by Lender to any
issuer thereof and/or related parties in connection with the Letter of Credit
Accommodations shall constitute additional Revolving Loans to Borrower pursuant
to this Section 2.
(b) In addition to any charges, fees or expenses charged by any bank or issuer
in connection with the Letter of Credit Accommodations, Borrower shall pay to
Lender a letter of credit fee at a rate equal to two and three-quarters (2.75%)
percent per annum on the daily outstanding balance of the Letter of Credit
Accommodations for the immediately preceding month (or part thereof), payable in
arrears as of the first day of each succeeding month, except that Borrower shall
pay to Lender such letter of credit fee, at Lender's option, without notice, at
a rate equal to five (5%) percent per annum on such daily outstanding balance
for: (i) the period from and after the date of termination or non-renewal hereof
until Lender has received full and final payment of all Obligations
(notwithstanding entry of a judgment against Borrower) and (ii) the period from
and after the date of the occurrence of an Event of Default for so long as such
Event of Default is continuing as determined by Lender. Such letter of credit
fee shall be calculated on the basis of a three hundred sixty (360) day year and
actual days elapsed and the obligation of Borrower to pay such fee shall survive
the termination or non-renewal of this Agreement.
(c) Borrower shall give Lender two (2) Business Days' prior written of
Borrower's request for the issuance of a Letter of Credit Accommodation. Such
notice shall be irrevocable and shall specify the original face amount of the
Letter of Credit Accommodation requested, the effective date (which date shall
be a Business Day) of issuance of such requested Letter of Credit Accommodation,
whether such Letter of Credit Accommodations may be drawn in a single or in
partial draws, the date on which such requested Letter of Credit Accommodation
is to expire (which date shall be a Business Day), the purpose for which such
Letter of Credit Accommodation is to be issued, and the beneficiary of the
requested Letter of Credit Accommodation. Borrower shall attach to such notice
the proposed form of the Letter of Credit Accommodation.
15
(d) In addition to being subject to the satisfaction of the applicable
conditions precedent contained in Section 4 hereof and the other terms and
conditions contained herein, no Letter of Credit Accommodations shall be
available unless each of the following conditions precedent have been satisfied
in a manner satisfactory to Lender: (i) Borrower shall have delivered to the
proposed issuer of such Letter of Credit Accommodation at such times and in such
manner as such proposed issuer may require, an application in form and substance
satisfactory to such proposed issuer and Lender for the issuance of the Letter
of Credit Accommodation and such other documents as may be required pursuant to
the terms thereof, and the form and terms of the proposed Letter of Credit
Accommodation shall be satisfactory to Lender and such proposed issuer, (ii) as
of the date of issuance, no order of any court, arbitrator or other Governmental
Authority shall purport by its terms to enjoin or restrain money center banks
generally from issuing letters of credit of the type and in the amount of the
proposed Letter of Credit Accommodation, and no law, rule or regulation
applicable to money center banks generally and no request or directive (whether
or not having the force of law) from any Governmental Authority with
jurisdiction over money center banks generally shall prohibit, or request that
the proposed issuer of such Letter of Credit Accommodation refrain from, the
issuance of letters of credit generally or the issuance of such Letters of
Credit Accommodation; and (iii) the Excess Availability, prior to giving effect
to any Reserves with respect to such Letter of Credit Accommodations, on the
date of the proposed issuance of any Letter of Credit Accommodations, shall be
equal to or greater than an amount equal to one hundred (100%) percent of the
face amount thereof and all other commitments and obligations made or incurred
by Lender with respect thereto. Effective on the issuance of each Letter of
Credit Accommodation, a Reserve shall be established in the applicable amount
set forth in Section 2.2(d)(iii).
(e) Except in Lender's discretion, the amount of all outstanding Letter of
Credit Accommodations and all other commitments and obligations made or incurred
by Lender in connection therewith shall not at any time exceed $300,000.00.
(f) Borrower shall indemnify and hold Lender harmless from and against any and
all losses, claims, damages, liabilities, costs and expenses which Lender may
suffer or incur in connection with any Letter of Credit Accommodations and any
documents, drafts or acceptances relating thereto, including any losses, claims,
damages, liabilities, costs and expenses due to any action taken by any issuer
or correspondent with respect to any Letter of Credit Accommodation. Borrower
assumes all risks with respect to the acts or omissions of the drawer under or
beneficiary of any Letter of Credit Accommodation and for such purposes the
drawer or beneficiary shall be deemed Borrower's agent. Borrower assumes all
risks for, and agrees to pay, all foreign, Federal, State and local taxes,
duties and levies relating to any goods subject to any Letter of Credit
Accommodations or any documents, drafts or acceptances thereunder. Borrower
hereby releases and holds Lender harmless from and against any acts, waivers,
errors, delays or omissions, whether caused by Borrower, by any issuer or
correspondent or otherwise with respect to or relating to any Letter of Credit
Accommodation, except for the gross negligence or willful misconduct of Lender
as determined pursuant to a final, non-appealable order of a court of competent
jurisdiction. The provisions of this Section 2.2(f) shall survive the payment of
Obligations and the termination or non-renewal of this Agreement.
16
(g) In connection with Inventory purchased pursuant to Letter of Credit
Accommodations, Borrower shall, at Lender's request, instruct all suppliers,
carriers, forwarders, customs brokers, warehouses or others receiving or holding
cash, checks, Inventory, documents or instruments in which Lender holds a
security interest to deliver them to Lender and/or subject to Lender's order,
and if they shall come into Borrower's possession, to deliver them, upon
Lender's request, to Lender in their original form. Borrower shall also, at
Lender's request, designate Lender as the consignee on all bills of lading and
other negotiable and non-negotiable documents.
(h) Borrower hereby irrevocably authorizes and directs any issuer of a Letter of
Credit Accommodation to name Borrower as the account party therein and to
deliver to Lender all instruments, documents and other writings and property
received by issuer pursuant to the Letter of Credit Accommodations and to accept
and rely upon Lender's instructions and agreements with respect to all matters
arising in connection with the Letter of Credit Accommodations or the
applications therefor. Nothing contained herein shall be deemed or construed to
grant Borrower any right or authority to pledge the credit of Lender in any
manner. Lender shall have no liability of any kind with respect to any Letter of
Credit Accommodation provided by an issuer other than Lender unless Lender has
duly executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Borrower shall be bound by any interpretation made in good faith by Lender, or
any other issuer or correspondent under or in connection with any Letter of
Credit Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of Borrower. Lender shall have the sole and exclusive right and
authority to, and Borrower shall not: (i) at any time an Event of Default exists
or has occurred and is continuing, (A) approve or resolve any questions of
non-compliance of documents, (B) give any instructions as to acceptance or
rejection of any documents or goods or (C) execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders, and (ii) at all
times, (A) grant any extensions of the maturity of, time of payment for, or time
of presentation of, any drafts, acceptances, or documents, and (B) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral. Lender may take such actions either in its
own name or in Borrower's name.
(i) Any rights, remedies, duties or obligations granted or undertaken by
Borrower to any issuer or correspondent in any application for any Letter of
Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been granted or undertaken by Borrower to Lender. Any duties or obligations
undertaken by Lender to any issuer or correspondent in any application for any
Letter of Credit Accommodation, or any other agreement by Lender in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been undertaken by Borrower to Lender and to apply in all
respects to Borrower.
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SECTION 3. INTEREST AND FEES
3.1 INTEREST.
(a) Borrower shall pay to Lender interest on the outstanding principal amount of
the Loans at the Interest Rate. All interest accruing hereunder on and after the
date of any Event of Default or termination or non-renewal hereof shall be
payable on demand.
(b) Interest shall be payable by Borrower to Lender monthly in arrears not later
than the first day of each calendar month and shall be calculated on the basis
of a three hundred sixty (360) day year and actual days elapsed. The interest
rate on non-contingent Obligations shall increase or decrease by an amount equal
to each increase or decrease in the Prime Rate effective on the first day of the
month after any change in such Prime Rate is announced based on the Prime Rate
in effect on the last day of the month in which any such change occurs. In no
event shall charges constituting interest payable by Borrower to Lender exceed
the maximum amount or the rate permitted under any applicable law or regulation,
and if any such part or provision of this Agreement is in contravention of any
such law or regulation, such part or provision shall be deemed amended to
conform thereto.
3.2 CLOSING FEE. Borrower shall pay to Lender as a closing fee the amount of
$75,000.00, which shall be fully earned as of the date hereof, $37,500.00 of
which shall be fully payable on the date hereof and $37,500.00 of which shall be
fully payable on April 1, 2003.
3.3 SERVICING FEE. Borrower shall pay to Lender monthly a servicing fee in an
amount equal to $750.00 in respect of Lender's services for each month (or part
thereof) while this Agreement remains in effect and for so long thereafter as
any of the Obligations are outstanding, which fee shall be fully earned as of
and payable in advance on the date hereof and on the first day of each month
hereafter.
3.4 UNUSED LINE FEE. Borrower shall pay to Lender monthly an unused line fee at
a rate equal to one quarter of one (.25%) percent per annum calculated upon the
amount by which the Revolving Loan Limit (reduced, however, to $8,000,000.00 for
the one year period commencing on the date hereof) exceeds the average daily
principal balance of the outstanding Revolving Loans and Letter of Credit
Accommodations during the immediately preceding month (or part thereof) while
this Agreement is in effect and for so long thereafter as any of the Obligations
are outstanding, which fee shall be payable on the first day of each month in
arrears.
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTER OF CREDIT ACCOMMODATIONS.
Each of the following is a condition precedent to Lender making the initial
Loans and providing the initial Letter of Credit Accommodations hereunder:
(a) Lender shall have received, in form and substance satisfactory to Lender,
all releases, terminations and such other documents as Lender may request to
evidence and effectuate the termination by the existing lenders to Borrower of
their respective financing arrangements with Borrower and the termination and
release by it or them, as the case may be, of any interest in and to any assets
and properties of Borrower and each Obligor, duly authorized,
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executed and delivered by it or each of them, including, but not limited to, (i)
UCC termination statements for all UCC financing statements previously filed by
it or any of them or their predecessors, as secured party and Borrower or any
Obligor, as debtor and (ii) satisfactions and discharges of any mortgages, deeds
of trust or deeds to secure debt by Borrower or any Obligor in favor of such
existing lender or lenders, in form acceptable for recording with the
appropriate Governmental Authority;
(b) all requisite corporate action and proceedings in connection with this
Agreement and the other Financing Agreements shall be satisfactory in form and
substance to Lender, and Lender shall have received all information and copies
of all documents, including records of requisite corporate action and
proceedings which Lender may have requested in connection therewith, such
documents where requested by Lender or its counsel to be certified by
appropriate corporate officers or Governmental Authority (and including a copy
of the certificate of incorporation of Borrower certified by the Secretary of
State (or equivalent Governmental Authority) which shall set forth the same
complete corporate name of Borrower as is set forth herein and such document as
shall set forth the organizational identification number of Borrower, if one is
issued in its jurisdiction of incorporation);
(c) no material adverse change shall have occurred in the assets, business or
prospects of Borrower since the date of Lender's latest field examination (not
including for this purpose the field review referred to in clause (d) below) and
no change or event shall have occurred which would impair the ability of
Borrower or any Obligor to perform its obligations hereunder or under any of the
other Financing Agreements to which it is a party or of Lender to enforce the
Obligations or realize upon the Collateral;
(d) Lender shall have completed a field review of the Records and such other
information with respect to the Collateral as Lender may require to determine
the amount of Revolving Loans available to Borrower (including, without
limitation, current perpetual inventory records and/or roll-forwards of Accounts
and Inventory through the date of closing and test counts of the Inventory in a
manner satisfactory to Lender, together with such supporting documentation as
may be necessary or appropriate, and other documents and information that will
enable Lender to accurately identify and verify the Collateral), the results of
which each case shall be satisfactory to Lender, not more than three (3)
Business Days prior to the date hereof;
(e) Lender shall have received, in form and substance satisfactory to Lender,
all consents, waivers, acknowledgments and other agreements from third persons
which Lender may deem necessary or desirable in order to permit, protect and
perfect its security interests in and liens upon the Collateral or to effectuate
the provisions or purposes of this Agreement and the other Financing Agreements,
including, without limitation, Collateral Access Agreements by owners and
lessors of leased premises of Borrower and by warehouses at which Collateral is
located;
(f) the Excess Availability as determined by Lender, as of the date hereof,
shall be not less than $600,000.00 after giving effect to the initial Loans made
or to be made and Letter of Credit Accommodations issued or to be issued in
connection with the initial transactions hereunder;
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(g) Lender shall have received, in form and substance satisfactory to Lender,
the Investment Property Control Agreement pertaining to Money Market Account
2000011121879 (or Lender's Affiliate shall control such money market account);
(h) Lender shall have received evidence, in form and substance satisfactory to
Lender, that Lender has a valid perfected first priority security interest in
all of the Collateral;
(i) Lender shall have received and reviewed lien and judgment search results for
the jurisdiction of incorporation or organization of Borrower, the jurisdiction
of the chief executive office of Borrower and all jurisdictions in which assets
of Borrower are located, which search results shall be in form and substance
satisfactory to Lender;
(j) Lender shall have received evidence of insurance and loss payee endorsements
required hereunder and under the other Financing Agreements, in form and
substance satisfactory to Lender, and certificates of insurance policies and/or
endorsements naming Lender as loss payee;
(k) Lender shall have received, in form and substance satisfactory to Lender,
such opinion letters of counsel to Borrower with respect to the Financing
Agreements and such other matters as Lender may request; and
(l) the other Financing Agreements and all instruments and documents hereunder
and thereunder shall have been duly executed and delivered to Lender, in form
and substance satisfactory to Lender.
4.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTER OF CREDIT ACCOMMODATIONS. Each
of the following is an additional condition precedent to Lender making Loans
and/or providing Letter of Credit Accommodations to Borrower, including the
initial Loans and Letter of Credit Accommodations] and any future Loans [and
Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in the other
Financing Agreements shall be true and correct in all material respects with the
same effect as though such representations and warranties had been made on and
as of the date of the making of each such Loan or providing each such Letter of
Credit Accommodation and after giving effect thereto, except to the extent that
such representations and warranties expressly relate solely to an earlier date
(in which case such representations and warranties shall have been true and
accurate on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any Governmental Authority
shall exist, and no action, suit, investigation, litigation or proceeding shall
be pending or threatened in any court or before any arbitrator or Governmental
Authority, which (i) purports to enjoin, prohibit, restrain or otherwise affect
(A) the making of the Loans or providing the Letter of Credit Accommodations, or
(B) the consummation of the transactions contemplated pursuant to the terms
hereof or the other Financing Agreements or (ii) has or could reasonably be
expected to have a material adverse effect on the assets, business or prospects
of Borrower or would impair the ability of Borrower to perform its obligations
hereunder or under any of the other Financing Agreements or of Lender to enforce
any Obligations or realize upon any of the Collateral; and
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(c) no Default or Event of Default shall exist or have occurred and be
continuing on and as of the date of the making of such Loan or providing each
such Letter of Credit Accommodation and after giving effect thereto.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1 GRANT OF SECURITY INTEREST. To secure payment and performance of all
Obligations, Borrower hereby grants to Lender a continuing security interest in,
a lien upon, and a right of set off against, and hereby assigns to Lender as
security, all personal property (except Vehicles) and real property and fixtures
and interests in property and fixtures of Borrower, whether now owned or
hereafter acquired or existing, and wherever located (together with all other
collateral security for the Obligations at any time granted to or held or
acquired by Lender, collectively, the "Collateral"), including:
(a) all Accounts;
(b) all general intangibles, including, without limitation, all Intellectual
Property;
(c) all goods, including, without limitation, Inventory and Equipment;
(d) all Real Property and fixtures;
(e) all chattel paper (including all tangible and electronic chattel paper);
(f) all instruments (including all promissory notes);
(g) all documents;
(h) all deposit accounts;
(i) all letters of credit, banker's acceptances and similar instruments and
including all letter-of-credit rights;
(j) all supporting obligations and all present and future liens, security
interests, rights, remedies, title and interest in, to and in respect of
Receivables and other Collateral, including (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
(k) all (i) investment property (including securities, whether certificated or
uncertificated, securities accounts, security entitlements, commodity contracts
or commodity accounts) and (ii) monies, credit balances, deposits and other
property of Borrower now or hereafter held or received by or in transit to
Lender or its Affiliates or at any other depository or
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other institution from or for the account of Borrower, whether for safekeeping,
pledge, custody, transmission, collection or otherwise;
(l) all commercial tort claims, including, without limitation, those identified
in the Information Certificate;
(m) to the extent not otherwise described above, all Receivables;
(n) all Records; and
(o) all products and proceeds of the foregoing, in any form, including insurance
proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.
5.2 PERFECTION OF SECURITY INTERESTS.
(a) Borrower irrevocably and unconditionally authorizes Lender (or its agent) to
file at any time and from time to time such financing statements with respect to
the Collateral naming Lender or its designee as the secured party and Borrower
as debtor, as Lender may require, and including any other information with
respect to Borrower or otherwise required by part 5 of Article 9 of the Uniform
Commercial Code of such jurisdiction as Lender may determine, together with any
amendment and continuations with respect thereto, which authorization shall
apply to all financing statements filed on, prior to or after the date hereof.
Borrower hereby ratifies and approves all financing statements naming Lender or
its designee as secured party and Borrower as debtor with respect to the
Collateral (and any amendments with respect to such financing statements) filed
by or on behalf of Lender prior to the date hereof and ratifies and confirms the
authorization of Lender to file such financing statements (and amendments, if
any). Borrower hereby authorizes Lender to adopt on behalf of Borrower any
symbol required for authenticating any electronic filing. In the event that the
description of the collateral in any financing statement naming Lender or its
designee as the secured party and Borrower as debtor includes assets and
properties of Borrower that do not at any time constitute Collateral, whether
hereunder, under any of the other Financing Agreements or otherwise, the filing
of such financing statement shall nonetheless be deemed authorized by Borrower
to the extent of the Collateral included in such description and it shall not
render the financing statement ineffective as to any of the Collateral or
otherwise affect the financing statement as it applies to any of the Collateral.
In no event shall Borrower at any time file, or permit or cause to be filed, any
correction statement or termination statement with respect to any financing
statement (or amendment or continuation with respect thereto) naming Lender or
its designee as secured party and Borrower as debtor.
(b) Borrower does not have any chattel paper (whether tangible or electronic) or
instruments as of the date hereof, except as set forth in the Information
Certificate. In the event that Borrower shall be entitled to or shall receive
any chattel paper or instrument after the date hereof, Borrower shall promptly
notify Lender thereof in writing. Promptly upon the receipt thereof by or on
behalf of Borrower (including by any agent or representative), Borrower shall
deliver, or cause to be delivered to Lender, all tangible chattel paper and
instruments that Borrower or may at any time acquire, accompanied by such
instruments of transfer or
22
assignment duly executed in blank as Lender may from time to time specify, in
each case except as Lender may otherwise agree. At Lender's option, Borrower
shall, or Lender may at any time on behalf of Borrower, cause the original of
any such instrument or chattel paper to be conspicuously marked in a form and
manner acceptable to Lender with the following legend referring to chattel paper
or instruments as applicable: "This [chattel paper] [instrument] is subject to
the security interest of Congress Financial Corporation (Florida) and any sale,
transfer, assignment or encumbrance of this [chattel paper] [instrument]
violates the rights of such secured party."
(c) In the event that Borrower shall at any time hold or acquire an interest in
any electronic chattel paper or any "transferable record" (as such term is
defined in Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act or in Section 16 of the Uniform Electronic Transactions
Act as in effect in any relevant jurisdiction), Borrower shall promptly notify
Lender thereof in writing. Promptly upon Lender's request, Borrower shall take,
or cause to be taken, such actions as Lender may reasonably request to give
Lender control of such electronic chattel paper under Section 9-105 of the UCC
and control of such transferable record under Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or, as the case may
be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such
jurisdiction.
(d) Borrower does not have any deposit accounts as of the date hereof, except as
set forth in the Information Certificate. Borrower shall not, directly or
indirectly, after the date hereof open, establish or maintain any deposit
account unless each of the following conditions is satisfied: (i) Lender shall
have received not less than five (5) Business Days prior written notice of the
intention of Borrower to open or establish such account which notice shall
specify in reasonable detail and specificity acceptable to Lender the name of
the account, the owner of the account, the name and address of the bank at which
such account is to be opened or established, the individual at such bank with
whom Borrower is dealing and the purpose of the account, (ii) the bank where
such account is opened or maintained shall be acceptable to Lender, and (iii) on
or before the opening of such deposit account, Borrower shall as Lender may
specify either (A) deliver to Lender a Deposit Account Control Agreement with
respect to such deposit account duly authorized, executed and delivered by
Borrower and the bank at which such deposit account is opened and maintained or
(B) arrange for Lender to become the customer of the bank with respect to the
deposit account on terms and conditions acceptable to Lender. The terms of this
subsection (d) shall not apply to deposit accounts specifically and exclusively
used for payroll, payroll taxes and other employee wage and benefit payments to
or for the benefit of Borrower's salaried employees.
(e) Borrower does not own or hold, directly or indirectly, beneficially or as
record owner or both, any investment property, as of the date hereof, or have
any investment account, securities account, commodity account or other similar
account with any bank or other financial institution or other securities
intermediary or commodity intermediary as of the date hereof, in each case
except as set forth in the Information Certificate.
(i) In the event that Borrower shall be entitled to or shall at any time
after the date hereof hold or acquire any certificated securities, Borrower
shall promptly endorse, assign and deliver the same to Lender, accompanied by
such instruments of transfer or
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assignment duly executed in blank as Lender may from time to time specify. If
any securities, now or hereafter acquired by Borrower are uncertificated and are
issued to Borrower or its nominee directly by the issuer thereof, Borrower shall
immediately notify Lender thereof and shall as Lender may specify, either (A)
cause the issuer to agree to comply with instructions from Lender as to such
securities, without further consent of Borrower or such nominee, or (B) arrange
for Lender to become the registered owner of the securities.
(ii) Borrower shall not, directly or indirectly, after the date hereof open,
establish or maintain any investment account, securities account, commodity
account or any other similar account (other than a deposit account) with any
securities intermediary or commodity intermediary unless each of the following
conditions is satisfied: (A) Lender shall have received not less than five (5)
Business Days prior written notice of the intention of Borrower to open or
establish such account which notice shall specify in reasonable detail and
specificity acceptable to Lender the name of the account, the owner of the
account, the name and address of the securities intermediary or commodity
intermediary at which such account is to be opened or established, the
individual at such intermediary with whom Borrower is dealing and the purpose of
the account, (B) the securities intermediary or commodity intermediary (as the
case may be) where such account is opened or maintained shall be acceptable to
Lender, and (C) on or before the opening of such investment account, securities
account or other similar account with a securities intermediary or commodity
intermediary, Borrower shall as Lender may specify either (1) execute and
deliver, and cause to be executed and delivered to Lender, an Investment
Property Control Agreement with respect thereto duly authorized, executed and
delivered by Borrower and such securities intermediary or commodity intermediary
or (2) arrange for Lender to become the entitlement holder with respect to such
investment property on terms and conditions acceptable to Lender.
(f) Borrower is not the beneficiary or otherwise entitled to any right to
payment under any letter of credit, banker's acceptance or similar instrument as
of the date hereof, except as set forth in the Information Certificate. In the
event that Borrower shall be entitled to or shall receive any right to payment
under any letter of credit, banker's acceptance or any similar instrument,
whether as beneficiary thereof or otherwise after the date hereof, Borrower
shall promptly notify Lender thereof in writing. Borrower shall immediately, as
Lender may specify, either (i) deliver, or cause to be delivered to Lender, with
respect to any such letter of credit, banker's acceptance or similar instrument,
the written agreement of the issuer and any other nominated person obligated to
make any payment in respect thereof (including any confirming or negotiating
bank), in form and substance satisfactory to Lender, consenting to the
assignment of the proceeds of the letter of credit to Lender by Borrower and
agreeing to make all payments thereon directly to Lender or as Lender may
otherwise direct or (ii) cause Lender to become, at Borrower's expense, the
transferee beneficiary of the letter of credit, banker's acceptance or similar
instrument (as the case may be).
(g) Borrower has no commercial tort claims as of the date hereof, except as set
forth in the Information Certificate. In the event that Borrower shall at any
time after the date hereof have any material commercial tort claims, Borrower
shall promptly notify Lender thereof in writing, which notice shall (i) set
forth in reasonable detail the basis for and nature of such commercial tort
claim and (ii) include the express grant by Borrower to Lender of a security
interest in such commercial tort claim (and the proceeds thereof). In the event
that such notice
24
does not include such grant of a security interest, the sending thereof by
Borrower to Lender shall be deemed to constitute such grant to Lender. Upon the
sending of such notice, any commercial tort claim described therein shall
constitute part of the Collateral and shall be deemed included therein. Without
limiting the authorization of Lender provided in Section 5.2(a) hereof or
otherwise arising by the execution by Borrower of this Agreement or any of the
other Financing Agreements, Lender is hereby irrevocably authorized from time to
time and at any time to file such financing statements naming Lender or its
designee as secured party and Borrower as debtor, or any amendments to any
financing statements, covering any such commercial tort claim as Collateral. In
addition, Borrower shall promptly upon Lender's request, execute and deliver, or
cause to be executed and delivered, to Lender such other agreements, documents
and instruments as Lender may require in connection with such commercial tort
claim.
(h) Borrower does not have any goods, documents of title or other Collateral in
the custody, control or possession of a third party as of the date hereof,
except as set forth in the Information Certificate and except for goods located
in the United States in transit to a location of Borrower permitted herein in
the ordinary course of business of Borrower in the possession of the carrier
transporting such goods. In the event that any goods, documents of title or
other Collateral are at any time after the date hereof in the custody, control
or possession of any other person not referred to in the Information Certificate
or such carriers, Borrower shall promptly notify Lender thereof in writing.
Promptly upon Lender's request, Borrower shall deliver to Lender a Collateral
Access Agreement duly authorized, executed and delivered by such person and
Borrower.
(i) Borrower shall take any other actions reasonably requested by Lender from
time to time to cause the attachment, perfection and first priority of, and the
ability of Lender to enforce, the security interest of Lender in any and all of
the Collateral, including, without limitation, (i) executing, delivering and,
where appropriate, filing financing statements and amendments relating thereto
under the UCC or other applicable law, to the extent, if any, that Borrower's
signature thereon is required therefor, (ii) causing Lender's name to be noted
as secured party on any certificate of title for a titled good if such notation
is a condition to attachment, perfection or priority of, or ability of Lender to
enforce, the security interest of Lender in such Collateral, (iii) complying
with any provision of any statute, regulation or treaty of the United States as
to any Collateral if compliance with such provision is a condition to
attachment, perfection or priority of, or ability of Lender to enforce, the
security interest of Lender in such Collateral, (iv) obtaining the consents and
approvals of any Governmental Authority or third party, including, without
limitation, any consent of any licensor, lessor or other person obligated on
Collateral, and taking all actions required by any earlier versions of the UCC
or by other law, as applicable in any relevant jurisdiction.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 BORROWER'S LOAN ACCOUNT. Lender shall maintain one or more loan account(s)
on its books in which shall be recorded (a) all Loans, Letter of Credit
Accommodations and other Obligations and the Collateral, (b) all payments made
by or on behalf of Borrower and (c) all other appropriate debits and credits as
provided in this Agreement, including fees, charges, costs,
25
expenses and interest. All entries in the loan account(s) shall be made in
accordance with Lender's customary practices as in effect from time to time.
6.2 STATEMENTS. Lender shall render to Borrower each month a statement setting
forth the balance in the Borrower's loan account(s) maintained by Lender for
Borrower pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Lender but shall, absent manifest errors or omissions,
be considered correct and deemed accepted by Borrower and conclusively binding
upon Borrower as an account stated except to the extent that Lender receives a
written notice from Borrower of any specific exceptions of Borrower thereto
within thirty (30) days after the date such statement has been mailed by Lender.
Until such time as Lender shall have rendered to Borrower a written statement as
provided above, the balance in Borrower's loan account(s) shall be presumptive
evidence of the amounts due and owing to Lender by Borrower.
6.3 COLLECTION OF ACCOUNTS.
(a) Borrower shall establish and maintain, at its expense, blocked accounts
and/or related accounts ("Blocked Accounts"), as Lender may specify, with such
banks as are acceptable to Lender into which Borrower shall promptly deposit and
direct its account debtors to directly remit all payments on Receivables and all
payments constituting proceeds of Inventory or other Collateral in the identical
form in which such payments are made, whether by cash, check or other manner.
Borrower shall deliver, or cause to be delivered to Lender, a Depository Account
Control Agreement duly authorized, executed and delivered by each bank where a
Blocked Account is maintained as provided in Section 5.2 hereof or at any time
and from time to time Lender may become bank's customer with respect to the
Blocked Accounts and promptly upon Lender's request, Borrower shall execute and
deliver such agreements or documents as Lender may require in connection
therewith. Borrower agrees that all payments made to such Blocked Accounts or
other funds received and collected by Lender, whether in respect of the
Receivables, as proceeds of Inventory or other Collateral or otherwise shall be
treated as payments to Lender in respect of the Obligations and therefore shall
constitute the property of Lender to the extent of the then outstanding
Obligations.
(b) For purposes of calculating the amount of the Loans available to Borrower,
such payments will be applied (conditional upon final collection) to the
Obligations on the Business Day of receipt by Lender of immediately available
funds in the Lender Payment Account provided such payments and notice thereof
are received in accordance with Lender's usual and customary practices as in
effect from time to time and within sufficient time to credit Borrower's loan
account on such day, and if not, then on the next Business Day. For the purposes
of calculating interest on the Obligations, such payments or other funds
received will be applied (conditional upon final collection) to the Obligations
one (1) Business Day following the date of receipt of immediately available
funds by Lender in the Lender Payment Account provided such payments or other
funds and notice thereof are received in accordance with Lender's usual and
customary practices as in effect from time to time and within sufficient time to
credit Borrower's loan account on such day, and if not, then on the next
Business Day. In the event that at any time or from time to time there are no
Revolving Loans outstanding, Lender shall be entitled to an administrative
charge in an amount equivalent to the interest Lender would have received for
such Business Day had there been Revolving Loans outstanding on such day.
26
(c) Borrower and its shareholders, directors, employees, agents, Subsidiaries or
other Affiliates shall, acting as trustee for Lender, receive, as the property
of Lender, any monies, checks, notes, drafts or any other payment relating to
and/or proceeds of Accounts or other Collateral which come into their possession
or under their control and immediately upon receipt thereof, shall deposit or
cause the same to be deposited in the Blocked Accounts, or remit the same or
cause the same to be remitted, in kind, to Lender. In no event shall the same be
commingled with Borrower's own funds. Borrower agrees to reimburse Lender on
demand for any amounts owed or paid to any bank at which a Blocked Account is
established or any other bank or person involved in the transfer of funds to or
from the Blocked Accounts arising out of Lender's payments to or indemnification
of such bank or person. The obligation of Borrower to reimburse Lender for such
amounts pursuant to this Section 6.3 shall survive the termination or
non-renewal of this Agreement.
6.4 PAYMENTS.
(a) All Obligations shall be payable to the Lender Payment Account as provided
in Section 6.3 or such other place as Lender may designate from time to time.
Lender shall apply payments received or collected from Borrower or for the
account of Borrower (including the monetary proceeds of collections or of
realization upon any Collateral) as follows: FIRST, to pay any fees, indemnities
or expense reimbursements then due to Lender from Borrower; second, to pay
interest due in respect of any Loans; THIRD, to pay principal due in respect of
the Loans; FOURTH, to pay or prepay any other Obligations whether or not then
due, in such order and manner as Lender determines. Notwithstanding anything to
the contrary contained in this Agreement, to the extent Borrower uses any
proceeds of the Loans or Letter of Credit Accommodations to acquire rights in or
the use of any Collateral or to repay any Indebtedness used to acquire rights in
or the use of any Collateral, payments in respect of the obligations shall be
deemed applied first to the Obligations arising from Loans and Letter of Credit
Accommodations that were not used for such purposes and second to the
Obligations arising from Loans and Letter of Credit Accommodations the proceeds
of which were used to acquire rights in or the use of any Collateral in the
chronological order in which Borrower acquired such rights or use.
(b) At Lender's option, all principal, interest, fees, costs, expenses and other
charges provided for in this Agreement or the other Financing Agreements may be
charged directly to the loan account(s) of Borrower. Borrower shall make all
payments to Lender on the Obligations free and clear of, and without deduction
or withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind. If after receipt of any payment of, or proceeds of
Collateral applied to the payment of, any of the Obligations, Lender is required
to surrender or return such payment or proceeds to any Person for any reason,
then the Obligations intended to be satisfied by such payment or proceeds shall
be reinstated and continue and this Agreement shall continue in full force and
effect as if such payment or proceeds had not been received by Lender. Borrower
shall be liable to pay to Lender, and does hereby indemnify and hold Lender
harmless for the amount of any payments or proceeds surrendered or returned (and
Lender shall notify Borrower thereof). This Section 6.4 shall remain effective
notwithstanding any contrary action which may be taken by Lender in reliance
upon such payment or proceeds. This Section
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6.4 shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.
6.5 AUTHORIZATION TO MAKE LOANS. Lender is authorized to make the Loans and
provide the Letter of Credit Accommodations based upon telephonic or other
instructions received from anyone purporting to be an officer of Borrower or
other authorized person or, at the discretion of Lender, if such Loans are
necessary to satisfy any Obligations. All requests for Loans or Letter of Credit
Accommodations hereunder shall specify the date on which the requested advance
is to be made or Letter of Credit Accommodations established (which day shall be
a Business Day) and the amount of the requested Loan. Requests received after
11:30 a.m., Miami, Florida time on any day shall be deemed to have been made as
of the opening of business on the immediately following Business Day. All Loans
and Letter of Credit Accommodations under this Agreement shall be conclusively
presumed to have been made to, and at the request of and for the benefit of,
Borrower when deposited to the credit of Borrower or otherwise disbursed or
established in accordance with the instructions of Borrower or in accordance
with the terms and conditions of this Agreement.
6.6 USE OF PROCEEDS. Borrower shall use the initial proceeds of the Loans
provided by Lender to Borrower hereunder only for: (a) payments to each of the
persons listed in the disbursement direction letter furnished by Borrower to
Lender on or about the date hereof and (b) costs, expenses and fees in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Financing Agreements. All other Loans made or Letter of
Credit Accommodations provided by Lender to Borrower pursuant to the provisions
hereof shall be used by Borrower only for general operating, working capital and
other proper corporate purposes of Borrower not otherwise prohibited by the
terms hereof. None of the proceeds will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security or for the purposes of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause any of
the Loans to be considered a "purpose credit" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, as amended.
SECTION 7. COLLATERAL REPORTING AND COLLATERAL COVENANTS
7.1 COLLATERAL REPORTING.
(a) Borrower shall provide Lender with the following documents in a form
satisfactory to Lender:
(i) on a regular basis as required by Lender, a schedule of sales made,
credits issued and cash received;
(ii) as soon as possible after the end of each month (but in any event
within fifteen (15) days after the end thereof), on a monthly basis or more
frequently as Lender may request, (A) agings of accounts payable (and including
information indicating the status of payments to owners and lessors of the
leased premises of Borrower) and (B) agings of accounts receivable (together
with a reconciliation to the previous month's aging and general ledger which
shall also be furnished in electronic form);
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(iii) upon Lender's request, (A) copies of customer statements and credit
memos, remittance advices and reports, and copies of deposit slips and bank
statements, (B) copies of shipping and delivery documents, and (C) copies of
purchase orders, invoices and delivery documents for Inventory and Equipment
acquired by Borrower;
(iv) such other reports as to the Collateral as Lender shall request from
time to time; and
(b) If any of Borrower's records or reports of the Collateral are prepared or
maintained by an accounting service, contractor, shipper or other agent,
Borrower hereby irrevocably authorizes such service, contractor, shipper or
agent to deliver such records, reports, and related documents to Lender and to
follow Lender's instructions with respect to further services at any time that
an Event of Default exists or has occurred and is continuing.
7.2 ACCOUNTS COVENANTS.
(a) Borrower shall notify Lender promptly of: (i) any material delay in
Borrower's performance of any of its obligations to any account debtor or the
assertion of any material claims, offsets, defenses or counterclaims by any
account debtor, or any disputes with account debtors, or any settlement,
adjustment or compromise thereof, (ii) all material adverse information relating
to the financial condition of any account debtor and (iii) any event or
circumstance which, to Borrower's knowledge would cause Lender to consider any
then existing Accounts as no longer constituting Eligible Accounts. No credit,
discount, allowance or extension or agreement for any of the foregoing shall be
granted to any account debtor without Lender's consent, except in the ordinary
course of Borrower's business in accordance with practices and policies
previously disclosed in writing to Lender and except as set forth in the
schedules delivered to Lender pursuant to Section 7.1(a) above. So long as no
Event of Default exists or has occurred and is continuing, Borrower shall
settle, adjust or compromise any claim, offset, counterclaim or dispute with any
account debtor. At any time that an Event of Default exists or has occurred and
is continuing, Lender shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with account
debtors or grant any credits, discounts or allowances.
(b) With respect to each Account: (i) the amounts shown on any invoice delivered
to Lender or schedule thereof delivered to Lender shall be true and complete,
(ii) no payments shall be made thereon except payments immediately delivered to
Lender pursuant to the terms of this Agreement, (iii) no credit, discount,
allowance or extension or agreement for any of the foregoing shall be granted to
any account debtor except as reported to Lender in accordance with this
Agreement and except for credits, discounts, allowances or extensions made or
given in the ordinary course of Borrower's business in accordance with practices
and policies previously disclosed to Lender, (iv) there shall be no setoffs,
deductions, contras, defenses, counterclaims or disputes existing or asserted
with respect thereto except as reported to Lender in accordance with the terms
of this Agreement, (v) none of the transactions giving rise thereto will violate
any applicable foreign, Federal, State or local laws or regulations, all
documentation relating thereto will be legally sufficient under such laws and
regulations and all such documentation will be legally enforceable in accordance
with its terms.
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(c) Lender shall have the right at any time or times, in Lender's name or in the
name of a nominee of Lender, to verify the validity, amount or any other matter
relating to any Account or other Collateral, by mail, telephone, facsimile
transmission or otherwise.
7.3 INVENTORY COVENANTS. With respect to the Inventory: (a) Borrower shall at
all times maintain inventory records reasonably satisfactory to Lender, keeping
correct and accurate records itemizing and describing the kind, type, quality
and quantity of Inventory, Borrower's cost therefor and daily withdrawals
therefrom and additions thereto; (b) Borrower shall produce, use, store and
maintain the Inventory with all reasonable care and caution and in accordance
with applicable standards of any insurance and in conformity with applicable
laws (including the requirements of the Federal Fair Labor Standards Act of
1938, as amended and all rules, regulations and orders related thereto); (c)
none of the Inventory or other Collateral constitutes farm products or the
proceeds thereof; (d) Borrower assumes all responsibility and liability arising
from or relating to the production, use, sale or other disposition of the
Inventory; (e) Borrower shall not sell Inventory to any customer on approval, or
any other basis which entitles the customer to return or may obligate Borrower
to repurchase such Inventory; (f) Borrower shall keep the Inventory in good and
marketable condition; and (g) Borrower shall not, without prior written notice
to Lender or the specific identification of such Inventory with respect thereto
provided by Borrower to Lender pursuant to Section 7.1(a) hereof, acquire or
accept any Inventory on consignment or approval.
7.4 EQUIPMENT COVENANTS. With respect to the Equipment: (a) upon Lender's
request, Borrower shall, at its expense, at any time or times as Lender may
request on or after an Event of Default, deliver or cause to be delivered to
Lender written appraisals as to the Equipment having a book value exceeding
$200,000.00, in form, scope and methodology acceptable to Lender and by an
appraiser acceptable to Lender, addressed to Lender and upon which Lender is
expressly permitted to rely; (b) Borrower shall keep the Equipment in good
order, repair, running and marketable condition (ordinary wear and tear
excepted); (c) Borrower shall use the Equipment with all reasonable care and
caution and in accordance with applicable standards of any insurance and in
conformity with all applicable laws; (d) the Equipment is and shall be used in
Borrower's business and not for personal, family, household or farming use; (e)
Borrower shall not remove any Equipment from the locations set forth or
permitted herein, except to the extent necessary to have any Equipment repaired
or maintained in the ordinary course of the business of Borrower or to move
Equipment directly from one location set forth or permitted herein to another
such location and except for the movement of laptop computers, cellular phones
and other mobile equipment in the ordinary course of business or the movement of
motor vehicles used by or for the benefit of Borrower in the ordinary course of
business; (f) the Equipment is now and shall remain personal property and
Borrower shall not permit any of the Equipment to be or become a part of or
affixed to real property; and (g) Borrower assumes all responsibility and
liability arising from the use of the Equipment.
7.5 POWER OF ATTORNEY. Borrower hereby irrevocably designates and appoints
Lender (and all persons designated by Lender) as Borrower's true and lawful
attorney-in-fact, and authorizes Lender, in Borrower's or Lender's name, to: (a)
at any time an Event of Default exists or has occurred and is continuing (i)
demand payment on Receivables or other Collateral, (ii) enforce payment of
Receivables by legal proceedings or otherwise, (iii) exercise all of Borrower's
rights and remedies to collect any Receivable or other Collateral, (iv) sell or
assign
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any Receivable upon such terms, for such amount and at such time or times as the
Lender deems advisable, (v) settle, adjust, compromise, extend or renew an
Account, (vi) discharge and release any Receivable, (vii) prepare, file and sign
Borrower's name on any proof of claim in bankruptcy or other similar document
against an account debtor or other obligor in respect of any Receivables or
other Collateral, (viii) notify the post office authorities to change the
address for delivery of remittances from account debtors or other obligors in
respect of Receivables or other proceeds of Collateral to an address designated
by Lender, and open and dispose of all mail addressed to Borrower and handle and
store all mail relating to the Collateral; and (ix) do all acts and things which
are necessary, in Lender's determination, to fulfill Borrower's obligations
under this Agreement and the other Financing Agreements and (b) at any time to
(i) take control in any manner of any item of payment in respect of Receivables
or constituting Collateral or otherwise received in or for deposit in the
Blocked Accounts or otherwise received by Lender, (ii) have access to any
lockbox or postal box into which remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral are sent or
received, (iii) endorse Borrower's name upon any items of payment in respect of
Receivables or constituting Collateral or otherwise received by Lender and
deposit the same in Lender's account for application to the Obligations, (iv)
endorse Borrower's name upon any chattel paper, document, instrument, invoice,
or similar document or agreement relating to any Receivable or any goods
pertaining thereto or any other Collateral, including any warehouse or other
receipts, or bills of lading and other negotiable or non-negotiable documents,
(v) clear Inventory the purchase of which was financed with Letter of Credit
Accommodations through U.S. Customs or foreign export control authorities in
Borrower's name, Lender's name or the name of Lender's designee, and to sign and
deliver to customs officials powers of attorney in Borrower's name for such
purpose, and to complete in Borrower's or Lender's name, any order, sale or
transaction, obtain the necessary documents in connection therewith and collect
the proceeds thereof, (vi) sign Borrower's name on any verification of
Receivables and notices thereof to account debtors or any secondary obligors or
other obligors in respect thereof. Borrower hereby releases Lender and its
officers, employees and designees from any liabilities arising from any act or
acts under this power of attorney and in furtherance thereof, whether of
omission or commission, except as a result of Lender's own gross negligence or
willful misconduct as determined pursuant to a final non-appealable order of a
court of competent jurisdiction.
7.6 RIGHT TO CURE. Lender may, at its option, (a) upon notice to Borrower, cure
any default by Borrower under any material agreement with a third party that
affects the Collateral, its value or the ability of Lender to collect, sell or
otherwise dispose of the Collateral or the rights and remedies of Lender therein
or the ability of Borrower to perform its obligations hereunder or under the
other Financing Agreements, (b) pay or bond on appeal any judgment entered
against Borrower, (c) discharge taxes, liens, security interests or other
encumbrances at any time levied on or existing with respect to the Collateral
and (d) pay any amount, incur any expense or perform any act which, in Lender's
judgment, is necessary or appropriate to preserve, protect, insure or maintain
the Collateral and the rights of Lender with respect thereto. Lender may add any
amounts so expended to the Obligations and charge Borrower's account therefor,
such amounts to be repayable by Borrower on demand. Lender shall be under no
obligation to effect such cure, payment or bonding and shall not, by doing so,
be deemed to have assumed any obligation or liability of Borrower. Any payment
made or other action taken by Lender under this Section shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
accordingly.
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7.7 ACCESS TO PREMISES. From time to time as requested by Lender, at the cost
and expense of Borrower, (a) Lender or its designee shall have complete access
to all of Borrower's premises during normal business hours and after notice to
Borrower, or at any time and without notice to Borrower if an Event of Default
exists or has occurred and is continuing, for the purposes of inspecting,
verifying and auditing the Collateral and all of Borrower's books and records,
including the Records, and (b) Borrower shall promptly furnish to Lender such
copies of such books and records or extracts therefrom as Lender may request,
and (c) Lender or its designee may use during normal business hours such of
Borrower's personnel, equipment, supplies and premises as may be reasonably
necessary for the foregoing and if an Event of Default exists or has occurred
and is continuing for the collection of Receivables and realization of other
Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender the following (which
shall survive the execution and delivery of this Agreement), the truth and
accuracy of which are a continuing condition of the making of Loans and
providing Letter of Credit Accommodations by Lender to Borrower:
8.1 CORPORATE EXISTENCE; POWER AND AUTHORITY. Borrower is a corporation duly
organized and in good standing under the laws of its state of incorporation and
is duly qualified as a foreign corporation and in good standing in all states or
other jurisdictions where the nature and extent of the business transacted by it
or the ownership of assets makes such qualification necessary, except for those
jurisdictions in which the failure to so qualify would not have a material
adverse effect on Borrower's financial condition, results of operation or
business or the rights of Lender in or to any of the Collateral. The execution,
delivery and performance of this Agreement, the other Financing Agreements and
the transactions contemplated hereunder and thereunder (a) are all within
Borrower's corporate powers, (b) have been duly authorized, (c) are not in
contravention of law or the terms of Borrower's certificate of incorporation,
by-laws, or other organizational documentation, or any indenture, agreement or
undertaking to which Borrower is a party or by which Borrower or its property
are bound and (d) will not result in the creation or imposition of, or require
or give rise to any obligation to grant, any lien, security interest, charge or
other encumbrance upon any property of Borrower. This Agreement and the other
Financing Agreements constitute legal, valid and binding obligations of Borrower
enforceable in accordance with their respective terms.
8.2 NAME; STATE OF ORGANIZATION; CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS.
(a) The exact legal name of Borrower is as set forth on the signature page of
this Agreement and in the Information Certificate. Borrower has not, during the
past five years, been known by or used any other corporate or fictitious name or
been a party to any merger or consolidation, or acquired all or substantially
all of the assets of any Person, or acquired any of its property or assets out
of the ordinary course of business, except as set forth in the Information
Certificate.
(b) Borrower is an organization of the type and organized in the jurisdiction
set forth in the Information Certificate. The Information Certificate accurately
sets forth the
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organizational identification number of Borrower or accurately states that
Borrower has none and accurately sets forth the federal employer identification
number of Borrower.
(c) The chief executive office and mailing address of Borrower and Borrower's
Records concerning Accounts are located only at the address identified as such
in the Information Certificate and its only other places of business and the
only other locations of Collateral, if any, are the addresses set forth in the
Information Certificate, subject to the right of Borrower to establish new
locations in accordance with Section 9.2 below. The Information Certificate
correctly identifies any of such locations which are not owned by Borrower and
sets forth the owners and/or operators thereof.
8.3 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. All financial statements
relating to Borrower which have been or may hereafter be delivered by Borrower
to Lender have been prepared in accordance with GAAP (except as to any interim
financial statements, to the extent such statements are subject to normal
year-end adjustments and do not include any notes) and fairly present the
financial condition and the results of operation of Borrower as at the dates and
for the periods set forth therein. Except as disclosed in any interim financial
statements furnished by Borrower to Lender prior to the date of this Agreement,
there has been no material adverse change in the assets, liabilities, properties
and condition, financial or otherwise, of Borrower, since the date of the most
recent audited financial statements furnished by Borrower to Lender prior to the
date of this Agreement.
8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES. The security interests and liens
granted to Lender under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated on the Information
Certificate and the other liens permitted under Section 9.8 hereof. Borrower has
good and marketable fee simple title to or valid leasehold interests in all of
its real property and good, valid and merchantable title to all of its other
properties and assets subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except those granted to Lender
and such others as are specifically listed on the Information Certificate or
permitted under Section 9.8 hereof.
8.5 TAX RETURNS. Borrower has filed, or caused to be filed, in a timely manner
all tax returns, reports and declarations which are required to be filed by it.
All information in such tax returns, reports and declarations is complete and
accurate in all material respects. Borrower has paid or caused to be paid all
taxes due and payable or claimed due and payable in any assessment received by
it, except taxes the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower and with
respect to which adequate reserves have been set aside on its books. Adequate
provision has been made for the payment of all accrued and unpaid Federal,
State, county, local, foreign and other taxes whether or not yet due and payable
and whether or not disputed.
8.6 LITIGATION. Except as set forth in the Information Certificate, there is no
present investigation by any Governmental Authority pending, or to the best of
Borrower's knowledge threatened, against or affecting Borrower, its assets or
business and there is no action, suit, proceeding or claim by any Person
pending, or to the best of Borrower's knowledge threatened, against Borrower or
its assets or goodwill, or against or affecting any transactions contemplated
33
by this Agreement, which if adversely determined against Borrower would result
in any material adverse change in the assets, business or prospects of Borrower
or would impair the ability of Borrower to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a party or of Lender
to enforce any Obligations or realize upon any Collateral.
8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS. Borrower is not in
default in any material respect under, or in violation in any material respect
of any of the terms of, any agreement, contract, instrument, lease or other
commitment to which it is a party or by which it or any of its assets are bound
and Borrower is in compliance in all material respects with all applicable
provisions of laws, rules, regulations, licenses, permits, approvals and orders
of any foreign, Federal, State or local Governmental Authority.
8.8 ENVIRONMENTAL COMPLIANCE.
(a) Except as set forth on the Information Certificate, Borrower and any
Subsidiary have not generated, used, stored, treated, transported, manufactured,
handled, produced or disposed of any Hazardous Materials, on or off its premises
(whether or not owned by it) in any manner which at any time violates any
applicable Environmental Law or any license, permit, certificate, approval or
similar authorization thereunder and the operations of Borrower and any
Subsidiary complies in all material respects with all Environmental Laws and all
licenses, permits, certificates, approvals and similar authorizations
thereunder.
(b) Except as set forth on the Information Certificate, there has been no
investigation, proceeding, complaint, order, directive, claim, citation or
notice by any Governmental Authority or any other person nor is any pending or
to the best of Borrower's knowledge threatened, with respect to any
non-compliance with or violation of the requirements of any Environmental Law by
Borrower and any Subsidiary or the release, spill or discharge, threatened or
actual, of any Hazardous Material or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials or any other environmental, health or safety matter, which affects
Borrower or its business, operations or assets or any properties at which
Borrower has transported, stored or disposed of any Hazardous Materials.
(c) Borrower and its Subsidiaries have no material liability (contingent or
otherwise) in connection with a release, spill or discharge, threatened or
actual, of any Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials.
(d) Borrower and its Subsidiaries have all licenses, permits, certificates,
approvals or similar authorizations required to be obtained or filed in
connection with the operations of Borrower under any Environmental Law and all
of such licenses, permits, certificates, approvals or similar authorizations are
valid and in full force and effect.
8.9 EMPLOYEE BENEFITS.
(a) Each Plan is in compliance with the applicable provisions of ERISA, the Code
and other federal or state law. Each Plan which is intended to qualify under
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service and
34
to the best of Borrower's knowledge, nothing has occurred which would cause the
loss of such qualification. Borrower and its ERISA Affiliates have made all
required contributions to any Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or to the best of Borrower's knowledge, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan. There has been no prohibited transaction or violation of
the fiduciary responsibility rules with respect to any Plan.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) the
current value of each Plan's assets (determined in accordance with the
assumptions used for funding such Plan pursuant to Section 412 of the Code) are
not less than such Plan's liabilities under Section 4001(a)(16) of ERISA; (iii)
Borrower and its ERISA Affiliates have not incurred and do not reasonably expect
to incur, any liability under Title IV of ERISA with respect to any Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iv) Borrower
and its ERISA Affiliates have not incurred and do not reasonably expect to
incur, any liability (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such liability) under Section 4201
or 4243 of ERISA with respect to a Multiemployer Plan; and (v) Borrower and its
ERISA Affiliates have not engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA.
8.10 BANK ACCOUNTS. All of the deposit accounts, investment accounts or other
accounts in the name of or used by Borrower maintained at any bank or other
financial institution are set forth in the Information Certificate, subject to
the right of Borrower to establish new accounts in accordance with Section 5.2
hereof.
8.11 INTELLECTUAL PROPERTY. Borrower owns or licenses or otherwise has the right
to use all Intellectual Property necessary for the operation of its business as
presently conducted or proposed to be conducted. As of the date hereof, Borrower
does not have any Intellectual Property registered, or subject to pending
applications, in the United States Patent and Trademark Office or any similar
office or agency in the United States, any State thereof, any political
subdivision thereof or in any other country, other than those described in the
Information Certificate hereto and has not granted any licenses with respect
thereto other than as set forth in the Information Certificate. No event has
occurred which permits or would permit after notice or passage of time or both,
the revocation, suspension or termination of such rights. To the best of
Borrower's knowledge, no slogan or other advertising device, product, process,
method, substance or other Intellectual Property or goods bearing or using any
Intellectual Property presently contemplated to be sold by or employed by
Borrower infringes any patent, trademark, servicemark, tradename, copyright,
license or other Intellectual Property owned by any other Person presently and
no claim or litigation is pending or threatened against or affecting Borrower
contesting its right to sell or use any such Intellectual Property. The
Information Certificate sets forth all of the agreements or other arrangements
of Borrower pursuant to which Borrower has a license or other right to use any
trademarks, logos, designs, representations or other Intellectual Property owned
by another person as in effect on the date hereof and the dates of the
expiration of such agreements or other arrangements of Borrower as in effect on
the date
35
hereof (collectively, together with such agreements or other arrangements as may
be entered into by Borrower after the date hereof, collectively, the "License
Agreements" and individually, a "License Agreement"). No trademark, servicemark
or other Intellectual Property at any time used by Borrower which is owned by
another person, or owned by Borrower subject to any security interest, lien,
collateral assignment, pledge or other encumbrance in favor of any person other
than Lender, is affixed to any Eligible Inventory, except to the extent
permitted under the term of the License Agreements listed on the Information
Certificate.
8.12 SUBSIDIARIES; AFFILIATES; CAPITALIZATION; SOLVENCY.
(a) Borrower does not have any direct or indirect Subsidiaries or Affiliates and
is not engaged in any joint venture or partnership except as set forth in the
Information Certificate, subject to the right of Borrower to form or acquire
Subsidiaries in accordance with Section 9.10 hereof.
(b) Borrower is the record and beneficial owner of all of the issued and
outstanding shares of Capital Stock of each of the Subsidiaries listed on the
Information Certificate as being owned by Borrower and there are no proxies,
irrevocable or otherwise, with respect to such shares and no equity securities
of any of the Subsidiaries are or may become required to be issued by reason of
any options, warrants, rights to subscribe to, calls or commitments of any kind
or nature and there are no contracts, commitments, understandings or
arrangements by which any Subsidiary is or may become bound to issue additional
shares of its Capital Stock or securities convertible into or exchangeable for
such shares.
(c) The issued and outstanding shares of Capital Stock of Borrower have been
duly authorized and are fully paid and non-assessable, and the shareholders
owning more than ten (10%) percent of the voting power of the total outstanding
Voting Stock of Borrower are the persons indicated in the Information
Certificate.
(d) Borrower is Solvent and will continue to be Solvent after the creation of
the Obligations, the security interests of Lender and the other transactions
contemplated hereunder.
8.13 LABOR DISPUTES.
(a) Set forth on the Information Certificate is a list (including dates of
termination) of all collective bargaining or similar agreements between or
applicable to Borrower and any union, labor organization or other bargaining
agent in respect of the employees of Borrower on the date hereof.
(b) There is (i) no significant unfair labor practice complaint pending against
Borrower or, to the best of Borrower's knowledge, threatened against it, before
the National Labor Relations Board, and no significant grievance or significant
arbitration proceeding arising out of or under any collective bargaining
agreement is pending on the date hereof against Borrower or, to best of
Borrower's knowledge, threatened against it, and (ii) no significant strike,
labor dispute, slowdown or stoppage is pending against Borrower or, to the best
of Borrower's knowledge, threatened against Borrower.
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8.14 RESTRICTIONS ON SUBSIDIARIES. Except for restrictions contained in this
Agreement or any other agreement with respect to Indebtedness of Borrower
permitted hereunder as in effect on the date hereof, there are no contractual or
consensual restrictions on Borrower or any of its Subsidiaries which prohibit or
otherwise restrict (a) the transfer of cash or other assets (i) between Borrower
and any of its Subsidiaries or (ii) between any Subsidiaries of Borrower or (b)
the ability of Borrower or any of its Subsidiaries to incur Indebtedness or
grant security interests to Lender in the Collateral.
8.15 MATERIAL CONTRACTS. The Information Certificate sets forth all Material
Contracts to which Borrower is a party or is bound as of the date hereof.
Borrower is not in breach of or in default under any Material Contract and has
not received any notice of the intention of any other party thereto to terminate
any Material Contract.
8.16 PAYABLE PRACTICES. Borrower has not made any material change in the
historical accounts payable practices from those in effect immediately prior
to the date hereof.
8.17 ACCURACY AND COMPLETENESS OF INFORMATION. All information furnished by or
on behalf of Borrower in writing to Lender in connection with this Agreement or
any of the other Financing Agreements or any transaction contemplated hereby or
thereby, including all information on the Information Certificate, is true and
correct in all material respects on the date as of which such information is
dated or certified and does not omit any material fact necessary in order to
make such information not misleading. No event or circumstance has occurred
which has had or could reasonably be expected to have a material adverse affect
on the business, assets or prospects of Borrower, which has not been fully and
accurately disclosed to Lender in writing prior to the date hereof.
8.18 SURVIVAL OF WARRANTIES; CUMULATIVE. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement and shall be deemed to have
been made again to Lender on the date of each additional borrowing or other
credit accommodation hereunder and shall be conclusively presumed to have been
relied on by Lender regardless of any investigation made or information
possessed by Lender. The representations and warranties set forth herein shall
be cumulative and in addition to any other representations or warranties which
Borrower shall now or hereafter give, or cause to be given, to Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 MAINTENANCE OF EXISTENCE.
(a) Borrower shall at all times preserve, renew and keep in full force and
effect its corporate existence and rights and franchises with respect thereto
and maintain in full force and effect all permits, licenses, trademarks,
tradenames, approvals, authorizations, leases and contracts necessary to carry
on the business as presently or proposed to be conducted.
(b) Borrower shall not change its name unless each of the following conditions
is satisfied: (i) Lender shall have received not less than thirty (30) days
prior written notice from Borrower of such proposed change in its corporate
name, which notice shall accurately set forth the new name; and (ii) Lender
shall have received a copy of the amendment
37
to the Certificate of Incorporation of Borrower providing for the name change
certified by the Secretary of State of the jurisdiction of incorporation or
organization of Borrower as soon as it is available.
(c) Borrower shall not change its chief executive office or its mailing address
or organizational identification number (or if it does not have one, shall not
acquire one) unless Lender shall have received not less than thirty (30) days'
prior written notice from Borrower of such proposed change, which notice shall
set forth such information with respect thereto as Lender may require and Lender
shall have received such agreements as Lender may reasonably require in
connection therewith. Borrower shall not change its type of organization,
jurisdiction of organization or other legal structure.
9.2 NEW COLLATERAL LOCATIONS. Borrower may only open any new location within the
continental United States provided Borrower (a) gives Lender thirty (30) days
prior written notice from Borrower of the intended opening of any such new
location and (b) executes and delivers, or causes to be executed and delivered,
to Lender such agreements, documents, and instruments as Lender may deem
necessary or desirable to protect its interests in the Collateral at such
location.
9.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC.
(a) Borrower shall, and shall cause any Subsidiary to, at all times, comply in
all material respects with all laws, rules, regulations, licenses, permits,
approvals and orders applicable to it and duly observe all requirements of any
foreign, Federal, State or local Governmental Authority, including ERISA, the
Code, the Occupational Safety and Health Act of 1970, as amended, the Fair Labor
Standards Act of 1938, as amended, and all statutes, rules, regulations, orders,
permits and stipulations relating to environmental pollution and employee health
and safety, including all of the Environmental Laws.
(b) Borrower shall give written notice to Lender immediately upon Borrower's
receipt of any notice of, or Borrower's otherwise obtaining knowledge of, (i)
the occurrence of any material event involving the release, spill or discharge,
threatened or actual, of any Hazardous Material or (ii) any material
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any material non-compliance with or violation of any
applicable Environmental Law by Borrower or (B) the release, spill or discharge,
threatened or actual, of any Hazardous Material other than in the ordinary
course of business and other than as permitted under any applicable
Environmental Law. Copies of all environmental surveys, audits, assessments,
feasibility studies and results of material remedial investigations shall be
promptly furnished, or caused to be furnished, by Borrower to Lender. Borrower
shall take prompt and appropriate action to respond to any non-compliance with
any of the Environmental Laws and shall regularly report to Lender on such
response.
(c) Without limiting the generality of the foregoing, whenever Lender reasonably
determines that there is material non-compliance, or any condition which
requires any action by or on behalf of Borrower in order to avoid any material
non-compliance, with any Environmental Law, Borrower shall, at Lender's request
and Borrower's expense: (i) cause an independent environmental engineer
acceptable to Lender to conduct such tests of the site where
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Borrower's non-compliance or alleged non-compliance with such Environmental Laws
has occurred as to such non-compliance and prepare and deliver to Lender a
report as to such non-compliance setting forth the results of such tests, a
proposed plan for responding to any environmental problems described therein,
and an estimate of the costs thereof and (ii) provide to Lender a supplemental
report of such engineer whenever the scope of such non-compliance, or Borrower's
response thereto or the estimated costs thereof, shall change in any material
respect.
(d) Borrower shall indemnify and hold harmless Lender, its directors, officers,
employees, agents, invitees, representatives, successors and assigns, from and
against any and all losses, claims, damages, liabilities, costs, and expenses
(including attorneys' fees and legal expenses) directly or indirectly arising
out of or attributable to the use, generation, manufacture, reproduction,
storage, release, threatened release, spill, discharge, disposal or presence of
a Hazardous Material, including the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of Borrower and the
preparation and implementation of any closure, remedial or other required plans.
All representations, warranties, covenants and indemnifications in this Section
9.3 shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.
9.4 PAYMENT OF TAXES AND CLAIMS. Borrower shall, and shall cause any Subsidiary
to, duly pay and discharge all taxes, assessments, contributions and
governmental charges upon or against it or its properties or assets, except for
taxes the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Borrower or such Subsidiary, as
the case may be, and with respect to which adequate reserves have been set aside
on its books. Borrower shall be liable for any tax or penalties imposed on
Lender as a result of the financing arrangements provided for herein and
Borrower agrees to indemnify and hold Lender harmless with respect to the
foregoing, and to repay to Lender on demand the amount thereof, and until paid
by Borrower such amount shall be added and deemed part of the Loans, PROVIDED,
THAT, nothing contained herein shall be construed to require Borrower to pay any
income or franchise taxes attributable to the income of Lender from any amounts
charged or paid hereunder to Lender. The foregoing indemnity shall survive the
payment of the Obligations and the termination or non-renewal of this Agreement.
9.5 INSURANCE. Borrower shall, and shall cause any Subsidiary to, at all times,
maintain with financially sound and reputable insurers, insurance with respect
to the Collateral against loss or damage and all other insurance of the kinds
and in the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated. Said policies of insurance shall be satisfactory to Lender as to form,
amount and insurer. Borrower shall furnish certificates, policies or
endorsements to Lender as Lender shall require as proof of such insurance, and,
if Borrower fails to do so, Lender is authorized, but not required, to obtain
such insurance at the expense of Borrower. All policies shall provide for at
least thirty (30) days prior written notice to Lender of any cancellation or
reduction of coverage and that Lender may act as attorney for Borrower in
obtaining, and at any time an Event of Default exists or has occurred and is
continuing, adjusting, settling, amending and canceling such insurance. Borrower
shall cause Lender to be named as a loss payee (except with respect to the
Vehicles) and an additional insured (but without any liability for any premiums)
under such insurance policies and Borrower shall obtain non-contributory
lender's loss payable endorsements to all insurance policies in form and
39
substance satisfactory to Lender. Such lender's loss payable endorsements shall
specify that the proceeds of such insurance shall be payable to Lender as its
interests may appear and further specify that Lender shall be paid regardless of
any act or omission by Borrower or any of its Affiliates. At its option, Lender
may apply any insurance proceeds received by Lender at any time to the cost of
repairs or replacement of Collateral and/or to payment of the Obligations,
whether or not then due, in any order and in such manner as Lender may determine
or hold such proceeds as cash collateral for the Obligations.
9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) Borrower shall, and shall cause any Subsidiary to, keep proper books and
records in which true and complete entries shall be made of all dealings or
transactions of or in relation to the Collateral and the business of Borrower
and its Subsidiaries in accordance with GAAP. Borrower shall promptly furnish to
Lender all such financial and other information as Lender shall reasonably
request relating to the Collateral and the assets, business and operations of
Borrower, and to notify the auditors and accountants of Borrower that Lender is
authorized to obtain such information directly from them. Without limiting the
foregoing, Borrower shall furnish or cause to be furnished to Lender, the
following: (i) within forty (40) days after the end of each fiscal month,
monthly unaudited consolidated financial statements, and unaudited consolidating
financial statements (including in each case balance sheets, statements of
income and loss, statements of cash flow, and statements of shareholders'
equity), all in reasonable detail, fairly presenting the financial position and
the results of the operations of Borrower and its Subsidiaries as of the end of
and through such fiscal month, certified to be correct by the chief financial
officer of Borrower, subject to normal year-end adjustments and accompanied by a
compliance certificate in form and substance acceptable to Lender, along with a
schedule in form reasonably satisfactory to Lender of the calculations used in
determining, as of the end of such month, whether Borrower was in compliance
with the covenant set forth in Section 9.17 of this Agreement for such month and
(ii) within one hundred twenty (120) days after the end of each fiscal year,
audited consolidated financial statements and audited consolidating financial
statements of Borrower and its Subsidiaries (including in each case balance
sheets, statements of income and loss, statements of cash flow and statements of
shareholders' equity), and the accompanying notes thereto, all in reasonable
detail, fairly presenting the financial position and the results of the
operations of Borrower and its Subsidiaries as of the end of and for such fiscal
year, together with the fully certified opinion of independent certified public
accountants, which accountants shall be an independent accounting firm selected
by Borrower and reasonably acceptable to Lender, that such financial statements
have been prepared in accordance with GAAP, and present fairly the results of
operations and financial condition of Borrower and its Subsidiaries as of the
end of and for the fiscal year then ended.
(b) Borrower shall promptly notify Lender in writing of the details of (i) any
material loss, damage, investigation, action, suit, proceeding or claim relating
to the Collateral or any other property which is security for the Obligations or
which would result in any material adverse change in Borrower's business,
properties, assets, goodwill or condition, financial or otherwise, (ii) any
Material Contract of Borrower being terminated or amended or any new Material
Contract entered into (in which event Borrower shall, if requested by Lender,
provide Lender with a copy of such Material Contract), (iii) any order, judgment
or decree in excess of $150,000.00 shall have been entered against Borrower or
any of its properties or assets, (iv) any
40
notification of material violation of laws or regulations received by Borrower,
(v) any ERISA Event, and (vi) the occurrence of any Default or Event of Default.
(c) Borrower shall promptly after the sending or filing thereof, furnish or
cause to be furnished to Lender copies of all reports, reasonably requested by
Lender from time to time, which Borrower sends to its stockholders generally and
copies of all reports and registration statements which Borrower files with the
Securities and Exchange Commission, any national securities exchange or the
National Association of Securities Dealers, Inc.
(d) Borrower shall furnish or cause to be furnished to Lender such budgets,
forecasts, projections and other information respecting the Collateral and the
business of Borrower, as Lender may, from time to time, reasonably request.
Lender is hereby authorized to deliver a copy of any financial statement or any
other information relating to the business of Borrower to any court or other
Governmental Authority or to any participant or assignee or prospective
participant or assignee. Borrower hereby irrevocably authorizes and directs all
accountants or auditors to deliver to Lender, at Borrower's expense, copies of
the financial statements of Borrower and any reports or management letters
prepared by such accountants or auditors on behalf of Borrower and to disclose
to Lender such information as they may have regarding the business of Borrower.
Any documents, schedules, invoices or other papers delivered to Lender may be
destroyed or otherwise disposed of by Lender one (1) year after the same are
delivered to Lender, except as otherwise designated by Borrower to Lender in
writing.
9.7 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC. Borrower shall not,
and shall not permit any Subsidiary to (and Lender does not authorize Borrower
to), directly or indirectly,
(a) merge into or with or consolidate with any other Person or permit any other
Person to merge into or with or consolidate with it; or
(b) sell, assign, lease, transfer, abandon or otherwise dispose of any Capital
Stock or Indebtedness to any other Person or any of the Collateral to any other
Person, except for (i) sales of Inventory in the ordinary course of business,
(ii) the disposition of worn-out or obsolete Equipment so long as (A) any
proceeds are paid to Lender and (B) such sales do not involve Equipment having
an aggregate fair market value in excess of $200,000.00 for all such Equipment
disposed of in any fiscal year of Borrower and (iii) the issuance and sale by
Borrower of Capital Stock of Borrower after the date hereof; PROVIDED, THAT, (A)
Lender shall have received not less than ten (10) Business Days prior written
notice of such issuance and sale by Borrower, which notice shall specify the
parties to whom such shares are to be sold, the terms of such sale, the total
amount which it is anticipated will be realized from the issuance and sale of
such stock and the net cash proceeds which it is anticipated will be received by
Borrower from such sale, (B) Borrower shall not be required to pay any cash
dividends or repurchase or redeem such Capital Stock or make any other payments
in respect thereof, (C) the terms of such Capital Stock, and the terms and
conditions of the purchase and sale thereof, shall not include any terms that
include any limitation on the right of Borrower to request or receive Loans or
Letter of Credit Accommodations or the right of Borrower to amend or modify any
of the terms and conditions of this Agreement or any of the other Financing
Agreements or otherwise in any way relate to or affect the arrangements of
Borrower with Lender or are more restrictive or
41
burdensome to Borrower than the terms of any Capital Stock in effect on the date
hereof, (D) except as Lender may otherwise agree in writing, all of the proceeds
from such sale and issuance shall be paid to Lender for application to the
Obligations in such order and manner as Lender may determine, and (E) as of the
date of such issuance and sale and after giving effect thereto, no Default or
Event of Default shall exist or have occurred;
(c) wind up, liquidate or dissolve; or
(d) agree to do any of the foregoing.
9.8 ENCUMBRANCES. Borrower shall not, and shall not permit any Subsidiary to,
create, incur, assume, suffer or permit to exist any security interest,
mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on
any of its assets or properties, including the Collateral, EXCEPT: (a) the
security interests and liens of Lender; (b) liens securing the payment of taxes,
either not yet overdue or the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Borrower or
such Subsidiary, as the case may be and with respect to which adequate reserves
have been set aside on its books; (c) non-consensual statutory liens (other than
liens securing the payment of taxes) arising in the ordinary course of
Borrower's or such Subsidiary's business to the extent: (i) such liens secure
Indebtedness which is not overdue or (ii) such liens secure Indebtedness
relating to claims or liabilities which are fully insured and being defended at
the sole cost and expense and at the sole risk of the insurer or being contested
in good faith by appropriate proceedings diligently pursued and available to
Borrower or such Subsidiary, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books; (d) zoning restrictions, easements,
licenses, covenants and other restrictions affecting the use of real property
which do not interfere in any material respect with the use of such real
property or ordinary conduct of the business of Borrower or such Subsidiary as
presently conducted thereon or materially impair the value of the real property
which may be subject thereto; (e) purchase money security interests in Equipment
and Vehicles (including Capital Leases) and purchase money mortgages on real
property to secure Indebtedness permitted under Section 9.9(b) hereof; and (f)
the security interests and liens set forth on the Information Certificate.
9.9 INDEBTEDNESS. Borrower shall not, and shall not permit any Subsidiary to,
incur, create, assume, become or be liable in any manner with respect to, suffer
or permit to exist, any Indebtedness or guarantee, assume, endorse, or otherwise
become responsible for (directly or indirectly) the performance, dividends or
other obligations of any Person, EXCEPT:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases) arising after the
date hereof to the extent secured by purchase money security interests in
Equipment and Vehicles (including Capital Leases) and purchase money mortgages
on real property not to exceed $150,000.00 in the aggregate at any time
outstanding so long as such security interests and mortgages do not apply to any
property of Borrower or any Subsidiary other than the Equipment or real property
so acquired, and the Indebtedness secured thereby does not exceed the cost of
the Equipment or real property so acquired, as the case may be;
42
(c) guarantees by any Subsidiaries of Borrower of the Obligations in favor
of Lenders;
(d) Indebtedness of Borrower under interest swap agreements, interest rate cap
agreements, interest rate collar agreements, interest rate exchange agreements
and similar contractual agreements entered into for the purpose of protecting a
Person against fluctuations in interest rates; PROVIDED, THAT, such arrangements
are with banks or other financial institutions that have combined capital and
surplus and undivided profits of not less than $250,000,000 and are not for
speculative purposes and such Indebtedness shall be unsecured;
(e) unsecured Indebtedness of Borrower arising after the date hereof to any
third person (other than Indebtedness otherwise permitted under this Section
9.9), PROVIDED, THAT, each of the following conditions is satisfied as
determined by Lender: (i) such Indebtedness shall be on terms and conditions
acceptable to Lender and shall be subject and subordinate in right of payment to
the right of Lender to receive the prior indefeasible payment and satisfaction
in full payment of all of the Obligations, pursuant to the terms of an
intercreditor agreement between Lender and such third party, in form and
substance satisfactory to Lender, (ii) Lender shall have received not less than
ten (10) days prior written notice of the intention of Borrower to incur such
Indebtedness, which notice shall set forth in reasonable detail satisfactory to
Lender the amount of such Indebtedness, the person or persons to whom such
Indebtedness will be owed, the interest rate, the schedule of repayments and
maturity date with respect thereto and such other information as Lender may
reasonably request with respect thereto, (iii) Lender shall have received true,
correct and complete copies of all agreements, documents and instruments
evidencing or otherwise related to such Indebtedness, (iv) except as Lender may
otherwise agree in writing, all of the proceeds of the loans or other
accommodations giving rise to such Indebtedness shall be paid to Lender for
application to the Obligations in such order and manner as Lender may determine,
(v) on and before the date of incurring such Indebtedness and after giving
effect thereto, no Default or Event of Default shall exist or have occurred,
(vi) Borrower shall not, directly or indirectly, (A) amend, modify, alter or
change the terms of such Indebtedness or any agreement, document or instrument
related thereto, EXCEPT, THAT, Borrower may, after prior written notice to
Lender, amend, modify, alter or change the terms thereof so as to extend the
maturity thereof, or defer the timing of any payments in respect thereof, or to
forgive or cancel any portion of such Indebtedness (other than pursuant to
payments thereof), or to reduce the interest rate or any fees in connection
therewith, or (B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness (except pursuant to regularly scheduled payments permitted herein),
or set aside or otherwise deposit or invest any sums for such purpose, and (vii)
Borrower shall furnish to Lender all notices or demands in connection with such
Indebtedness either received by Borrower or on its behalf promptly after the
receipt thereof, or sent by Borrower or on its behalf concurrently with the
sending thereof, as the case may be;
(f) the Indebtedness set forth on the Information Certificate; PROVIDED, THAT,
(i) Borrower may only make regularly scheduled payments of principal and
interest in respect of such Indebtedness in accordance with the terms of the
agreement or instrument evidencing or giving rise to such Indebtedness, as in
effect on the date hereof, (ii) Borrower shall not, directly or indirectly, (A)
amend, modify, alter or change the terms of such Indebtedness or any agreement,
document or instrument related thereto as in effect on the date hereof EXCEPT,
THAT, Borrower may, after prior written notice to Lender, amend, modify, alter
or change the terms
43
thereof so as to extend the maturity thereof, or defer the timing of any
payments in respect thereof, or to forgive or cancel any portion of such
Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, and (iii) Borrower shall
furnish to Lender all notices or demands in connection with such Indebtedness
either received by Borrower or on its behalf, promptly after the receipt
thereof, or sent by Borrower or on its behalf, concurrently with the sending
thereof, as the case may be.
9.10 LOANS, INVESTMENTS, ETC. Borrower shall not, and shall not permit any
Subsidiary to, directly or indirectly, make, or suffer or permit to exist, any
loans or advance money or property to any person, or any investment in (by
capital contribution, dividend or otherwise) or purchase or repurchase the
Capital Stock or Indebtedness or all or a substantial part of the assets or
property of any person, or form or acquire any Subsidiaries, or form or invest
in any joint venture(s), or agree to do any of the foregoing, EXCEPT:
(a) the endorsement of instruments for collection or deposit in the ordinary
course of business;
(b) investments in cash or Cash Equivalents, PROVIDED, THAT, (i) no Revolving
Loans are then outstanding and (ii) the terms and conditions of Section 5.2
hereof shall have been satisfied with respect to the deposit account or
investment account in which such cash or Cash Equivalents are held;
(c) the existing equity investments of Borrower as of the date hereof in its
Subsidiaries, PROVIDED, THAT, Borrower shall have no obligation to make any
other investment in, or loans to, or other payments in respect of, any such
Subsidiaries;
(d) equity investments of Borrower in any wholly-owned Subsidiary incorporated
under the laws of any State of the United States of America or any joint venture
formed or acquired after the date hereof, PROVIDED, THAT, (i) promptly upon such
formation or acquisition, Borrower shall cause any such Subsidiary to execute
and deliver to Lender, in form and substance satisfactory to Lender, (A) an
absolute and unconditional guarantee of payment of the Obligations, (B) a
security agreement granting to Lender a first security interest and lien (except
as otherwise consented to in writing by Lender) upon all of the assets of such
Subsidiary, and (C) such other agreements, documents and instruments as Lender
may require, including, but not limited to, supplements and amendments hereto
and other loan agreements or instruments evidencing Indebtedness of such new
Subsidiary to Lender, (ii) promptly upon Lender's request: (A) Borrower shall
execute and deliver to Lender, in form and substance satisfactory to Lender, a
pledge and security agreement granting to Lender a first pledge of and lien on
all of the issued and outstanding shares of Capital Stock of such Subsidiary,
and (B) Borrower shall deliver the original stock certificates evidencing such
shares of Capital Stock (or such other evidence as may be issued in the case of
a limited liability company or other entity) together with stock powers with
respect thereto duly executed in blank (or the equivalent thereof in the case of
a limited liability company), (iii) as of the date of any payment in respect of
such investment and after giving effect thereto, no Default or Event of Default
shall exist or have occurred, (iv) in no event shall the aggregate amount of all
capital contributions, investments or other amounts paid by
44
Borrower to any Subsidiary formed or acquired after the date hereof or to any
other person for or otherwise in connection with the formation or acquisition
thereof or any joint venture exceed $75,000.00, and (v) as of the date of any
payment in respect of such investment and after giving effect thereto, Excess
Availability (A) shall be not less than $250,000.00 and (B) for each of the
immediately preceding thirty (30) consecutive days shall have been not less than
$250,000.00;
(e) stock or obligations issued to Borrower by any Person (or the representative
of such Person) in respect of Indebtedness of such Person owing to Borrower in
connection with the insolvency, bankruptcy, receivership or reorganization of
such Person or a composition or readjustment of the debts of such Person;
PROVIDED, THAT, the original of any such stock or instrument evidencing such
obligations shall be promptly delivered to Lender, upon Lender's request,
together with such stock power, assignment or endorsement by Borrower as Lender
may request;
(f) obligations of account debtors to Borrower arising from Accounts which are
past due evidenced by a promissory note made by such account debtor payable to
Borrower; PROVIDED, THAT, promptly upon the receipt of the original of any such
promissory note by Borrower, such promissory note shall be endorsed to the order
of Lender by Borrower and promptly delivered to Lender as so endorsed;
(g) the loans and advances set forth on the Information Certificate; PROVIDED,
THAT, as to such loans and advances, (i) Borrower shall not, directly or
indirectly, amend, modify, alter or change the terms of such loans and advances
or any agreement, document or instrument related thereto and (ii) Borrower shall
furnish to Lender all notices or demands in connection with such loans and
advances either received by Borrower or on its behalf, promptly after the
receipt thereof, or sent by Borrower or on its behalf, concurrently with the
sending thereof, as the case may be.
9.11 DIVIDENDS AND REDEMPTIONS. Borrower shall not, directly or indirectly,
declare or pay any dividends on account of any shares of class of Capital Stock
of Borrower or such Subsidiary now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of Capital Stock
(or set aside or otherwise deposit or invest any sums for such purpose) for any
consideration or apply or set apart any sum, or make any other distribution (by
reduction of capital or otherwise) in respect of any such shares or agree to do
any of the foregoing, except (a) in any case in the form of shares of Capital
Stock consisting of common stock and (b) any Subsidiary of Borrower may pay any
dividends to Borrower.
9.12 TRANSACTIONS WITH AFFILIATES. Borrower shall not, directly or indirectly,
(a) purchase, acquire or lease any property from, or sell, transfer or lease any
property to, any officer, director, agent or other person affiliated with
Borrower, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's business and upon fair and reasonable terms no less
favorable to the Borrower than Borrower would obtain in a comparable arm's
length transaction with an unaffiliated person or (b) make any payments of
management, consulting or other fees for management or similar services, or of
any Indebtedness owing to any officer, employee, shareholder, director or other
Affiliate of Borrower except reasonable
45
compensation to officers, employees and directors for services rendered to
Borrower in the ordinary course of business.
9.13 COMPLIANCE WITH ERISA. Borrower shall and shall cause each of its ERISA
Affiliates to: (a) maintain each Plan (other than a Multiemployer Plan) in
compliance, in all material respects, with the applicable provisions of ERISA,
the Code and other Federal and State law; (b) cause each Plan which is qualified
under Section 401(a) of the Code to maintain such qualification; (c) not
terminate any of such Plans so as to incur any liability to the Pension Benefit
Guaranty Corporation; (d) not allow or suffer to exist any prohibited
transaction involving any of such Plans or any trust created thereunder which
would subject Borrower or such ERISA Affiliate to a tax or penalty or other
liability on prohibited transactions imposed under Section 4975 of the Code or
ERISA; (e) make all required contributions to any Plan which it is obligated to
pay under Section 302 of ERISA, Section 412 of the Code or the terms of such
Plan; (f) not allow or suffer to exist any accumulated funding deficiency,
whether or not waived, with respect to any such Plan; or (g) not allow or suffer
to exist any occurrence of a reportable event or any other event or condition
which presents a material risk of termination by the Pension Benefit Guaranty
Corporation of any such Plan that is a single employer plan, which termination
could result in any liability to the Pension Benefit Guaranty Corporation.
9.14 END OF FISCAL YEARS: FISCAL QUARTERS. Borrower shall, for financial
reporting purposes, cause its, and each of its Subsidiaries' (a) fiscal years to
end on June 30 of each year and (b) fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
9.15 CHANGE IN BUSINESS. Borrower shall not engage in any business other than
the business of Borrower on the date hereof and any business reasonably related,
ancillary or complimentary to the business in which Borrower is engaged on the
date hereof.
9.16 LIMITATION OF RESTRICTIONS AFFECTING SUBSIDIARIES. Borrower shall not,
directly, or indirectly, create or otherwise cause or suffer to exist any
encumbrance or restriction which prohibits or limits the ability of any
Subsidiary of Borrower to (a) pay dividends or make other distributions or pay
any Indebtedness owed to Borrower or any Subsidiary of Borrower; (b) make loans
or advances to Borrower or any Subsidiary of Borrower, (c) transfer any of its
properties or assets to Borrower or any Subsidiary of Borrower; or (d) create,
incur, assume or suffer to exist any lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, other than encumbrances and
restrictions arising under (i) applicable law, (ii) this Agreement, (iii)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of Borrower or any of its Subsidiaries, (iv) customary
restrictions on dispositions of Real Property interests found in reciprocal
easement agreements of Borrower or its Subsidiary, (v) any agreement relating to
permitted Indebtedness incurred by a Subsidiary of Borrower prior to the date on
which such Subsidiary was acquired by Borrower and outstanding on such
acquisition date, and (vi) the extension or continuation of contractual
obligations in existence on the date hereof; PROVIDED, THAT, any such
encumbrances or restrictions contained in such extension or continuation are no
less favorable to Lender than those encumbrances and restrictions under or
pursuant to the contractual obligations so extended or continued.
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9.17 BOOK NET WORTH. Borrower shall, at all times, maintain Book Net Worth of
not less than $4,500,000.00 during Borrower's fiscal year ending June 30, 2003,
and $5,000,000.00 thereafter.
9.18 LICENSE AGREEMENTS.
(a) Borrower shall (i) promptly and faithfully observe and perform all of the
material terms, covenants, conditions and provisions of the material License
Agreements to be observed and performed by it, at the times set forth therein,
if any, (ii) not do, permit, suffer or refrain from doing anything which could
reasonably be expected to result in a default under or breach of any of the
terms of any material License Agreement, (iii) not cancel, surrender, modify,
amend, waive or release any material License Agreement in any material respect
or any term, provision or right of the licensee thereunder in any material
respect, or consent to or permit to occur any of the foregoing; EXCEPT, THAT,
subject to Section 9.18(b) below, Borrower may cancel, surrender or release any
material License Agreement in the ordinary course of the business of Borrower;
PROVIDED, THAT, Borrower shall give Lender not less than thirty (30) days prior
written notice of its intention to so cancel, surrender and release any such
material License Agreement, (iv) give Lender prompt written notice of any
material License Agreement entered into by Borrower after the date hereof,
together with a true, correct and complete copy thereof and such other
information with respect thereto as Lender may request, (v) give Lender prompt
written notice of any material breach of any obligation, or any default, by any
party under any material License Agreement, and deliver to Lender (promptly upon
the receipt thereof by Borrower in the case of a notice to Borrower, and
concurrently with the sending thereof in the case of a notice from Borrower) a
copy of each notice of default and every other notice and other communication
received or delivered by Borrower in connection with any material License
Agreement which relates to the right of Borrower to continue to use the property
subject to such License Agreement, and (vi) furnish to Lender, promptly upon the
request of Lender, such information and evidence as Lender may require from time
to time concerning the observance, performance and compliance by Borrower or the
other party or parties thereto with the terms, covenants or provisions of any
material License Agreement.
(b) Borrower will either exercise any option to renew or extend the term of each
material License Agreement in such manner as will cause the term of such
material License Agreement to be effectively renewed or extended for the period
provided by such option and give prompt written notice thereof to Lender or give
Lender prior written notice that Borrower does not intend to renew or extend the
term of any such material License Agreement or that the term thereof shall
otherwise be expiring, not less than sixty (60) days prior to the date of any
such non-renewal or expiration. In the event of the failure of any Borrower to
extend or renew any material License Agreement, Lender shall have, and is hereby
granted, the irrevocable right and authority, at its option, to renew or extend
the term of such material License Agreement, whether in its own name and behalf,
or in the name and behalf of a designee or nominee of Lender or in the name and
behalf of Borrower, as Lender shall determine at any time that an Event of
Default shall exist or have occurred and be continuing. Lender may, but shall
not be required to, perform any or all of such obligations of any Borrower under
any of the License Agreements, including, but not limited to, the payment of any
or all sums due from Borrower thereunder. Any sums so paid by Lender shall
constitute part of the Obligations.
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9.19 COSTS AND EXPENSES. Borrower shall pay to Lender on demand all costs,
expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Lender's
rights in the Collateral, this Agreement, the other Financing Agreements and all
other documents related hereto or thereto, including any amendments, supplements
or consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including: (a) all costs and
expenses of filing or recording (including Uniform Commercial Code financing
statement filing taxes and fees, documentary taxes, intangibles taxes and
mortgage recording taxes and fees, if applicable); (b) costs and expenses and
fees for insurance premiums, environmental audits, surveys, assessments,
engineering reports and inspections, appraisal fees and search fees, costs and
expenses of remitting loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the Blocked Accounts, together with
Lender's customary charges and fees with respect thereto; (c) charges, fees or
expenses charged by any bank or issuer in connection with the Letter of Credit
Accommodations; (d) costs and expenses of preserving and protecting the
Collateral; (e) costs and expenses paid or incurred in connection with obtaining
payment of the Obligations, enforcing the security interests and liens of
Lender, selling or otherwise realizing upon the Collateral, and otherwise
enforcing the provisions of this Agreement and the other Financing Agreements or
defending any claims made or threatened against Lender arising out of the
transactions contemplated hereby and thereby (including preparations for and
consultations concerning any such matters); (f) all out-of-pocket expenses and
costs heretofore and from time to time hereafter incurred by Lender during the
course of periodic field examinations of the Collateral and Borrower's
operations, plus a per diem charge at the rate of $750 per person per day (not
to exceed the aggregate of $12,000.00 per annum, excluding the initial survey
and pre-funding update costs and in the absence of an Event of Default) for
Lender's examiners in the field and office; and (g) the disbursements and
reasonable fees of counsel (including legal assistants) to Lender in connection
with any of the foregoing.
9.20 FURTHER ASSURANCES. At the request of Lender at any time and from time to
time, Borrower shall, at its expense, duly execute and deliver, or cause to be
duly executed and delivered, such further agreements, documents and instruments,
and do or cause to be done such further acts as may be necessary or proper to
evidence, perfect, maintain and enforce the security interests and the priority
thereof in the Collateral and to otherwise effectuate the provisions or purposes
of this Agreement or any of the other Financing Agreements. Lender may at any
time and from time to time request a certificate from an officer of Borrower
representing that all conditions precedent to the making of Loans and providing
Letter of Credit Accommodations contained herein are satisfied. In the event of
such request by Lender, Lender may, at its option, cease to make any further
Loans or provide any further Letter of Credit Accommodations until Lender has
received such certificate and, in addition, Lender has determined that such
conditions are satisfied.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 EVENTS OF DEFAULT. The occurrence or existence of any one or more of the
following events are referred to herein individually as an "Event of Default",
and collectively as "Events of Default":
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(a) (i) Borrower fails to pay when due any of the Obligations or (ii) Borrower
or any Obligor fails to perform any of the covenants contained in Sections
9.6(c), 9.6(d) and 9.20 of this Agreement and such failure shall continue for
fifteen (15) days; PROVIDED, THAT, such fifteen (15) day period shall not apply
in the case of: (A) any failure to observe any such covenant which is not
capable of being cured at all or within such fifteen (15) day period or which
has been the subject of at least two (2) prior failures within a six (6) month
period or (B) an intentional breach of Borrower or any Obligor of any such
covenant or (iii) Borrower fails to perform any of the terms, covenants,
conditions or provisions contained in this Agreement or any of the other
Financing Agreements other than those described in Sections 10.1(a)(i) and
10.1(a)(ii) above;
(b) any representation, warranty or statement of fact made by Borrower to Lender
in this Agreement, the other Financing Agreements or any other agreement,
schedule, confirmatory assignment or otherwise shall, when made or deemed made,
be false or misleading in any material respect;
(c) any Obligor revokes, terminates or fails to perform any of the terms,
covenants, conditions or provisions of any guarantee, endorsement or other
agreement of such party in favor of Lender;
(d) any judgment for the payment of money is rendered against Borrower or any
Obligor in excess of $275,000.00 in any one case or in excess of $275,000.00 in
the aggregate and shall remain undischarged or unvacated for a period in excess
of thirty (30) days or execution shall at any time not be effectively stayed, or
any judgment other than for the payment of money, or injunction, attachment,
garnishment or execution is rendered against Borrower or any Obligor or any of
their assets;
(e) any Obligor (being a natural person or a general partner of an Obligor which
is a partnership) dies or Borrower or any Obligor, which is a partnership,
limited liability company, limited liability partnership or a corporation,
dissolves or suspends or discontinues doing business;
(f) Borrower or any Obligor becomes insolvent (however defined or evidenced),
makes an assignment for the benefit of creditors, makes or sends notice of a
bulk transfer or calls a meeting of its creditors or principal creditors;
(g) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at law or in equity) is
filed against Borrower or any Obligor or all or any part of its properties and
such petition or application is not dismissed within thirty (30) days after the
date of its filing or Borrower or any Obligor shall file any answer admitting or
not contesting such petition or application or indicates its consent to,
acquiescence in or approval of, any such action or proceeding or the relief
requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership,
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readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at a law or equity) is filed by
Borrower or any Obligor or for all or any part of its property; or
(i) any default by Borrower or any Obligor in respect any Indebtedness (other
than Indebtedness owing to Lender), in any case in an amount in excess of
$100,000.00, which default continues for more than the applicable cure period,
if any, with respect thereto, or any default by Borrower or any Obligor under
any Material Contract, which default continues for more than the applicable cure
period, if any, with respect thereto;
(j) any bank at which any deposit account of Borrower is maintained shall fail
to comply with any of the terms of any Deposit Account Control Agreement to
which such bank is a party or any securities intermediary, commodity
intermediary or other financial institution at any time in custody, control or
possession of any investment property of Borrower shall fail to comply with any
of the terms of any Investment Property Control Agreement to which such person
is a party;
(k) any material provision hereof or of any of the other Financing Agreements
shall for any reason cease to be valid, binding and enforceable with respect to
any party hereto or thereto (other than Lender) in accordance with its terms, or
any such party shall challenge the enforceability hereof or thereof, or shall
assert in writing, or take any action or fail to take any action based on the
assertion that any provision hereof or of any of the other Financing Agreements
has ceased to be or is otherwise not valid, binding or enforceable in accordance
with its terms, or any security interest provided for herein or in any of the
other Financing Agreements shall cease to be a valid and perfected first
priority security interest in any of the Collateral purported to be subject
thereto (except as otherwise permitted herein or therein);
(l) an ERISA Event shall occur which results in or could reasonably be expected
to result in liability of Borrower in an aggregate amount in excess of
$250,000.00;
(m) any Change of Control;
(n) the indictment by any Governmental Authority, or as Lender may reasonably
and in good faith determine, the threatened indictment by any Governmental
Authority of Borrower or any Obligor of which Borrower, any Obligor or Lender
receives notice, in either case, as to which there is a reasonable possibility
of an adverse determination, in the good faith determination of Lender, under
any criminal statute, or commencement or threatened commencement of criminal or
civil proceedings against Borrower, pursuant to which statute or proceedings the
penalties or remedies sought or available include forfeiture of (i) any of the
Collateral having a value in excess of $25,000.00 or (ii) any other property of
Borrower which is necessary or material to the conduct of its business;
(o) there shall be a material adverse change in the business, assets or
prospects of Borrower or any Obligor after the date hereof; or
(p) there shall be an event of default under any of the other Financing
Agreements.
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10.2 REMEDIES.
(a) At any time an Event of Default exists or has occurred and is continuing,
Lender shall have all rights and remedies provided in this Agreement, the other
Financing Agreements, the UCC and other applicable law, all of which rights and
remedies may be exercised without notice to or consent by Borrower or any
Obligor, except as such notice or consent is expressly provided for hereunder or
required by applicable law. All rights, remedies and powers granted to Lender
hereunder, under any of the other Financing Agreements, the UCC or other
applicable law, are cumulative, not exclusive and enforceable, in Lender's
discretion, alternatively, successively, or concurrently on any one or more
occasions, and shall include, without limitation, the right to apply to a court
of equity for an injunction to restrain a breach or threatened breach by
Borrower of this Agreement or any of the other Financing Agreements. Lender may,
at any time or times, proceed directly against Borrower or any Obligor to
collect the Obligations without prior recourse to any Obligor or any of the
Collateral.
(b) Without limiting the foregoing, at any time an Event of Default exists or
has occurred and is continuing, Lender may, in its discretion and, without
limitation, (i) accelerate the payment of all Obligations and demand immediate
payment thereof to Lender (PROVIDED, THAT, upon the occurrence of any Event of
Default described in Sections 10.1(g) and 10.1(h), all Obligations shall
automatically become immediately due and payable), (ii) with or without judicial
process or the aid or assistance of others, enter upon any premises on or in
which any of the Collateral may be located and take possession of the Collateral
or complete processing, manufacturing and repair of all or any portion of the
Collateral, (iii) require Borrower, at Borrower's expense, to assemble and make
available to Lender any part or all of the Collateral at any place and time
designated by Lender, (iv) collect, foreclose, receive, appropriate, setoff and
realize upon any and all Collateral, (v) remove any or all of the Collateral
from any premises on or in which the same may be located for the purpose of
effecting the sale, foreclosure or other disposition thereof or for any other
purpose, (vi) sell, lease, transfer, assign, deliver or otherwise dispose of any
and all Collateral (including entering into contracts with respect thereto,
public or private sales at any exchange, broker's board, at any office of Lender
or elsewhere) at such prices or terms as Lender may deem reasonable, for cash,
upon credit or for future delivery, with the Lender having the right to purchase
the whole or any part of the Collateral at any such public sale, all of the
foregoing being free from any right or equity of redemption of Borrower, which
right or equity of redemption is hereby expressly waived and released by
Borrower and/or (vii) terminate this Agreement. If any of the Collateral is sold
or leased by Lender upon credit terms or for future delivery, the Obligations
shall not be reduced as a result thereof until payment therefor is finally
collected by Lender. If notice of disposition of Collateral is required by law,
ten (10) days prior notice by Lender to Borrower designating the time and place
of any public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable notice
thereof and Borrower waives any other notice. In the event Lender institutes an
action to recover any Collateral or seeks recovery of any Collateral by way of
prejudgment remedy, Borrower waives the posting of any bond which might
otherwise be required. At any time an Event of Default exists or has occurred
and is continuing, upon Lender's request, Borrower will either, as Lender shall
specify, furnish cash collateral to the issuer to be used to secure and fund
Lender's reimbursement obligations to the issuer in connection with any Letter
of Credit Accommodations or furnish cash collateral to Lender for the Letter of
Credit Accommodations. Such cash
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collateral shall be in the amount equal to one hundred (110%) percent of the
amount of the Letter of Credit Accommodations plus the amount of any fees and
expenses payable in connection therewith through the end of the expiration of
such Letter of Credit Accommodations.
(c) Lender may, at any time or times that an Event of Default exists or has
occurred and is continuing, enforce Borrower's rights against any account
debtor, secondary obligor or other obligor in respect of any of the Accounts or
other Receivables. Without limiting the generality of the foregoing, Lender may
at such time or times (i) notify any or all account debtors, secondary obligors
or other obligors in respect thereof that the Receivables have been assigned to
Lender and that Lender has a security interest therein and Lender may direct any
or all account debtors, secondary obligors and other obligors to make payment of
Receivables directly to Lender, (ii) extend the time of payment of, compromise,
settle or adjust for cash, credit, return of merchandise or otherwise, and upon
any terms or conditions, any and all Receivables or other obligations included
in the Collateral and thereby discharge or release the account debtor or any
secondary obligors or other obligors in respect thereof without affecting any of
the Obligations, (iii) demand, collect or enforce payment of any Receivables or
such other obligations, but without any duty to do so, and Lender shall not be
liable for its failure to collect or enforce the payment thereof nor for the
negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Lender may deem necessary or desirable for the protection
of its interests. At any time that an Event of Default exists or has occurred
and is continuing, at Lender's request, all invoices and statements sent to any
account debtor shall state that the Accounts and such other obligations have
been assigned to Lender and are payable directly and only to Lender and Borrower
shall deliver to Lender such originals of documents evidencing the sale and
delivery of goods or the performance of services giving rise to any Accounts as
Lender may require. In the event any account debtor returns Inventory when an
Event of Default exists or has occurred and is continuing, Borrower shall, upon
Lender's request, hold the returned Inventory in trust for Lender, segregate all
returned Inventory from all of its other property, dispose of the returned
Inventory solely according to Lender's instructions, and not issue any credits,
discounts or allowances with respect thereto without Lender's prior written
consent.
(d) To the extent that applicable law imposes duties on Lender to exercise
remedies in a commercially reasonable manner (which duties cannot be waived
under such law), Borrower acknowledges and agrees that it is not commercially
unreasonable for Lender (i) to fail to incur expenses reasonably deemed
significant by Lender to prepare Collateral for disposition or otherwise to
complete raw material or work in process into finished goods or other finished
products for disposition, (ii) to fail to obtain third party consents for access
to Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain consents of any Governmental Authority or other third party
for the collection or disposition of Collateral to be collected or disposed of,
(iii) to fail to exercise collection remedies against account debtors, secondary
obligors or other persons obligated on Collateral or to remove liens or
encumbrances on or any adverse claims against Collateral, (iv) to exercise
collection remedies against account debtors and other persons obligated on
Collateral directly or through the use of collection agencies and other
collection specialists, (v) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (vi) to contact other persons, whether or not in the
same business as Borrower for expressions of interest in acquiring all or any
portion of the Collateral, (vii) to hire one or more
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professional auctioneers to assist in the disposition of Collateral, whether or
not the collateral is of a specialized nature, (viii) to dispose of Collateral
by utilizing Internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing so,
or that match buyers and sellers of assets, (ix) to dispose of assets in
wholesale rather than retail markets, (x) to disclaim disposition warranties,
(xi) to purchase insurance or credit enhancements to insure Lender against risks
of loss, collection or disposition of Collateral or to provide to Lender a
guaranteed return from the collection or disposition of Collateral, or (xii) to
the extent deemed appropriate by Lender, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist
Lender in the collection or disposition of any of the Collateral. Borrower
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by Lender would not be commercially
unreasonable in Lender's exercise of remedies against the Collateral and that
other actions or omissions by Lender shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section. Without
limitation of the foregoing, nothing contained in this Section shall be
construed to grant any rights to Borrower or to impose any duties on Lender that
would not have been granted or imposed by this Agreement or by applicable law in
the absence of this Section.
(e) For the purpose of enabling Lender to exercise the rights and remedies
hereunder, Borrower hereby grants to Lender, to the extent assignable, an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to Borrower) to use, assign, license or sublicense any of the
trademarks, service-marks, trade names, business names, trade styles, designs,
logos and other source of business identifiers and other Intellectual Property
and general intangibles now owned or hereafter acquired by Borrower, wherever
the same may be located, including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout thereof.
(f) Lender may apply the cash proceeds of Collateral actually received by Lender
from any sale, lease, foreclosure or other disposition of the Collateral to
payment of the Obligations, in whole or in part and in such order as Lender may
elect, whether or not then due. Borrower shall remain liable to Lender for the
payment of any deficiency with interest at the highest rate provided for herein
and all costs and expenses of collection or enforcement, including attorneys'
fees and legal expenses.
(g) Without limiting the foregoing, upon the occurrence of a Default or Event of
Default, Lender may, at its option, without notice, (i) cease making Loans or
arranging for Letter of Credit Accommodations or reduce the lending formulas or
amounts of Revolving Loans and Letter of Credit Accommodations available to
Borrower and/or (ii) terminate any provision of this Agreement providing for any
future Loans or Letter of Credit Accommodations to be made by Lender to
Borrower.
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SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL WAIVER.
(a) The validity, interpretation and enforcement of this Agreement and the other
Financing Agreements and any dispute arising out of the relationship between the
parties hereto, whether in contract, tort, equity or otherwise, shall be
governed by the internal laws of the State of Florida (without giving effect to
principles of conflicts of law).
(b) Borrower and Lender irrevocably consent and submit to the non-exclusive
jurisdiction of the State of Florida and the United States District Court for
the Southern District of Florida, whichever Lender may elect, and waive any
objection based on venue or FORUM NON CONVENIENS with respect to any action
instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental to the dealings
of the parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and whether in contract, tort, equity or
otherwise, and agree that any dispute with respect to any such matters shall be
heard only in the courts described above (except that Lender shall have the
right to bring any action or proceeding against Borrower or its property in the
courts of any other jurisdiction which Lender deems necessary or appropriate in
order to realize on the Collateral or to otherwise enforce its rights against
Borrower or its property).
(c) Borrower hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by certified mail (return
receipt requested) directed to its address set forth herein and service so made
shall be deemed to be completed five (5) days after the same shall have been so
deposited in the U.S. mails, or, at Lender's option, by service upon Borrower in
any other manner provided under the rules of any such courts. Within twenty (20)
days after such service, Borrower shall appear in answer to such process,
failing which Borrower shall be deemed in default and judgment may be entered by
Lender against Borrower for the amount of the claim and other relief requested.
(d) BORROWER AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY
OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT
OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR
THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN
CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER AND LENDER EACH HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER OR LENDER MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
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(e) Lender shall not have any liability to Borrower (whether in tort, contract,
equity or otherwise) for losses suffered by Borrower in connection with, arising
out of, or in any way related to the transactions or relationships contemplated
by this Agreement, or any act, omission or event occurring in connection
herewith, unless it is determined by a final and non-appealable judgment or
court order binding on Lender, that the losses were the result of acts or
omissions constituting gross negligence or willful misconduct of Lender. In any
such litigation, Lender shall be entitled to the benefit of the rebuttable
presumption that it acted in good faith and with the exercise of ordinary care
in the performance by it of the terms of this Agreement. Except as prohibited by
law, Borrower waives any right which it may have to claim or recover in any
litigation with Lender any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual damages. Borrower: (i)
certifies that neither Lender nor any representative, agent or attorney acting
for or on behalf of Lender has represented, expressly or otherwise, that Lender
would not, in the event of litigation, seek to enforce any of the waivers
provided for in this Agreement or any of the other Financing Agreements and (ii)
acknowledges that in entering into this Agreement and the other Financing
Agreements, Lender is relying upon, among other things, the waivers and
certifications set forth in this Section 11.1 and elsewhere herein and therein.
11.2 WAIVER OF NOTICES. Borrower hereby expressly waives demand, presentment,
protest and notice of protest and notice of dishonor with respect to any and all
instruments and chattel paper, included in or evidencing any of the Obligations
or the Collateral, and any and all other demands and notices of any kind or
nature whatsoever with respect to the Obligations, the Collateral and this
Agreement, except such as are expressly provided for herein. No notice to or
demand on Borrower which Lender may elect to give shall entitle Borrower to any
other or further notice or demand in the same, similar or other circumstances.
11.3 AMENDMENTS AND WAIVERS. Neither this Agreement nor any provision hereof
shall be amended, modified, waived or discharged orally or by course of conduct,
but only by a written agreement signed by an authorized officer of Lender, and
as to amendments, as also signed by an authorized officer of Borrower. Lender
shall not, by any act, delay, omission or otherwise be deemed to have expressly
or impliedly waived any of its rights, powers and/or remedies unless such waiver
shall be in writing and signed by an authorized officer of Lender. Any such
waiver shall be enforceable only to the extent specifically set forth therein. A
waiver by Lender of any right, power and/or remedy on any one occasion shall not
be construed as a bar to or waiver of any such right, power and/or remedy which
Lender would otherwise have on any future occasion, whether similar in kind or
otherwise.
11.4 WAIVER OF COUNTERCLAIMS. Borrower waives all rights to interpose any
claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
11.5 INDEMNIFICATION. Borrower shall indemnify and hold Lender, and its
directors, agents, employees and counsel, harmless from and against any and all
losses, claims, damages, liabilities, costs or expenses imposed on, incurred by
or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
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administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of
counsel. To the extent that the undertaking to indemnify, pay and hold harmless
set forth in this Section may be unenforceable because it violates any law or
public policy, Borrower shall pay the maximum portion which it is permitted to
pay under applicable law to Lender in satisfaction of indemnified matters under
this Section. To the extent permitted by applicable law, Borrower shall not
assert, and Borrower hereby waives, any claim against Lender, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement, any of the other Financing Agreements or any undertaking or
transaction contemplated hereby. The foregoing indemnity shall survive the
payment of the Obligations and the termination or non-renewal of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 TERM.
(a) This Agreement and the other Financing Agreements shall become effective as
of the date set forth on the first page hereof and shall continue in full force
and effect, unless sooner terminated pursuant to the terms hereof, for a term
ending on the date three (3) years from the date hereof (the "Renewal Date"),
and from year to year thereafter unless Lender or Borrower furnishes sixty (60)
days prior written notice to the other party hereto, stating its intention not
to extend (or further extend) the Renewal Date or any subsequent annual
extension thereof; PROVIDED, THAT, this Agreement and all other Financing
Agreements must be terminated simultaneously. In addition, Borrower may
terminate this Agreement at any time upon ten (10) days prior written notice to
Lender (which notice shall be irrevocable) and Lender may terminate this
Agreement at any time on or after an Event of Default. Upon the effective date
of termination or non-renewal of this Agreement, Borrower shall pay to Lender,
in full, all outstanding and unpaid Obligations and shall furnish cash
collateral to Lender (or at Lender's option, a letter of credit issued for the
account of Borrower and at Borrower's expense, in form and substance
satisfactory to Lender, by an issuer acceptable to Lender and payable to Lender
as beneficiary) in such amounts as Lender determines are reasonably necessary to
secure (or reimburse) Lender from loss, cost, damage or expense, including
attorneys' fees and legal expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the Obligations and/or as
to which Lender has not yet received final and indefeasible payment. Such
payments in respect of the Obligations and cash collateral shall be remitted by
wire transfer in Federal funds to such bank account of Lender, as Lender may, in
its discretion, designate in writing to Borrower for such purpose. Interest
shall be due until and including the next Business Day, if the amounts so paid
by Borrower to the bank account designated by Lender are received in such bank
account later than 12:00 noon, Miami, Florida time.
(b) No termination of this Agreement or the other Financing Agreements shall
relieve or discharge Borrower of its respective duties, obligations and
covenants under this Agreement or the other Financing Agreements until all
Obligations have been fully and finally discharged and paid, and Lender's
continuing security interest in the Collateral and the rights and
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remedies of Lender hereunder, under the other Financing Agreements and
applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid. Accordingly, Borrower waives any rights
which it may have under the UCC to demand the filing of termination statements
with respect to the Collateral, and Lender shall not be required to send such
termination statements to Borrower, or to file them with any filing office,
unless and until this Agreement is terminated in accordance with its terms and
all of the Obligations are paid and satisfied in full in immediately available
funds; PROVIDED, HOWEVER, that Lender shall, in connection with the sale of or
financing for any patent collaterally assigned to secure the Obligations,
release its security interest in any such patent upon its receipt of all sale or
financing proceeds, in an amount no less than $100,000.00, for such patent.
(c) If for any reason (other than Borrower's refinancing of the Obligations with
Wachovia Bank at any time at lest one year after the date of this Agreement)
this Agreement is terminated prior to the end of the then current term or
renewal term of this Agreement, in view of the impracticality and extreme
difficulty of ascertaining actual damages and by mutual agreement of the parties
as to a reasonable calculation of Lender's lost profits as a result thereof,
Borrower agrees to pay to Lender, upon the effective date of such termination,
an early termination fee in the amount set forth below if such termination is
effective in the period indicated:
Amount Period
------ ------
(i) three (3%) percent of From the date hereof to and
the Maximum Credit including September 25, 2003
(ii) one and one-half (1.5%) From September 26, 2003 to and
percent of the Maximum including September 25, 2004
Credit
(iii) one-half of one (.5%) From September 26, 2004 to and
percent of the Maximum including September 25, 2005 or if
Credit the term of this Agreement is
extended, at any time prior to the
end of the then current term.
Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrower agrees
that it is reasonable under the circumstances currently existing. In addition,
Lender shall be entitled to such early termination fee upon the occurrence of
any Event of Default described in Sections 10.1(g) and 10.1(h) hereof, even if
Lender does not exercise its right to terminate this Agreement, but elects, at
its option, to provide financing to Borrower or permit the use of cash
collateral under the United States Bankruptcy Code. The early termination fee
provided for in this Section 12.1 shall be deemed included in the Obligations.
12.2 INTERPRETATIVE PROVISIONS.
(a) All terms used herein which are defined in Article 1 or Article 9 of the UCC
shall have the meanings given therein unless otherwise defined in this
Agreement.
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(b) All references to the plural herein shall also mean the singular and to the
singular shall also mean the plural unless the context otherwise requires.
(c) All references to Borrower and Lender pursuant to the definitions set forth
in the recitals hereto, or to any other person herein, shall include their
respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this Agreement" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not any particular provision of this Agreement and as this Agreement
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean "including,
without limitation".
(f) All references to the term "good faith" used herein when applicable to
Lender shall mean, notwithstanding anything to the contrary contained herein or
in the UCC, honesty in fact in the conduct or transaction concerned. Borrower
shall have the burden of proving any lack of good faith on the part of Lender
alleged by Borrower at any time.
(g) An Event of Default shall exist or continue or be continuing until such
Event of Default is waived in accordance with Section 11.3 or is cured in a
manner satisfactory to Lender, if such Event of Default is capable of being
cured as determined by Lender.
(h) Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given in accordance with
GAAP, and all financial computations hereunder shall be computed, unless
otherwise specifically provided herein, in accordance with GAAP as consistently
applied and using the same method for inventory valuation as used in the
preparation of the financial statements of Borrower most recently received by
Lender prior to the date hereof.
(i) In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including", the words "to" and
"until" each mean "to but excluding" and the word "through" means "to and
including".
(j) Unless otherwise expressly provided herein, (i) references herein to any
agreement, document or instrument shall be deemed to include all subsequent
amendments, modifications, supplements, extensions, renewals, restatements or
replacements with respect thereto, but only to the extent the same are not
prohibited by the terms hereof or of any other Financing Agreement, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
recodifying, supplementing or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for convenience of reference
only and shall not affect the interpretation of this Agreement.
(l) This Agreement and other Financing Agreements may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such
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limitations, tests and measurements are cumulative and shall each be performed
in accordance with their terms.
(m) This Agreement and the other Financing Agreements are the result of
negotiations among and have been reviewed by counsel to Lender and the other
parties, and are the products of all parties. Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Lender merely
because of Lender's involvement in their preparation.
12.3 NOTICES. All notices, requests and demands hereunder shall be in writing
and deemed to have been given or made: if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next Business Day, one (1)
Business Day after sending; and if by certified mail, return receipt requested,
five (5) days after mailing. All notices, requests and demands upon the parties
are to be given to the following addresses (or to such other address as any
party may designate by notice in accordance with this Section):
If to Borrower: Xxxxxxxxx Mobile Fueling, Inc.
000 Xxxx Xxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, President
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to Lender: Congress Financial Corporation (Florida)
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Portfolio Manager
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
12.4 PARTIAL INVALIDITY. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
12.5 SUCCESSORS; DISCLOSURE OF INFORMATION; CONFIDENTIALITY. This Agreement, the
other Financing Agreements and any other document referred to herein or therein
shall be binding upon and inure to the benefit of and be enforceable by Lender,
Borrower and their respective successors and assigns, except that Borrower may
not assign its rights under this Agreement, the other Financing Agreements and
any other document referred to herein or therein without the prior written
consent of Lender. Lender may, after notice to Borrower, assign its rights and
delegate its obligations under this Agreement and the other Financing Agreements
and
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further may assign, or sell participations in, all or any part of the Loans, the
Letter of Credit Accommodations or any other interest herein to another
financial institution or other person, in which event, the assignee or
participant shall have, to the extent of such assignment or participation, the
same rights and benefits as it would have if it were the Lender hereunder,
except as otherwise provided by the terms of such assignment or participation.
Lender shall hold all non-public information with respect to Borrower obtained
pursuant to the Financing Agreements in accordance with its customary procedures
for handling confidential information. Lender may, in connection with any
assignment, proposed assignment, participation or proposed participation,
disclose to the assignee, participant, proposed assignee or proposed
participant, any information relating to Borrower furnished to Lender by or on
behalf of Borrower; PROVIDED, that, prior to any such disclosure, each such
assignee, proposed assignee, participant or proposed participant shall agree
with Borrower or Lender to preserve the confidentiality of any confidential
information relating to Borrower received from Lender.
12.6 ENTIRE AGREEMENT. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.
12.7 COUNTERPARTS, ETC. This Agreement or any of the other Financing Agreements
may be executed in any number of counterparts, each of which shall be an
original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile shall have the same force and effect
as the delivery of an original executed counterpart of this Agreement or any of
such other Financing Agreements. Any party delivering an executed counterpart of
any such agreement by telefacsimile shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of such agreement.
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IN WITNESS WHEREOF, Lender and Borrower have caused these presents to be
duly executed as of the day and year first above written.
LENDER BORROWER
CONGRESS FINANCIAL CORPORATION XXXXXXXXX MOBILE FUELING,
(FLORIDA) INC.
By: /s/ XXXX X. XXXXXXXX By: /s/ XXXXXXX X. XXXXX
--------------------------- ----------------------------
Title: VICE PRESIDENT Title: SVP/CFO
------------------------ -------------------------
ADDRESS: CHIEF EXECUTIVE OFFICE:
000 Xxxxxxxx Xxxxxx 000 Xxxx Xxxxxxx Xxxxx Xxxx
Xxxxx 000 Xxxxx 000
Xxxxx, Xxxxxxx 00000 Xxxx Xxxxxxxxxx, Xxxxxxx 00000
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